Network Managing Solutions, LLC v. AT&T, Inc. et al.

Filing 63

REPORT AND RECOMMENDATIONS re 18 MOTION to Dismiss Counts I and III of the Second Amended Complaint filed by AT&T, Inc., AT&T Mobility, LLC, 22 MOTION for the Court to Take Judicial Notice of Certain Exhibits in Connection with Their Motion to Dismiss Counts I and III of the Second Amended Complaint filed by AT&T, Inc., AT&T Mobility, LLC. Please note that when filing Objections pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer tha n ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 11/30/2017. Signed by Judge Mary Pat Thynge on 11/9/17. (cak)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
NETWORK MANAGING SOLUTIONS,
LLC,
Plaintiff,
v.
AT&T INC., (terminated) and
AT&T MOBILITY, LLC,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

C.A. No. 16-295-RGA-MPT

REPORT AND RECOMMENDATION
I.

INTRODUCTION
On April 25, 2016, plaintiff, Networking Management Solutions, LLC (“NMS”),

filed this action against defendants AT&T Inc.1 and AT&T Mobility, LLC, alleging
infringement of U.S. Patent No. 6,351,213 (the ‘213 patent”), U.S. Patent No 6,420,968
(“the ‘968 patent”), U.S. Patent No. 6,728,688 (“the ‘688 patent”), and U.S. Patent
6,553,099 (“the ‘099 patent”).2 On February 22, 2017, plaintiff filed a second amended
complaint.3 Plaintiff seeks a permanent injunction of all allegedly infringing activities by
defendant and damages as a result of the infringement.4 On March 8, 2017, defendants
filed a motion to dismiss Counts I and III pursuant to FED. R. CIV. P. 12(b)(6) for failure
to state a claim upon which relief can be granted in response to plaintiff’s second
1

On July 27, 2017, pursuant to the parties’ stipulation, the court ordered the
dismissal of defendant AT&T Inc. from this action without prejudice. See D.I. 48. In this
Report and Recommendation, “defendant” refers to AT&T Mobility.
2
D.I. 1.
3
D.I. 17.
4
Id. at ¶ 65.

amended complaint.5
Pending before this court is defendant’s Rule 12(b)(6) motion (D.I. 18) and
defendant’s motion for the court to take judicial notice of certain exhibits (D.I. 22). This
Report and Recommendation addresses whether plaintiff sufficiently stated its patent
infringement claims in Counts I and III, and whether the court may take judicial notice of
certain exhibits. For the reasons stated below, it is recommended that the defendants’
motion to dismiss be granted and defendant’s motion for the court to take judicial notice
be denied.
II.

BACKGROUND
A.

Parties

Plaintiff is a limited liability company formed under the laws of Delaware with its
principal place of business in Costa Mesa, California.6 Defendant AT&T Inc. is a
corporation existing and organized under the laws of Delaware and its principal place of
business is located in Dallas, Texas.7 Defendant AT&T Mobility LLC is a limited liability
company existing and organized under the laws of Delaware and its principal place of
business is located in Atlanta, Georgia.8 On July 25, 2017, AT&T Inc. was dismissed
from the action without prejudice.9
B.

Patents-in-Suit

Since the issuance of the ‘213 patent and ‘968 patent from the United States

5

D.I. 18.
D.I. 17 at ¶ 1.
7
Id. at ¶ 2.
8
Id. at ¶ 4.
9
D.I. 48.
6

2

Patent and Trademark Office (“USPTO”) on February 26, 2002 and July 16, 2002,
plaintiff asserts it currently holds and has held all rights to the patents by assignment
from the inventor Lucian Hirsch.10 The ‘213 patent is entitled, “Method and
Communication System for Processing Alarms Using a Management Network Involving
Several Layers of Management.”11 The ‘968 patent is entitled, “Method and
Communication System for Handling Alarms Using a Management Network that has a
Number of Management Levels.”12 Plaintiff further claims, since the issuance of the
‘688 patent from the USPTO on April 27, 2004, it currently holds and has held all rights
to the patent by assignment from the inventors Lucian Hirsch and Alfred Schmidbauer.13
The ‘688 patent is entitled, “Method and Communication System for Handling Alarms
Using a Management Network Having a Number of Management Levels.”14 Also,
plaintiff contends it currently holds and has held all rights to the ‘099 patent by
assignment from the inventor Michael Gundlach since its issuance on April 22, 2003.15
The ‘099 patent is entitled, “Device for Indirectly Forwarding Messages in Data and/or
Communications Networks.”16
C.

3GPP Standards

3d Generation Partnership Project (“3GPP”) unites the different
telecommunications standard development organizations and provides mobile

10

D.I. 17 at ¶ 10-11.
Id. at ¶ 10.
12
Id. at ¶ 11.
13
Id. at ¶ 12.
14
Id.
15
Id. at ¶ 14.
16
Id.
11

3

broadband standards to its members.17 3GPP covers cellular telecommunications
network technologies and provides complete system specifications.18 As such, it
produces technical specifications relating to network alarm management and lawful
intercept technologies.19 In relationship to network alarm management, 3GPP has set
forth requirements entitled, “Telecommunication management, Principles and high level
requirements” (Version 8.5) (“TS 32.101"), “Telecommunication management, Fault
Management, Part 1: 3G fault management requirements” (Version 8.0) (“TS 32.1111"), and “Telecommunication management, Fault Management, Part 2: Alarm
Integration Reference Point (IRP): Information Services (IS)” (Version 8.1) (“TS 32.1112").20 In relationship to lawful intercept technologies, the 3GPP requirements are
entitled, “3G security, Lawful Interception requirements” (Version 8.1) (“TS 33.106"),
“3G security, Lawful interception architecture and functions” (Version 8.12) (“TS
33.107"), and “3G security, Handover interface for Lawful Interception (LI)” (Version
8.14) (“TS 33.108").21
III.

STANDARD OF REVIEW
A.

Motion to Dismiss for Failure to State a Claim

FED. R. CIV. P. 12(b)(6) governs a motion to dismiss a complaint for failure to

17

About 3GPP Home, 3GPP.ORG, http://www.3gpp.org/about-3gpp/about-3gpp
(last visited Nov. 1, 2017).
18
Id.
19
Specifications, 3GPP.ORG, http://www.3gpp.org/specifications/specifications
(updated every three months).
20
3GPP Specification series, 32 series, 3GPP.ORG,
http://www.3gpp.org/DynaReport/32-series.htm (last updated Dec. 8, 2016).
21
3GPP Specification series, 33 series, 3gpp.org,
http://www.3gpp.org/DynaReport/33-series.htm (last updated Dec. 8, 2016).
4

state a claim upon which relief can be granted.22 The purpose of a Rule 12(b)(6) motion
is to test the sufficiency of the complaint, not to resolve disputed facts or decide the
merits of the case.23 “The issue is not whether a plaintiff will ultimately prevail but
whether the claimant is entitled to offer evidence to support the claims.”24 A motion to
dismiss may be granted only if, after “accepting all well-pleaded allegations in the
complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not
entitled to relief.”25 While the court draws all reasonable factual inferences in the light
most favorable to a plaintiff, it rejects unsupported allegations, “bald assertions,” and
“legal conclusions.”26
To survive a motion to dismiss, a plaintiff’s factual allegations must be sufficient
to “raise a right to relief above the speculative level . . . .”27 Plaintiffs are therefore
required to provide the grounds of their entitlement to relief beyond mere labels and

22

FED. R. CIV. P. 12(b)(6).
Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993).
24
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (citations omitted);
see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 n.8 (2007) (“[W]hen a
complaint adequately states a claim, it may not be dismissed based on a district court’s
assessment that the plaintiff will fail to find evidentiary support for his allegations or
prove his claim to the satisfaction of the factfinder.”).
25
Maio v. Aetna, Inc., 221 F.3d 472, 481-82 (3d Cir. 2000) (citing In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997)).
26
Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,
459 U.S. 519, 526 (1983) (“It is not . . . proper to assume [plaintiff] can prove facts that it
has not alleged or that the defendants have violated the . . . laws in ways that have not
been alleged.”); see also Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting
Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations omitted) (rejecting
“unsupported conclusions and unwarranted inferences, or a legal conclusion couched
as a factual allegation”)).
27
Twombly, 550 U.S. at 555 (citations omitted). See also Victaulic Co. v.
Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (citation omitted).
23

5

conclusions.28 Although heightened fact pleading is not required, “enough facts to state
a claim to relief that is plausible on its face” must be alleged.29
A claim has facial plausibility when a plaintiff pleads factual content sufficient for
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.30 The plausibility standard does not rise to a “probability
requirement,” but requires “more than a sheer possibility that a defendant has acted
unlawfully.”31 Once stated adequately, a claim may be supported by showing any set of
facts consistent with the allegations in the complaint.32 Courts generally consider only
the allegations contained in the complaint, the exhibits attached, and matters of public
record when reviewing a motion to dismiss.33
B.

Direct Infringement

In McZeal v. Sprint Nextel, Corp.,34 the Federal Circuit held that FED. R. CIV. P.
Form 1835 is sufficient to state a claim of direct infringement.36 This finding was
reiterated in In re Bill of Lading Trans. & Proc. Sys. Patent Litig.,37 where the court
28

Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).
Id. at 570. See also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir.
2008) (“In its general discussion, the Supreme Court explained that the concept of a
‘showing’ requires only notice of a claim and its grounds, and distinguished such a
showing from ‘a pleader's bare averment that he wants relief and is entitled to it.’”)
(quoting Twombly, 550 U.S. at 555 n.3).
30
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
31
Id.
32
Twombly, 550 U.S. at 563 (citations omitted).
33
See, e.g., Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d
1192, 1196 (3d Cir. 1993) (citations omitted).
34
501 F.3d 1354 (Fed. Cir. 2007)
35
Form 18 is the descendant of Form 16, as discussed in McZeal, 501 F.3d
1354. Form 18 became effective December 1, 2007.
36
McZeal, 501 F.3d at 1356.
37
681 F.3d 1323 (Fed. Cir. 2012).
29

6

stated “to the extent . . . that Twombly and its progeny conflict with the Forms and
create different pleading requirements, the Forms control.”38 Effective December 1,
2015, Form 18 was abrogated, leaving direct infringement claims subject to the
Twombly and Iqbal pleading standard.
Under 35 U.S.C. § 271(a), direct infringement of a patent occurs when someone
“without authority makes, uses, offers to sell, or sells any patented invention, within the
United States or imports into the United States any patented invention during the term
of the patent.”39 In Fujitsu Ltd. v. Netgear Inc.,40 the Federal Circuit held that district
courts could “rely on an industry standard in analyzing infringement.”41
C.

Motion for the Court to Take Judicial Notice

Generally, a district court ruling on a motion to dismiss cannot consider matters
outside of the pleadings.42 However, courts may consider documents that are
“incorporated into the complaint by reference, and matters of which a court may take
judicial notice.”43 The rationale underlying the general rule is that looking to outside
documents creates lack of notice to the plaintiff.44 However, under the exception, the

38

Id. at 1334.
35 U.S.C. § 271(a) (2010).
40
620 F.3d 1321, 1327 (Fed. Cir. 2010)
41
Id. (following approach in Dynacore Holdings Corp. v. U.S. Phillips Co., 363
F.3d 1263 (Fed. Cir. 2004)).
42
In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)
(citing Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985)).
43
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). See
also Burlington, 114 F.3d at 1426 (stating that document “integral to or explicitly relied
upon in the complaint” may be considered without motion to dismiss becoming motion
for summary judgement (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st
Cir. 1996)).
44
Burlington, 114 F.3d at 1426.
39

7

lack of notice issue is eliminated because the plaintiff “has actual notice . . . and has
relied upon these documents in framing the complaint.”45 Allowing these particular
outside documents prevents either party from extracting isolated statements which may
be misleading.46
1.

Judicial Notice

Under FED. R. EVID. 201(b), the court may judicially note a fact “that is not subject
to reasonable dispute because it (1) is generally known within the trial court’s territorial
jurisdiction; or (2) can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.”47 Public records are one type of document
that courts can judicially notice.48 An important factor is whether the public has
unqualified access to all of these documents.49 Courts have determined that certain
public records meet these requirements, including criminal case dispositions such as
convictions or mistrials, letter decisions of government agencies, and published reports
of administrative bodies.50
2.

Integral Documents

Documents that are “integral to or explicitly relied upon in the complaint” may be
considered without turning the motion to dismiss into a motion for summary
judgement.51 In determining whether a document is integral to the complaint, the court
45

Id. (quoting Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir. 1993)).
Id. at 1426 (citing Shaw, 82 F.3d at 1220).
47
FED. R. EVID. 201(b).
48
City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998).
49
Pension Ben. Guar. Corp. v. White Consol. Industries, Inc., 998 F.2d 1192,
1197 (3d Cir. 1993).
50
Id.
51
Burlington, 114 F.3d at 1426 (quoting Shaw, 82 F.3d at 1220).
46

8

must ascertain whether the complaint is “based on” the outside document.52 This
approach meets the rationale behind the general prohibition of outside documents
because the plaintiff would have actual notice of a document on which he relied in his
complaint.53
IV.

ANALYSIS
A.

Parties’ Contentions

Defendant asserts that plaintiff’s second amended complaint fails to state a claim
because, under a standards-based infringement action, it must show that every
implementation of the standard violates the patents.54 Defendant argues the 3GPP
Fault Management Standard does not require performing the actions protected under
the ‘688 and ‘213 patents because the standard specifies a particular result, not the
ways in which to achieve this result.55 In addition, defendant notes plaintiff’s original
complaint alleged that defendant infringed the patents by using the CMIP solution set.56
However, this set was discontinued by 3GPP in 2007, and AT&T has not used the set.57
Defendant reasons that the misinformation in the original complaint plus the fact that the
second amended complaint does not cite to any section of the current solution sets
shows the implausibility of plaintiff’s claims.58
On the other hand, plaintiff claims it meets pleading requirements because it
52

Schmidt v. Skolas, 770 F.3d 241, 249-50 (3d Cir. 2014).
Burlington, 114 F.3d at 1426 (quoting Watterson v. Page, 987 F.2d 1, 3-4 (1st
Cir. 1993)).
54
D.I. 19 at 8.
55
Id. at 9.
56
Id. at 12.
57
Id.
58
Id.
53

9

provides references to specific provisions of the standard and connects them with the
corresponding patent infringement claim.59 In addition, plaintiff argues that defendant’s
positions fall outside the scope of pleading requirements because defendant is
attempting to discuss disputed facts rather than whether plaintiff has provided enough
evidence to support its claims.60 Moreover, while the solution sets (which are not relied
upon in the second complaint) do provide alternative solutions, plaintiff maintains the
standards stated in the second complaint provide the requirements for all fault
management systems.61 In the alternate, plaintiff asks the court for leave to amend the
second complaint.62
B.

Judicial Notice is Unnecessary because the Outside Documents are
Integral to the Complaint

While the exhibits are publically available documents, judicial notice is not
needed because they are explicitly relied on in the second amended complaint. Exhibits
A-G are copies of the specifications relied on by plaintiff in its second amended
complaint.63 Moreover, these specifications make up the standard which plaintiff uses
to support patent infringement. Thus, the second complaint is “based on” the
documents, and plaintiff has actual notice of them. As the briefs presented by both
parties highlight, there is a dispute about what the standards require. Taking judicial
notice of the truth of the documents’ contents could breach the boundaries of judicial

59

D.I. 26 at 6-7.
Id. at 8.
61
Id. at 13.
62
Id. at 13-14.
63
See supra notes 19-20 and accompanying text for descriptions of the different
standards; see also D.I. 22 at 3-6 (describing each exhibit).
60

10

notice.64 While the court could take judicial notice of the existence of the documents,
the court so declines since these documents may be introduced as documents integral
to the second complaint, and thereby avoids the possibility of overstepping the
boundaries of judicial notice.65
C.

Plaintiff Sufficiently Plead Counts I and III Using a Standards-Based
Direct Infringement Approach but Employs an Out-of-Date Standard

In the order dismissing the original claims, the court noted that plaintiff identified
“at least one claim from each asserted patent that it alleges defendants infringed” and
that plaintiff alleged defendants adopted the 3GPP standards.66 However, plaintiff’s
claims were insufficient because they failed to provide information to support the
allegation that the 3GPP standards are incorporated in the patents.67
In the second amended complaint, plaintiff included information from its patents
and the standards to show how the patents cover the standards. In Count I, plaintiff
alleges the processes used in specifications TS 32.101, TS 32.111-1, and TS 32.111-2
infringe the ‘213 patent .68 Specifically, plaintiff states defendant must necessarily
practice the ‘213 patent because the specifications require:
(i) a network organized hierarchically, wherein a Network Manager (NM)
oversees the operation of a Network Element (NE) using a communication
interface (N interface or ‘Itf-N’) . . . (ii) a synchronization procedure is
64

See Werner v. Werner, 267 F.3d 288, 295 (3d Cir. 2001) (refusing to take
judicial notice of content of meeting minutes because could breach boundaries of
judicial notice).
65
See id. (deciding to judicially notice existence of meeting minutes because they
were “capable of accurate and ready determination by resort to sources whose
accuracy cannot reasonably be questioned”).
66
D.I. 16.
67
Id.
68
D.I. 17 at ¶ 34-40.
11

required after every start up of the N interface between the NM and the
NE, this synchronization procedure between the NM and NE includes the
NM triggering a synchronization by sending a request notification to the
NE . . . (iii) following receipt of the request notification, the NE sends to the
NM information to enable the NM to know which reported alarm data
correspond to which synchronization request notification . . . and (iv) the
NM specifies filter criteria to the NE for the synchronization . . . .69
In Count III, plaintiff contends the processes in specifications TS 32.101, TS 32.111-1,
and TS 32.111-2 infringe the ‘688 patent.70 Specifically, plaintiff states defendant must
necessarily practice the ‘688 patent because the specifications require:
(i) a network organized hierarchically, wherein a Network Manager (NM)
oversees the operation of a Network Element (NE) using a communication
interface (N interface or ‘Itf-N’) . . . (ii) current alarm information is sent from
an NE to more than one NM during a period of time . . . (iii) a
synchronization procedure is required after every start up of the N interface
between an NE and its relevant NMs, this synchronization procedure
between the NE and its NMs includes the NMs triggering a synchronization
by sending a request notification to the NE . . . and (iv) following receipt of
the request notification from its respective NMs, the NE sends to an NM
information to enable the NM to know which reported alarm data
corresponds to which synchronization request notification . . . .71
Viewing the motion in a light most favorable to plaintiff, it alleges sufficient facts to
state a plausible claim because, by showing what the standards require, the
standards may be compared with the patents to determine whether defendant, in
following these standards, infringes.
While the second amended complaint is sufficiently plead, the standards on
which plaintiff relies in Counts I and III range in date from 2009 to 2010.72 For

69

Id. at ¶ 25-26 (citations omitted).
Id. at ¶ 48-54.
71
Id. at ¶ 28 (citations omitted).
72
See D.I. 17 at ¶ 19 (noting versions of standards and years of release for TS
32.101, TS 32.111-1, and TS 32.111-2 standards).
70

12

example, with respect to the TS 32.101 specification, 15 new releases of this
specification have occurred since the 8.5 version.73 While it is unknown whether
the relevant information relating to network alarm management has significantly
changed in the new releases, there have been substantive changes to the
specifications.74 For this reason, plaintiff should be granted leave to amend the
complaint to indicate the specific standards defendant allegedly practices that
result in infringement.
V.

CONCLUSION
For the foregoing reasons, I recommend that:
(1) Defendants’s motion to dismiss Counts I and III for failure to state a

claim upon which relief can be granted (D.I.18) be GRANTED.
(2) Defendant’s motion for the court to take judicial notice of certain exhibits
(D.I. 22) be DENIED.
(3) Plaintiff be granted leave to amend the second amended complaint to
include the appropriate versions of the 3GPP standards, with its amendment due
within fourteen (14) days after the date for objections has expired, should no
objections be filed.
This Report and Recommendation is filed pursuant to 28 U.S.C.

73

3GPP Specification Series, 32.101 Portal, 3GPP.ORG,
https://portal.3gpp.org/desktopmodules/Specifications/SpecificationDetails.aspx?specific
ationId=1838 (last updated Sept. 21, 2017).
74
See D.I. 22-1 at 6 (explaining number system of 3GPP version specifications
wherein specification is numbered according to ‘version x.y.z’ where if x is greater than
3 document has been approved and y is “incremented for changes of substance, i.e.
technical enhancements, corrections, updates, etc.”).
13

§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. Objections and
responses are limited to seven (7) pages each.
The parties are directed to the Court’s Standing Order in Non-Pro Se
Matters 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.
Date: November 9, 2017

/s/ Mary Pat Thynge
Chief U.S. Magistrate Judge

14