Princeton Digital Image Corporation v. Harmonix Music Systems Inc. et al

Filing 188

REPORT AND RECOMMENDATION recommending GRANTING-IN-PART and DENYING-IN-PART D.I. 101 MOTION to Dismiss for Failure to State a Claim filed by Princeton Digital Image Corporation. Please note that when filing Objections pursuant to Fede ral 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 2/6/2017. Signed by Judge Christopher J. Burke on 1/19/2017. (mlc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

PRINCETON DIGITAL IMAGE
CORPORATION,
Plaintiff/CounterclaimDefendant,

v.
KONAMI DIGITAL ENTERTAINMENT
INC., HARMONIX MUSIC SYSTEMS,
INC. and ELECTRONIC ARTS, INC.,
Defendants/CounterclaimPlaintiffs.

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Civil Action No. 12-1461-LPS-CJB

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REPORT AND RECOMMENDATION

In this patent action filed by Plaintiff and Counterclaim-Defendant Princeton Digital
Image Corporation ("PDIC") against Defendants and Counterclaim-Plaintiffs Konami Digital
Entertainment Inc. ("Konami"), Harmonix Music Systems, Inc. ("Harmonix") and Electronic
Arts, Inc. ("EA") (collectively, "Defendants"), PDIC alleges that Defendants directly and
indirectly infringe United States Patent No. 5,513,129 (the "'129 patent"). Presently before the
Court is PDIC's motion to dismiss Harmonix and EA's counterclaims for a declaratory judgment
of invalidity and noninfringement pursuant to Federal Rule of Civil Procedure 12(b)(6) (the
"Motion"). (D .I. 101) For the reasons set out below, the Court recommends that the District
Court GRANT-IN-PART and DENY-IN-PART the Motion.
I.

BACKGROUND

PDIC is the owner, by assignment, of the '129 patent. (D.I. 94 at ,-r 10) The '129 patent,
entitled "Method and System for Controlling Computer-Generated Virtual Environment in
Response to Audio Signals[,]" relates generally to virtual reality ("VR") computer systems

controlled by music or control tracks created from music. ('129 patent, col. 1:8-18; see also D.I.
94 at if 25) 1 The '129 patent has 23 claims, ('129 patent, cols. 29:1-30:65), though (as will be
further explained below) only dependent claims 14, 19 and 20 remain at issue in this case.
PDIC filed this action on November 13, 2012. (D.I. 1) It also filed a related action (in
which it also asserts the '129 patent) against Ubisoft Entertainment SA ("Ubisoft SA") and
Ubisoft Inc. ("Ubisoft Inc.," and collectively with Ubisoft SA, "Ubisoft"), on February 27, 2013.
(Civil Action No. 13-335-LPS-CJB ("the Ubisoft Action"), D.I. 1)2
As the cases began to move forward, Defendants filed multiple petitions for inter partes
review ("IPR") with respect to the '129 patent. On November 15, 2013, for example, Harmonix
filed a petition with the United States Patent and Trademark Office (the "PTO") for IPR of
claims 1, 5-6, 8-13, 15-19, and 21-23 of the '129 patent. (D.I. 118, ex. 3 at 5-71) 3 In the petition,
Harmonix argued that the claims were invalid in light of three prior art references ("Fallacaro,"
"Pimentel" and "Pocock-Williams"). 4 On May 9, 2014, the PTO's Patent Trial and Appeal
Board ("PTAB") instituted review only on claims 10, 11, 22 and 23 (the "Harmonix '155 IPR").

The '129 patent appears on the docket in this action more than once, including as
an exhibit to the Third Amended Complaint. (D.I. 94, ex. 1) Citation to the patent will simply
be to the "'129 patent."
2

On July 17, 2013, Chief Judge Leonard P. Stark referred this action and the
Ubisoft Action to the Court to hear and resolve all pre-trial matters, up to and including the
resolution of case-dispositive motions. (D.I. 30; Ubisoft Action, D.I. 10)
Citations to the Exhibits of D.I. 118 will be to the page numbers generated by the
ECF system.
4

Before this action and the Ubisoft Action further progressed in this Court, on
January 15, 2014, the Court imposed a stay of both cases pending resolution of the IPR
proceedings. (D.I. 70; Ubisoft Action, D.I. 52)
2

(Id., ex. 3 at 213-34) Thus, inter alia, the PTAB determined that it was not persuaded that there
was a reasonable likelihood that the petitioner would prevail in showing that claim 19 was
unpatentable, and did not institute review on that claim. (Id., ex. 3 at 233)
On April 15, 2014, Ubisoft SA filed a second petition for IPR, seeking review of all
claims of the '129 patent (that is, claims 1-23); Ubisoft SA requested review of the claims over
combinations of five references that were different than the ones cited in the Harmonix '155 IPR
("Tsumura," "Lytle," "Adachi," "Williams," and "Thalmann"). (Id., ex. 4 at 8-72) 5 On October
17, 2014, the PTAB instituted review of claims 1-13, 15-18 and 21-23 (the "Ubisoft '635 IPR").

(Id., ex. 4 at 152-77) Thus, the PTAB determined that it was not persuaded that there was a
reasonable likelihood that the petitioner would prevail in showing that claims 14, 19 or 20 were
unpatentable, and did not institute review on those three claims. (Id., ex. 4 at 162, 171, 175)
On November 17, 2014, Harmonix and Konami filed a third petition for IPR (the
"Konami/Harmonix '271 IPR"), which included a request for review of claims 14, 19 and 20,
along with a corresponding motion seeking joinder of that proceeding with the Ubisoft IPR. (Id.,
ex. 5 at 2-103) In addition to petitioning on the same grounds as did Ubisoft SA, Konami and
Harmonix presented new challenges that had not been presented by Ubisoft SA: a challenge to
claims 19 and 20 based on Lytle, and a challenge to claims 14, 19 and 20 based on Adachi and
Tsumura. (Id.) On June 2, 2015, the PTAB denied the request for joinder and denied IPR review

Tsumura, Lytle and Adachi will all be particularly relevant to the instant Motion.
Tsumura is U.S. Patent No. 5,208,413 (issued May 4, 1993); Lytle is Wayne T. Lytle, Driving
Computer Graphics Animation.from a Musical Score, in Scientific Excellence in
Supercomputing: The IBM 1990 Contest Prize Papers 643-86 (Keith R. Billingsley et al. ed.
1992); and Adachi is U.S. Patent No. 5,048,390 (issued September 17, 1991). (D.I. 104 at 4 &
nn. 6-8)
3

on procedural grounds. (Id., ex. 5 at 271-90) More specifically, the PTAB concluded that
Konami and Harmonix had presented "no persuasive argument or evidence to explain why the
grounds of unpatentability asserted in the Petition could not have been asserted in the
[Harmonix] '155 IPR[,]" noted thatjoinder would increase the cost, time and effort that would
need to be expended by PDIC in the Ubisoft '635 IPR, and explained that Konami and Harmonix
had not shown that joinder would "promote efficient resolution of the unpatentability issues
without substantially affecting the schedule for the [Ubisoft] '635 IPR." (Id., ex. 5 at 289) For
those reasons, the PTAB "decline[ d] to exercise [its] jurisdiction under 35 U.S.C. § 315(c) to
authorize joinder" and denied the motion for joinder. (Id.) And since the petition for IPR was
filed more than one year after Harmonix was served with the Complaint in the instant case,
absent joinder, the Konami/Harmonix '271 IPR petition was time-barred. (Id., ex. 5 at 277-78)
Therefore, the PTAB stated that "exercising our discretion under 35 U.S.C. § 314(a) and 37
C.F.R. § 42.108(b), we decline to institute an [IPR] in the instant proceeding." (Id., ex. 5 at 278)
In the Harmonix '155 IPR proceeding, the PTAB ultimately issued a Final Written
Decision on May 6, 2015, holding that claims 10, 11, 22 and 23 are invalid. (Id., ex. 3 at 386415) In the Ubisoft '635 IPR, the PTAB issued a Final Written Decision on October 16, 2015,
holding that claims 1-13, 15-18 and 21-23 are invalid. (Id., ex. 4 at 384-428) PDIC did not
appeal either of these Final Written Decisions. Thus, the effect of the PTAB' s Final Written
Decisions was to leave only three dependent claims of the patent (claims 14, 19 and 20) still
valid.
After the Court lifted a stay of this case and the Ubisoft Action in January 2016, PDIC
filed the now-operative complaint in this case, the Third Amended Complaint ("TAC"). In the
4

TAC, PDIC alleged that Harmonix, Konami and EA infringe claims 14, 19 and 20 of the '129
patent by their development, testing, use, publication, and/or distribution of: (1) the Karaoke
Revolution, Dance Dance Revolution, and Rock Band video game series; (2) peripheral devices

to be used with the games; and (3) playable song tracks for use with the games. (D.I. 94)
Thereafter, on March 7, 2016, Harmonix and EA filed an Answer to the TAC, which
included two Counterclaims: a First Counterclaim seeking a declaratory judgment of invalidity
of the patent-in-suit and a Second Counterclaim seeking a declaratory judgment of
noninfringement of the patent. (D.I. 97 at 22-26) The First Counterclaim sought a declaration
that claim 14 was invalid as obvious over at least Adachi and Tsumura, and that claims 19 and 20
were invalid as anticipated at least over Lytle; the counterclaim noted that the "PTAB has not
issued any decision" that claim 14 or claims 19 and 20 were invalid on these grounds. (Id. at 2425,

at~~

16-17, 23-24) The Second Counterclaim asserted that "Harmonix and EA have not

infringed and are not infringing, either directly or indirectly, nor have the[y] contributed to or
induced infringement by others, of any valid claim of the '129 patent, either literally or under the
doctrine of equivalents." (Id. at 26,

at~

29)

PDIC filed the instant Motion on March 31, 2016. (D.I. 101) Briefing on the Motion was
completed on April 28, 2016. (D.I. 106)

II.

STANDARD OF REVIEW
The sufficiency of pleadings for non-fraud cases is governed by Federal Rule of

Civil Procedure 8, which requires "a short and plain statement of the claim showing that the
pleader is entitled to relief[.]" Fed. R. Civ. P. 8(a)(2). Courts use the same standard in ruling on
a motion to dismiss a counterclaim under Rule l 2(b )( 6) as they do in assessing a claim in a
5

complaint. See Idenix Pharms., Inc. v. Gilead Scis., Inc., Civil Action No. 13-1987-LPS, 2014
WL 4222902, at *5 (D. Del. Aug. 25, 2014); Tyco Fire Prods. LP v. Victaulic Co., 777 F. Supp.
2d 893, 898-99 (E.D. Pa. 2011) (citing cases).
When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, a
court conducts a two-part analysis. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009). First, the court separates the factual and legal elements of a claim, accepting "all of the
complaint's well-pleaded facts as true, but[] disregard[ing] any legal conclusions." Id. at 21011. Second, the court determines "whether the facts alleged in the complaint are sufficient to
show that the plaintiff has a 'plausible claim for relief."' Id. at 211 (quoting Ashcroft v. Iqbal,
556 U.S. 662, 679 (2009)). "A claim has facial plausibility 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 (citing Bell At!. Corp. v. Twombly, 550 U.S. 544,
556 (2007)). In assessing the plausibility of a claim, the court must "construe the complaint in
the light most favorable to the plaintiff, and determine whether, under any reasonable reading of
the complaint, the plaintiff may be entitled to relief." Fowler, 578 F .3d at 210 (quoting Phillips

v. Cnty. ofAllegheny, 515 F.3d 224, 233 (3d Cir. 2008)).

III.

DISCUSSION
PDIC makes two different types of arguments in support of its Motion. The Court will

address both in tum.

A.

Estoppel

First, PDIC argues that the First Counterclaim fails to state a plausible claim for relief
under the Twombly/Iqbal standard. In this regard, it claims that Harmonix and EA are estopped
6

from asserting invalidity based on prior art, including Adachi, Tsumura and Lytle, 6 that was
raised or reasonably could have been raised in the Harmonix IPR proceedings referenced above.
(D.I. 102 at 6-12; D.I. 106 at 3-9) Harmonix and EA respond that they are not estopped from
presenting the arguments in the First Counterclaim-that claim 14 is invalid as obvious over
Adachi and Tsumura and that claims 19 and 20 are invalid as anticipated over Lytle-because
claims 14, 19 and 20 were not the subject of a Final Written Decision in an IPR proceeding.
(D.I. 104 at 6-14) 7 For the reasons set out below, the Court agrees with Harmonix and EA. 8
This dispute implicates the text of 35 U.S.C. § 315(e) ("Section 315"), which is a part of
the Leahy-Smith America Invents Act ("AIA"). Section 315(e) reads as follows:
(e) Estoppel. -

(1) Proceedings before the Office.- The petitioner in an inter

6

The only bases for invalidity that Harmonix and EA plead facts in support thereof
in the First Counterclaim are those relating to their assertions that claims 14, 19 and 20 are
invalid under 35 U.S.C. §§ 102 and/or 103, in view of Adachi, Tsumura and/or Lytle. (D.I. 102
at 6; D.I. 106 at 1 n.l) Therefore, those are the only claims that the Court will discuss in this
subsection.
7

Although the Court is resolving a motion to dismiss, it may consider not only the
allegations in the pleadings, but also matters of public record, orders, exhibits attached to the
pleadings, and documents incorporated into the pleadings by reference. See, e.g., Quest Integrity
USA, LLC v. Clean Harbors Indus. Servs., Inc., C.A. No. 14-1482-SLR, Civ. No. 14-1483-SLR,
2015 WL 4477700, at *2 (D. Del. July 22, 2015) (citing Oshiver v. Levin, Fishbein, Sedran &
Berman, 38 F.3d 1380, 1384-85 n.2 (3d Cir. 1994)). The Court's decision below considers
certain content in Defendants' IPR Petitions and the PTAB' s rulings in those proceedings. This
is permissible here, as IPR records are "matter[ s] of public record," see Choon 's Design, LLC v.
Zenacon, LLC, No. 2:13-cv-13568, 2015 WL 539441, at *5 (E.D. Mich. Feb. 9, 2015), and the
Final Written Decisions in the Harmonix '155 IPR and the Ubisoft '635 IPR are attached as
exhibits to Defendants' Answer and Counterclaims, (D.I. 97, exs. 1-2).
8

As to this question of IPR estoppel, since the issue is unique to patent cases, the
Court will look to Federal Circuit law for guidance. See Senju Pharm. Co., Ltd. v. Apotex Inc.,
891 F. Supp. 2d 656, 659-60 (D. Del. 2012) (citing cases).
7

partes review of a claim in a patent under this chapter that results in
a final written decision under section 318(a), or the real party in
interest or privy of the petitioner, may not request or maintain a
proceeding before the Office with respect to that claim on any
ground that the petitioner raised or reasonably could have raised
during that inter partes review.

(2) Civil actions and other proceedings.- The petitioner in an
inter partes review of a claim in a patent under this chapter that
results in a final written decision under section 318(a), or the real
party in interest or privy of the petitioner, may not assert ... in a
civil action arising in whole or in part under section 1338 of title 28
... that the claim is invalid on any ground that the petitioner raised
or reasonably could have raised during that inter partes review.
35 U.S.C. § 315(e). As Harmonix and EA note, (D.I. 104 at 6-7), the plain text of Section
315(e)(2) indicates that an IPR petitioner (here, Harmonix, who was a petitioner in the Harmonix
'155 IPR and the Konami/Harmonix '271 IPR) 9 would be estopped from asserting that "the
claim" of a patent (here, claims 14, 19 and 20 of the '129 patent) is invalid in this action on any
ground that the petitioner raised or reasonably could have raised during those IPR
proceedings-but only to the extent that the IPR proceeding at issue is one that "results in a final
written decision" as to those claims.
However, as was noted above, neither the Harmonix '155 IPR nor the Konami/Harmonix
'271 IPR resulted in a "final written decision" as to the validity of claims 14, 19 or 20. In the
Harmonix '155 IPR, Harmonix never sought review of claims 14 and 20, and the PTAB declined
to institute review of claim 19. In the Konami/Harmonix '271 IPR, while Harmonix sought
review of all three claims, the PTAB declined to institute review of each of the claims. The

9

PDIC asserts that EA would be considered to be in privity with Harmonix, for
purposes of the application of Section 315(e). (D.I. 102 at 9 n.4) Harmonix and EA do not
appear to dispute this, (D.I. 104; D.I. 106 at 1 n.1 ), and so the Court assumes this is so for
purposes of resolving the Motion.
8

PTAB also determined that it would not join the proceeding with the Ubisoft '635 IPR.
While PDIC pushes back against this conclusion, (D.I. 102 at 6-12), the Court's decision
here is squarely in line with the way that the United States Court of Appeals for the Federal
Circuit has discussed the estoppel provisions of the AIA. For example, in Synopsys, Inc v.
Mentor Graphics Corp., 814 F.3d 1309 (Fed. Cir. 2016), the Federal Circuit considered whether
the AIA's statutory scheme required that the PTAB's Final Written Decision in an IPR
proceeding must address every claim raised in a petition for IPR-including those claims as to
which review was not granted. The Synopsys Court ultimately concluded that the statute only
required the PTAB to address in a Final Written Decision those claims as to which review was
granted. Synopsys, 814 F.3d at 1316. In the appeal, the plaintiff had argued that "the Board's
[then-current] practice of issuing final decisions only addressing some of the claims in the
petition [e.g., only those claims as to which review was instituted] is inconsistent with the
estoppel provisions of the AIA, because final decisions that do not address all of the claims 'will
have limited estoppel effect' and thus do not 'force a party to bring all of its claims in one
forum."' Id. In responding to this argument, however, the Synopsys Court flatly stated that the
"validity of claims for which the [PTAB} did not institute inter partes review can still be litigated
in district court." Id. (emphasis added). And it explained that this conclusion was not
inconsistent with the overall structure of the AIA, noting that even though the AIA served to
estop petitioners from making some invalidity arguments thereafter in district court, the statute
"cannot replace the district court in all instances[.]" Id.; see also HP Inc. v. MPHJ Tech. Invs.,
LLC, 817 F.3d 1339, 1346 (Fed. Cir. 2016). The Federal Circuit's statement in Synopsys clearly

9

forecloses PDIC's argument here. 10
Thus, for the reasons stated above, 11 the Court recommends that PDIC's Motion be
denied as to the First Counterclaim.

10

Additionally, in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc.,
817 F.3d 1293 (Fed. Cir. 2016), the opinion for the Court also assessed Section 315(e)(2).
Therein, the Federal Circuit explained that where the PTAB did not address in its Final Written
Decision a particular ground as to why the claims at issue were invalid (because the PTAB had
denied review on that ground, finding the ground to be "redundant" of other grounds of invalidity
on which review had been instituted), then the petitioner was not estopped from raising that
ground in future district court proceedings. Shaw Indus., 817 F.3d at 1297, 1300. The Shaw
Indus. Court explained that this was because the "IPR does not begin until it is instituted" and
thus the petitioner "did not raise-nor could it have reasonably raised-the [ground for invalidity
at issue] during the IPR. The plain language of the statute prohibits the application of estoppel
under these circumstances." Id. at 1300 (emphasis in original); but see id. at 1305 (Reyna, J.,
concurring) (stating that the question of "[w]hether estoppel applies .... is [not] for us to decide
in the first instance, despite the invitation from [plaintiff], because the issue is not properly
before us"). The language used in Shaw Indus. seems to suggest an even more petitioner-friendly
view of the scope of estoppel under Section 315(e)(2)-i.e., that even had the PTAB instituted
review of claims 14, 19 or 20 in a proceeding in which Harmonix was the petitioner, and even if
it had issued a Final Written Decision as to those claims, ifthe PTAB had not instituted review
of the claims in view of the grounds for invalidity at issue here, then Harmonix and EA would
not be estopped from raising those grounds in the First Counterclaim. See Intellectual Ventures I
LLC v. Toshiba Corp., -F. Supp. 3d. - , Civ. No. 13-453-SLR, 2016 WL 7341713, at *13 (D.
Del. Dec. 19, 2016); see also Intellectual Ventures I LLC v. Toshiba Corp., Civ. No. 13-453SLR, 2017 WL 107980, at* 1 (D. Del. Jan. 11, 2017). But the Court need not rely on Shaw
Indus. here, as no IPR involving Harmonix was even instituted as to these claims, and so
estoppel could not possibly apply.
11

PDIC also argues that in denying Harmonix and Konami's request for joinder and
for review in the Konami/Harmonix '271 IPR, the PTAB "applied the statutory estoppel of 35
U.S. C. § 315(e)( 1)" when it noted in its decision that the petitioner did not present "persuasive
argument or evidence to explain why the new challenges asserted in the Petition could not have
been asserted in the [Harmonix '155 IPR]." (D.I. 102 at 8) But as Harmonix and EA note, in
these decisions, the PTAB never cited to Section 315(e) at all, nor did it ever specifically state
that it was applying the estoppel provision of Section 315(e)( 1) in rendering those decisions.
(D.I. 104 at 14) Instead, the PTAB noted that it was declining to "exercise our discretion under
35 U.S.C. § 315(c)" in deciding not to authorize joinder with the Ubisoft '635 IPR, (D.I. 84, ex. B
at 10), and that it was exercising its "discretion under 35 U.S.C. § 314(a)" and under related
regulations in declining to institute the Konami/Harmonix '271 IPR, (id., ex. Cat 8).
10

B.

Failure to Plead Sufficient Facts

Second, PDIC asserts that the allegations in the Second Counterclaim do not meet the

Twombly/Iqbal standard, because Harmonix and EA do not allege facts therein from which
noninfringement of the patent-in-suit can be plausibly inferred. (D.I. 102 at 12-13; D.I. 106 at 910) That is, PDIC claims that the allegations in the counterclaim are "merely a formulaic
recitation of the elements of the claim [of noninfringement], without any supporting facts or even
any identification of the products that are alleged not to infringe." (D.I. 102 at 12) The Second
Counterclaim, in its entirety, reads as follows:
28.
The allegations of Paragraphs 1-27 of the Counterclaims are
incorporated by reference as if fully set forth herein.
29.
Harmonix and EA have not infringed and are not infringing,
either directly or indirectly, nor have the[y] contributed to or
induced infringement by others, of any valid claim of the '129
patent, either literally or under the doctrine of equivalents.
30.
Accordingly, Harmonix and EA are entitled to a declaratory
judgment that they have not infringed and do not infringe the '129
patent.
(D.I. 97 at 26,

at~~

28-30)

The Twombly/Iqbal standard should apply here to all aspects of the Second
Counterclaim. 12 Harmonix and EA do not seriously contend that any allegations of no direct

12

Harmonix and EA suggest, in a footnote, that the counterclaim (at least, as to its
allegations of no direct infringement) need not meet the Twombly/Iqbal standard. (D.I. 104 at 14
n.22) Prior to December 1, 2015, a declaratory judgment claim of no direct infringement of a
patent needed only to contain allegations that equaled or exceeded the level of specificity
required by Form 18 of the Federal Rules of Civil Procedure (though, even at that time, a
declaratory judgement claim of no indirect infringement was required to meet the more stringent
requirements of Rule 8 and Twombly/Iqbal). TSMC Tech., Inc. v. Zand, LLC, Civil Action No.
14-721-LPS-CJB, 2015 WL 661364, at *5-6 (D. Del. Feb. 13, 2015). Then, on December 1,
2015, the Supreme Court of the United States abrogated Federal Rule of Civil Procedure 84 and
11

infringement in the Second Counterclaim-that is, allegations that certain of their products do
not meet the limitations of the relevant claims of the patent-in-suit-are robust enough to meet
the Twombly/Iqbal standard. (D.I. 104 at 15-16) And they are not. The three paragraphs that
make up the Second Counterclaim, set out above, contain no facts of any kind, let alone
sufficient facts to make out a plausible claim. Nor have Harmonix and EA articulated how
Paragraph 28's "incorporation by reference" paragraph would otherwise save the counterclaim.
Thus, it is clear that the Motion should be granted on this ground.
With that said, it is within the Court's discretion to allow leave to amend, see Foman v.

Davis, 371 U.S. 178, 182 (1962), and such leave should be permitted "when justice so
requires[,]" Fed. R. Civ. P. 15(a)(2). Here, Harmonix and EA requested the ability to amend if

the Appendix of Forms, including Form 18. Mayne Pharma Int'! PTY Ltd. v. Merck & Co., Inc.,
Civil Action No. 15-438-LPS-CJB, 2015 WL 7833206, at *2 n.1 (D. Del. Dec. 3, 2015). Under
the new post-amendment regime, allegations of direct infringement or declaratory judgment
claims of no direct infringement would be subject to the pleading standards established in
Twombly and Iqbal. Id.; see also Raindance Techs, Inc. v. JOx Genomics, Inc., Civil Action No.
15-152-RGA, 2016 WL 927143, at *2 (D. Del. Mar. 4, 2016). The Supreme Court's Order
accompanying the submission of the amendments to Congress stated that the amendments "shall
take effect on December 1, 2015, and shall govern in all proceedings in civil cases thereafter
commenced and, insofar as just and practicable, all proceedings then pending." Mayne Pharma
Int'! PTY Ltd., 2015 WL 7833206, at *2 n.1 (citation omitted); cf Paluch v. Sec'y Pa. Dept.
Corrections, 442 F. App'x 690, 693 (3d Cir. 2011) ("Generally, when amended procedural rules
take effect during the pendency of a case, the amended rules will be given retroactive application
to the maximum extent possible, unless doing so would work injustice."). Here, although this
case "commenced" before the December 1, 2015 amendments, PDIC suggests that the new
standard should apply to the allegations of no direct infringement in the Second Counterclaim.
(D.I. 102 at 5 & n.5) And the Court agrees that this would be a just and practicable
result---especially here, where the TAC and the Answer were both filed after the amendments
issued, and where the TAC's counterpart allegations of direct infringement are lengthy and
contain real detail. (D.1. 94); see also RAH Color Techs. LLC v. Ricoh USA Inc., -F. Supp. 3d
- , CIVIL ACTION NO. 2:15-cv-05203-JCJ, 2016 WL 3632720, at *1, *5-6 (E.D. Pa. July 7,
2016) (coming to a similar conclusion, where the original complaint was filed prior to the
December 1, 2015 amendments, but where the counterclaims in the responsive pleading at issue
were filed after that date).
12

their allegations were deemed wanting. (D.I. 104 at 16) PDIC has not suggested that amendment
would cause undue prejudice or would be futile, and so the Court recommends that Harmonix
and EA be given leave to file an Amended Answer and Counterclaims that attempts to correct the
deficiencies of the Second Counterclaim outlined above. See, e.g., Mayne Pharma Int'! PTY Ltd.

v. Merck & Co., Inc., Civil Action No. 15-438-LPS-CJB, 2015 WL 7833206, at *6 (D. Del. Dec.
3, 2015).
IV.

CONCLUSION
The Court recommends that the Motion be GRANTED-IN-PART and DENIED-IN-

p ART. More specifically, the Court recommends that as to its request for dismissal of the First
Counterclaim, the Motion be DENIED, and that as to its request for dismissal of the Second
Counterclaim, the Motion be GRANTED without prejudice to Defendants' ability to amend their
pleading.
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)(2). The failure of a party to object to legal conclusions may result in the
loss of the right to de novo review in the district court. See Sincavage v. Barnhart, 171 F. App'x
924, 925 n.1 (3d Cir. 2006); Henderson v. Carlson, 812 F.2d 874, 878-79 (3d Cir. 1987).
The parties are directed to the Court's Standing Order for Objections Filed Under Fed. R.
Civ. P. 72, dated October 9, 2013, a copy of which is available on the District Court's website,
located at http://www.ded.uscourts.gov.

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Dated: January 19, 2017
Christopher J. Burke
UNITED STA TES MAGISTRATE JUDGE

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