VLSI Technology LLC v. Intel Corporation

Filing 110

MEMORANDUM OPINION Signed by Judge Colm F. Connolly on 3/26/2019. (nmf)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
VLSI TECHNOLOGY LLC,
Plaintiff,

v.

Civil Action No. 18-966-CFC

INTEL CORPORATION,
Defendant. :

Brian E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, Delaware;
Christopher Abernethy, Morgan Chu, Benjamin W. Hattenbach, Leah
Johannesson, Amy E. Proctor, Dominik Slusarczyk, S. Adina Stohl, Charlotte J.
Wen, IRELL & MANELLA LLP, Los Angeles, California, Counsel for Plaintiff
Jack B. Blumenfeld, Jeremy A. Tigan, MORRIS, NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, Delaware; Omar F. Amin, GIBSON, DUNN &
CRUTCHER LLP, Washington, District of Columbia; Mark N. Reiter, GIBSON,
DUNN & CRUTCHER LLP, Dallas, Texas; David C. Marcus, WILMER,
CUTLER, PICKERING, HALE AND DORR LLP, Los Angeles, California;
Arthur W. Coviello, Liv Herriot, Jason D. Kipnis, Mark D. Selwyn, Kathryn
Zalewski, WILMER, CUTLER, PICKERING, HALE AND DORR LLP, Palo
Alto, California; Richard A. Crudo, Gregory H. Lantier, Christa Laser, Amanda L.
Major, WILMER, CUTLER, PICKERING, HALE AND DORR LLP,
Washington, District of Columbia; Alexandra Amrhein, Kevin A. Goldman, Jordan
L. Hirsch, William F. Lee, Dominic E. Massa, Joseph Mueller, Louis W. Tompros,
WILMER, CUTLER, PICKERING, HALE AND DORR LLP, Boston,
Massachusetts; Olga Musayev, S. Calvin Walden, WILMER, CUTLER,
PICKERING, HALE AND DORR LLP, New York, New York, Counsel for_
Defendant

MEMORANDUM OPINION
March 26, 2019
Wilmington, Delaware

CONNOLLY, ITED ST

ES DISTRICT JUDGE

Plaintiff VLSI Technology LLC has sued Defendant Intel Corporation for
patent infringement. VLSI alleges that Intel has directly and willfully infringed
and, unless enjoined, will directly and willfully infringe five patents relating to
computer chip technology-U.S. Patent Nos. 6,212,633 (the "#633 patent"),
7,246,027 (the "#027 patent"), 7,247,552 (the "#552 patent"), 7,523,331 (the
"#331 patent"), and 8,081,026 (the "#026 patent"). See D.I. 1 at ,r,r 15, 37, 46, 60,
68, 88, 97, 119, 128, 148. VLSI also alleges that Intel has indirectly infringed and,
unless enjoined, will indirectly infringe the #633, #027, #331, and #026 patents.

See id. at ,r,r 32, 33, 55, 56, 114, 115, 143, 144. VLSI's indirect infringement
claims are based on allegations of both induced infringement and contributory
infringement. VLSI also seeks in the complaint's prayer for relief"enhanced
damages pursuant to 35 U.S.C. § 284." Id. at 46.
Intel filed a motion to dismiss "VLSI' s claims for willful infringement" of
the #633, #552, #331, and #026 patents and VLSI's claims for indirect
infringement of the #633, #331, and #026 patents. D.I. 17. As the Patent Act, 35
U.S.C. § 1 et seq., does not create a cause of action for willful infringement, I
understand Intel's motion to dismiss "VLSI' s claims for willful infringement" to
be a motion, with respect to the #633, #552, #331, and #026 patents, to dismiss

VLSI's willfulness-based claim for enhanced damages under 35 U.S.C. § 284 and
strike from the complaint the allegations of willful infringement. See generally

Deere & Co. v. AGCO Corp., 2019 WL 668492, at *3-4 (D. Del. Feb. 19, 2019).
To state a claim upon which relief can be granted, a complaint must contain
"a short and plain statement of the claim showing that the pleader is entitled to
relief." FED. R. Crv. P. 8(A)(2). Detailed factual allegations are not required, but
the complaint must set forth sufficient factual matter, accepted as true, to "state a
claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). A claim is facially plausible when the factual content allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When
considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all
factual allegations in the complaint and view them in the light most favorable to
the plaintiff. Umlandv. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008).
Under Federal Circuit law, to allege plausibly a willfulness-based enhanced
damages claim, VLSI must allege facts from which it can be plausibly inferred
both that Intel knew about the asserted patents and that Intel knew or should have
known that its conduct amounted to infringement of those patents. See Deere,
2019 WL 668492, at *4 (citing WCM Indus., Inc. v. JPS Corp., 721 F. App'x 959,
970 (Fed. Cir. 2018); Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876

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F.3d 1350, 1371 (Fed. Cir. 2017); and WesternGeco L.L.C. v. Ion Geophysical
Corp., 837 F.3d 1358, 1362 (Fed. Cir. 2016), rev'd on other grounds, 138 S. Ct.

2129 (2018)). "[I]nduced infringement[] [and] contributory infringement require[]
[both] knowledge of the patent[ s] in suit and knowledge of patent infringement."
Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1926 (2015).

Knowledge of the Asserted Patents

The complaint plausibly alleges that Intel knew of the existence of the #633,
#331, and #026 patents, as it alleges that Intel cited these patents in Intel's
prosecutions of other patents. D.I. 1 at ,r,r 31, 113, 142. The complaint, however,
fails to allege any facts from which it can be plausibly inferred that Intel knew or
should have known of the existence of the #552 patent.
With respect to the #552 patent, the complaint alleges only that "Intel has
had knowledge of the [#]552 Patent at least since the filing of this complaint, and if
it did not have actual knowledge prior to that time, it was willfully blind to the
existence of the [#]552 Patent based on, for example, its publicly-known corporate
policy forbidding its employees from reading patents held by outside companies or
individuals." Id. at ,r 84. This allegation is deficient in two respects. First, the
complaint itself cannot serve as the basis for a defendant's actionable knowledge.
The purpose of a complaint is not to create a claim but rather to obtain relief for an
existing claim. Second, knowledge based on willful blindness exists only where

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"{l) the defendant[] subjectively believe[d] that there [was] a high probability that
a fact exists and (2) the defendant[] [took] deliberate actions to avoid learning of
that fact." Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011).
Here, there is no allegation in the complaint from which it could be plausibly
inferred that Intel subjectively believed that there was a high probability that the
#552 patent existed; and thus there is no basis from which to conclude that Intel
was willfully blind to the #552 patent's existence. Accordingly, I will dismiss the
claim for enhanced damages insofar as it is based on the #552 patent. (VLSI did
not allege induced or contributory infringement of the #552 patent.)
Knowledge ofPatent Infringement
VLSI argues in it briefing that its allegations of willful blindness make it
plausible that Intel knew or was willfully blind about whether Intel's products
infringe the asserted patents. In VLSI's words:
In addition to willfully blinding itself to VLSI 's
patents, Intel also willfully blinded itself to its
infringement of those patents. For example, Intel's
"publicly-known corporate policy forbidding its
employees from reading patents held by outside
companies or individuals" also prevented its engineers
from comparing those patents to Intel's products, yet it is
precisely that comparison that would have resulted in
Intel's actual knowledge of its infringement.
D.I. 27 at 14 (emphasis added) (quoting D.I. 1 at ,r 31). But VLSI alleges in its
complaint only that "Intel has been willfully blind to [each] patent's existence."

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D.I. 1 at ,r,r 31, 54, 113, 142 (emphasis added); see also D.I. 1 at ,r 84 ("Intel ...
was willfully blind to the existence of the [#]552 Patent ....") (emphasis added).
VSLI never alleges that Intel has been willfully blind to its infringement of those
patents. Accordingly, with respect to the #633, #552, #331, and #026 patents, I
will strike from the complaint the allegations of willful infringement and dismiss
the enhanced damages claim; and with respect to the #633, #331, and #026 patents,
I will dismiss the claims for induced and contributory infringement.
The Court will issue an order consistent with this Memorandum Opinion.

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