Rothschild Mobile Imaging Innovations LLC v. Mitek Systems Inc. et al

Filing 51

MEMORANDUM ORDER granting 13 MOTION to Dismiss for Failure to State a Claim (Motion to Dismiss Willfulness Allegations) filed by JPMorgan Chase Bank N.A., Mitek Systems Inc., JPMorgan Chase & Co.. Signed by Judge Sue L. Robinson on 3/30/2015. (fms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ROTHSCHILD MOBILE IMAGING
INNOVATIONS, LLC,
Plaintiff,

v.
MITEK SYSTEMS, INC.,
JPMORGAN CHASE & CO., AND
JPMORGAN CHASE BANK, N.A.,
Defendants.

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Civ. No. 14-617-SLR

MEMORANDUM ORDER
At Wilmington this~day of March, 2015, having reviewed defendants' motion
to dismiss plaintiff's claims of willful patent infringement (D.I. 13), and the papers filed in
connection therewith;
IT IS ORDERED that defendants' motion to dismiss plaintiff's claims of willful
patent infringement (D.I. 13) is granted, for the reasons that follow:
1. Background. On May 16, 2014, plaintiff Rothschild Mobile Imaging
Innovations LLC ("Rothschild") filed the instant action against defendant Mitek Systems
Inc. ("Mitek") alleging infringement of United States Patent Nos. 7,450, 163, "7,456,872,
7,991,792, and 7,995,118 ("the patents-in-suit"). (D.I. 1) On June 12, 2014, plaintiff
filed an amended complaint, adding JPMorgan Chase & Co., and JPMorgan Chase
Bank N.A. as defendants (collectively with Mitek, "defendants"), and infringement
allegations involving additional software products. (D.I. 7) The court has jurisdiction
pursuant to 28 U.S.C. §§ 1331 and 1338(a).

2. Standard. A motion filed under Federal Rule of Civil Procedure 12(b )(6) tests
the sufficiency of a complaint's factual allegations. Bell At/. Corp. v. Twombly, 550 U.S.
544, 555 (2007); Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A complaint must
contain "a short and plain statement of the claim showing that the pleader is entitled to
relief, in order to give the defendant fair notice of what the ... claim is and the grounds
upon which it rests." Twombly, 550 U.S. at 545 (internal quotation marks omitted)
(interpreting Fed. R. Civ. P. 8(a)). Consistent with the Supreme Court's rulings in

Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Third Circuit requires a twopart analysis when reviewing a Rule 12(b)(6) motion.

Edwards v. A.H. Cornell & Son,

Inc., 610 F.3d 217, 219 (3d Cir. 2010); Fowlerv. UPMC Shadyside, 578

F.~ld

203, 210

(3d Cir. 2009). First, a court should separate the factual and legal elements of a claim,
accepting the facts and disregarding the legal conclusions. Fowler, 578 F.~ld. at 21011. Second, a court should determine whether the remaining well-pied facts sufficiently
show that the plaintiff "has a 'plausible claim for relief."' Id. at 211 (quoting lqbal, 556
U.S. at 679). As part of the analysis, a court must accept all well-pleaded factual
allegations in the complaint as true, and view them in the light most favorable to the

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plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536
U.S. 403, 406 (2002); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
In this regard, a court may consider the pleadings, public record, ordeirs, exhibits
attached to the complaint, and documents incorporated into the complaint by reference.

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Oshiver v. Levin,
Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n.2 (3d Cir. 1994).

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3. The court's determination is not whether the non-moving party "will ultimately
prevail" but whether that party is "entitled to offer evidence to support the claims."
United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295., 302 (3d Cir.
2011). This "does not impose a probability requirement at the pleading

sta~1e,"

but

instead "simply calls for enough facts to raise a reasonable expectation that discovery
will reveal evidence of [the necessary element]." Phillips, 515 F.3d at 234 (quoting
Twombly, 550 U.S. at 556). The court's analysis is a context-specific task ri3quiring the
court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 663-64.

4. Analysis.
To establish 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. The state of mind of the accused infringer is
not relevant to this objective inquiry. If this threshold objective standard is
satisfied, the patentee must also demonstrate 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 tho
accused infringer.
In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (citatiion omitted). An
objectively high likelihood that the infringer's actions constitute infringe1ment of a valid
patent equates with a showing of objective recklessness. Id.; see also Minks v. Polaris
Indus., 546 F.3d 1364, 1380 (Fed. Cir. 2008). In making these determinations, the court
must examine the totality of the circumstances. Broadcom Corp. v. Qualcomm Inc., 543
F.3d 683, 700 (Fed. Cir. 2008).
5. The Federal Circuit has further explained that,
in ordinary circumstances, willfulness will depend on an infringer's
prelitigation conduct. It is certainly true that patent infringement is an
ongoing offense that can continue after litigation has commenced.

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However, when a complaint is filed, a patentee must have a good faith
basis for alleging willful infringement. Fed. R. Civ. Pro. 8, 11 (b }. So a
willfulness claim asserted in the original complaint must necessarily be
grounded exclusively in the accused infringer's pre-filing conduct. By
contrast, when an accused infringer's post-filing conduct is reckless, a
patentee can move for a preliminary injunction, which generally provides
an adequate remedy for combating post-filing willful infringement. A
patentee who does not attempt to stop an accused infringer's activities in
this manner should not be allowed to accrue enhanced damages based
solely on the infringer's post-filing conduct. Similarly, if a patentee
attempts to secure injunctive relief but fails, it is likely the infrin1~ement did
not rise to the level of recklessness.

Seagate, 497 F.3d at 1374 (emphasis added).
6. In its original complaint, plaintiff alleged, that "Mitek had knowledge of the
[patents-in-suit] and the allegations of infringement at least since filing of this lawsuit,
when Mitek was placed on actual notice of infringement," and requested a judgment that
Mitek's infringement was willful. (D.I. 1 at 1f1f 21, 26, 31, 36)

The amended complaint

alleges:
On information and belief, Mitek has had knowledge of the [patents-in-suit]
and the allegations of infringement since at least the filing of this lawsuit,
when Mitek was placed on actual notice of infringement, and Chase Bank
has had knowledge of the [patents-in-suit] and the allegations of
infringement since at least the filing of this First Amended Complaint.
Defendants' infringement of the [patents-in-suit] ha[s] been and continues
to be willful and deliberate as of the date the Defendants were placed on
actual notice of infringement.
(D.I. 7at1f1f 26, 31, 37, 42)
7. In Aeritas, LLC v. Alaska Air Grp., Inc., 893 F. Supp. 2d 680 (D. Del. 2012),
the court explained that
assertions of willful infringement do not pass muster under Rule 8, given:
(a) the apparent recognition by [plaintiff] that it had no good faith basis to
assert willful infringement for [defendant]'s prelitigation conduct; (b) the
Federal Circuit's recognition that willfulness ordinarily depends on an
infringer's prelitigation conduct; and (c) the fact that the burden to prove
willful infringement includes more than mere knowledge of the patent.

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Id. at 685. The court concludes that the mere notice of the charge of infring ement
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gleaned from the complaint does not pass muster for a willfulness claim under Rule 8.
Moreover, the complaint contains no facts establishing "objective recklessness of the
infringement risk." See e.g., Courtesy Products, L.L.C. v. Hamilton 81'9ach Brands, Inc.,
Civ. No. 13-2012-SLR, 2014 WL 5780877, at *5 (D. Del. Nov. 5, 2014) (citation
omitted).
8. Conclusion. For the aforementioned reasons, defendant's motion to dismiss
the allegations of willfulness (D.I. 13) is granted.

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United States

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istrict Judge