Monec Holding AG v. Motorola Mobility Inc. et al

Filing 61

REPORT AND RECOMMENDATIONS- denying as moot 30 MOTION to Dismiss for Failure to State a Claim, granting 41 MOTION to Dismiss for Failure to State a Claim. Please note that when filing Objections pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 8/20/2012. Signed by Judge Sherry R. Fallon on 8/3/2012. (lih)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MONEC HOLDING AG,

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Plaintiffs,

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v.

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MOTOROLA MOBILITY, INC.,
SAMSUNG ELECTRONICS AMERICA,
INC., SAMSUNG ELECTRONICS, INC.,
HTC CORP., HTC AMERICA, INC. and
EXEDA, INC.,
Defendants.

Civil Action No. 11-798-LPS-SRF

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REPORT AND RECOMMENDATION
I.

INTRODUCTION
Presently before the court in this patent infringement action is a motion to dismiss the

first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by three sets
of defendants: (1) Motorola Mobility, Inc.; (2) Samsung Electronics America, Inc. and Samsung
Electronics Co., Ltd.; and (3) HTC Corporation, HTC America, Inc., and Exeda, Inc.
(collectively, "Defendants") on January 13, 2012. (D.I. 41) For the reasons which follow, I
recommend that the court grant the motion to dismiss the claims of indirect infringement and
willfulness without prejudice.

II.

BACKGROUND
On January 1, 2002, United States Patent No. 6,335,678 ("the '678 patent"), entitled

"Electronic Device, Preferably an Electronic Book," issued to Theodor Heutschi. (D.I. 34

at~

14) On November 12, 2009, a request for ex parte reexamination of the '678 patent was filed,

and the United States Patent and Trademark Office (the "PTO") issued an ex parte reexamination
certificate to Plaintiff MONEC Holding AG ("MONEC" or "Plaintiff'') on May 10, 2011. (Jd at
~~

15-16) MONEC is the owner by assignment of the entire right, title, and interest in and to the

'678 patent, as reexamined. (Jd.

at~~

14, 18) The reexamined '678 patent embodiments include

a flat electronic device housing a processing system to communicate, store, interact with, and
display digital media transferred from a peripheral device over a multiband radio network station
incorporating a GSM/SIM chip and manipulated by various input means, including a touch
screen. (!d. at ~ 17)
MONEC filed its complaint in the instant action on September 9, 2011, asserting
infringement ofthe '678 patent, as reexamined. (D.I. 1) MONEC filed its first amended
complaint on December 19, 2011, alleging that each Defendant manufactures, markets, and/or
sells smart phones and tablet computers 1 which allegedly infringe the reexamined '678 patent.
(D.I. 34

at~~

22-1 00) Specifically, MONEC alleges that Defendants instruct their customers,

both retailers and end-users, on infringing uses of the Infringing Products, and Defendants knew
or should have known that the Infringing Products were especially made for use in an
infringement of the reexamined '678 patent and that there is no substantially noninfringing use of
the Infringing Products. (!d.

at~~

33-35, 58-60, 88-90) According to MONEC, Defendants'

competitors Apple and Hewlett-Packard have engaged in litigation with MONEC regarding
infringement ofthe '678 patent (the "Apple Action" and the "HP Action," respectively), and this
litigation received substantial press coverage which likely would have been followed and

1

These products include the Motorola 4G Atrix smart phone, the Motorola Xoom tablet,
Samsung's Infuse 4G smart phone and Galaxy Tab, and HTC's ThunderBolt smart phone and
Jetstream tablet (collectively, the "Infringing Products").

2

monitored by Defendants, who are also involved in litigation against Apple. (Id. at ,-r,-r 37-40, 6266, 92-95)

III.

LEGAL STANDARD
To state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a complaint

must contain a "short and plain statement of the claim showing that the pleader is entitled to
relief." Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are not required, the
complaint must set forth sufficient factual matter, accepted as true, to "state a claim for relief that
is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A claim is facially plausible when the factual
allegations allow the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. Twombly, 550 U.S. at 555-56; Iqbal, 556 U.S. at 663. The court "need not
accept as true threadbare recitals of a cause of action's elements, supported by mere conclusory
statements." !d.
Following the Supreme Court's decision in Iqbal, district courts have conducted a twopart analysis in determining the sufficiency of the claims. First, the court must separate the
factual and legal elements of the claim, accepting the complaint's well-pleaded facts as true and
disregarding the legal conclusions. Iqbal, 556 U.S. at 663. Second, the court must determine
whether the facts alleged in the complaint state a plausible claim by conducting a context-specific
inquiry that "draw[s] on [the court's] experience and common sense." !d. at 663-64; Fowler v.
UP MC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the Supreme Court instructed in Iqbal,
"[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged- but it has not 'show[n]'- 'that the pleader is entitled to

3

relief."' Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
IV.

DISCUSSION
A.

Indirect Infringement

1.

Legal standards
(a)

Knowledge

To prevail on a claim for indirect infringement, a defendant must first demonstrate direct
infringement, and then establish that the "defendant possessed the requisite knowledge or intent
to be held vicariously liable." Dynacore Holdings Corp. v. US. Philips Corp., 363 F.3d 1263,
1272-73 (Fed. Cir. 2004). The knowledge requirement must be met by a showing of either actual
knowledge or willful blindness. Global-Tech Appliances, Inc. v. SEB SA., 131 S. Ct. 2060, 2068
(2011). At the pleading stage, "the question before the Court on defendants' motions to dismiss
is whether [the plaintiff] has plead sufficient facts ... for the Court to infer that the defendants
had knowledge of [the plaintiffs] patents and that their products infringed on those patents."
Trading Techs. Int'l, Inc. v. BCG Partners, Inc., 2011 WL 3946581, at *3 (N.D. Ill. Sept. 2,
2011) (emphasis in original) (citing Global-Tech, 131 S. Ct. at 2068).
This court has held that a complaint sufficiently pleads a defendant's actual knowledge
when a plaintiff alleges that the defendant or its predecessor learned of a patent-in-suit from an
exchange of proprietary information pursuant to a licensing agreement, 2 or when a plaintiff

2

See Xpoint Techs. v. Microsoft Corp., 730 F. Supp. 2d 349, 357 (D. Del. 2010); Netgear,
Inc. v. Ruckus Wireless, Inc., 2012 WL 1118773, at *4 (D. Del. Mar. 28, 2012) ("Ruckus has had
knowledge of the '035 patent long before the filing of this lawsuit because Ruckus previously
licensed the '035 patent from IBM Corporation.").
4

alleges that a defendant previously filed papers with the PTO identifying the patents as prior art. 3
In contrast, a plaintiff fails to sufficiently plead knowledge of the patent-in-suit when the plaintiff
merely recites the elements for indirect infringement without supporting facts, 4 or when the
factual allegations merely support the conclusion that the parties have patents in the same field. 5
The Supreme Court recently held that a plaintiff may plead knowledge for purposes of a
claim for induced infringement by applying the theory of willful blindness, rejecting the
"deliberate indifference" standard previously applied by the Federal Circuit. See Global-Tech,
131 S. Ct. at 2071. The Supreme Court identified a willfully blind defendant as "one who takes
deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be
said to have actually known the critical facts." !d. at 2070-71. To state a claim for willful
blindness, a plaintiff must plead facts demonstrating that the defendant "(1) subjectively believed
there was a high probability a particular fact existed or was true, and (2) took deliberate actions
to avoid learning ofthat fact." Vasudevan Software, Inc. v. TIBCO Software Inc., 2012 WL
1831543, at *5 (N.D. Cal. May 18, 2012) (citing Global-Tech, 131 S. Ct. at 2070). A complaint
that fails to identify any affirmative actions taken by the defendant to avoid gaining actual
knowledge of the patent-in-suit is insufficient to state a claim for relief based on the willful

See Mallinckrodt Inc. v. E-Z-Em, Inc., 671 F. Supp. 2d 563, 569 (D. Del. 2009); see also
D.l. 46, Ex. A.
3

4

See Minkus Elec. DisplaySys. Inc. v. Adaptive MicroSys. LLC, 2011 WL 941197, at *3 (D.
Del. Mar. 16, 2011); Xpoint Techs., 730 F. Supp. 2d at 357; Mallinckrodt, Inc. v. E-Z-Em Inc., 670
F. Supp. 2d 349, 354 (D. Del. 2009); IpVenture Inc. v. Lenovo Group Ltd., 2012 WL 2564893, at
*2 (D. Del. June 29, 2012); HSM Portfolio LLC v. Fujitsu Ltd., 2012 WL 2580547, at *1 (D. Del.
July 3, 2012).
5

See Eon Corp. IP Holdings LLCv. FLO TV Inc., 802 F. Supp. 2d 527,533 (D. Del. 2011);
IPLearn LLC v. K12 Inc., C.A. No. 11-1026-RGA, D.I. 20 at 2-3 (D. Del. July 2, 2012).
5

blindness theory under the pleading standards set forth in Rule 8, Twombly, and Iqbal. Id. at *6;

see also Mikkelsen Graphic Eng'g Inc. v. Zund Am., Inc., 2011 WL 6122377, at *7 n.3 (E.D.
Wis. Dec. 8, 2011) (concluding on summary judgment that willful blindness did not apply
because there was no evidence that the defendant deliberately shielded itself from clear evidence
that the acts it induced constituted patent infringement).

(b)

Induced infringement

Pursuant to 35 U.S.C. § 271(b), "[w]hoever actively induces infringement of a patent
shall be liable as an infringer." "To prove induced infringement, the patentee must show direct
infringement, and that the alleged infringer knowingly induced infringement and possessed
specific intent to encourage another's infringement." Toshiba Corp. v. Imation Corp., 681 F.3d
1358, 1363 (Fed. Cir. 2012) (internal quotations omitted). As such, a claim for inducement must
allege the requisite knowledge and intent. Mallinckrodt, 670 F. Supp. 2d at 354. "The
requirement that the alleged infringer knew or should have known his actions would induce
actual infringement necessarily includes the requirement that he or she knew of the patent." DSU

Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1304 (Fed. Cir. 2006) (en bane). However,
knowledge of infringement is not enough. Metro-Goldwyn-Mayer Studios v. Grokster, Ltd., 545
U.S. 913, 915 (2005). "Inducement requires evidence of culpable conduct, directed to
encouraging another's infringement, not merely that the inducer had knowledge of the direct
infringer's activities." DSU Med. Corp., 471 F.3d at 1306.

(c)

Contributory infringement

"Contributory infringement imposes liability on one who embodies in a non-staple device
the heart of a patented process and supplies the device to others to complete the process and

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appropriate the benefit ofthe patented invention." Vita-Mix Corp. v. Basic Holding, Inc., 581
F .3d 1317, 1327 (Fed. Cir. 2009). To state a claim for contributory infringement, an infringer
must sell, offer to sell or import into the United States a component of an infringing product
"knowing [the component] to be especially made or especially adapted for use in an infringement
of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use." 35 U.S.C. § 271(c); see Lucent Techs. v. Gateway, Inc., 580 F.3d 1301, 1320
(Fed. Cir. 2009). As with induced infringement, a claim for contributory infringement must also
contain allegations of the requisite knowledge of the patent-in-suit at the time of infringement.

Mallinckrodt, 670 F. Supp. 2d at 355; see also Global-Tech, 131 S. Ct. at 2068. In addition, the
patentee bears the burden of proving that the accused products have no substantial non-infringing
uses. See Golden Blount, Inc. v. Robert H Peterson Co., 438 F.3d 1354, 1363 (Fed. Cir. 2006).

2.

Parties' contentions

In support of their motion to dismiss, Defendants contend that the first amended
complaint does not allege sufficient facts to support a plausible claim that each defendant
actually knew of the reexamined '678 patent before the action was filed. (D.I. 42 at 11, 16)
Defendants allege that MONEC's assumption of Defendants' knowledge based on the litigation
activities of certain competitors prior to the reexamination is insufficient because mere notice of
a patent, or possible infringement of that patent, does not establish that Defendants knowingly
induced or specifically intended to induce infringement. (!d. at 12)
In response, MONEC alleges that Defendants improperly merge the burden of pleading
indirect infringement with the burden of proving it, and MONEC must only show sufficient
factual allegations for the court to infer that Defendants either had actual knowledge of the

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patent-in-suit or remained willfully blind. (D.I. 45 at 5, 7) MONEC contends that the first
amended complaint alleges that Defendants actively monitor the litigation activities of their
competitors, which would have led Defendants to learn of the '678 patent in this case. (!d. at 7)
Moreover, MONEC contends that knowledge of the original '678 patent claims would invariably
cause Defendants to inquire as to the reexamination of the '678 patent. (!d. at 8) MONEC
distinguishes the court's decision in Eon Corp. IP Holdings LLC v. FLO TV Inc., by noting that
the competitor in the present matter has been involved in highly publicized litigation concerning
the same allegedly infringing product and only one patent. (!d. at 9)
Defendants reply that the cases cited by MONEC do not reflect the revised pleading
standard following the Supreme Court's decisions in Twombly and Iqbal. (D.I. 46 at 1-2)
Defendants further allege that indirect infringement requires actual, not constructive knowledge
of the exact patent-in-suit, and MONEC has failed to plead knowledge of the reexamined '678
patent. (!d. at 3) Defendants contend that they would have no reason to inquire about a
subsequent reexamination of the '678 patent based on the Apple Action, in which Apple's
motion for summary judgment of non-infringement was granted. (!d. at 5-6) Defendants argue
that requiring market participants to monitor each competitor's litigation, and to review and
monitor reexamination proceedings of patents involved in competitors' litigations, is at odds with
Federal Circuit precedent. (ld. at 6)

3.

Analysis
(a)

Actual knowledge

MONEC fails to allege sufficient facts that would allow the court to infer that Defendants

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had actual knowledge 6 of the reexamined '678 patent at the time they committed the allegedly
infringing activities. As a preliminary matter, MONEC pleads no facts indicating that
Defendants followed the reexamination proceedings of the '678 patent, and instead assumes that
Defendants would have known about the reexamined '678 patent based on the litigation activities
of their competitors regarding the original '678 patent. MONEC cites no authority indicating
that actual knowledge of an original patent is equivalent to actual knowledge of a reexamined
patent, and the relevant case law suggests that drawing such an inference is too tenuous even at
the pleading stage. See Eon, 802 F. Supp. 2d at 533-34 (finding that allegations of actual
knowledge were too tenuous to state a claim even where the defendant acquired rights to a patent
which expressly listed the patent-in-suit as prior art); see also Trading Techs., 2011 WL
3946581, at *4 n.5 (holding that "pleading that the competitor would be monitoring the
plaintiff's patent filings and any patents issued to it" is insufficient to establish knowledge, and
the litigants' competition in the same industry is "not sufficiently plausible by itself to pass
muster under Iqbal.").
This court has not been convinced of the sufficiency of pleadings charging knowledge
that is based upon a defendant's participation in the same market, media publicity and unrelated
litigation by the defendant's competitors concerning the relevant patent. Consequently,
MONEC's argument fails for reasons similar to those set forth in this court's decisions in Eon,

Chalumeau Power Sys. LLC v. Alcatel-Lucent et al., and Soft View LLC v. Apple Inc. See Eon,

6

The first amended complaint alleges that each Defendant had both actual and constructive
knowledge of the patent-in-suit. (D.I. 34 at~~ 36, 61, 91) However, actual (not constructive)
knowledge of the patent-in-suit is necessary to state a claim for indirect infringement under the
Supreme Court's decision in Global-Tech, unless the patentee is claiming willful blindness. See
Global-Tech, 131 S. Ct. at 2068.
9

802 F. Supp. 2d at 533; SofiView LLCv. Apple Inc., C.A. No. 10-389-LPS, 2012 WL 3061027
(D. Del. July 26, 2012); Chalumeau Power Sys. LLC v. Alcatel-Lucent et al., C.A. No. 11-1175RGA (D. Del. July 18, 2012) (D.I. 57, Ex. A). In Eon, the court rejected the plaintiffs allegation
that the defendants knew about the patent-in-suit by virtue of their participation in the same
market, describing the argument as particularly weak "given the rapidly changing nature of
technologically-based markets such as interactive television." Eon, 802 F. Supp. 2d at 533. In

Chalumeau, this court declined to accept a plaintiffs argument that an alleged infringer's actual
knowledge of a competitor's suit concerning the same patent would be sufficient to withstand
dismissal at the pleading stage, describing the theory as "fanciful." (D.I. 57, Ex. A) Most
recently, in Soft View, the court found that heightened media attention to relevant patent lawsuits
does not "plausibly suggest that [the defendant] would have been aware of those particular media
reports, particularly given the sheer number and frequency of patent lawsuits asserted against
smartphone manufacturers." SofiView, 2012 WL 3061027, at *6.
Thus, MONEC's reliance on Defendants' participation as "reasonable economic actor[s]
and competitor[ s]" in the same technologically-based industry is insufficient to establish actual
knowledge of the reexamined '678 patent. Although MONEC attempts to bolster its assertion by
alleging that Defendants should be aware that MONEC has previously been involved in patent
litigation with Apple, 7 this court has clearly established that there is no presumption of actual
knowledge from such other patent suits that is sufficient to withstand dismissal at the pleading
stage. MONEC argues that Defendants would "likely" monitor the activities of their
competitors, including litigation involving HP and Apple. (D.I. 45 at 7) However, Defendants

7

See D.I. 34 at~~ 37, 62, 92.
10

have produced a listing of more than two hundred patent cases involving Apple. (D.I. 43, Ex. E)
MONEC fails to explain how Defendants "would have obtained" selective knowledge of a
specific patent in a specific case, without wading through the pool of more than two hundred
cases involving different patents. (D.I. 45 at 10) Consequently, it is not a plausible argument to
charge Defendants with knowledge of the '678 patent from among hundreds of cases involving
their competitors' products.
Assuming that MONEC has sufficiently pled Defendants' actual knowledge of the
original '678 patent, MONEC asks the court to equate such knowledge with actual knowledge of
the reexamined '678 patent, without adequately pleading their connection. (D.I. 45 at 8)
According to MONEC, notice of the '678 patent litigation should have motivated each Defendant
to continue tracking its further activity through reexamination. (!d.) MONEC cites no authority
for imposing a duty on Defendants to indefinitely track a particular patent in anticipation of a
potential infringement lawsuit. Here, Apple successfully defended non-infringement of the
original '678 patent, a ruling later vacated due to a settlement agreement. (D.I. 43, Ex. B)
However, the Apple Action concluded more than a year before the reexamined '678 patent issued
on May 10, 2011. (D.I. 43, Ex. D.; D.I. 1, Ex. B) Such speculation falls short of a plausible
argument for equating knowledge of the '678 patent with actual knowledge of the patent-in-suit,
the reexamined '678 patent.
MONEC's reliance upon Investpic, LLC v. FactSet Research Systems, Inc. for its
contention that knowledge of the patent should be readily apparent from public disclosure is
inapposite to the facts of this case. In Jnvestpic, the court found that public disclosure supported
an inference of an individual defendant's knowledge because the patent-in-suit had been cited by
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at least seventy-nine issued patents in the past ten years. See Jnvestpic, LLC v. FactSet Research
Sys., Inc., 2011 WL 4591078, at *1-2 (D. Del. Sept. 30, 2011). The first amended complaint in
the present matter contains no similar allegations supporting an inference that the reexamined
'678 patent is widely known and frequently referenced in the industry. Instead, the alleged public
disclosure stems from two lawsuits against Defendants' competitors, which concluded well
before the issuance of the reexamined '678 patent.

(b)

Willful blindness

MONEC's contention that the court should apply the "willful blindness" standard set
forth in Global-Tech also fails. The allegations in the first amended complaint do not suggest
that Defendants purposefully avoided knowledge of the '678 patent. Instead, the allegations
plainly indicate that each Defendant, "as a reasonable economic actor and competitor, likely
monitors the activities of its primary competitors, such as Apple, including patent litigation in
which those competitors are involved, and as a result [Defendants] would have obtained
knowledge of the '678 patent, as reexamined." (D.I. 34

at~~

40, 66, 95) These contentions

suggest that Defendants actively sought out knowledge of their competitors' patent litigation
activities. See Vasudevan, 2012 WL 1831543, at *6 (rejecting willful blindness argument where
the plaintiff"neglected to identify any affirmative actions taken by [the defendant] to avoid
gaining actual knowledge of the [patent-in-suit]."). Although the first amended complaint also
contains allegations of"constructive knowledge ofthe '678 Patent, and the Reexamined '678
Patent," 8 these allegations are insufficient to establish "active efforts by an inducer" to avoid

8

(D.I. 34

at~~

36, 61, 91)
12

knowledge of the patent-in-suit. Global-Tech, 131 S. Ct. at 2071. 9
(c)

Intent

Even if MONEC were able to satisfy the "actual knowledge" requirement to state a claim
for indirect infringement, the first amended complaint does not satisfy the "intent" prong. To
appropriately plead indirect infringement, MONEC must allege knowledge of the allegedly
infringing nature ofthe asserted conduct, both under§ 271(b) ("knowledge that the induced acts
constitute patent infringement") and§ 271(c) ("knowledge that the combination for which [its]
component was especially designed [is] both patented and infringing"). Apeldyn Corp. v. Sony
Corp., 2012 WL 1129371, at *3 (D. Del. Apr. 4, 2012).

MONEC asserts that each Defendant "induced and will continue to contribute to and/or
induce the infringement of the Reexamined '678 Patent by others ... " (D.I. 34

at~~

29, 54, 84)

Such indirect infringement is claimed from each Defendant's conduct in selling, advertising,
supplying and instructing its respective customers on the use of the infringing product. The
conclusory averments contain no factual support to establish the requisite "intent." Allegations
of the marketing activities of the Defendants do not, on their own, demonstrate that Defendants
knew such activities were infringing or that Defendants possessed the specific intent to
encourage another's infringement. See Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1330 (Fed.
Cir. 2010) (induced infringement could be based on fact that defendant received letter accusing
its products of infringement and continued to sell products containing allegedly infringing

9

1n Global-Tech, the defendant took deliberate steps to disregard a patent by copying and
selling as its own invention, a version of a patented product that lacked U.S. patent markings. Every
feature of the product was copied, except for its cosmetics. Moreover, the defendant made a
deliberate effort to omit disclosure of the patent to its attorney preparing a patent opinion. No
similarly contrived conduct has been alleged to invoke the standard in the pending matter.
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component); Tarkus Imaging, Inc. v. Adobe Sys., Inc., 2012 WL 2175788, at *4 (D. Del. June 14,
2012) (actual knowledge of patent-in-suit in combination with evidence that defendant advertised
use of accused features and provided users with instructions on infringing uses was sufficient to
preclude summary judgment regarding intent to induce infringement). MONEC pleads the
requirements for indirect infringement without reference to any facts which demonstrate how the
requirements are satisfied in this instance. See Pieczenik v. Abbott Labs., 2011 WL 104534 7, at
*7 (D.N.J. Mar. 23, 2011) (finding insufficient facts to support claim for inducement where
plaintiff alleged that defendant sold the purportedly infringing items, but alleged no facts from
which to infer knowledge or intent). To the extent intent is to be inferred from the same source
as actual knowledge, i.e., competition and litigation in the same smart phone market, it is not
sufficiently pleaded.
At oral argument, MONEC cited this court's decision inApeldyn Corp. v. Sony Corp., in
which the court stated that there is no impediment to limiting indirect infringement to postlitigation conduct. See Apeldyn Corp. v. Sony Corp.,- F. Supp. 2d-, 2012 WL 1129371, at
*4 (D. Del. Apr. 4, 2012); see also Walker Digital, LLC v. Facebook, Inc.,- F. Supp. 2d-,
2012 WL 1129370, at *5 (D. Del. Apr. 4, 2012). 10 In Apeldyn and Walker Digital, the court
concluded that a plaintiff may plead actual knowledge of the patents-in-suit as of the filing of the
initial complaint to state a cause of action limited to the defendant's post-litigation conduct, and
a defendant's decision to continue its conduct despite knowledge gleaned from the complaint is
sufficient to establish the intent element required to state a claim for indirect infringement. Id.
The court confirmed that pre-suit knowledge of the patent must be alleged unless the plaintiff

10

BothApeldyn and Walker Digital were issued after the completion of briefing in this case.
14

limits its cause of action for indirect infringement to post-litigation conduct. See id. Apeldyn and

Walker Digital are inapposite to the facts ofthis case 11 because the first amended complaint fails
to supply any factual allegations that would convert the post-suit knowledge into a plausible
allegation ofknowledge of the infringing use. See Chalameau, C.A. No. 11-1175-RGA, at 2-3
(D. Del. July 18, 2012) (D.I. 57, Ex. A).

B.

Willful Infringement
1.

Legal standard

To prove a cause of action for willful infringement, a patent owner must demonstrate by
clear and convincing evidence that the infringer acted despite an "objectively high likelihood that
its actions constituted infringement" and that this "objectively-defined risk was ... either known
or so obvious that it should have been known to the accused infringer." In re Seagate Tech.,
LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). If the first prong cannot be shown, then the court

should not put the issue of willfulness -including the second "subjective" prong- before a jury.

See Powell v. Home Depot USA., Inc., 663 F.3d 1221, 1236 (Fed. Cir. 2011) ("Should the court
determine that the infringer's reliance on a defense was not objectively reckless, it cannot send
the question of willfulness to the jury, since proving the objective prong is a predicate to
consideration of the subjective prong."). "Drawing inferences, especially for 'an intentimplicating question such as willfulness, is particularly within the province of the fact finder that
observed the witnesses."' Bard Peripheral Vascular, Inc. v. WL. Gore & Assocs., Inc., 670 F.3d

11

The court also acknowledged that its holdings in Apeldyn and Walker Digital were
inconsistent with its prior decisions in Xpoint Techs. v. Microsoft Corp., 730 F. Supp. 2d 349 (D.
Del. 2010) and Eon, 802 F. Supp. 2d 527. See Apeldyn, 2012 WL 1129371, at *4 n.8; Walker
Digital, 2012 WL 1129370, at *6 n.11.
15

1171, 1189-90 (Fed. Cir. 2012) (quoting Rolls-Royce, Ltd. v. GTE Valeron Corp., 800 F.2d 1101,
1110 (Fed. Cir. 1986)).
At the pleading stage, a plaintiff alleging a cause of action for willful infringement must
"plead facts giving rise to at least a showing of objective recklessness of the infringement risk."
St. Clair Intellectual Prop. Consultants, Inc. v. Hewlett-Packard Co., 2012 WL 1134318, at *2-3

(D. Del. Mar. 28, 2012) (internal quotations omitted). "Actual knowledge of infringement or the
infringement risk is not necessary to plead a claim for willful infringement," but the complaint
must adequately allege "factual circumstances in which the patents-in-suit [are] called to the
attention" of the defendants." Id. The complaint must "demonstrate[] a link between the
various allegations of knowledge of the patents-in-suit and the allegations that the risks of
infringement" were either known or were so obvious that they should have been known. Id. at
*3.

2.

Parties' contentions

In support of their motion to dismiss, Defendants contend that the first amended
complaint fails to state a claim for willful infringement because MONEC pleads no facts to
support its allegation that Defendants "willfully and wantonly infringed the Reexamined '678
Patent in deliberate and intentional disregard ofMonec's rights." (D.I. 42 at 19) Instead,
Defendants contend that MONEC makes conclusory allegations that Defendants had "full
knowledge" ofthe reexamined '678 patent. (Jd.) Even if Defendants knew ofthe reexamined
'678 patent, Defendants contend that MONEC makes no factual allegations supporting how or
why Defendants would have known that the patent applied to their allegedly infringing activities
or that Defendants acted in deliberate disregard ofMONEC's rights. (Jd. at 20)

16

In response, MONEC contends that the ultimate determination of whether infringement
has been willful is a question of fact and is to be determined based on the totality of the
circumstances. (D.I. 45 at 14) MONEC contends that the facts in the amended complaint are
sufficient for the court to infer that Defendants had actual or constructive knowledge of the
infringed patents for purposes of determining whether indirect infringement is sufficiently pled,
and no further assertions of knowledge are required to state a claim for willful infringement. (!d.
at 14-15)

3.

Analysis

MONEC's failure to sufficiently plead that Defendants had any reason to know of the
reexamined '678 patent is also fatal to its claim for willful infringement. See St. Clair, 2012 WL
1134318, at *2-3 (finding willfulness claim adequately pled where complaint set forth factual
circumstances demonstrating actual knowledge of patents-in-suit in addition to facts giving rise
to a showing of objective recklessness of the infringement risk); see also Walker Digital, 2012
WL 1129370, at *7-8 (upholding claim for willful infringement where the amended complaint
provided evidence that the defendant had pre-suit knowledge of the patents-in-suit due to the
defendant's interactions with the plaintiff's representatives); Netgear, Inc. v. Ruckus Wireless,
Inc., 2012 WL 1118773, at *5 (D. Del. Mar. 28, 2012) (same). For the reasons previously stated,

the first amended complaint does not sufficiently allege Defendants' actual knowledge of the
reexamined '678 patent. MONEC's contentions do not plausibly support the conclusion that
each Defendant "acted despite an objectively high likelihood that its actions constituted
infringement of a valid patent," and that Defendants knew or should have known that their
actions constituted infringement of a valid patent. Chalumeau, C.A. No. 11-1175-RGA, D.I. 50

17

at 3 (quoting In re Seagate Tech., LLC, 497 F.3d at 1371 (internal quotations omitted)).

V.

CONCLUSION
For the foregoing reasons, I recommend that the court deny Defendants' motion to

dismiss the original complaint as moot (D.I. 30), and grant Defendants' motion to dismiss
MONEC's claims in the first amended complaint for induced, contributory, and willful
infringement of the reexamined '678 patent, without prejudice (D.I. 41). 12
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(l)(B), Fed. R.
Civ. P. 72(b)(l), and D. Del. LR 72.1. The parties may serve and file specific written objections
within fourteen (14) days after being served with a copy of this Report and Recommendation.
Fed. R. Civ. P. 72(b). The objections and responses to the objections are limited to ten (10)
pages each.
The parties are directed to the court's standing Order in Non Pro Se matters for
Objections filed under Fed. R. Civ. P. 72, dated November 16,2009, a copy of which is available
on the court's website, www.ded.uscourts.gov.

Dated: August

3~ 2012

12

MONEC suggested the potential for a cure of any pleading deficiencies by a further
amendment of the complaint. As there is no pending motion pursuant to Rule 15, the court declines
to consider the request at this stage.
18