McRo Inc. v. 2K Games Inc.

Filing 41

REPORT AND RECOMMENDATIONS recommending GRANTING-IN-PART and DENYING-IN-PART (17 in 1:12-cv-01513-LPS-CJB) MOTION to Dismiss for Failure to State a Claim (The Amended Complaint) filed by Rockstar Games Inc., and (18 in 1:12-cv-01517-LPS-CJB) MOTION t o Dismiss for Failure to State a Claim (The Second Amended Complaint) filed by Take-Two Interactive Software Inc. and (17 in 1:12-cv-01519-LPS-CJB) MOTION to Dismiss for Failure to State a Claim (The Second Amended Complaint) filed by 2K Games Inc. P lease 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 bri efing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 4/3/2014. Signed by Judge Christopher J. Burke on 3/17/2014. Associated Cases: 1:12-cv-01513-LPS-CJB, 1:12-cv-01517-LPS-CJB, 1:12-cv-01519-LPS-CJB(dlk) (dlk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
McRO, INC., d/b/a PLANET BLUE,
Plaintiff,
v.
ROCKSTAR GAMES, INC.,
Defendant.
McRO, INC., d/b/a PLANET BLUE,
Plaintiff,
v.
TAKE-TWO INTERACTIVE
SOFTWARE, INC.,
Defendant.
McRO, INC., d/b/a PLANET BLUE,
Plaintiff,
v.
2K GAMES, INC.,
Defendant.

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Civil Action No. 12-1513-LPS-CJB

Civil Action No. 12-1517-LPS-CJB

Civil Action No. 12-1519-LPS-CJB

REPORT AND RECOMMENDATION
Presently pending in these three related cases are Defendants Rockstar Games, Inc.
("Rockstar"), Take-Two Interactive Software, Inc. ("Take-Two") and 2K Games, Inc.'s ("2K")
(collectively, "Defendants") motions to dismiss PlaintiffMcRo, Inc., d/b/a Planet Blue's
("Plaintiff' or "McRo") direct, induced and willful infringement claims against them, pursuant to

Federal Rule of Civil Procedure 12(b)(6). (D.I. 18; Civil Action No. 12-1513-LPS-CJB, D.I. 17;
Civil Action No. 12-1519-LPS-CJB, D.I. 17) 1 For the reasons that follow, the Court
recommends that Defendants' motions be GRANTED-IN-PART AND DENIED-IN-PART.

I.

BACKGROUND
Plaintiff commenced these actions on November 21, 2012, alleging that Defendants

infringed certain claims of two of its patents, U.S. Patent No. 6,307,576 ("the '576 patent") and
6,611,278 ("the '278 patent"). (D.I. 1) Before Defendants answered, Plaintiffs filed a First
Amended Complaint in all three actions, and in the Take-Two action, thereafter filed a Second
Amended Complaint. (D.I. 4, 16; Civil Action No. 12-1513-LPS-CJB, D.l. 15; Civil Action No.
12-1519-LPS-CJB, D .I. 15)2 In the complaints at issue here, Plaintiff alleges direct infringement
(pursuant to 35 U.S.C. §§ 271(a) and 271(g)), induced infringement, and willful infringement of

Unless otherwise noted, the allegations in the respective pleadings at issue are
identical, save for changes to the name of the accused party. As a result, the opening and reply
briefs of the three Defendants here are, in essence, identical as to the claims relating to that party,
and Plaintiff filed the same answering brief in all three cases. For these reasons, the Court
addresses all three motions together in this Report and Recommendation. To avoid redundancy,
representative citations in this Report and Recommendation will be to the docket and the
complaint-at-issue in the Take-Two matter, unless otherwise noted.
2

In the Take-Two action, Plaintiffs filing of the Second Amended Complaint
appears to have been in violation ofFederal Rule of Civil Procedure 15(a), as it was filed without
consent of the opposing party or leave of court. (D.I. 19 at 1) However, because the Defendant
focuses its challenge on the factual sufficiency of that complaint, and because the Court cannot
discern prejudice to the Defendant in doing so, the Court will permit the filing of the Second
Amended Complaint in that action, and will go on to address the sufficiency of its allegations
pursuant to Rule 12(b)(6). Cf DeGuiseppe v. Vertis, Inc., No. 04-4348,2005 WL 2271865, at *2
(E.D. Pa. Sept. 15, 2005); Gardner v. Authorized Distribution Network, Inc., Civ. A. No. 915335, 1992 WL 245873, at *1 (E.D. Pa. Sept. 21, 1992).
2

both the '576 and '278 patents by some or all Defendants. (D.I. 16 at~~ 14, 15, 19, 20). 3
Defendants thereafter each filed the motions to dismiss, pursuant to Rule 12(b)(6). On
July 31, 2013, these cases were referred to the Court by Judge Leonard P. Stark to hear and
resolve all pretrial matters, up to and including the resolution of case-dispositive motions. (D.I.
25; Civil Action No. 12-1513-LPS-CJB, D.I. 26; Civil Action No. 12-1519-LPS-CJB, D.I. 24)

II.

DISCUSSION
Defendants' motions allege that Plaintiff has insufficiently pleaded claims of direct and

induced infringement (as to all three Defendants) and willful infringement (as to Rockstar and
Take-Two). 4 The Court will consider these arguments in tum.

A.

Direct Infringement

To properly plead a claim of direct infringement, a complaint must at least comply with
Form 18 of the Federal Rules of Civil Procedure. SeeK-Tech Telecomms., Inc. v. Time Warner
Cable, Inc., 714 F.3d 1277, 1283-84 (Fed. Cir. 2013) ("[T]o the extent any conflict exists

between Twombly (and its progeny) and the Forms regarding pleadings requirements, the Forms
control."); Clouding IP, LLC v. Amazon. com, Inc., C.A. Nos. 12-641-LPS, 12-642-LPS, 12-675-

3

Both Count I (containing allegations regarding the '576 patent) and Count II
(containing allegations regarding the '278 patent) of the respective complaints contain nearly
verbatim language, differing only as to the patent number referenced. (Compare D.I. 16 at~~ 1317, with id. at~~ 18-22) To the extent the Court cites below only to the allegations as to one of
the patents-in-suit, it does so nevertheless in order to address the respective allegations as to both
patents.
4

In the motions, Defendants have not moved to dismiss Plaintiffs claims of direct
infringement under Section 271(g) on any grounds distinct from those referenced below.
3

LPS, 2013 WL 2293452, at *2 (D. Del. May 24, 2013). 5 Form 18 provides the following
exemplary language relating to the required allegation of infringement:
3. The defendant has infringed and is still infringing the Letters
Patent by making, selling, and using electric motors that embody
the patented invention, and the defendant will continue to do so
unless enjoined by this court.
Fed. R. Civ. P., App. of Forms, Form 18 (emphasis in original). 6 Thus, as a general matter,
"Form 18 does not require [plaintiff] to specify 'what functionality infringed, or any facts that
show how [defendant] performs even one step of a claimed method."' Clouding IP, 2013 WL
2293452, at *2 (citation omitted). And with regard to identification of accused products, "Form
18 requires only identification of a general category of products, for example 'electric[]
motors[,]"' id., or a general identification of an allegedly infringing method, Gammino v.
American Tel. & Tel. Co., Civ. No. 12-666-LPS, 2013 WL 6154569, at *3 (D. Del. Nov. 22,
2013). In the end, "[t]he touchstones of an appropriate analysis under Form 18 are notice and
facial plausibility" and while "these requirements serve as a bar against frivolous pleading, it is
not an extraordinarily high one." K-Tech Telecomms., 714 F.3d at 1286 (internal citations
omitted).

While review of the sufficiency of a pleading pursuant to Rule 12(b)(6) is
analyzed under regional circuit law, the Federal Circuit has explained that its prior decisions
"regarding the requirements ofF orm 18 and its relationship to the pleading standards set forth in
Twombly and Iqbal [were] dictated by Supreme Court precedent" and that it would thus interpret
those requirements in the same manner, no matter what Circuit a case originated from. K-Tech
Telecomms., 714 F.3d at 1283 n.l.
6

In total, Form 18 requires "(1) an allegation of jurisdiction; (2) a statement that the
plaintiff owns the patent; (3) a statement that defendant has been infringing the patent 'by
making, selling, and using [the device] em bodying the patent'; (4) a statement that the plaintiff
has given the defendant notice of its infringement; and (5) a demand for an injunction and
damages." K-Tech Telecomms., 714 F.3d at 1283 (citation omitted).

4

With regard to its allegations of direct infringement, Plaintiffs complaints allege:
Upon information and belief, [Defendant] has, as part of the
development process for its computer and/or video games that
include 3-dimensional animated characters, used and continues to
use software processes in the United States for automatically adding
lip-synchronization and facial expression to the animated characters
using the phonetic structure of the words spoken by the characters
and has made, used, offered to sell, sold, and/or imported, and
continues to make, use, offer to sell, sell, and/or import, computer
and/or video games created using those processes in the United
States, including this judicial district. By using the aforementioned
software processes, [Defendant] has directly infringed the [patentin-suit] under 35 U.S.C. § 271(a), either literally or under the
doctrine of equivalents. By using, offering to sell, selling, and/or
importing computer and/or video games created using the
aforementioned software processes, [Defendant] has been and is
now infringing the [patent-in-suit] under 35 U.S.C. § 271(g), either
literally or under the doctrine of equivalents.
(D.I. 16

at~~

14, 19).

In arguing for dismissal of the direct infringement claims, Defendants analogize the

allegations here to those found wanting in two other cases in this Court. First, citing the decision
in Fifth Market, Inc. v. CME Group, Inc., C.A. No. 08-520 GMS, 2009 WL 5966836, at *1 (D.
Del. May 14, 2009), Defendants aver that the complaint "merely defines accused products by
reference to the claims [in the patent-in-suit], without providing any guidance as to which
categories of products allegedly infringe." (D.I. 19 at 5). Second, quoting the decision in Eidos
Communications, LLC v. Skype Technologies SA, 686 F. Supp. 2d 465,468 (D. Del. 2010),
Defendants assert that the complaint "merely identifies 'examples of large technology areas, not
genres of products[,]"' and argues that the description of such products "would incorporate most

5

or all of' Defendants' products. (Id.) 7
The Court disagrees that these cases are analogous. In Fifth Market, the direct
infringement allegation was found insufficient because the complaint's sole reference to any
product of the defendant appeared in the facts section of the pleading; no such reference appeared
in the count of infringement in question, which instead cited only to undefined "products and
methods covered by the claims of the asserted patents" and contained no reference to "a single
infringing product or method." Fifth Market, 2009 WL 5966836, at *1; St. Clair Intellectual
Prop. Consultants, Inc. v. Apple Inc., C.A. No. 10-00982-LPS, 2011 WL 4571812, at *3 (D. Del.
Sept. 30, 2011) (distinguishing Fifth Market in this way). And in Eidos, the complaint did not
"specify a[ n accused] product or method at all" and made only a "vague" reference to
defendants' '"communication system products and/or methodologies"' in that regard. Eidos, 686
F. Supp. 2d at 467-68. In contrast, here, although the allegations are not particularly detailed, in
the counts of direct infringement at issue Plaintiff does at least identify the specific processes
(i.e., a method) alleged to infringe (the use of "software processes in the United States for
automatically adding lip-synchronization and facial expression to ... animated characters using
the phonetic structure of the words spoken by the characters") and the identifiable categories of
products ("computer and/or video games that include 3-dimensional characters") that are said to
utilize those processes. (D.I. 16 at~~ 14, 19) Thus, Plaintiff's factual allegations are not

7

Contrary to the nature of the allegations in Plaintiff's Second Amended Complaint
against it, (see, e.g., D.l. 16 at~~ 11, 12), Defendant Take-Two also avers that it does not make
or develop video games; rather, its subsidiaries do. (D.I. 19 at 1, 4). Nevertheless, at this stage
of the proceedings, the Court is to take the Plaintiff's factual allegations as true. See St. Clair
Intellectual Prop. Consultants, Inc. v. Apple Inc., C.A. No. 10-00982-LPS, 2011 WL 4571812, at
*2 n.2 (D. Del. Sept. 30, 2011); Tarkus Imaging, Inc. v. Adobe Sys., Inc., Civ. No. 10-63-LPS,
2011 WL 1557930, at *2 (D. Del. Apr. 21, 2011).
6

problematic in the same way as were the allegations in Fifth Market and Eidos. See also Xpoint

Techs., Inc. v. Microsoft Corp., 730 F. Supp. 2d 349, 353-54 (D. Del. 2010) (finding that a
complaint satisfied Form 18 when it "identified general categories of accused products[,]''
specifically "processors, chipsets, and motherboards" with the Court also noting that the
allegations also briefly described the means by which those products infringe). 8
Beyond these arguments, Defendants assert that the allegations are insufficient because
they do not address "which [particular computer or video] games are at issue"; "what qualities
those games share that would infringe the specific mechanisms for lip-synchronization claimed
in the patens-in-suit"; or "how any video game products allegedly infringe." (D.I. 19 at 6, 7)
The Court cannot square those arguments with the reality that Form 18 does not require a
plaintiff to list specific accused products, nor to "specify 'what functionality infringed, or any
facts that show how [the defendant] performs even one step of a claimed method.'" Clouding IP,
2013 WL 2293452, at *2 (citation omitted). Indeed, our Court has noted that "[i]dentification of
one allegedly infringing product or method for each count of [direct] infringement alleged in a
complaint is generally sufficient to meet the requirements of Form 18." Gammino, 2013 WL
6154569, at *3.
Form 18's requirements are minimal. In the end, under this Court's precedent, Plaintiff's

Defendant cites to a decision of the United States District Court for the Northern
District of California, in which that Court found, inter alia, that similarly-worded complaints
filed by Plaintiff in that district did not state a claim for direct infringement. (D.I. 20, ex. A) To
the extent that this decision relied upon the conclusion that the facts pleaded in the respective
complaints were insufficient to meet Form 18's requirements, (id. at 5-6), the Court finds that the
cases cited in support either involve dissimilar factual circumstances to those here, or are not
reconcilable with this Court's precedent as to what types of allegations satisfy Form 18's
minimal requirements.
7

allegations regarding direct infringement are sufficient to satisfy those requirements. See, e.g.,

Fairchild Semiconductor Corp. v. Power Integrations, Inc., 935 F. Supp. 2d 772, 775-76 (D. Del.
Mar. 29, 2013) (finding direct infringement allegations sufficient where plaintiff"expressly
identified a general category of products, power supply controllers, and further restricted that
category to controllers that include certain features and circuits"). 9

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." In order 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 quotation marks and citation omitted). While the
sufficiency of allegations of direct infringement are measured by whether they comply with Form
18, the general principles of Twombly and Iqbal apply to indirect infringement claims. In re Bill

ofLading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1336-37 (Fed. Cir.
2012).
The relevant allegations of induced infringement are as follows:
Upon information and belief, [Defendant] actively, knowingly, and
intentionally induced, and continues to actively, knowingly, and
intentionally induce, infringement of the [patent-in-suit] under 35

9

As to Defendants' assertions that the product categories associated with the
infringement allegations constitute "most or all" of the products they are alleged to make, this
Court has found such an argument to be unavailing at the motion to dismiss stage, "as narrowing
of [such] issues regarding infringement is 'best achieved through the use of traditional
mechanisms of discovery."' St. Clair, 2011 WL 4571812 at *2 (citation omitted); see also
Infineon Techs. AG v. Volterra Semiconductor Corp., No. C-11-6239 MMC, 2012 WL 5988461,
at *3 (N.D. Cal. Nov. 29, 2012) (citing cases).
8

U.S.C. § 271 (b) by contracting with game developers to directly
infringe the [patent-in-suit] by using the aforementioned software
processes to create computer and/or video games that [Defendant]
makes, uses, offers to sell, sells, and/or imports, all with
knowledge of the [patent-in-suit] and its claims; with knowledge
that its game developers will use the methods claimed in the
[patent-in-suit]; and with the knowledge and the specific intent to
encourage and facilitate those infringing uses of the
aforementioned software processes through the creation and
dissemination of instructional materials, product manuals, and
technical materials related to, referenced by or incorporated within
the statement of work between Defendant and its developers.
[Defendant] has had knowledge of the [patent-in-suit] since at least
as early as January 2008 as a result of email and telephonic
communications between Mr. Maury Rosenfeld and at least Peter
Welch and its actions constitute knowing and willful infringement
of the [patent-in-suit]. [Defendant] also has knowledge of its
induced infringement of the [patent-in-suit] through the filing and
service of the Complaint and despite this knowledge continues to
commit tortuous conduct by way of patent infringement.
(D.I. 16 at~~ 15, 20) 10 Defendants contend that these allegations are wanting in several respects,
(D.I. 19 at 8-10), which the Court will address in tum.

1.

Identity of Direct Infringers

First, Defendants appear to argue that the complaints fail to sufficiently identify who the
direct infringers are. (D.I. 19 at 8-9) Identification of a specific third-party direct infringer is not
required to survive a motion to dismiss an induced infringement claim, so long as the factual

10

These are the allegations in the Second Amended Complaint against Take-Two.
The induced infringement allegations against Rockstar are identical, except that notice there is
alleged to have occurred "since at least as early as January 2008 as a result of correspondence
and other communications between Mr. Maury Rosenfeld and Rockstar's legal department in and
around that time .... " (Civil Action No. 12-1513-LPS-CJB, D.I. 15 at~~ 15, 20) The induced
infringement allegations are also identical with respect to 2K, except that they do not include a
sentence alleging knowledge since January 2008; the allegations are only that 2K has had the
requisite knowledge through the filing and service of the original Complaint against it. (Civil
Action No. 12-1519-LPS-CJB, D.I. 15 at~~ 15, 20)
9

allegations are sufficient to allow the inference that at least one direct infringer exists. In re Bill
ofLading, 681 F.3d at 1336; Fairchild Semiconductor Corp., 935 F. Supp. 2d at 777 n.6. Taking

into account the nature of the allegations above (relating to direct infringement via the use of
certain software processes in the creation of certain computer or video games, alleged to be
induced by Defendants that are a part of the video game industry), the identification of"game
developers" as the alleged direct infringers is sufficient to meet this requirement. (D.I. 16 at~~
15, 20)

2.

Knowledge that Direct Infringer's Acts Constituted Infringement

A plaintiff must also allege facts plausibly showing that the defendant had knowledge that
the alleged direct infringer's acts constituted infringement. See Pragmatus A V, LLC v. Yahoo!
Inc., C.A. No. 11-902-LPS-CJB, 2013 WL 2295344, at *1 (D. Del. May 24, 2013) (citing In re
Bill ofLading, 681 F.3d at 1339). While a plaintiff need not "prove its case at the pleading

stage[,]'' what is required is that the facts pleaded, "when considered in their entirety and in
context, lead to the common sense conclusion that a patented method is being practiced." In re
Bill ofLading, 681 F.3d at 1339, 1343.

Defendants aver that although the complaints "allege[] that [the Defendant] had
knowledge of the patents-in-suit as of January 2008," they are "entirely silent on knowledge of
infringement before this suit[.]" (D.I. 19 at 9) The Court agrees.
As to post-suit knowledge of infringement, see Clouding IP, LLC v. Google Inc., C.A.
No. 12-639-LPS, 2013 WL 5176702, at *1 (D. Del. Sept. 16, 2013), the complaints' allegations
are simply that the game developers "us[e] the aforementioned software processes to create"
infringing computer and/or video games and that Defendants have knowledge that "its game
10

developers will use the methods claimed" in the patents-in-suit, (D.I. 16 at~~ 15, 20). Those
"aforementioned" processes were the ones mentioned in the direct infringement claims:
"software processes in the United States for automatically adding lip-synchronization and facial
expression to the animated characters using the phonetic structure of the words spoken by the
characters[.]'' (Id.

at~~

14, 19)

This assertion of infringing use, as Defendants note, is in reality little more than a rephrasing of a portion of the language of Claim 1 of the '576 patent and '278 patent, respectively.
(D.I. 23 at 2) It is really not much different from a bland statement that an entity has taken some
unspecified action to practice a "method claimed" in the patents-in-suit. Just as important, the
complaints do not really contain any further more specific, concrete factual allegations as to what
particular type of actions the developers have actually taken, or what kind of development they
have actually engaged in, that are plausibly asserted to amount to the use of the claimed
methods. II As a result, Plaintiffs pleadings have failed to sufficiently allege Defendants' postsuit knowledge of infringing conduct by the game developers. See, e.g., Versata Software, Inc. v.
Cloud9 Analytics, Inc., Civil Action No. 12-925-LPS-CJB, 2014 WL 631517, at *4 (D. Del. Feb.

II
The Court's finding here as to the insufficiency of the allegations of knowledge of
infringing conduct (as to the claims of induced infringement) is similar to part of the rationale
behind the Northern District of California's decision referenced above (finding insufficiently
pleaded claims of direct infringement). (D.I. 20, ex. A at 5 (finding that complaints' "generic
references to methods that automatically animate lip synchronization and facial expression in
Defendants' 'computer and/or videogames' are too conclusory and too vague to state a claim for
relief' and amounted to "merely a restatement of [plaintiffs] vague allegation of infringement"))
The difference is that while the Court finds that these basic allegations are sufficient to meet the
minimal requirements of Form 18, they are not sufficient to state a plausible claim of induced
infringement pursuant to the general principles of Twombly and Iqbal and their progeny. See,
e.g., CriAgri, Inc. v. Pinnaclife, Inc., No. 5:11-cv-06635-LHK, 2013 WL 11569, at *2-4 (N.D.
Cal. Jan. 1, 2013).

11

18, 2014) (finding defendant's knowledge of infringing conduct of direct infringer insufficiently
pleaded where "Plaintiffs have simply identified the accused products and generically alleged
that their use [by Defendants' customers] somehow infringes the asserted patents."); cf Clouding
IP, LLC v. Rackspace Hosting, Inc., C.A. No. 12-675-LPS, 2014 WL 495752, at *3 (D. Del. Feb.

6, 2014) (denying motion to dismiss induced infringement claims where plaintiff alleged
sufficient facts to, inter alia, explain what it was that the direct infringers-who were customers
and end-users of defendant's products-did that amounted to the practicing of the patented
systems and methods); Walker Digital, LLC v. Facebook, Inc., 852 F. Supp. 2d 559, 564-66 (D.
Del. 20 12) (denying motion to dismiss induced infringement claims where complaint, which set
out how the direct infringers would use accused apparatuses in an infringing manner, sufficiently
identified the "allegedly infringing conduct," among other requirements).

3.

Specific Intent

A plaintiff must also allege facts to allow for the plausible inference that the indirect
infringer had the specific intent to induce infringement by the direct infringer (that is, that the
indirect infringer encouraged the direct infringement). See Pragmatus A V, LLC, 2013 WL
2295344, at *1; see also Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1292-93
(Fed. Cir. 2008) ("Thus, '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."') (emphasis added) (citation omitted).
The complaints do reference the contractual relationship between Defendants and the
game developers, and allege that Defendants encourage infringement through "creation and
dissemination of instructional materials, product manuals, and technical materials" to those
12

developers. (D.I. 16 at ,-r,-r 15, 20) These types of allegations could be sufficient to demonstrate
the encouragement of patent infringement-had, for example, Plaintiff pleaded sufficient facts
relating to how the game developers' actions are said to amount to infringement. But such facts
are absent here. Therefore, it means little to assert that Defendants encouraged something to
happen through engaging in certain actions (like the dissemination of instructional materials),
where little of substance is said about what that "something" is in the first place. See, e.g.,

MONEC Holding AG v. Motorola Mobility, Inc., 897 F. Supp. 2d 225,234 (D. Del. 2012)
(finding that, in the absence of sufficient factual allegations regarding defendant's knowledge
that direct infringer's activities were infringing, assertions that defendant's "selling, advertising,
supplying and instructing its ... customers on the use of the infringing product" were not, "on
their own," sufficient to set out a plausible allegation of specific intent to induce infringement);

see also Synopsys, Inc. v. ATopTech, Inc., Case No. C 13-cv-02965 SC, 2013 WL 5770542, at
*15-16 (N.D. Cal. Oct. 24, 2013) (finding that plaintiff had failed to "provide bare facts
supporting [the] claim" that defendant induced infringement "by dictating by its ... instructions
to users thereto the manner in which the software is used causing such infringement," and noting
that plaintiff"could ... have pled facts as to how Defendant's design or instruction were meant
to induce or encourage" users to directly infringe, but did not) (internal quotation marks and
citations omitted). Thus, the allegations as to this element are insufficient as well.

C.

Willful Infringement

To prove a case of 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

13

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). 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. See, e.g., IP Venture Inc. v. Lenovo Grp. Ltd., Civil Action
No. 11-588-RGA, 2013 WL 126276, at *2 (D. Del. Jan. 8, 2013); MONEC, 897 F. Supp. 2d at
236; St. Clair Intellectual Prop. Consultants, Inc. v. Hewlett-Packard Co., C.A. No. 10-425-LPS,
2012 WL 1134318, at *2 (D. Del. Mar. 28, 2012). 12 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 defendant. MONEC, 897 F. Supp. 2d at 236; Hewlett-Packard Co., 2012 WL
1134318, at *2. "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." MONEC, 897 F. Supp. 2d at 236
(quoting Hewlett-Packard Co., 2012 WL 1134318, at *3). In Hewlett-Packard Co., this Court
found that a complaint alleging willful infringement sufficiently demonstrated that link by
"listing explicit instances where [the defendant] was aware of both the patents-in-suit and that it
was either practicing or contemplating practicing technologies related to the patents-in-suit."
2012 WL 1134318, at *3.
Plaintiffs complaints assert that Defendants engaged in willful infringement of the

12

See also Cloud Farm Assocs., L.P. v. Volkswagen Grp. ofAm., Inc., C.A. No. 10502-LPS, 2012 WL 3069390, at *3 (D. Del. July 27, 2012) (noting that in order to plead a claim
of willful infringement, a plaintiff must meet the requirements of Rule 8 and Rule 11 (b) of the
Federal Rules of Civil Procedure, and must provide a "pleading equivalent to 'with a knowledge
of the patent and of his infringement."') (internal quotation marks and citation omitted).
14

patents-in-suit. (See, e.g., D.I. 16 at 7) 13 Plaintiff appears to support these allegations by
pointing to its communications with Defendants about the patents-in-suit beginning in January
2008. (!d.

at~~

15, 20)

The Court agrees with Defendants that these allegations make "no link whatsoever
between [Defendants' knowledge of the patents-in-suit based on the 2008 communications] and
any allegations that [Defendants] knew or should have known of any objectively-defined risk that
its actions infringed the patents-in-suit." (D.I. 19 at 10) Here, unlike the case in HewlettPackard Co., the complaints do not plead sufficient specific factual matter about what
Defendants or others were actually doing in order to plausibly indicate that, at any point,
Defendants were or should have been aware that they were committing patent infringement. See
Chalumeau Power Sys. LLC v. Alcatel-Lucent, Civil Action No. 11-1175-RGA, 2012 WL
6968938, at *2 (D. Del. July 18, 2012) (dismissing willful infringement claims where facts
pleaded did not plausibly support the conclusion that defendants "acted despite an objectively
high likelihood that its actions constituted infringement of a valid patent" or that they "knew or
should have known that their actions constituted infringement of a valid patent") (internal
quotation marks and citation omitted); cf Hand Held Prods., Inc. v. Amazon. com, Inc., C.A. No.
12-CV-00768-RGA-MPT, 2013 WL 507149, at *7 (D. Del. Feb. 6, 2013) (finding willful
infringement allegations sufficient where plaintiff pleaded facts that not only demonstrated that
defendants had prior knowledge of the patent-in-suit, but also facts indicating why "once aware
[of the patent], it was obvious their mobile applications risked infringement because those

13

Since Plaintiff does not allege willful infringement against 2K, reference to
"Defendants" in this subsection is to Rockstar and Take-Two.
15

applications use a smartphone to capture, read, and decode barcodes."). And Plaintiff, for its
part, does not specifically address Defendants' assertions regarding the insufficiency of its willful
infringement claims. (D.I. 22; D.I. 23 at 4)
Accordingly, the Court finds Plaintiff's allegations insufficient to plead a claim for willful
infringement.

III.

CONCLUSION
For the foregoing reasons, the Court recommends that Defendants' motions be

GRANTED-IN-PART (as to the claims of induced and willful infringement) AND DENIED-INpART (as to the claims of direct infringement). As to the induced infringement and willful
infringement allegations, as it is within this Court's discretion to grant leave to amend, see
Foman v. Davis, 371 U.S. 178, 182 (1962), because amendment should be allowed "whenjustice

so requires[,]" Fed. R. Civ. P. 15(a)(2), and because it is not clear that amendment would cause
undue prejudice or would be futile, the Court recommends that Plaintiff be given leave to file a
further amended complaint addressing the deficiencies outlined above. See, e.g., Pragmatus A V,
LLC, 2013 WL 2295344, at *2.

This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B), Fed. R.
Civ. P. 72(b)(1), 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 Henderson v. Carlson, 812 F.2d 874,
878-79 (3d Cir. 1987); Sincavage v. Barnhart, 171 F. App'x 924, 925 n.l (3d Cir. 2006).
The parties are directed to the Court's Standing Order for Objections Filed Under Fed. R.
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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.

Dated: March 17, 2014
Christopher J. Burke
UNITED STATES MAGISTRATE JUDGE

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