Pragmatus AV LLC v. Yahoo! Inc.

Filing 153

MEMORANDUM ORDER ADOPTING REPORT AND RECOMMENDATION -- granting in part and denying in part 44 Motion to Dismiss ; adopting 61 Report and Recommendation. Signed by Judge Leonard P. Stark on 5/24/13. (ntl)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

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PRAGMATUS AV, LLC,

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Plaintiff,

v.

C.A. No. 11-902-LPS-CJB

YAHOO! INC.,
Defendant.

MEMORANDUM ORDER
WHEREAS, Magistrate Judge Burke issued a Report and Recommendation (the
"Report") (D.I. 61) dated November 13, 2012 recommending that the Court deny Defendant
Yahoo! Inc.'s ("Yahoo!" or "Defendant") Motion to Dismiss the First Amended Complaint (the
"Motion") as it pertains to PlaintiffPragmatus AV, LLC's ("Pragmatus" or "Plaintiff') direct
infringement claim and grant Defendant's Motion as it pertains to Plaintiffs indirect
infringement claims;
WHEREAS, Plaintiff filed timely objections to the Report on November 30, 2012 (D.I.
74) ("Objections");
WHEREAS, Defendant responded to the Objections on December 17,2012 (D.I. 80);
WHEREAS, the Court has considered the Motion de novo, as it presents case-dispositive
issues, see 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b)(3);
NOW THEREFORE, IT IS HEREBY ORDERED that:
1.

The Objections are OVERRULED.

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2.

Magistrate Judge Burke's Report is ADOPTED.

3.

Yahoo!'s Motion to Dismiss (D.I. 44) is DENIED with respect to direct

infringement and GRANTED with respect to induced infringement and contributory
infringement.
4.

Yahoo! moved to dismiss Pragmatus' First Amended Complaint ("'FAC")

(D.I. 43) for failure to state a claim with respect to: (1) direct infringement; (2) induced
infringement; and (3) contributory infringement. Judge Burke's Report recommends that the
Court deny Yahoo's Motion with respect to direct infringement but grant the Motion with respect
to both induced infringement and contributory infringement. (See Report at 31) Pragmatus
objects only to the dismissal of its induced infringement claim.
5.

Pragmatus contends that the Report is wrong because: (1) Pragmatus adequately

pled knowledge ofthe infringing acts; and (2) specific intent can be pled generally or inferred
from knowledge of infringement. (See D.I. 74) Pragmatus also contends that the induced
infringement claim is proper with respect to post-filing activities.
a.

With respect to knowledge of infringing acts, to survive a motion to

dismiss, a complaint must contain facts "'plausibly showing that [the alleged indirect infringer]
knew that the [direct infringer's] acts constituted infringement." In re Bill ofLading
Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012). The FAC

alleges only that "'Pragmatus has provided Yahoo! written notice of its infringement." (D.I. 43 at
3, 4, 5, 6, 7) Other than identifying the direct infringers as "at least users of Yahoo! Messenger,"
the FA C contains no facts to suggest that Yahoo! knew that those users infringed or knew how
those users infringed the asserted patents.

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b.

With respect to intent, the complaint must contain facts "plausibly

showing that [the alleged indirect infringer] specifically intended [the direct infringers] to
infringe [the patent-at-issue]." In re Bill ofLading, 681 F.3d at 1339. While intent maybe pled
generally, the Court must have some factual basis from which to draw an inference of intent. In
this case, the F AC does not even use the word "intent," let alone allege any facts to support an
inference that Yahoo! specifically intended or encouraged its users to infringe. For instance, the
FAC does not provide any allegations as to the relationship between Yahoo! and users ofthe
accused Yahoo! Messenger product. With respect to Pragmatus' contention that intent can be
inferred because Yahoo! has "continued the acts which induced infringement after gaining
knowledge of infringement" (D.I. 74 at 3), the cases Pragmatus relies on address not intent but,
instead, whether filing a complaint may satisfy the knowledge requirement for pleading indirect
infringement. See, e.g., Soft View LLC v. Apple Inc., 2012 WL 3061027, at *7 (D. Del. July 26,
2012); Walker Digital, LLC v. Facebook, Inc., 852 F. Supp. 2d 559, 565 (D. Del. 2012).
6.

Pragmatus seeks leave to file a second amended complaint. (D.I. 74 at 4) Yahoo!

objects, but offers no substantive reasons for its opposition. (D.I. 80 at 4) Amendment should be
allowed "whenjustice so requires." Fed. R. Civ. P. 15(a)(2). It is within the discretion ofthe
Court to grant leave to amend. See Foman v. Davis, 371 U.S. 178, 182 (1962). The Court will

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exercise its discretion and grant Pragmatus leave to file a second amended complaint. Any
amended complaint shall be filed within 21 days from the date ofthis Order. Failure to file an
amended complaint within this time frame will result in dismissal of the induced infringement

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claims with prejudice.

May24, 2013
Wilmington, Delaware

TES DISTRICT JUDGE

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