SIPCO, LLC et al v. Streetline, Inc.

Filing 15

MEMORANDUM ORDER Granting #7 MOTION to Dismiss. Plaintiff has twenty-one days to file an amended complaint. Signed by Judge Richard G. Andrews on 1/20/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELA WARE
SIPCO, LLC, IP CO., LLC,
Plaintiffs,
Civil Action No. 16-830-RGA

v.

STREETLINE, INC., and KAPSCH
TRAFFICCOM HOLDING CORP.,
Defendants.

MEMORANDUM ORDER

Defendants' Motion to Dismiss under Rule 12(b)(6) (D.I. 7) is GRANTED, with leave to
amend within twenty-one days.
Plaintiffs complaint for direct patent infringement against two defendants asserts ten
patents in ten counts. Defendants' motion to dismiss raises the issue whether the complaint
meets the Twombly/Iqbal pleading standard.
The complaint identifies two defendants, Streetline and Kapsch. It alleges that since
April 16, 2015, Streetline "operates as a wholly-owned subsidiary" of Kapsch. (D.I. 1, if 5). The
complaint does not otherwise mention Kapsch. The complaint gives some history of Plaintiff
and its founder, and recites the results of various PTAB proceedings. Other than in the ten
counts of the complaint (and from what can be gleaned by looking at the patents, which are
attached to the complaint as exhibits), there is nothing in the complaint relevant to the issue of
the sufficiency of the pleadings.
The counts of the complaint follow one of two formats. Five of them (Counts 2, 3, 5, 8,

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and 10) state that Plaintiff asserts a particular patent issued on a particular date with a particular
title. For example, "Plaintiff ... is the owner by assignment of United States Patent No.
8,625,496 entitled 'Wireless Network System and Method for Providing Same.' ('the '496
patent'). The '496 Patent was duly and legally issued on January 7, 2014. A true and correct
copy of the '496 Patent is attached as Exhibit 2." (Id.,

ii 21 ).

There follows one or more

allegations of infringement, for example, "Defendants have directly infringed and continue to
infringe at least claim 27 of the Patent (literally and/or under the doctrine of equivalents) by
making, having had made, using, offering for sale and selling, or offering for use and using, the
Streetline smart parking monitoring hardware within the scope of the claims." (Id., ii 22). There
follows an allegation of damages. That is it. The other five (Counts 1, 4, 6, 7, and 9) have a
slightly more robust format, the difference being that instead of the accused product being "the
Streetline smart parking monitoring hardware within the scope of the claims," the accused
products are described as:

the Streetline smart parking monitoring hardware and software systems in combination
with one or more of Parker (which guides drivers to available parking spaces), ParkerMap
(a free service for city merchants that enables them to provide real-time parking
information to their patrons, and which can be embedded on a merchant's website and
automatically updates with the latest parking information to ease shoppers' planning
process), ParkEdge (a self-publishing tool that enables public and private off-street
parking to publish their parking garage and lot locations, space inventory, rates, hours,
and availability in real-time), Enforcement (a mobile application that enables the City and
its enforcement team to improve compliance and achieve optimal turnover), ParkSight
Analytics (a Software-as-a-service (SaaS) which provides parking data that can be
accessed 24/7 with a secure login credential via the web) and/or ParkingData (which
provides access to data for parking locations and availability through two complementary
APis), within the scope of the claims.

(Id.,
1

mean.

ii 18). 1

I do not understand what the phrase, "within the scope of the claims," is supposed to

As noted above, Plaintiff asserts Claim 27 of the '496 patent. It reads:
27. In a wireless system comprising a plurality of second nodes and a first node
configured to implement a first node process, the first node process including receiving
data packets via a first node wireless radio, sending data packets via said wireless radio,
communicating with a network, performing node link tree housekeeping functions,
maintaining a second node link tree having second node link entries representing each of
the plurality of second nodes, dynamically updating the tree to reflect the current
operational status of the second nodes, and rerouting data packets around inactive or
malfunctioning second nodes, a second node in the plurality of second nodes, the second
node configured to implement a second node process including: sending and receiving
data packet via a second node wireless radio; maintaining a send/receive data buffer in a
digital memory; and selecting a link to the first node that is one of a direct link to the first
node and an indirect link to the first node through at least one of the remainder of the
plurality of second nodes.
Defendants' brief states that only one of the patents has anything to do with
parking, which seems to be what Defendants' products are related to. That would be U.S. patent
no. 8,223,010, for which, in Count 4, claim 1 is asserted. It reads:
1. A vehicle parking monitoring system, comprising: a parking space sensor
enabled to detect the presence of at least one vehicle in a first parking space of a first
parking area; and a parking area transceiver in communication with the parking space
sensor, the parking area transceiver configured to receive information from the parking
space sensor and transmit the information to a gateway, the parking area transceiver also
configured to receive information from the gateway, wherein the gateway is connected to
a wide area network and configured to receive information from the parking area
transceiver and transmit the information to the wide area network, the gateway also
configured to receive information from the wide area network and transmit the
information to the parking area transceiver.
The complaint contains no attempt to connect anything in the patent claims to anything
about any of the accused products.
The issue of what exactly Twombly/Iqbal requires to state a plausible claim of patent
infringement is the subject of some debate in the district courts. The latest word from the Federal
Circuit is a few months old. See Lyda v. CBS Corp., 838 F.3d 1331 (Fed. Cir. 2016). In Lyda,
the Court considered the sufficiency of the allegations of joint infringement. Appellant was not

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arguing that the allegations were sufficient under the Twombly/Iqbal standard, but the Court
nevertheless discussed the sufficiency. The Court stated, "[T]he [complaint] must plausibly
allege that Defendants exercise the requisite 'direction or control' over the performance of the
claim steps, such that performance of every step is attributable to Defendants." Id. at 1340. The
Court went on to note the absence of "any factual allegations" to support the allegation of
direction or control, including how the direction or control occurred, and the relationship
between the Defendants and the third parties who were committing the infringing acts. The
Court concluded that there were "no allegations ... that can form the basis of a reasonable
inference that each claim step was performed by or should be attributed to Defendants." Id.
I do not need to consider at this juncture exactly how much Plaintiff must allege in order
to withstand a motion to dismiss. 2 Right now, Plaintiff makes two factual allegations. One, here
are ten patents we own. Two, you sell some products, which we have identified. Plaintiff makes
a legal conclusion, to wit, the sales of your products infringe out patents. This is insufficient to
plausibly allege patent infringement. Clearly, Plaintiff could allege a lot more than it has, as no
ethical lawyer would bring this lawsuit if the plaintiff could not allege more. Plaintiff does not
have to allege everything it has, but it does have to write a complaint (construing the allegations
in the light most favorable to the plaintiff) that makes it plausible to think a defendant has
infringed at least one claim of any asserted patent.

2

I think Defendants go too far in saying or implying Plaintiff has to produce infringement
contentions. I also think Defendants go too far in saying that if more than one claim is asserted
from a patent, there has to be factual support alleged for each such claim. On the other hand, I
think Defendants are correct that it is insufficient to state as a fact that an infringing defendant
company is a wholly-owned subsidiary of a second company, and, by virtue of that alone, the
second company is therefore also liable for infringement.
That being said, a motion to dismiss for failure to state a claim in a patent case is not the
place for claim construction or the judge learning the technology that is being asserted.

Thus, the motion to dismiss is granted. Plaintiff has twenty-one days to file an amended
complaint.
IT IS SO ORDERED this

to

day of January 2017.

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