United Access Technologies LLC v. AT&T Inc. et al

Filing 25

MEMORANDUM ORDER DENYING 15 MOTION to Dismiss Based upon Fed. R. Civ. P. 12(B)(6) filed by SBC Internet Services Inc., AT&T Services Inc., AT&T Corp. Signed by Judge Leonard P. Stark on 7/26/13. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
UNITED ACCESS
TECHNOLOGIES, LLC,
Plaintiff,
C.A. No. 11-338-LPS

v.

AT&T CORP., ET AL.,
Defendants.

MEMORANDUM ORDER
At Wilmington this 26th day of July, 2013, this matter coming before the Court upon the
Motion to Dismiss (D.I. 15) plaintiff United Access Technologies, LLC's ("Plaintiff') Amended
Complaint (D.I. 12), filed by Defendants AT&T Corp., AT&T Services, Inc., and SBC Internet
Services, Inc. (collectively, "Defendants" or "AT&T"), and having considered the parties' papers
submitted in connection therewith;
IT IS HEREBY ORDERED that Defendants' motion to dismiss for failure to state a
claim (D.I. 15) is DENIED for the reasons that follow.
1.

On April 15, 2011, Plaintiff filed suit against AT&T Inc. and 74 other defendants

alleging infringement of U.S. Patent Nos. 5,844,596 (the "'596 Patent"), 6,243,446 (the "'446
Patent"), and 6,542,585 (the "'585 Patent") (collectively, the "Asserted Patents"). On March 29,
2012, Plaintiff filed an Amended Complaint, reducing the total number of defendants to 72. On
July 23,2012, Plaintiffvoluntarily dismissed all defendants except AT&T.
2.

On July 30, 2012, Defendants moved to dismiss the Amended Complaint based

on laches. (See D.l. 16) Defendants argue laches presumptively bars plaintiff's claims because,

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with full knowledge of AT&T' s relevant activities, Plaintiff sat on its patent rights for nearly
nine years without attempting to enforce them against AT&T. (See generally D.l. 16; D.l. 21 at
3-4) In particular, Plaintiffs predecessor sued AT&T in July 2002 for alleged infringement of
several of the same patents, and a week later voluntarily dismissed the suit. Then, although
knowing by July 2002 of AT&T' s accused activities, Plaintiff waited until after the patents
expired (on July 14, 2009) to bring suit again. Defendants contend that the dilatory conduct of
Plaintiffs predecessor is imputed to Plaintiff. Defendants further assert that Plaintiffs delay was
inexcusable and has materially prejudiced AT&T. Finally, Defendants argue that Plaintiff does
not in its Amended Complaint offer any justification for its lengthy delay in bringing this suit.
3.

Plaintiff responds that Defendants' contentions are conclusory. In Plaintiffs

view, AT&T has failed to show that Plaintiffs delay was unreasonable and inexcusable, or that
AT&T has been prejudiced by that delay. At bottom, Plaintiff contends that its alleged delay is
not apparent from the face of the Amended Complaint, and therefore the laches defense is not
amenable to resolution on a motion to dismiss. Plaintiff argues:
Defendants' affirmative defense of laches is predicated on certain
factual allegations that cannot be gleaned from the face of United
Access's Amended Complaint. For example, Defendants allege
that (1) United Access has imputed knowledge of a lawsuit filed by
Inline against ATTC in 2002; (2) United Access has imputed
knowledge of Defendants' infringing activities in 1998, when the
'596 patent issued; (3) Defendants did not receive actual notice of
Inline's intent to sue after the EarthLink case; (4) Defendants'
potential witnesses and documents may be unavailable as a result
ofthe delay; and (5) Defendants made increasing investments in
the accused technology as a result of the delay. See D.l. 16 at 7-12.
These factual allegations underlying Defendants' laches argument
were not alleged in the Amended Complaint and thus cannot be
accepted as true. As discussed below, United Access disputes
many of these allegations.

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(D .I. 19 at 9-1 0) Plaintiff adds that a presumption of laches should not apply because Plaintiff
did not delay more than six years in filing suit against AT&T, given that three years should be
excluded for the time the patents-in-suit had been temporarily found invalid in error. (See id. at
11) Finally, according to Plaintiff, even a presumption of laches would be rebutted here because
"during the period of alleged delay, it was involved in other related litigation on the same patents
brought by its predecessor in title that did not conclude until November 2011." (!d. at 1)
4.

Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)

requires the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis,
372 F.3d 218,223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but
whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted).

Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded
allegations in the complaint as true, and viewing them in the light most favorable to plaintiff,
plaintiff is not entitled to relief." Maio v. Aetna, Inc., 221 F .3d 4 72, 481-82 (3d Cir. 2000)
(internal quotation marks omitted).
5.

"[W]hen the defense oflaches is clear on the face of the complaint, and where it is

clear that the plaintiff can prove no set of facts to avoid the insuperable bar, a court may consider
the defense on a motion to dismiss." Lennon v. Seaman, 63 F. Supp. 2d 428, 439 (S.D.N.Y.
1999).
6.

The Court agrees with Plaintiff that the necessary elements for Defendants'

defense oflaches are not "clear on the face of the complaint." Id. at 439. Instead, as in Lennon,
"a ruling on the defendant's defense oflaches would necessarily involve a fact-intensive analysis
and balancing of equities that would require the Court to consider matters outside the pleadings

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that are in dispute." !d. Discovery will be required before the laches defense can be fairly
evaluated. See generally Autodesk Canada Co. v. Assimilate, Inc., No. 08-587-SLR-LPS, 2009
WL 3151026, at *8 (D. Del. Sept. 29, 2009) (denying defendant's motion to dismiss and/or for
summary judgment that was "filed less than two months after the case was filed, before discovery
had begun"). This is particularly true with respect to AT&T' s claims of lack of notice, prejudice,
and the circumstances surrounding its continued investment in alleging infringing technology.
Accordingly, the Motion to Dismiss is DENIED.

UNITED STATES DIST