Gammino v. American Telephone and Telegraph Company et al

Filing 58

MEMORANDUM ORDER re 31 MOTION to Dismiss filed by Century Link Inc. is DENIED as moot; 34 MOTION to Dismiss filed by Verizon Communications Inc. is DENIED as moot; 41 MOTION for Leave to File Amended Complaint filed by John R. Gammino is GRANTED. Signed by Judge Leonard P. Stark on 11/22/13. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JOHNR. GAMMINO,
Plaintiff,

v.

Civ. No. 12-666-LPS

AMERICAN TELEPHONE AND
TELEGRAPH COMPANY, AND
UNKNOWN AMERICAN TELEPHONE
& TELEGRAPH COMPANY
SUBSIDIARIES,
CENTURYTEL LONG DISTANCE
LLC, EMBARQ PAYPHONE
SERVICES INC., QWEST
COMMUNICATIONS COMPANY LLC,
EMBARQ COMMUNICATIONS INC.,
SPRINT COMMUNICATIONS
COMPANY LP, SPRINT SPECTRUM
LP, NEXTEL OPERATIONS INC.,
VIRGIN MOBILE USA LP, SPRINT
NEXTEL CORPORATION, AND
UNKNOWN SPRINT SUBSIDIARIES,
VERIZON COMMUNICATIONS INC.,
AND UNKNOWN VERIZON
SUBSIDIARIES,
Defendants.

MEMORANDUM ORDER
At Wilmington this 22nd day of November, 2013:
Pending before the Court are motions filed by Plaintiff John R. Gammino ("Plaintiff')
and Defendants American Telephone & Telegraph Company ("AT&T"); CenturyTel Long

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Distance LLS, Embarq Payphone Services, Inc., Embarq Communications Inc., and Qwest
Communications Company, LLC ("CenturyTel"); Sprint Communications Company L.P., Sprint
Spectrum L.P., Nextel Operations Inc., Virgin Mobile USA, L.P., and Sprint Nextel Corporation
("Sprint"); and Verizon Communications Inc. ("Verizon").
Plaintiffs Motion for Leave to Amend
Plaintiff initiated this patent infringement action by filing of a complaint on May 29,
2012. (D.I. 1) The original complaint asserted claims for direct and indirect infringement of
U.S. Patent No. 5,359,643 ("the '643 patent") against all Defendants. The original complaint
also sought as relief treble damages for willful infringement. (D .I. 1 at 13) After AT&T filed a
motion to dismiss (D.I. 21), Plaintiffvoluntarily dismissed the indirect infringement claims
against all Defendants. (D.I. 27; see also D.I. 44; D.I. 49 (holding dismissal of indirect
infringement claim against AT&T was with prejudice, pursuant to F.R.C.P. 41(a)(l)(B), due to
prior dismissal of same claim against same defendant in related action))
On November 7, 2012, Plaintiff filed his pending Motion for Leave to File Amended
Complaint. (D .I. 41) ("Motion to Amend") By his Motion to Amend, Plaintiff seeks to clarify
and strengthen his assertions of direct and willful infringement against all Defendants. (D.I. 42 at
2) Plaintiffs proposed amendments would add: additional CenturyTel defendants; examples of
advertising by each set of Defendants that describe allegedly infringing methods and practices
used for placing a telephone call through a central office using methods of payment to place the
call; allegations that CenturyTel, AT&T, and Verizon have been on notice of infringement ofthe
patent-in-suit since at least the May 2012 filing of the original complaint; and allegations that
Sprint has been on notice of its infringement ofthe patent-in-suit since at least January 2011,
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based on the filing of a patent infringement action in the Eastern District of Pennsylvania. (See
D.I. 41-9)
Federal Rule of Civil Procedure 15(a)(2) provides that, after a responsive pleading has
been filed, a party may amend its pleading "only with the opposing party's written consent or the
court's leave," and "[t]he court should freely give leave when justice so requires." The decision
to grant or deny leave to amend lies within the discretion of the court. See Foman v. Davis, 371
U.S. 178, 182 (1962); In re Burlington Coat Factory Sees. Litig., 114 F.3d 1410, 1434 (3d Cir.
1997). The Third Circuit has adopted a liberal approach to the amendment of pleadings. See
Dole v. Area, 921 F.2d 484, 487 (3d Cir. 1990). In the absence of undue delay, bad faith, or
dilatory motives on the part of the moving party, the amendment should be freely granted, unless
it is futile or unfairly prejudicial to the non-moving party. See Foman, 371 U.S. at 182; In re
Burlington, 114 F.3d at 1434. An amendment is futile if it is frivolous, fails to state a claim upon
which relief can be granted, or "advances a claim or defense that is legally insufficient on its
face." Koken v. GPC Int'l, Inc., 443 F.Supp. 2d 631,634 (D. Del. 2006).
Only AT&T opposes Plaintiffs Motion to Amend. AT&T argues only that amendment is
futile because Plaintiffs claims of patent infringement are barred by the doctrine of claim
preclusion. (D.I. 46 at 7) AT&T contends that because the dismissal of former Count IIalleging indirect infringement against AT&T - was with prejudice, and because Plaintiffs claim
for direct infringement is asserted against the same defendant on the same alleged facts, the
adjudication on the merits of the claim for indirect infringement must also bar Plaintiffs claim

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for direct infringement. (!d. at 3-4) 1
The Court disagrees. Res judicata (claim preclusion) applies to actions brought
subsequent to an adjudication on the merits; in combination with Rule 41(a)(l), it prevents a
plaintiff from bringing the same complaint for a third time after two previous voluntary
dismissals. See, e.g., American Cyanamid Co. v. Capuano, 381 F.3d 6, 17 (1st Cir. 2004);
Manning, 914 F.2d at 47; St. Clair Intellectual Property Consultants, Inc. v. Samsung
Electronics Co. Ltd., 291 F.R.D. 75,78 (D. Del. 2013); Catbridge Machinery, LLCv. Cytec
Engineered Materials, 2012 WL 2958244 at 1-2 (D.N.J. Jul. 18, 2012). For res judicata to
apply, among other things the adjudication on the merits must have occurred in a previous
proceeding and resulted in a final judgment. See In re Mullarkey, 536 F.3d 215,225 (3d Cir.
2008); CoreStates Bank, NA. v. Huls America, Inc., 176 F.3d 187, 194 (3d Cir. 1999). The
dismissal with prejudice of Plaintiffs indirect infringement claim occurred in the instant action
and there has been no final judgment. Moreover, Plaintiffs dismissed indirect infringement
cause of action arises under 35 U.S.C. § 271(b), while Plaintiffs remaining direct infringement
cause of action arises under a different statute, namely 35 U.S.C. § 271(a). Res judicata does not

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bar Plaintiffs direct infringement claim.

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As AT&T's opposition to the Motion to Amend is based solely on futility, and the Court
has rejected that position, it follows that the Court will grant Plaintiffs Motion to Amend.

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Pursuant to Federal Rule of Civil Procedure 41(a)(1), the "two dismissal rule" means
that a second voluntary dismissal serves as an "adjudication upon the merits" and the doctrine of
res judicata applies. See Manning v. South Carolina Dept. of Highway & Public Transp., 914
F.2d 44,47 (4th Cir. 1990).

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Defendants' Motions to Dismiss
On October 11, 2012, Defendant CenturyTel answered Plaintiffs complaint regarding
direct infringement and simultaneously moved to dismiss Plaintiffs claim for willful
infringement. (D.I. 31 ("CenturyTel's Motion"), 33) CenturyTel argues that Plaintiffs

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complaint fails to allege either knowledge of the '643 patent or disregard of an objectively high
risk of infringement. (D.I. 32 at 1)
Also on October 11, 2012, Verizon filed a motion to dismiss (D.I. 34 ("Verizon
Motion")), which is joined by Sprint (D .I. 37). The Verizon Motion contends that the complaint
fails to state a claim for direct infringement, as it does not adequately identify an infringing

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product or process; and fails to state a claim for willful infringement, as it does not allege

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knowledge of the '643 patent or disregard of an objectively high risk of infringement by

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defendants. (D.I. 35 at 1; D.I. 37)

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The motions to dismiss are brought pursuant to Federal Rule of Civil Procedure 12(b)(6).
In reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, courts conduct a

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well-pleaded facts as true, but [disregarding] any legal conclusions." /d. at 210-11. This first

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two-part analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First,

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courts separate the factual and legal elements of a claim, accepting "all of the complaint's

step requires courts to draw all reasonable inferences in favor of the non-moving party. See Maio
v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, the Court is not obligated to accept as

true "bald assertions," Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)
(internal quotation marks omitted), "unsupported conclusions and unwarranted inferences,"

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Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir.

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1997), or allegations that are "self-evidently false," Nami v. Fauver, 82 F.3d 63, 69 (3d Cir.
1996). Second, courts determine "whether the facts alleged in the complaint are sufficient to
show that the plaintiff has a 'plausible claim for relief."' Fowler, 578 F.3d at 211 (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific
determination, requiring the court "to draw on its judicial experience and common sense." !d. at
679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that
discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media
Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

Because the CenturyTel and Verizon Motions are directed to the original complaint, and
today the Court is granting Plaintiffs Motion to Amend- making the proposed Amended
Complaint the operative complaint- the Court will deny the motions to dismiss as moot.
Nonetheless, in light of the length of time that this action has already been pending, and in hopes
that yet another round of motions to dismiss may be avoided, 2 the Court offers the following
guidance as to the adequacy of the pleadings contained in the Amended Complaint.
Direct Infringement
"District courts must evaluate complaints alleging direct infringement by reference to
Form 18 ofthe Appendix of Forms to the Federal Rules of Civil Procedure ('Form 18')."
K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 2013 WL 1668960, at *1 (Fed. Cir.

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The Court recognizes that the Defendants who did not oppose Plaintiffs Motion to
Amend have stated "they reserve their right to move to dismiss the Amended Complaint." (D .I.
47 at 2)

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Apr.18, 2013); see also McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356-57 (Fed. Cir. 2007).
As it relates to accused products, Form 18 only requires identification of a general category of
products, for example "electrical motors." Plaintiffs must specify at least a general class of
products or a general identification of an allegedly infringing method. See Eidos Comms., LLC v.
Skype Techs. SA, 686 F .Supp. 2d 465, 467 (D. Del. 201 0). Identification of one allegedly

infringing product or method for each count of infringement alleged in a complaint is generally
sufficient to meet the requirements of Form 18. See Clouding IP, LLC v. Amazon. com, Inc.,
2013 WL 2293452 at *2 (D. Del. May 24, 2013).
In the Verizon Motion, Verizon (joined by Sprint) argues that Plaintiffhas not identified
an infringing product or method in sufficient detail to provide fair notice of the alleged direct
infringement. (D.I. 35 at 4) The Amended Complaint attaches examples ofVerizon's internet
advertising, illustrating methods of placing telephone calls on Verizon's systems and network,
which are expressly alleged by Plaintiff to be within the scope of the claims of the '643 patent.
(D.I. 41-3

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76; D.I. 41-8) The Amended Complaint contains similar allegations and

attachments relating to Sprint. (D.I. 41-3

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57; D.I. 41-7) Consistent with Form 18, it

appears that these allegations are adequate for pleading direct infringement. See Clouding IP,
2013 WL 2293452, at *2.
Willful infringement
In order to plead a claim for willful infringement, a plaintiff must provide "a pleading
equivalent to 'with a knowledge of the patent and of his infringement."' Sentry Protection
Prods., Inc. v. Eagle Mfg. Co., 400 F.3d 910,918 (Fed. Cir. 2005). "[A]n allegation ofwillful

infringement is not subject to a heightened pleading standard, but instead must meet the
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requirements of Rules 8 and ll(b) ofthe Federal Rules of Civil Procedure." Milwaukee Elec.
Tool Corp. v. Hitachi Koki Co., Ltd., 2011 WL 665439, at *2 (E.D. Wise. Feb. 14, 2011); see
also generally Ferguson Beauregard/Logic Controls, Division of Dover Res., Inc. v. Mega Sys.,
LLC, 350 F.3d 1327, 1343 (Fed. Cir. 2003) ("Willfulness does not equate to fraud, and thus, the

pleading requirement for willful infringement does not rise to the stringent standard required [for
fraud]."); MobileMedia Ideas LLC v. HTC Corp., 2011 WL 4347037 at *2 (E.D. Tex. Sep. 15,
2011) ("[T]he bar for pleading willful infringement is not high."). Pursuant to Federal Rule of
Civil Procedure 9, knowledge may be averred generally. For purposes of pleading willful
infringement, knowledge of the patent by the defendant may be alleged in a subsequently
amended complaint based on allegations of infringement contained in an original complaint. See
Clouding IP, LLC v. Google Inc., 2013 WL 5176702 at* 1 (D. Del. Sept. 26, 2013) (citing Cloud
Farm Assoc., LLP v. Volkswagen Group ofAm. Inc., 2012 WL 3069390 (D. Del. July 27, 2012)).

CenturyTel argued that the original complaint contained no allegation it had notice of the
'643 patent or of an objectively high likelihood of infringement. (D.I. 32 at 3) Plaintiffs
Amended Complaint alleges notice of the '643 patent as of the date of the filing of the original
complaint, and further alleges a high risk of infringement. (D.I. 41-3 at ,-r,-r 50-51) Consistent
with this Court's prior decision in Clouding IP v. Google, see 2013 WL 5176702, at *1, it
appears that these allegations are adequate for pleading willful infringement.
In the Verizon Motion, Verizon and Sprint make essentially the same contentions
regarding the inadequacy of the willfulness allegations contained in the original complaint. For
at least the same reasons as already given, it appears that the allegations of the Amended
Complaint are adequate for pleading willful infringement. With respect to Sprint, the Amended
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Complaint further alleges knowledge ofthe patent-in-suit since at least January 2011, based on
prior litigation between the parties.
Conclusion
Accordingly, for the reasons stated above, IT IS HEREBY ORDERED that:
1.

Plaintiffs Motion for Leave to File Amended Complaint (D.I. 41) is GRANTED.

The proposed amended complaint (D.I. 41-3) is DEEMED FILED.
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Defendant CenturyTel's Motion to Dismiss Plaintiffs Claim for Willful Patent

Infringement (D.I. 31) is DENIED AS MOOT.
3.

Defendant Verizon's Motion to Dismiss (D.I. 34), in which Defendant Sprint

joins (D.I. 37), is DENIED AS MOOT.

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