Simpson Performance Products, Inc. v. NecksGen Inc.

Filing 50

ORDER: (1) denying as moot 44 Motion to Stay Action Pending Inter Partes Review; and (2) granting in part and denying in part 37 Motion to Dismiss for Failure to State a Claim. If Plaintiff elects to amend its pleading, it must file a Second Amended Complaint within ten (10) days of the date this Order is filed. Signed by Judge Roger T. Benitez on 5/16/2018. (anh)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 SIMPSON PERFORMANCE PRODUCTS, INC., 15 ORDER: Plaintiff, 13 14 Case No.: 3:17-cv-01704-BEN-MDD v. (1) DENYING AS MOOT MOTION TO STAY ACTION PENDING INTER PARTES REVIEW; and NECKSGEN INC., Defendant. 16 (2) GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 17 18 19 In this patent infringement action, Plaintiff Simpson Performance Products, Inc. 20 (“Simpson”) alleges Defendant NecksGen Inc. (“NecksGen”) infringed its ownership 21 rights to U.S. Patent No. 9,351,529 B1. Now pending before the Court are Defendant’s 22 renewed motion to dismiss Plaintiff’s First Amended Complaint and Defendant’s motion 23 to stay action pending inter partes review. (Docket Nos. 37, 44.) The motions are fully 24 briefed. For the reasons that follow, the motion to stay pending inter partes review is 25 DENIED as moot, and the motion to dismiss is GRANTED in part and DENIED in 26 part. 27 /// 28 /// 1 3:17-cv-01704-BEN-MDD BACKGROUND1 1 2 Plaintiff Simpson manufactures automotive and motorsports specialty/performance 3 products, including head and neck restraints for competitive racing. It is the named 4 assignee of U.S. Patent No. 9,351,529 B1 (“the ’529 Patent”). The ’529 Patent, entitled 5 “Multi-Point Tethering System for Head and Neck Restraint Devices,” was issued on 6 May 31, 2016. 7 Defendant NecksGen is an automotive and motorsports products supplier; it sells 8 safety equipment for professional and amateur drivers including head and neck restraints 9 for competitive racing. Simpson alleges that two of NecksGen’s products, the NecksGen 10 REV and the NecksGen REV2LITE (“the Accused Devices”), infringe claims 1, 8, and 11 14 of the ’529 Patent. Specifically, Simpson alleges NecksGen is liable for (1) direct 12 infringement under 35 U.S.C. § 271(a); (2) induced infringement under 35 U.S.C. 13 § 271(b); and (3) contributory infringement under 35 U.S.C. § 271(c). Simpson further 14 seeks enhanced damages for alleged willful infringement under 35 U.S.C. § 284. 15 PROCEDURAL HISTORY 16 On August 24, 2016, Plaintiff filed its initial complaint asserting a single claim for 17 patent infringement in the U.S. District Court for the Western District of North Carolina. 18 (Docket No. 1.) On December 14, 2016, Defendant filed a motion to dismiss for failure 19 to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (Docket 20 No. 11), which Plaintiff elected to respond to by filing the operative First Amended 21 Complaint (Docket No. 12). On January 25, 2017, Defendant moved to dismiss 22 Plaintiff’s FAC, again under Rule 12(b)(6) for failure to state a claim. (Docket No. 16.) 23 On June 6, 2017, Defendant filed a motion to dismiss for improper venue in light of the 24 Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. 25 26 27 28 The following overview of the facts are drawn from the allegations of Plaintiff’s First Amended Complaint (Docket No. 12, “FAC”), which the Court assumes true for purposes of evaluating Defendant’s motions. The Court is not making factual findings. 1 2 3:17-cv-01704-BEN-MDD 1 Ct. 1514 (2017). (Docket No. 20.) On August 22, 2017, the Honorable District Judge 2 Richard Voorhees issued an order denying as moot Defendant’s motion to dismiss the 3 initial complaint, granting Defendant’s motion to dismiss for improper venue, and 4 transferring the action to this District. (Docket No. 25.) 5 On August 29, 2017, the case was assigned to this Court. After considering the 6 procedural history of the case, this Court denied Defendant’s motion to dismiss the FAC 7 without prejudice. (Docket No. 29.) On September 22, 2017, Defendant filed a renewed 8 Rule 12(b)(6) motion to dismiss Plaintiff’s FAC. (Docket No. 37.) On December 5, 9 2017, after its motion to dismiss was fully briefed, Defendant filed a motion to stay the 10 action pending inter partes review (“IPR”) on the grounds that it had filed an IPR petition 11 to contest the validity of the ’529 Patent with the United States Patent and Trademark 12 Office’s (“USPTO’s”) Patent Trial and Appeals Board (“PTAB”). (Docket No. 44.) 13 While both motions were pending, the PTAB issued a decision denying 14 Defendant’s IPR petition for the ’529 Patent, rendering moot Defendant’s motion to stay. 15 NecksGen, Inc. v. Simpson Performance Prods, Inc., Case No. IPR2018-00133 (P.T.A.B. 16 May 4, 2018) (Paper No. 9). Accordingly, Defendant’s motion to stay action pending 17 IPR review is DENIED, and the Court shall proceed to evaluation of its remaining 18 motion to dismiss for failure to state a claim. 19 20 LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint 21 if, taking all factual allegations as true, the complaint fails to state a plausible claim for 22 relief on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. 23 Twombly, 550 U.S. 544, 556-57 (2007). Dismissal is appropriate if the complaint fails to 24 state enough facts to raise a reasonable expectation that discovery will reveal evidence of 25 the matter complained of, or if the complaint lacks a cognizable legal theory under which 26 relief may be granted. Twombly, 550 U.S. at 556. 27 “A claim is facially plausible ‘when the plaintiff pleads factual content that allows 28 the court to draw the reasonable inference that the defendant is liable for the misconduct 3 3:17-cv-01704-BEN-MDD 1 alleged.’” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Iqbal, 556 2 U.S. at 678). While the Court must draw all reasonable inferences in the non-movant’s 3 favor, it need not “necessarily assume the truth of legal conclusions merely because they 4 are cast in the form of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 5 F.3d 1136, 1139 (9th Cir. 2003) (internal quotations omitted). “Threadbare recitals of the 6 elements of a cause of action, supported by mere conclusory statements, do not suffice.” 7 Iqbal, 556 U.S. at 678. 8 9 DISCUSSION A. Direct Infringement 10 To survive motion to dismiss, a plaintiff asserting a claim for direct patent 11 infringement must plausibly allege that the defendant, “without authority[,] makes, uses, 12 offers to sell, or sells any patented invention.” 35 U.S.C. § 271(a); see also Scripps 13 Research Inst. v. Illumina, Inc., No. 16-CV-661-JLS (BGS), 2017 WL 1361623, at *3 14 (S.D. Cal. Apr. 14, 2017) (same). 15 Defendant argues Plaintiff has not met its pleading burden because the FAC does 16 not sufficiently allege the Accused Devices “meet each and every limitation” of the 17 allegedly infringed claims of the ’529 Patent. (Mot. at p. 4.) In essence, Defendant 18 contends that because claims 1, 8, and 14 of the ’529 Patent necessarily include a helmet 19 and the Accused Products do not include a helmet, Plaintiff has not and ultimately cannot 20 state a claim for direct patent infringement. Plaintiff responds that Defendant’s motion 21 improperly seeks a premature claim construction. The Court agrees. 22 Whether a helmet is required for infringement of claims 1, 8, and 14 of the ’529 23 Patent is an issue of claims construction, which is not properly considered in a 12(b)(6) 24 motion.2 Discflo Corp. v. Am. Process Equip., Inc., No. 11-CV-00476 BTM (RBB), 25 26 27 28 Throughout its motion, Defendant argues Plaintiff’s FAC consists of legal conclusions or conclusory allegations, which the Court should not accept. However, Defendant’s motion to dismiss the direct infringement claim relies on Defendant’s own 2 4 3:17-cv-01704-BEN-MDD 1 2011 WL 6888542, at *2 (S.D. Cal. Dec. 29, 2011). Here, the FAC identifies the patent 2 at issue, the allegedly infringing products, the claims allegedly infringed by the products, 3 and alleges “Defendant offers to sell and/or sells” those products “directly and/or 4 indirectly through authorized distributors and/or other intermediaries.” (FAC ¶ 23.) The 5 Court finds Plaintiff has met its pleading burden. Accordingly, Defendant’s motion to 6 dismiss Plaintiff’s claim for direct infringement is DENIED. 7 B. Indirect Infringement 8 1) 9 “Whoever actively induces infringement of a patent shall be liable as an infringer.” Induced Infringement 10 35 U.S.C. § 271(b). To state a claim for inducement pursuant to 35 U.S.C. § 271(b), a 11 plaintiff must plausibly allege “first that there has been direct infringement, and second 12 that the alleged infringer knowingly induced infringement and possessed specific intent to 13 encourage another’s infringement.” FootBalance Sys. Inc. v. Zero Gravity Inside, Inc., 14 No. 15-CV-1058 JLS (DHB), 2016 WL 903681, at *3 (S.D. Cal. Feb. 8, 2016) (quoting 15 Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340, 1354 (Fed. Cir. 2008)) 16 (additional citation and internal quotation marks omitted; emphasis added). 17 To induce infringement, a defendant must “actively and knowingly” aid and abet 18 another’s direct infringement. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (Fed. 19 Cir. 2006) (quoting Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. 20 21 22 23 24 25 26 27 28 legal conclusion regarding construction of claims 1, 8, and 14 of the ’529 Patent. But “[d]etermination of an infringement claim involves a two-step inquiry. ‘First, the claims are construed, a question of law in which the scope of the asserted claims is defined.’” Discflo Corp. v. Am. Process Equip., Inc., No. 11-CV-00476-BTM (RBB), 2011 WL 6888542, at *2 (S.D. Cal. Dec. 29, 2011) (quoting Advanced Cardiovascular Systems, Inc. v. Scimed Life Systems, Inc., 261 F.3d 1329, 1336 (Fed. Cir. 2001)). “Second, the claims, as construed, are compared to the accused device . . . . This is a question of fact.” Id. “The two-step process of ‘[c]laim construction and infringement analysis should not be resolved on a motion to dismiss.’” Id. (quoting Fujitsu Ltd. v. Belkin Intern., Inc., 782 F. Supp. 2d 868, 890 (N.D. Cal. 2011)). 5 3:17-cv-01704-BEN-MDD 1 Cir. 1988)) (emphasis in original). A defendant’s “knowledge of the acts alleged to 2 constitute infringement” is not sufficient. Id. (quoting Warner–Lambert Co. v. Apotex 3 Corp., 316 F.3d 1348, 1363 (Fed. Cir. 2003)) (citation omitted in original). Additionally, 4 “[t]he mere knowledge of possible infringement by others does not amount to 5 inducement; specific intent and action to induce infringement must be proven.” Id. 6 (quoting Warner–Lambert, 316 F.3d at 1364) (internal quotation marks omitted). 7 Even assuming there has been direct infringement, the Court agrees with 8 Defendant that the FAC lacks specific facts to plausibly allege that it knowingly induced 9 infringement and possessed specific intent to encourage another’s infringement. Simply 10 put, other than its own conclusory allegation,3 which the Court need not assume true, the 11 FAC is completely devoid of any specific factual allegations regarding either 12 Defendant’s pre-suit knowledge of the ’529 Patent or its intent to induce others to 13 infringe the ’529 Patent. 14 Accordingly, Defendant’s motion to dismiss the inducement claim is GRANTED. 15 2) 16 “Whoever offers to sell or sells within the United States or imports into the United 17 States a component of a patented machine, manufacture, combination or composition, or 18 a material or apparatus for use in practicing a patented process, constituting a material 19 part of the invention, knowing the same to be especially made or especially adapted for 20 use in an infringement of such patent, and not a staple article or commodity of commerce 21 suitable for substantial noninfringing use, shall be liable as a contributory infringer.” 35 22 U.S.C. § 271(c). Contributory Infringement 23 24 25 26 27 28 The only allegation regarding inducement states: “NecksGen intended to induce direct infringement by end users (e.g., drivers). For example, the Accused Devices are offered for sale and sold through NecksGen’s website for use in conjunction with a helmet by drivers during the operation of a vehicle. Use of the Accused Devices as induced by NecksGen directly infringes the ‘529 Patent.” (FAC ¶ 47.) This is not sufficient to plausibly state a claim for inducement. 3 6 3:17-cv-01704-BEN-MDD 1 To state a claim for contributory infringement under 35 U.S.C. § 271(c), a plaintiff 2 must plausibly allege: “1) that there is direct infringement, 2) that the accused infringer 3 had knowledge of the patent, 3) that the component has no substantial noninfringing uses, 4 and 4) that the component is a material part of the invention.” FootBalance, 2016 WL 5 903681, at *3 (quoting Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1326 (Fed. Cir. 6 2010)) (additional citation and internal quotation marks omitted). Similar to Plaintiff’s claim for inducement, the Court agrees with Defendants that 7 8 the FAC lacks specific factual allegations from which the Court may draw a plausible 9 inference of contributory infringement. Again, apart from Plaintiff’s own conclusory 10 allegation,4 the FAC lacks factual allegations to plausibly establish Defendant’s pre-suit 11 knowledge of the ’529 Patent, that the component had no substantial non-infringing uses, 12 or that the component is a material part of the invention. As a result, the Court also GRANTS Defendant’s motion to dismiss Plaintiff’s 13 14 contributory infringement claim. 15 C. 16 Willful Infringement Finally, Defendant seeks dismissal of Plaintiff’s willful infringement claim and to 17 strike the accompanying request for enhanced damages under 35 U.S.C. § 284 on the 18 grounds that the FAC lacks plausible allegations of its pre-suit knowledge of the alleged 19 infringement of the ’529 Patent. Alternatively, Defendant asserts Plaintiff fails to state a 20 claim for willful infringement based on guidance provided by the Supreme Court in Halo 21 Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016). In response, Plaintiff argues 22 that, post-Halo, pre-suit knowledge is no longer a prerequisite to willful infringement 23 24 25 26 27 28 The only allegation regarding contributory infringement states: “The Accused Devices are intended to be used and are used only as a restraint device for controlling a driver’s head during operation of a vehicle, and thus, clearly have no substantial noninfringing uses. Furthermore, NecksGen knows that the Accused Devices are especially made or especially adapted to infringe.” (FAC ¶ 45.) Like the inducement allegation, this is insufficient to meet Plaintiff’s pleading burden. 4 7 3:17-cv-01704-BEN-MDD 1 and, regardless, its pleadings are sufficient to support its claim. The Court agrees with 2 Defendant that the FAC fails to state a claim for willful infringement.5 3 To establish willful infringement, a patentee must plead that “the infringer was 4 aware of the asserted patent, but nonetheless ‘acted despite an objectively high likelihood 5 that its actions constituted infringement of a valid patent.’” Commercial Copy 6 Innovations, Inc. v. Ricoh Elecs., Inc., No. SAC-V17437-JVS (KESX), 2017 WL 7 7838719, at *5 (C.D. Cal. Oct. 16, 2017) (quoting i4i Ltd. P’ship v. Microsoft Corp., 598 8 F.3d 831, 860 (Fed. Cir. 2010), aff’d, 564 U.S. 91 (2011)) (internal quotation marks 9 omitted). In this case, Plaintiff merely alleges in a conclusory fashion that: 10 NecksGen’s infringement of the ‘529 Patent is willful because NecksGen continues to make, import, sell, offer of sale, and/or use the Accused Devices and has knowledge that its actions constitute infringement of the ‘529 Patent (at least since being notified thereof by virtue of this lawsuit). . . [.] NecksGen has expanded its infringement of the ‘529 Patent since the filing of this lawsuit by subsequently adding the NecksGen REV2LITE head and neck restraint to its product offerings. Accordingly, pursuant to 35 U.S.C. § 284, Simpson isentitled [sic] to an increase in the damages awarded up to three times the amount found or assessed by this Court or a jury. 11 12 13 14 15 16 17 18 (FAC ¶ 49.) Once again, these are Plaintiff’s own conclusions, which the Court need not 19 assume true. 20 Moreover, in Halo, the Supreme Court discussed that: 21 Section 284 allows district courts to punish the full range of culpable behavior. Yet none of this is to say that enhanced 22 23 24 25 26 27 28 5 The Court acknowledges that, post-Halo, there is a split in authority as to whether a plaintiff must allege pre-suit knowledge to plausibly allege a claim for will infringement (and thus be eligible for enhanced damages). Commercial Copy Innovations, Inc. v. Ricoh Elecs., Inc., No. SACV-17437-JVS (KESX), 2017 WL 7838719, at *5 (C.D. Cal. Oct. 16, 2017) (comparing cases). However, at this stage, because the Court finds Plaintiff has not sufficiently alleged willful infringement (either pre- or post-suit), it declines to decide this issue. 8 3:17-cv-01704-BEN-MDD 1 2 3 4 damages must follow a finding of egregious misconduct. As with any exercise of discretion, courts should continue to take into account the particular circumstances of each case . . . [.] Consistent with nearly two centuries of enhanced damages under patent law, however, such punishment should generally be reserved for egregious cases typified by willful misconduct. 5 6 Halo, 136 S. Ct. at 1933-34 (emphasis added). In short, the FAC is further deficient 7 because it fails to plausibly allege an inference that Defendant engaged in egregious 8 conduct. Slot Speaker Techs., Inc. v. Apple, Inc., No. 13-CV-01161-HSG, 2017 WL 9 4354999, at *2 (N.D. Cal. Sept. 29, 2017) (“Plaintiff provides no specific factual 10 allegations about Defendant’s subjective intent or details about the nature of Defendant’s 11 conduct to render a claim of willfulness plausible, and not merely possible.”) (citing 12 Twombly, 550 U.S. at 570; Finjan, Inc. v. Cisco Sys. Inc., No. 17-CV-00072-BLF, 2017 13 WL 2462423, at *5 (N.D. Cal. June 7, 2017)). Accordingly, Defendant’s motion to 14 dismiss and request to strike Plaintiff’s request for enhanced damages are GRANTED. 15 CONCLUSION 16 For all of the reasons stated above, the Court GRANTS in part and DENIES in 17 part Defendant’s motion to dismiss. Specifically, Plaintiff’s direct infringement claim 18 remains, while the inducement, contributory infringement, and willful infringement 19 claims are DISMISSED with leave to amend. In addition, Plaintiff’s request for 20 enhanced damages pursuant to 35 U.S.C. § 284 is STRICKEN with leave to amend. If 21 Plaintiff elects to amend its pleading, it must file a Second Amended Complaint (“SAC”) 22 that cures the defects identified above within ten (10) days of the date this Order is filed. 23 IT IS SO ORDERED. 24 25 Dated: May 16, 2018 26 27 28 9 3:17-cv-01704-BEN-MDD

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