ReefEdge Networks LLC v. Juniper Networks Inc.

Filing 103

MEMORANDUM OPINION re 16 MOTION to Dismiss Based upon ReefEdge's Claims for Willful Infringement and Amended Claims for Indirect Infringement. Signed by Judge Leonard P. Stark on 3/21/2014. (rpg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
REEFEDGE NETWORKS, LLC,
Plaintiff,
V.

C.A. No. 13-412-LPS
JUNIPER NETWORKS, INC.,
Defendant.

Brian E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, DE.
Marc A. Fenster, Alexander C. Giza, Andrew D. Weiss, RUSS AUGUST & KABAT,
Los Angeles, CA
Attorneys for Plaintiff.

Jack B. Blumenfeld, Michael J. Flynn, MORRIS, NICHOLS, ARSHT & TUNNELL LLP,
Wilmington, DE.
Morgan Chu, Jonathan S. Kagan, IRELL & MANELLA LLP, Los Angeles, CA.
Douglas J. Dixon, Timothy J. Heggem, Nima Hefazi, IRELL & MANELLA LLP,
Newport Beach, CA.
Attorneys for Defendant.

MEMORANDUM OPINION

March 21, 2014
Wilmington, Delaware

STARK, U.S. District Judge:

Presently before the Court is Defendant Juniper Networks, Inc.'s ("Juniper") Motion to
Dismiss PlaintiffReeffidge Networks, LLC's ("Reeffidge") Claims for Willful Infringement and
Amended Claims for Indirect Infringement. (D.I. 16) The Court held oral argument on the
motion on December 18, 2013. (D.I. 66) ("Tr.") For the reasons stated below, the Court will
grant the motion.
I.

BACKGROUND

On March 13, 2013, Reeffidge Networks, LLC ("Reeffidge") filed its original Complaint
against Juniper, asserting claims for direct and indirect infringement of U.S. Patents Nos.
6,633,761 (the "'761 patent"), 6,975,864 (the "'864 patent"), and 7,197,308 (the "'308 patent").
(D.I. 1) On May 3, Juniper moved to dismiss Reeffidge's claims for indirect and joint
infringement. (D.I. 9) On May 20, Reeffidge responded to Juniper's motion to dismiss by filing
its First Amended Complaint ("PAC"). (D.I. 12) Although the PAC dropped Reeffidge's
contributory and joint infringement claims, it reasserted Reeffidge's inducement allegations. (!d.
at~~ 15, 22, 29) The FAC also added claims for willful infringement. (!d. at~~ 16, 23, 30) 1

Juniper now moves to dismiss Reeffidge's claims for willful infringement and amended claims
for induced infringement. (D.I. 16)
In the FAC, Reeffidge alleges that Juniper had pre-suit knowledge of the patents-in-suit
because Juniper's Deputy General Counsel and Vice President, Intellectual Property, Meredith
McKenzie, had knowledge of the patents-in-suit. (D.I. 12

at~

10) According to Reeffidge, Ms.

McKenzie is responsible for managing all aspects of intellectual property at Juniper, including
1

The PAC asserts three claims for direct, induced, and willful infringement. (D.I. 12)

licensing, patents, and litigation. (!d.) The FAC alleges that, prior to joining Juniper, Ms.
McKenzie was Senior Director, Intellectual Property at Symantec Corporation ("Symantec").

(!d.

at~

9) According to ReefEdge, while she worked for Symantec, Ms. McKenzie marketed

the patents-in-suit to ReefEdge in a process that ultimately led to ReefEdge's acquisition of the
patents-in-suit from Symantec. (!d.) Additionally, ReefEdge alleges that after Ms. McKenzie
joined Juniper, representatives of ReefEdge made several attempts to meet with Juniper
regarding licensing the patents-in-suit. (!d. at ~16) Based on these allegations, ReefEdge argues
that Juniper willfully infringed the patents-in-suit because Ms. McKenzie's knowledge of the
patents-in-suit may be imputed to Juniper. (D.I. 20 at 1) ReefEdge also alleges that Juniper
induces infringement of the patents-in-suit by advertising and providing technical support
services for its allegedly infringing products. (D .I. 12 at ~~ 15, 22, 2 9)

II.

LEGALSTANDARDS
Pursuant to Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a "short

and plain statement of the claim showing that the pleader is entitled to relief." Even though a
plaintiff need not allege detailed factual information, in order to survive a motion to dismiss for
failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its
face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (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. See id. at 663. At the motion to dismiss stage, the court "must accept as
true the factual allegations in the complaint and all reasonable inferences that can be drawn
therefrom." Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996). However, the court "need not accept

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as true threadbare recitals of a cause of action's elements, supported by mere conclusory
statements." Iqbal, 556 U.S. at 678.

III.

DISCUSSION
A.

Willful Infringement

To prove a cause of action for willful infringement, "a patentee must show by clear and
convincing evidence that the infringer acted despite an objectively high likelihood that its actions
constituted infringement of a valid patent." In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed.
Cir. 2007). Once this first prong is shown, "the patentee must also demonstrate that this
objectively-defined risk ... was either known or so obvious that it should have been known to
the accused infringer." !d. At the pleadings stage, plaintiffs alleging willful infringement must
plead facts giving rise to "at least a showing of objective recklessness of the infringement risk."

!d.; see also St. Clair Intellectual Prop. Consultants, Inc. v. Hewlett-Packard Co., 2012 WL
1134318, at *2-3 (D. Del. Mar. 28, 2012). In addition to pleading knowledge ofthe patents-in
suit, "[t]he 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 Holding AG v. Motorola Mobility, Inc.,
897 F.Supp.2d 225, 236 (D. Del. 2012) (internal quotation marks omitted).
In its FAC, ReefEdge alleges that "Juniper's Deputy General Counsel and Vice President,
Intellectual Property," Meredith McKenzie, had knowledge of the patents-in-suit due to her
previous employment with Symantec Corporation ("Symantec"). (D.I. 12

at~

10) At the time

that Ms. McKenzie worked for Symantec, Symantec owned the patents-in-suit. (!d.

at~~

Juniper alleges that Ms. McKenzie was responsible for marketing the patents-in-suit to

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9-1 0)

ReefEdge. (!d. at '1!9) Because Ms. McKenzie is now allegedly responsible for managing all
aspects of Juniper's intellectual property, ReefEdge continues, her knowledge may be attributed
to Juniper. (!d. at 10-11)
ReefEdge makes no specific allegations linking the knowledge Ms. McKenzie may have
acquired from her work at Symantec to her work at Juniper. For instance, ReefEdge does not
allege that Ms. McKenzie performed any analysis of Juniper's products or patent portfolio or
even that Deputy General Counsels generally perform such tasks. The only allegation in
ReefEdge's FAC that touches on Ms. McKenzie's work states that "[o]n information and belief,
Ms. McKenzie is responsible for managing all aspects of intellectual property at Juniper,
including licensing." (!d. at 'Ill 0) ReefEdge does not allege that Ms. McKenzie was aware of
Juniper's allegedly infringing products, which were on the market for years before Ms.
McKenzie joined Juniper. (D.I. 17 at 7) Furthermore, the FAC does not "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 Holding AG, 897 F.Supp.2d at 236. In the absence of any allegation in the FAC that
Ms. McKenzie was involved with the accused product, the Court concludes it would not be
reasonable to infer that the "risks of infringement were either known or were so obvious that they
should have been known" to Ms. McKenzie and Juniper. !d.
ReefEdge also alleges that it made repeated attempts to meet with Juniper to discuss
licensing. (D.I. 12 at '1!'1!16, 23, 30) However the FAC is devoid of any facts alleging that these
attempts included identifying the patents-in-suit or the accused products. (!d. at '1!'1!16, 23, 30)
ReefEdge cites this Court's decisions in SoftView, 2012 WL 3061027, and Fairchild

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Semiconductor Corp. v. Power Integrations, Inc., 935 F. Supp.2d 772 (D. Del. 2013), for the

proposition that this Court has upheld allegations of willful infringement with fewer facts than
the facts alleged here. The Court disagrees. The plaintiff in Soft View alleged three separate
bases for the defendant's pre-suit knowledge of the patents, including the fact that defendant's
subsidiary cited the patent-in-suit in one of its own patent applications. See 2012 WL 3061027,
at *5. In Fairchild Semiconductor, the defendant alleged and plaintiff did not contest that
plaintiff had actual knowledge ofthe patent. See 935 F. Supp.2d at 777 n.7. Reeffidge's factual
allegations do not reach the level of particularity that the allegations in Soft View or Fairchild
Semiconductor reached.

Ultimately, Reeffidge has not pled sufficient facts to successfully allege Juniper's pre-suit
knowledge of the patents-in-suit or that Juniper knowingly acted with an objectively high
likelihood of infringement. Thus, Reeffidge' s willful infringement claims will be dismissed.
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." Liability under§ 271(b) "requires knowledge that the induced
acts constitute patent infringement." Global-Tech Appliances, Inc. v. SEB SA., 131 S. Ct. 2060,
2068 (20 11 ). This Court has held that "the filing of a complaint is sufficient to provide
knowledge of the patents-in-suit for purposes of stating a claim for indirect infringement
occurring after the filing date." SoftView, 2012 WL 3061027, at *7. Additionally, "inducement
requires that the alleged infringer knowingly induced infringement and possessed specific intent
to encourage another's infringement." DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed.
Cir. 2006). "To survive a motion to dismiss, therefore, [Plaintiff's] amended complaint[] must

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contain facts plausibly showing that [the Defendant] specifically intended [its] customers to
infringe the [patents-in-suit] and knew that the customer's acts constituted infringement." In re

Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir.
2012).
ReefEdge alleges that Juniper induces infringement by advertising and providing
technical support services for allegedly infringing products. (D.I. 12

at~~

15, 22, 29) But

marketing activities are not sufficient to constitute induced infringement unless the marketing
activities are coupled with actual knowledge of the patents-in-suit and awareness that the accused
products infringe the patent-in-suit. Compare Tarkus Imaging, Inc. v. Adobe Sys., Inc., 2012 WL
2175788, at *4 (D. Del. June 14, 2012) (finding that because Adobe allegedly had knowledge of
patent-in-suit and "was aware that its accused products infringed the patent-in-suit ... a
reasonable juror could ... conclude that Adobe knew it was inducing users of its accused
products to infringe"), with MONEC Holding AG, 897 F. Supp. 2d at 234 (assuming defendant
had actual knowledge ofpatents-in-suit, "[a]llegations of marketing activities ... 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").
As discussed above, ReefEdge's FAC does not adequately plead facts showing that
anyone at Juniper had both pre-suit knowledge of the patents-in-suit and the knowledge that
these patents were being infringed. Even if Ms. McKenzie's pre-suit knowledge of the patentsin-suit can be imputed to Juniper, the FAC does not allege any facts showing that Ms. McKenzie
had any knowledge ofthe accused products. Hence, the FAC fails adequately to allege that prior
to the filing of this suit, Juniper specifically intended its customers to infringe the patents-in suit.

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Accordingly, the FAC's claims for induced infringement prior to the initiation of this lawsuit will
be dismissed.
ReefEdge also alleges that Juniper continues to induce infringement despite having actual
post-filing knowledge of the patents-in-suit and the accused devices. (See D.I. 12

at~~

15, 22,

29) In the FAC, ReefEdge alleges that Juniper encourages "the use of its products and services
in an infringing manner" and then goes on to cite to marketing material directed at using the
accused products in an allegedly infringing manner. (!d.) ReefEdge also alleges that Juniper
induces infringement through its technical support services by "instructing its customers to use
its products in an infringing way." (!d.)
In Telecomm Innovations, LLC v. Ricoh Co., Ltd., Judge Robinson faced a similar issue.

See 2013 WL 4017096 (D. Del. Aug. 6, 2013). There, the complaint alleged that the defendant
induced infringement by
providing those customers and others with technical support and
services, as well as detailed explanations, instructions and
information as to arrangements, applications and uses of the
[a]ccused [i]nstrumentalities that promote and demonstrate how to
use the [a]ccused [i]nstrumentalities in a manner that would
infringe the '519 patent.

!d. at *3. Judge Robinson held that the allegation of marketing activity was sufficiently
particular to survive a motion to dismiss. !d. at *4 ("[P]laintiff's complaint alleges that
defendants have the requisite intent by encouraging their customers to infringe ... whether
through marketing, or support and instructions.") (emphasis added).
The same analysis leads to the same conclusion here. ReefEdge's allegations of Juniper's
marketing activities and instructions to customers to use the accused products in an infringing

7

manner, even after Juniper had actual notice of the alleged infringement by specific accused
products as a result of the filing of the original complaint, pleads specific intent to induce
infringement with sufficient particularity.
Accordingly, given the factual allegations regarding the customers' direct infringement,
defendant's knowledge of the patents-in-suit, and defendant's specific intent to induce
infringement, plaintiff has adequately alleged that Juniper induced direct infringement after the
filing of the instant suit.

IV.

CONCLUSION
For the reasons stated above, Juniper's motion is GRANTED IN PART and DENIED IN

PART. Willful infringement and pre-suit induced infringement will be dismissed from this case.
The case against Juniper will proceed only on the direct infringement and post-filing induced
infringement allegations. An appropriate Order follows.

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