Big Baboon, Inc. v. SAP America, Inc. et al

Filing 50

ORDER by Judge Haywood S. Gilliam, Jr. DENYING 38 MOTION TO DISMISS, DENYING 42 MOTION FOR SANCTIONS, AND DENYING 44 MOTION FOR PARTIAL SUMMARY JUDGMENT. Case Management Statement due by 9/4/2018. Case Management Conference set for 9/11/2018 02:00 PM in Oakland, Courtroom 2, 4th Floor. (ndrS, COURT STAFF) (Filed on 8/28/2018)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

BIG BABOON, INC.,
Plaintiff,

8
v.

9
10

SAP AMERICA, INC., et al.,
Defendants.

United States District Court
Northern District of California

11

Case No. 17-cv-02082-HSG
ORDER DENYING MOTION TO
DISMISS, DENYING MOTION FOR
SANCTIONS, AND DENYING MOTION
FOR PARTIAL SUMMARY
JUDGMENT
Re: Dkt. Nos. 38, 42, 44

12
Pending before the Court are a motion to dismiss, Dkt. No. 38, and a related motion for
13
sanctions, Dkt. No. 42, filed by Defendants SAP America, Inc. and HP Inc., (collectively,
14
15
16

“Defendants”). Also pending is a motion for partial summary judgment filed by Plaintiff Big
Baboon, Inc. Dkt. No. 44. For the reasons detailed below, the Court DENIES Defendants’
motion to dismiss, DENIES Defendants’ motion for sanctions, and DENIES Plaintiff’s motion

17
for summary judgment.
18
19

I.

BACKGROUND
Plaintiff Big Baboon, Inc., the owner by assignment of United States Patent No. 6,343,275

20
21

(the “’275 Patent”), filed this action on April 13, 2017, alleging direct and willful infringement of
the ’275 Patent. See Dkt. No. 1; Dkt. No. 37 (“FAC”) ¶¶ 2, 19. On June 23, 2017, Defendants

22
filed a motion for sanctions and motion to dismiss. See Dkt. Nos. 19, 20. The Court denied
23
24

Defendants’ motion for sanctions and granted Defendants’ motion to dismiss with leave to amend
based in part on Plaintiff’s failure to identify a product that allegedly meets every limitation of the

25
asserted claims. Dkt. No. 36 at 5–6. Plaintiffs filed its first amended complaint on April 17, 2018.
26
27
28

Dkt. No. 37 (“FAC”).

1

II.

MOTION TO DISMISS
A.

2

Pleading Standard

As discussed in this Court’s prior ruling, the pleading standard articulated in Twombly and

3
Iqbal apply in the patent context. Accord Atlas IP LLC v. Pac. Gas & Elec. Co., No. 15–cv–
4

05469–EDL, 2016 WL 1719545, at *3 (N.D. Cal. Mar. 9, 2016) (“allegations of direct

5
infringement are now subject to the pleading standards established by Twombly and Iqbal”);
6
e.Digital Corp., 2016 WL 4427209, at *2–*3.
7

Under this standard, the Court must dismiss a complaint if it fails to allege “enough facts to

8
state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
9

(2007). This “facial plausibility” standard requires “more than labels and conclusions, and a

10
formulaic recitation of the elements of a cause of action will not do.” Id. at 555. Rather, it

United States District Court
Northern District of California

11
12
13
14
15

requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant
has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see Twombly, 550 U.S. at 555
(“factual allegations must be enough to raise a right to relief above the speculative level.”).
Although courts do not require “heightened fact pleading of specifics,” Twombly, 550 U.S. at 570,
a plaintiff must allege “‘enough fact[s] to raise a reasonable expectation that discovery will reveal’

16
the defendant is liable for the misconduct alleged.” In re Bill of Lading Transmission &
17
Processing Sys. Patent Litig., 681 F.3d 1323, 1341 (Fed. Cir. 2012) (quoting Twombly, 550 U.S. at
18
556).
19
20

In reviewing the plausibility of a complaint, courts “accept factual allegations in the
complaint as true and construe the pleadings in the light most favorable to the nonmoving party.”

21
Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). However,
22

courts “are not bound to accept as true a legal conclusion couched as a factual allegation.”

23
Twombly, 550 U.S. at 555. In assessing the sufficiency of a complaint on a motion to dismiss, a
24
25

court “can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 678. “While legal

26
conclusions can provide the framework of a complaint, they must be supported by factual
27

allegations.” Id. at 679. A court next considers the complaint’s “well-pleaded, nonconclusory

28
2

1

factual allegations” and, assuming their veracity, determines whether “they plausibly give rise to

2

an entitlement to relief.” Id. at 679. Determining plausibility is a “context-specific task that

3

requires the reviewing court to draw on its judicial experience and common sense.” Id.

4

In patent cases, purely procedural issues of law are governed by the law of the regional

5

circuit. K–Tech, 714 F.3d at 1282. In the Ninth Circuit, to be entitled to the presumption of truth,

6

a complaint’s allegations “must contain sufficient allegations of underlying facts to give fair notice

7

and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216

8

(9th Cir. 2011), cert. denied, 132 S. Ct. 2101 (2012).

9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18

B.

Discussion

Plaintiff asserts independent claim 15 of the ’275 Patent, and dependent claims 20–34,
which rely on claim 15. Claim 15 reads:
A method comprising the steps of:
providing an end-to-end, business-to-business, e-commerce business
automation software for automation business functions across
multiple business domains;
identifying multiple modules of the software; and
via Web administration, producing a software configuration in
which selected ones of the modules are enabled or disabled;
wherein the software producing a workscope/workflow structured
display of complex database records each comprising multiple lines
of text and pertaining to both a first party to a business transaction
and a second party to the business transaction, the structured display
constituting an integrated decision-making environment for a
particular business function.

19

Dkt. No. 37-1 (’275 Patent) at claim 15; FAC ¶¶ 28, 36.

20

Plaintiff alleges that, within the past six years, Defendants have directly infringed and are

21

infringing claims 15 and 20–34 by making, using, and/or selling in this judicial district “modified

22

versions of R/3 Release 3.0E which include web-functionality.” FAC ¶¶ 28–29, 46–47.

23

According to the FAC, R/3 is enterprise software made by SAP and used by Defendants, and

24

Release 3.0E is a version of the software that predated the ’275 patent, but lacked the web

25

functionality claimed in asserted claim 15. FAC ¶¶ 3, 39. Plaintiff alleges as a basis for its

26

infringement theory that R/3 Release 3.0E, which predates the ’275 Patent’s December 22, 1997

27

priority date, satisfies every element of claim 15 other than “via Web administration, producing a

28

software configuration in which selected ones of the modules are enabled or disabled.” FAC ¶¶
3

1

36–38, 41. Plaintiff’s allegations regarding R/3 Release 3.0E rely upon SAP’s prior art claim

2

chart taken from the ’275 patent reexamination proceedings. FAC ¶¶ 32–33, 39–40. Plaintiff

3

alleges that “[a]t some point in 1997 or thereafter, the web-enabled R/3 system was made and sold

4

by SAP which included web-enabled or disabled software modules.” FAC ¶ 39. Plaintiff

5

additionally lists nineteen software releases that it describes as updates to the R/3 Release 3.0E

6

with web-based functionality. FAC ¶ 29–30.
The Court, in dismissing Plaintiff’s original complaint, ordered Plaintiff to identify “the

7
8

specific infringing product and how such product infringes the ’275 Patent” in any amended

9

complaint. Dkt. No. 36 at 6. Plaintiff has done so in the FAC by pointing to the list of software
releases used by Defendants that allegedly include both features of the R/3 Release 3.0E and web-

11
United States District Court
Northern District of California

10

based functionality, as required by claim 15. Because Plaintiff’s infringement claim is sufficient

12

to meet the facial plausibility standard, the Court DENIES Defendant’s motion to dismiss.

13

III.

MOTION FOR SANCTIONS
Defendants, for the second time, seek sanctions against Plaintiff under Federal Rule of

14
15

Civil Procedure 11 for filing a complaint that is legally and factually baseless without conducting

16

a reasonable pre-suit investigation. Dkt. No. 42 at 1, 3, 9–11. Specifically, Defendants seek

17

sanctions, including attorneys’ fees and/or a monetary penalty. Id. at 3, 11–12. As the basis for

18

their motion, Defendants reiterate the arguments made in their dismissal motion, and reference

19

events arising out of a 2009 lawsuit, initiated by Plaintiff against Defendant HP, in the Central

20

District of California to support their contention that the complaint is factually baseless.
The Court has considered Defendants’ arguments and DENIES the motion.

21
22
23

IV.

MOTION FOR PARTIAL SUMMARY JUDGMENT
Plaintiff moves for partial summary judgment of infringement, asserting that “the web-

24

enabled R/3 3.0E system that existed after the priority date of the ’275 patent infringes claims 15

25

and 20–34 cannot be genuinely disputed.” Dkt. No. 44 at 16. Discovery has not yet commenced,

26

and Plaintiffs offer as evidence the allegations contained in a prior art claim chart and declaration

27

regarding products that existed prior to the priority date of the ’275 patent, none of which amounts

28

to uncontroverted (or incontrovertible) evidence regarding the accused products. In light of the
4

1

multitude of disputed facts underlying Plaintiff’s claim, the Court finds DENIES Plaintiff’s

2

motion for partial summary judgment.

3
4

V.

CONCLUSION
Accordingly, the Court DENIES Defendant’s motion to dismiss, DENIES Defendants’

5

motion for sanctions, and DENIES Plaintiff’s motion for partial summary judgment. The Court

6

SETS a Case Management Conference on Tuesday, September 11 at 2:00 p.m. to discuss a case

7

schedule. The parties shall file a joint case management statement by September 4, 2018.

8
9
10

United States District Court
Northern District of California

11

IT IS SO ORDERED.
Dated: 8/28/2018
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5