Lyda v. CBS Interactive, Inc.
Filing
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ORDER GRANTING 16 Motion to Dismiss, With Prejudice, and Denying Request for Attorneys' Fees and Sanctions Without Prejudice. Signed by Judge Jeffrey S. White on March 1, 2017. (jswlc3S, COURT STAFF) (Filed on 3/1/2017)
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NOT FOR CITATION
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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EDWIN LYDA,
Plaintiff,
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United States District Court
Northern District of California
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v.
CBS INTERACTIVE, INC.,
Defendant.
Case No. 16-cv-06592-JSW
ORDER GRANTING MOTION TO
DISMISS, WITH PREJUDICE, AND
DENYING REQUEST FOR
ATTORNEYS’ FEES AND SANCTIONS
WITHOUT PREJUDICE
Re: Dkt. No. 16
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Now before the Court for consideration is the motion to dismiss filed by CBS Interactive,
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Inc. (“Defendant”). The Court has considered the parties’ papers, relevant legal authority, the
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record in this case, and it found the motion suitable for disposition without oral argument. See
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N.D. Civ. L.R. 7-1(b). For the reasons set forth herein, the Court GRANTS Defendant’s motion to
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dismiss, with prejudice.
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BACKGROUND
In 2014, Plaintiff filed a complaint, which he subsequently amended, against Defendant
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and CBS Corporation (“CBS”) in the United States District Court for the Southern District of New
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York. In that case, Plaintiff alleged Defendant and CBS infringed United States Patent No.
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7,434,243, Response Apparatus Method and System (the “’243 Patent”) and United States Patent
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No. 7,730,506, Method and Apparatus for Response System (the “’506 Patent”) (“Lyda I”). (See
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Dkt. No. 1, Compl. ¶ 9; Dkt. No. 16-1, Declaration of Ehsun Forghany (“Forghany Decl.”), ¶¶ 2-3,
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Ex. 1 (Lyda I Complaint), Ex. 2 (Lyda I Amended Complaint).)
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On July 16, 2015, the Lyda I court dismissed the amended complaint for failure to state a
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claim, and it denied Plaintiff leave to file a second amended complaint. (Forghany Decl., ¶ 4, Ex.
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3 (Opinion and Order at 6-9).) The United States Court of Appeals for the Federal Circuit
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affirmed. See Lyda v. CBS Corporation, 838 F.3d 1331 (Fed. Cir. 2016) (“Lyda I”).1
On November 14, 2016, Plaintiff filed his Complaint in this action, in which he asserts
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four claims for relief against Defendant based on alleged infringement of the ’243 Patent and the
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’506 Patent. Plaintiff’s allegations of infringement in this case, as in Lyda I, are premised on
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voting by the viewing audience of the television show “Big Brother.”
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According to the patents, audience members of game shows or
reality programs often use input devices to electronically vote in
response to cues during the shows. In particular, the ’243 and ’506
patents cover methods and systems for obtaining real time responses
to remote programming’ by allowing persons viewing or listening to
a broadcast to respond to the broadcast in real time without requiring
a personal computer.
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Lyda I, 838 F.3d at 1334.
Plaintiff alleges that Lyda I put Defendant on notice of claim 8 of the ‘243 Patent and
United States District Court
Northern District of California
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claim 1 of the ‘506 Patent. Plaintiff alleges that, notwithstanding that notice, Defendant continued
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to broadcast Big Brother, including permitting voting by the audience, and thereby induced
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infringement “of the aforementioned patents by conducting most of the steps of method claims
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and inducing the television audience to become direct infringers.” (Compl. ¶¶ 9-10, 15-16, 19-
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20.)
ANALYSIS
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A.
Applicable Legal Standard.
Defendant moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Under
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The issues presented to the Federal Circuit were whether Plaintiff’s complaint satisfied the
pleading requirements set forth in Form 18 of the Appendix of Forms, which accompanied, now
abrogated, Federal Rule of Civil Procedure 84. The Federal Circuit also considered whether
claims of joint infringement should be measured by the pleading requirements set forth in Form 18
or whether they should be judged by the pleading standards set forth in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2006) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Lyda I, 838 F.3d at
1338-39. The court held that, as with claims for induced or contributory infringement, claims of
joint infringement should be governed by the Twombly and Iqbal standards. Id. at 1339.
Plaintiff agreed at oral argument that he was proceeding against CBS and Defendant on a
“joint infringement theory of direct infringement,” and the Federal Circuit also concluded that
each of Plaintiff’s claims “implicates joint infringement.” It then found that Plaintiffs’ allegations
were not sufficient under Twombly and Iqbal and affirmed the district court’s decision to dismiss
the case with prejudice. Id. at 1339-41.
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Rule 12(b)(6), the Court’s “inquiry is limited to the allegations in the complaint, which are
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accepted as true and construed in the light most favorable to the plaintiff.” Lazy Y Ranch LTD v.
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Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleadings standard of Federal
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Rule of Civil Procedure 8(a)(2), “a plaintiff’s obligation to provide the ‘grounds’ of his
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‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the
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elements of a claim for relief will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain,
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478 U.S. 265, 286 (1986)). Pursuant to Twombly, a plaintiff must not allege conduct that is
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conceivable but must allege “enough facts to state a claim to relief that is plausible on its face.”
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Id. at 570. “A claim has facial plausibility when the Plaintiff pleads factual content that allows the
court to draw the reasonable inference that the Defendant is liable for the misconduct alleged.”
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United States District Court
Northern District of California
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Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “Ordinarily affirmative defenses may
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not be raised by motion to dismiss, … but this is not true when, as here, the defense raises no
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disputed issues of fact.” Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984) (citations
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omitted).
As a general rule, “a district court may not consider any material beyond the pleadings in
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ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled
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on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) (citation
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omitted). However, the Court may consider documents attached to the complaint, documents
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relied upon but not attached to the complaint, when the authenticity of those documents is not
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questioned, and other matters of which the Court can take judicial notice, without converting a
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motion to dismiss into a motion for summary judgment. Zucco Partners LLC v. Digimarc Corp.,
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552 F.3d 981, 990 (9th Cir. 2009).2
If the allegations are insufficient to state a claim, a court should grant leave to amend,
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unless amendment would be futile. See, e.g. Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
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Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th
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Defendant requests that the Court take judicial notice of the pleadings and orders filed in
connection with Lyda I. Plaintiff has not objected to Defendant’s request. Because the Court may
take judicial notice of the existence of those documents, it grants Defendant’s request. See, e.g.,
Lee v. City of Los Angeles, 250 F.3d 668, 689-90 (9th Cir. 2001); Fed. R. Evid. 201.
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Cir. 1990).
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B.
Plaintiff’s Claims Are Barred by the Doctrine of Res Judicata.
Defendant argues Plaintiff’s claims are barred by res judicata, because they could have
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been raised in Lyda I. “Res judicata, also known as claim preclusion, bars litigation in a
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subsequent action of any claims that were raised or could have been raised in the prior action.”
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Owens v. Kaiser Foundation Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (citation
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omitted). The doctrine of res judicata and collateral estoppel “is a rule of fundamental and
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substantial justice, of policy and of private peace, which should be cordially regarded and enforced
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by courts.” Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981).
The Ninth Circuit’s test to determine whether the doctrine of res judicata applies is “well-
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United States District Court
Northern District of California
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established.” Mpoyo v. Litton Electro-Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005); see also
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Accumed v. Stryker Corp., 525 F.3d 1319, 1323 (Fed. Cir. 2008) (“To the extent that a case turns
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on general principles of claim preclusion, as opposed to a rule of law having special application to
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patent cases, this court applies the law of the regional circuit in which the district court sits[.]”).
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The Court considers whether “‘the earlier suit ... (1) involved the same ‘claim’ or cause of action
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as the later suit, (2) reached a final judgment on the merits, and (3) involved identical parties or
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privies.’” Mpoyo, 430 F.3d at 987 (quoting Sidhu v. Flecto Co., 279 F.3d 896, 900 (9th Cir.
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2002)).
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Plaintiff does not dispute that Lyda I reached a final judgment on the merits or that it
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involved identical parties. Thus, the only issue is whether Plaintiff raised or could have raised
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these claims in Lyda I. The Court analyzes this issue under Federal Circuit law. See Accumed,
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525 F.3d at 1323. The Federal Circuit is guided by the approach set forth in the Restatement
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(Second) of Judgments, by which “a claim is defined by the transactional facts from which it
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arises.” Id. It is undisputed that Lyda I involved the same patents and Plaintiff alleged Defendant
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infringed at least some of the same patent claims at issue in this case. In addition, Plaintiff’s
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claims of infringement in Lyda I also are based on the voting procedures used in connection with
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Big Brother. (See, e.g., Lyda I Amended Complaint ¶¶ 6-8.) Plaintiff’s current theory of liability
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is that Defendant induced infringement of the ’243 and ’506 Patents. See 35 U.S.C. § 271(b)
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(“Whoever actively induces infringement of a patent shall be liable as an infringer.”).
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In order “[t]o establish liability under section 271(b), a patent holder must prove that once
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the defendants knew of the patent, they actively and knowingly aided and abetted another’s direct
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infringement.” DSU Medical Corp. v. JMS Co. Ltd., 471 F.3d 1293, 1305 (Fed. Cir. 2006)
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(internal quotations and brackets omitted). Plaintiff argues he could not have asserted these claims
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in Lyda I, because Defendant “was unaware of the patents-in-suit, and [Defendant] was incapable
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of knowingly inducing infringement without such knowledge.” (Opp. Br. at 6:11-13.)
Plaintiff has not provided the Court with any authority to suggest that he was legally
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precluded from asserting Defendant induced infringement in Lyda I. The Federal Circuit has not
directly addressed this issue.3 However, courts have permitted claims based on induced
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United States District Court
Northern District of California
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infringement to go forward without pre-suit knowledge of a patent and have limited recovery to
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post-suit conduct. See, e.g., Windy City Innovations LLC v. Microsoft Corp., 193 F. Supp. 3d
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1109, 1115-16 (N.D. Cal. 2016); CAP Co., Ltd. v. McAfee, Inc., Nos. 14-cv-05068-JD, 14-cv-
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05071-JD, 2015 WL 3945875, at *4-5 (N.D. Cal. June 26, 2015); Bascom Research LLC v.
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Facebook, Inc., Nos. 12-cv-6293-SI through 12-cv-6297-SI, 2013 WL 968210, at *3-4 (N.D. Cal.
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Mar. 12, 2013); cf. Script Security Solutions, LLC v. Amazon.com, Inc., 170 F. Supp. 3d 928, 937
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(E.D. Tex. 2015) (citing cases and noting majority view permits claims for induced infringement
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based on filing of lawsuit to establish knowledge); Rembrandt Social Media LP v. Facebook, Inc.,
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950 F. Supp. 2d 876, 882 (E.D. Va. 2013) (noting split in district courts, but that majority view
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finds that “post-suit knowledge (i.e., knowledge provided by the filing of the lawsuit) satisfies the
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knowledge element for indirect infringement,” and that consequence is a patent holder “may only
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recover damages for indirect infringement for the period of time that commences once the putative
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infringer learns of the patent”). In light of the lack of guidance from the Federal Circuit and the
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split in authority, Plaintiff had at least a colorable basis to allege the knowledge element of a claim
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In In re Bill of Lading Transmission and Processing System Patent Litigation, on which
Defendant relies, the Federal Circuit found that the plaintiff sufficiently alleged claims for induced
infringement. 681 F.3d 1323, 1345-45 (Fed. Cir. 2012). In at least two of the complaints, the
plaintiff relied on the complaint to allege the defendant knew of the patent. Id. The court did not,
however, directly hold that a complaint is sufficient to show a defendant has the requisite
knowledge of a patent for purposes of induced infringement.
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for induced infringement based on the filing of the complaint.
The Court’s conclusion that Plaintiff’s claims are barred is further supported by the fact
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Plaintiff’s argument that Defendant was not aware of the patents-in-suit before he filed Lyda I is
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not supported by the record. In Lyda I, in order to support an allegation of willful infringement,
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Plaintiff alleged that “[o]n or about July 7, 2011, Defendant CBS Interactive was provided with
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the notice sent to Defendant CBS pointing out the patents-in-suit and informed that its activities
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were infringing the ‘243 and ‘506 Patents.” Plaintiff also alleged that Defendant was a willful
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infringer because “it continued its infringing activities after being informed that those activities
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were infringing the patents-in-suit.” (Lyda I Complaint ¶ 69.) Plaintiff reasserted those
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allegations in his amended complaint. (Lyda I Amended Complaint ¶ 71.)
Defendant also has submitted the letter referenced in the Lyda I Complaint as an exhibit.
United States District Court
Northern District of California
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(Dkt. No. 22-2, Supplemental Declaration of Ehsun Forghany, ¶ 2, Ex. 7 (letter dated July 11,
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2011.) Although the letter is sparse on details, Plaintiff stated that “at least claims 1 and 9 of the
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‘243 patent and at least claims 1 and 7 of the ‘506 patent are being infringed by the texting of
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selections offered to the [Big Brother] audience.” (Id.) Defendant acknowledged that it received
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the letter on July 28, 2011, and stated that it had “obtained copies of the patents and reviewed each
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of the claims of both” patents-in-suit. (Id., ¶ 3, Ex. 8.)
The Court finds that the facts alleged in this case arise from the same set of transactional
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facts that gave rise to Lyda I. In addition, Plaintiff has not demonstrated that he was precluded
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from asserting claims of induced infringement, and the facts show he could have raised such
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claims in Lyda I.
Accordingly, the Court finds Plaintiff’s claims are barred by the doctrine of res judicata.4
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C.
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Defendant has moved the Court for an award of attorneys’ fees, on the basis that the case
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The Court Denies, Without Prejudice, Defendant’s Request for Attorney’s Fees and
Sanctions.
qualifies as an “exceptional” case under 35 U.S.C. section 285. In the alternative, Defendant seeks
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In light of this ruling, the Court does not reach Defendant’s alternative argument regarding
the sufficiency of the pleadings.
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san
nctions under 28 U.S.C. section 1927 The Cour denies those requests, without prej
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rt
judice. The
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Court’s ruling is without pr
rejudice to Defendant fil
D
ling a proper noticed m
rly
motion for fe and/or
ees
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san
nctions, with fourteen days after en of judgm
hin
d
ntry
ment. See Fe R. Civ. P 54(d); N.D L.R. 7ed.
P.
D.
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8(d If Defend moves for fees and costs under both Section 285 and Se
d).
dant
f
n
ection 1972, it shall
,
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add
dress the leg authority and standard supportin a request f fees and costs under both
gal
ds
ng
for
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statutes. In add
dition, Defen
ndant shall support any s
s
such motion with declar
n
rations and d
documentary
y
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evi
idence that sets forth the fees and costs it seeks t recover.
s
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to
CONCLU
USION
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For the foregoing re
easons, the Court GRAN Defend
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NTS
dant’s motion to dismiss. Because
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lea to amend would be futile, the Co dismisse this case w prejudic The Cou shall issue
ave
d
fu
ourt
es
with
ce.
urt
e
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United States District Court
Northern District of California
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a separate judg
gment, and th Clerk sha close this file.
he
all
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IT IS SO ORDER
S
RED.
Da
ated: March 1, 2017
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___
__________
___________
__________
________
JEF
FFREY S. W
WHITE
Un
nited States D
District Judg
ge
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