Elm 3DS Innovations LLC v. SK hynix America Inc. et al.

Filing 114

MEMORANDUM ORDER re 65 REPORT AND RECOMMENDATION is ADOPTED; 24 MOTION to Dismiss is DENIED. Signed by Judge Leonard P. Stark on 3/31/16. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ELM 3DS INNOVATIONS , LLC, a Delaware
limited liability company,
Plaintiff,
Civil Action No. 14-1432-LPS-CJB

v.
SK HYNIX INC., SK HYNIXAMERICA, INC.,
HYNIXSEMICONDUCTOR
MANUFACTURING AMERICA, INC. , and SK
HYNIX MEMORY SOLUTIONS INC.,
Defendants.

MEMORANDUM ORDER
WHEREAS, Magistrate Judge Burke issued a 10-page Report and Recommendation
("Report") (D.I. 65), dated October 16, 2015, recommending that Defendants' Motion to Dismiss
Plaintiff's Pre-Suit Induced Infringement Claims ("Motion") (D.I. 24) be denied;
WHEREAS , on November 2, 2015 , Defendants objected to the Report ("Objections")
(D.I. 70), arguing that the Report erred in finding that Plaintiff's factual allegations provided a
plausible basis for inferring induced infringement because it incorrectly concluded that
Defendants had actual knowledge of the '239 patent before this lawsuit was filed;
WHEREAS, on November 19, 2015, Plaintiff responded to the Objections (D.I. 83),
arguing that (1) the Report made neither factual nor legal errors and (2) Plaintiff's complaint
alleged facts sufficient to support a plausible allegation of induced infringement;
WHEREAS , the Court has considered Defendant' s Motion de nova, as it presents casedispositive issues, see 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b)(3), and has further reviewed

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all of the pertinent filings;
NOW THEREFORE, IT IS HEREBY ORDERED that:
1.

Defendant' s Objections are OVERRULED, Judge Burke's Report is ADOPTED,

and Defendants' Motion (D.I. 24) is DENIED.
2.

Defendants argue that the Report's actual knowledge analysis improperly gave

weight to Defendants' competitors' knowledge of the patents-in-suit. The Court disagrees.
Defendants are correct that numerous cases have found that factual allegations based on general
participation in a relevant market may not form a basis for inferring actual knowledge of a
particular patent. See, e.g., EON Corp. IP Holdings, 802 F. Supp. 2d 527, 533-534 (declining to
infer actual knowledge from fact that sophisticated market participant would likely have learned
of patent through reasonable due diligence); MONEC Holding, 897 F. Supp. 2d 225, 233
(participation as "reasonable economic actor[s] and competitor[s)" in same technologically-based
industry is insufficient to establish actual knowledge); Soft View LLC v. Apple Inc. , 2012 WL
3061027, at *6 (D. Del. July 26, 2012) (widespread knowledge of third-party litigation involving
patent does not make actual knowledge plausible). Yet every case must be evaluated on its own
merits. Here, Plaintiff argues not that participation in the relevant market would have given
Defendants merely incentives or opportunities to know about the patent, but, rather, that
Defendants' knowledge may be inferred from their participation in the semiconductor market
where, allegedly, the existence of the patent-in-suit was common knowledge. Defendants '
participation in an industry group that was working to standardize technologies related to the
patents-in-suit is a specific factual allegation further supporting Defendants ' knowledge of the
patent. The Court cannot say at this stage that these well-pleaded factual allegations do not
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plausibly allege Defendants' knowledge. Hence, the Court finds no error in Judge Burke's
conclusion. Investpic, LLC v. FactSet Research Sys., Inc., 2011 WL 4591078, at *2 (D. Del.
Sept. 30, 2011).
3.

Defendants argue that the Report' s actual knowledge analysis gave improper

weight to Defendants' knowledge of the '239 patent's parent. The Court finds it unnecessary to
consider this argument because even were this found to be error it would not alter the Court' s
conclusion to deny the motion to dismiss.
4.

Defendants argue that the Report erred in finding that the complaint sufficiently

alleged Defendants' knowledge of and specific intent to induce infringement. The Court
disagrees, for the reasons outlined in the Report. (D.I. 65 at iii! 13-14)
5.

Defendants also argue that the Report erred in finding that Plaintiff was not

required to make entity-specific factual allegations. The Court disagrees, for the reasons outlined
in the Report. (D.I. 65 at if 15)
6.

The Court agrees with the Report' s statement that "[i]n the end," the Motion

presents "a very close call." (D .I. 65 at if 12) Yet the Court also agrees with the Report that
"considered as a whole," the allegations in the complaint "render it at least plausible" that
Defendants were "aware of the ' 239 patent and its claims as of the date of the patent' s issuance."

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