Intellectual Ventures I LLC et al v. Toshiba Corporation et al

Filing 184

MEMORANDUM OPINION. Signed by Judge Sherry R. Fallon on 8/17/15. (kjk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
INTELLECTUAL VENTURES I LLC
and INTELLECTUAL VENTURES II
LLC,

)
)
)
)
Plaintiffs,
)
)
v.
)
)
TOSHIBA CORPORATION, TOSHIBA
)
AMERICA, INC., TOSHIBA AMERICA )
ELECTRONIC COMPONENTS, INC., and )
TOSHIBA AMERCICA INFORMATION )
SYESTMS, INC.,
)
)
)
Defendants.

C.A. No. 13-453-SLR-SRF

MEMORANDUM OPINION
I.

INTRODUCTION
Presently before the court in this patent infringement action are the following motions:

(1) a motion for leave to file an amended complaint pursuant to Federal Rule of Civil Procedure
15(a)(2), filed by plaintiffs Intellectual Ventures I, LLC and Intellectual Ventures II, LLC
(collectively, "plaintiffs" or "Intellectual Ventures") (D.I. 116); and (2) a motion for leave to
amend the answers, defenses, and counterclaims pursuant to Federal Rule of Civil Procedure
15(a)(2), filed by defendants Toshiba Corporation, Toshiba America, Inc., Toshiba America
Electronic Components, Inc., and Toshiba America Information Systems, Inc. (collectively,
"defendants" or "Toshiba") (D.I. 115). For the following reasons, the court will grant plaintiffs'
motion for leave to file an amended complaint. Defendants' motion for leave to file an amended
answer is denied as moot. Defendants shall file a responsive pleading to the amended complaint
as permitted by Fed. R. Civ. P. 15(a)(3).

II.

BACKGROUND
On March 20, 2013, plaintiffs filed suit in this district against defendants alleging

infringement often patents: U.S. Patent Nos. 5,500,819 ("the '819 patent"), 5,568,431 ("the '431
patent"), 5,600,606 ("the '606 patent"), 5,687,132 ("the '132 patent"), 1 5,701,270 ("the '270
patent"), 5,829,016 ("the '016 patent"), 6,058,045 ("the '045 patent"), 2 5,938,742 ("the '742
patent"), 7,836,371 ("the '371 patent"), and 6,618,788 ("the '788 patent") (collectively, the
"patents-in-suit"). (D.1. 1) On September 3, 2014, the court dismissed plaintiffs' allegations of
willful infringement, ruling that the notice allegations in the original complaint were "general
allegation[s] about 'discussions' or 'a presentation' ... insufficient to withstand a motion to
dismiss." (D.I. 33 at 9; D.I. 34) Pursuant to the scheduling order, the deadline to amend
pleadings passed on April 24, 2015. (D.I. 55) The motions presently pending before the court
were filed on or before the deadline for amended pleadings set forth in the scheduling order.
Fact discovery is scheduled to close on February 19, 2016. (Id)

III.

LEGAL STAND ARD
Rule 15(a)(2) of the Federal Rules of Civil Procedure 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."
Fed. R. Civ. P. 15(a)(2). 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 Secs.
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. Arco, 921F.2d484, 487 (3d Cir. 1990). In the absence
1

The parties stipulated to dismiss the '132 patent, and the court granted the stipulation on July
13, 2015. (D.I. 175) Therefore, the '132 patent is no longer at issue in the case.
2
The parties stipulated to dismiss the '045 patent, and the court granted the stipulation on July 2,
2015. (D .I. 171) Therefore, the '045 patent is no longer at issue in the case.
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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.

IV.

ANALYSIS
A.

Motion to Amend the Complaint

1.

Undue Delay and Prejudice

The court does not find that plaintiffs proposed amended complaint would cause undue
delay or prejudice. First, plaintiffs' motion for leave to amend was filed within the deadline set
forth in the scheduling order for amending pleadings, which generally precludes a finding of
undue delay. See Invensas Corp. v. Renesas Elecs. Corp., C.A. No. 11-448-GMS-CJB, 2013
WL 1776112, at *3 (D. Del. Apr. 24, 2013) (granting plaintiffs motion to amend and finding no
undue delay when plaintiffs filed on the last day set by the scheduling order for the filing of
amendments to pleadings); Butamax Advanced Biofuels LLC v. Gevo, Inc., C.A. No. 11-54-SLR,
2012 WL 2365905, at *2 (D. Del. June 21, 2012) (holding that a motion to amend filed on the
deadline for amended pleadings was "filed timely and, therefore, there can be no unfair prejudice
to defendant"). Second, the case is still in its early stages, and fact discovery is not scheduled to
close until February 19, 2016. Finally, the original complaint contained allegations of
willfulness, and defendants have been aware of those claims since the onset of the case. (D.I. 34;
D.I. 55)
Plaintiffs' purported failure to explain the eight-month delay between dismissal of the
willfulness claims from the original complaint and the filing of the proposed amended claims is
insufficient to deny leave to amend under the facts of the present case. "The mere passage of
time does not require that a motion to amend a complaint be denied on grounds of delay."

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Cureton v. Nat'! Collegiate Athletic Ass 'n, 252 FJd 267, 273 (3d Cir. 2001). Moreover,

defendants do not claim that they will be prejudiced by the proposed amendment, let alone
"show that [they were] unfairly disadvantaged or deprived of the opportunity to present facts or
evidence which [they] would have offered had the ... amendments been timely." Bechtel v.
Robinson, 886 F.2d 644, 652 (3d Cir. 1989) (internal quotations omitted); see also LifePort Scis.
LLC v. Endologix Inc., C.A. No. 12-1791-GMS, D.I. 105 at (D. Del. July 29, 2015) ("Even

assuming the plaintiff is correct that the defendant could have filed its motion sooner, the court
cannot say the delay was undue ... when this was explicitly contemplated as a possibility.");
NHB Assignments LLC v. Gen. Atl. LLC, C.A. No. 12-1020-SLR, 2013 WL 4630022, at *3 (D.

Del. Aug. 29, 2013).
The cases relied upon by defendants are distinguishable because the motions to amend in
the cited cases were filed after the close of discovery. See USX Corp. v. Barnhart, 395 F.3d 161,
167-68 (3d Cir. 2004) (three year delay before proposed amendment filed); Lorenz v. CSX Corp.,
1F.3d1406, 1414 (3d Cir. 1993) (nearly two year delay before leave to amend was filed); Cot'n
Wash, Inc. v. Henkel Corp., 56 F. Supp. 3d 613, 621 (D. Del. 2014) (motion to amend was not

filed until after the close of fact discovery); Rose Hall, Ltd v. Chase Manhattan Overseas
Banking Corp., 93 F.R.D. 858, 863 (D. Del. 1982) (proposed amendment had not been pleaded

in the original or first amended pleading, and almost three years had passed since
commencement of the action).

2.

Futility

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
Int1, Inc., 443 F. Supp. 2d 631, 634 (D. Del. 2006). The standard for assessing futility of

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amendment under Rule 15(a) is the same standard oflegal sufficiency applicable under Rule
12(b)(6). Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). Specifically, the amended
pleading must fail to state a claim upon which relief could be granted even after the district court
"take[s] all pleaded allegations as true and view[s] them in a light most favorable to the
plaintiff." Winer Family Trust v. Queen, 503 F.3d 319, 331 (3d Cir. 2007); see also Great W

Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 175 (3d Cir. 2010).
In the present matter, plaintiffs seek leave to amend the complaint to add causes of action
for willful infringement. The Federal Circuit has set forth a two-pronged standard for
establishing willful infringement, an objective prong and a subjective prong. With respect to the
former, "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. The
state of mind of the accused infringer is not relevant to this objective inquiry." In re Seagate

Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (internal citations omitted). If the objective
prong is satisfied, the patentee must next establish that "this objectively-defined risk (determined
by the record developed in the infringement proceeding) was either known or so obvious that it
should have been known to the accused infringer." Id. This subjective prong hinges on the fact
finder's assessments of the credibility of witnesses. LG Elecs. US.A., Inc. v. Whirlpool Corp.,
798 F. Supp. 2d 541, 557 (D. Del. 2011). "The drawing of inferences, particularly in respect of
an intent-implicating question such as willfulness, is peculiarly within the province of the fact
finder that observed the witnesses." Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209,
1225 (Fed. Cir. 2006) (citation omitted).
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."

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St. Clair Intellectual Prop. Consultants, Inc. v. Hewlett-Packard Co., C.A. No. 10-425-LPS,
2012 WL 1134318, at *2-3 (D. Del. Mar. 28, 2012). "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 [a]re called to the
attention" of the defendants. MONEC Holding AG v. Motorola Mobility, Inc., 897 F. Supp. 2d
225, 236 (D. Del. 2012).
The parties agree that plaintiffs' proposed amendments for the '819, '606, '270, and '788
patents provide sufficient details to show that the patents-in-suit were called to defendants'
attention. 3 (D.I. 137 at 6) Instead, defendants allege that the amended complaint fails to
sufficiently plead the objective recklessness prong of the willfulness inquiry because there is no
allegation in the amended complaint of "deliberate infringement," or that the risks of
infringement were either known or so obvious that they should have been known. (Id)
In dismissing the willfulness contentions in the original complaint, the court was not
satisfied with the general manner that plaintiffs, who own hundreds of patents, had averred to
non-specific "discussions" and "presentations" to establish knowledge of defendants'
infringement. Intellectual Ventures I LLC v. Toshiba Corp., 66 F. Supp. 3d 495, 500 (D. Del.
2014). Moreover, the court concluded that willfulness could not rest on a letter written to
defendants only one day before the complaint was filed. Id
The amended complaint sufficiently pleads the objective recklessness prong with respect
to the patents-in-suit. The amended complaint contains allegations that defendants disregarded
the risk of infringement by continuing to disseminate the allegedly infringing products after

3

The parties dispute the sufficiency of the allegations regarding knowledge of the '371 patent,
which is discussed, infra, in greater detail.
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receiving notice of the patents,4 which is sufficient to establish an inference that defendants knew
or should have known that the conduct would likely infringe a patent. See Netgear, Inc. v.

Ruckus Wireless, Inc., 852 F. Supp. 2d 470, 477 (D. Del. 2012) (inferring from the amended
complaint that defendant knew or should have known that its conduct would likely infringe a
valid patent, and declining to require more detail with respect to willful infringement claim than
is required by Form 18). Specifically, the amended complaint sets forth the following
allegations:
PATENT-IN-SUIT
'819 patent

DETAILS IN AMENDED COMPLAINT

•
•

•

•
•
•
•

'606 patent

•
•

•
~

•
•
•

'270 patent

•
•
•

•
•
•

'788 patent

•
•
•
•
•

Informed of patent on 9/7/10
Claim chart on 6/9/11
Presentation on claim chart on 6/30/11
Infringement notice letter 3/19/13
Complaint served 3/20/13
First set of interrogatories on Toshiba 11114/14
Infringement contentions 4/2/15
Informed of patent on 917/10
Claim chart on 6/9/11
Presentation on claim chart on 6/30/11
Infringement notice letter 3/19/13
Complaint served 3/20/13
First set of interrogatories on Toshiba 11/14/14
Infringement contentions 4/2/15
Informed of patent on 917/10
Presentation on claims in comparison to accused products on
12/21110
Infringement notice letter 3/19/13
Complaint served 3/20/13
First set of interrogatories on Toshiba 11114/14
Infringement contentions 4/2/15
Presentation on claim chart on 11114/12
Infringement notice letter 3/19/13
Complaint served 3/20/13
First set of interrogatories on Toshiba 11114/14
Infringement contentions 4/2/15

(D.I. 116, Ex. 1 at irir 28-29, 31-32, 48-49, 51-52, 68-69, 71-72, 108-09, 111-12, 118-19, 12122)

4

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(D.I. 116, Ex. 1) Therefore, plaintiffs' proposed amendment with respect to the '819 patent, the
'606 patent, and the '270 patent is granted. The court will next turn to defendants' specific
concerns regarding the sufficiency of the amended pleading as it pertains to the '371 patent and
the '788 patent.
With respect to the '371 patent, defendants contend that the allegations in the amended
complaint are insufficient because plaintiffs failed to remedy the deficiencies in the original
complaint by providing more than general allegations regarding discussions and presentations.
(D.I. 137 at 6) However, the proposed amended complaint contains sufficiently more detail than
the original complaint regarding defendants' notice of the '371 patent. (D.I. 116, Ex. 2 at if 110)
Specifically, the amended complaint alleges that plaintiffs "informed [defendants] of the '371
patent on or about September 7, 2010," "provided [defendants] with a presentation discussing the
'371 patent and [defendants'] system-on-chip (SoC) products as an attachment to an email" on
June 30, 2011, "presented the presentation to [defendants] at a meeting in Tokyo on June 30,
2011," and notes that defendants have "not identified any bases for [their] assertions of
noninfringement" in response to plaintiffs' interrogatories. (Id) The contentions in the amended
complaint are similar to the facts set forth in Walker Digital, LLC v. Facebook, Inc. because
plaintiffs discussed the '371 patent in the context of defendants' accused system-on-chip
products. 852 F. Supp. 2d 559, 568 (D. Del. 2012). These allegations are sufficiently specific to
warrant granting the motion to amend as it pertains to the '3 71 patent.
Likewise, plaintiffs' proposed amendment to add a cause of action for willful
infringement of the '788 patent is not futile. In the proposed amended pleading, plaintiffs allege
"Intellectual Ventures II is the exclusive owner of all rights, titles, and interest in the .... '788

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patent, and has the right to bring this suit to recover damages for any current or past
infringement" of the '788 patent. (D.I. 116, Ex. 1 at~ 25) At this stage of the litigation, the
court must "take all pleaded allegations as true and view[s] them in a light most favorable to the
plaintiff." Winer Family Trustv. Queen, 503 F.3d 319, 331 (3d Cir. 2007). Accordingly,
defendants' contention that plaintiffs did not own the patent at the time of the presentation is
insufficient to warrant denial of the motion to amend at this stage of the proceedings. In
addition, ownership of the patent would not seem to factor into an analysis that is concentrated
on whether defendants knew or should have known of the risk of infringement of the patent.
Defendants' contentions regarding ownership of the patent involve factual inquiries to be
resolved following discovery. See Vink v. Hendrikus Johannes Schijf Rolkan NV, 839 F.2d 676,
678 (Fed. Cir. 1988).

B.

Motion to Amend the Answer, Defenses, and Counterclaims

Based on the foregoing analysis, defendants' motion for leave to amend the answer,
affirmative defenses, and counterclaims is denied as moot. Defendants will have the opportunity
to file their pleading in response to the amended complaint.

V.

CONCLUSION
For the foregoing reasons, plaintiffs' motion for leave to amend (D.I.116) is granted.

Defendants' motion for leave to amend their answers, defenses, and counterclaims (D.I. 115) is
denied as moot. An Order consistent with this Memorandum Opinion shall issue.
This Memorandum Opinion is filed pursuant to 28 U.S.C. § 636(b)(l)(A), Fed. R. Civ. P.
72(a), and D. Del. LR 72.l(a)(2). The parties may serve and file specific written objections
within fourteen (14) days after being served with a copy of this Memorandum Opinion. Fed. R.
Civ. P. 72(a). The objections and responses to the objections are limited to ten (10) pages each.

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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 court's website,
www.ded.uscourts.gov.

Dated: August 17, 2015
ES MAGISTRATE JUDGE

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