Panduit Corp. v. Corning Optical Communications LLC
Filing
49
ORDER denying 44 Motion to Dismiss for Failure to State a Claim. Having disposed of the instant motion, the court hereby LIFTS the stay on this case, and an initial order on planning and scheduling will follow. Signed by District Judge Louise Wood Flanagan on 11/7/2019. (Collins, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:18-CV-229-FL
PANDUIT CORP.,
Plaintiff,
v.
CORNING INCORPORATED,
Defendant.
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ORDER
This matter is before the court on defendant’s motion to dismiss plaintiff’s amended
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (DE 44). The issues raised have
been fully briefed, and in this posture are ripe for ruling. For the reasons that follow, the court
denies defendant’s motion.
STATEMENT OF THE CASE
On February 7, 2018, plaintiff, owner of United States Patent Numbers 8,351,027 (“’027
patent”) and 8,488,115 (“’115 patent”), both entitled “Method and Metric for Selecting and
Designing Multimode Fiber for Improved Performance,” initiated this suit asserting claims against
defendant Corning Optical Communications LLC, for patent infringement, induced infringement,
and contributory infringement in violation of 35 U.S.C. § 271(a), (b), and (c), respectively, in the
district court for the Western District of North Carolina.1 The parties successfully moved three
1
After this action was filed, it was determined that defendant Corning Optical Communications LLC’s parent
company, above-named defendant Corning Incorporated, is the appropriately named defendant. Defendant Corning
Incorporated does not have physical presence in the Western District but does in the Eastern District. (See DE 19).
On July 18, 2018, the parties filed joint motion to substitute Corning Incorporated for Corning Optical
Communications LLC and amend the case caption, which motion was granted the next day.
times for order granting motion for extension of time for defendant to file answer and then filed
joint motion to transfer to this district, which transfer occurred on May 23, 2018.
That same day this case transferred to the Eastern District, defendant filed its first motion
to dismiss plaintiff’s complaint for failure to state a claim. The court granted defendant’s motion,
dismissing plaintiff’s claims without prejudice because plaintiff failed to plausibly allege that some
activity by defendant performs a “selection” of fibers “for use a communications network” using
the three steps of plaintiff’s patented method. With leave of court, plaintiff filed an amended
complaint. Thereafter, defendant filed its second motion to dismiss, arguing that plaintiff’s
amended complaint suffers from the same defects that warranted dismissal of plaintiff’s original
complaint.
STATEMENT OF THE FACTS
The facts alleged in plaintiff’s amended complaint are summarized as follows. The United
States Patent and Trademark Office issued the ’027 patent on January 8, 2013, and the ’115 patent
on July 16, 2014, both of which relate to innovate methods using new and useful techniques for
selecting multimode optical fiber. Both patents share the same description of the invention and
have largely identical claims, with both patents including one method claim, reciting a “method
for selecting multimode optical fiber.” More specifically, the ’115 patent claims as follows:
1. A method for selecting multimode optical fiber for use in a communications
network, said method comprising:
measuring a pulse delay for pulses traveling through different radii of a
number of multimode optical fibers:
subtracting the pulse delay at a first radius of each multi mode optical fiber
from the pulse delay at a second, larger radius of each multimode
fiber; and
choosing for use in the communications network those optical fibers in
which the result of subtracting the pulse delay at the first radius from
the pulse delay at the second radius is a negative number.
2
2. The method of claim 1 wherein said first radius is 5µm and said second radius is
19 µm.
3. The method of claim 1 wherein said first radius is 5µm and said second radius is
20 µm.
4. The method of claim 1 wherein said first radius and said second radius are 14
µm to 15µm apart.
(See ’115 patent (DE 43-2) at col. 6, ll. 32-47; see also ’027 patent (DE 43-1) at col. 6, ll. 30-46
(largely identical to ’115 patent)).
In other words, the patents at issue propose a three-step method for selecting optical fiber:
1) fiber is measured at two different locations in a certain way, 2) those two measurements are
subtracted, and 3) the fiber is chosen if the result of that subtraction is a negative number. (See
Am. Compl. ¶¶ 11-12). The patent explains that fibers having a negative Differential Mode Delay
(“DMD”) shift, or a negative number resulting from the “measure of the difference in pulse delay
. . . between the fastest and slowest modes traversing the fiber,” have lower error rates and
outperform positive DMD shifted fibers. (See id. ¶¶ 13–16; ’115 patent (DE 43-2) at col. 1, ll. 3437; id. at col. 5, ll. 24-26 (“The negative DMD shift fibers exhibit lower [bit error rates] overall
and significantly outperform the positive DMD shifted fibers.”)).
Optical fiber is made by drawing glass into thin strands. (Am. Compl. ¶ 17 (citing
Corning’s
Manufacturing
Advantage,
July
26,
2013,
https://www.youtube.com/watch?v=7tsF3mSpqX8 [https://perma.cc/4PWQ-YCNZ] at 1:10–
3:00)). During the fiber draw process, fiber parameters are monitored using computer controls
and layers of protective coating are applied. (Id. ¶ 18 (citing Corning’s Manufacturing Advantage
at 3:00–3:30)). After the draw process, the optical fiber is tested for strength, optical performance
and geometric parameters. (Id. ¶ 19 (citing Corning’s Manufacturing Advantage at 3:30–3:51)
(“[T]hen optical and physical parameters are measured to verify performance against
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specifications.”)). Bandwidth, or information-carrying capacity of the optical fiber, is verified by
measuring DMD in accordance with known industry practices, including those defined by
Telecommunications Industry Association (“TIA”) standard TIA-220. (Id. (internal citations
omitted)). The DMD measurements are used to calculate industry-standard Effective Modal
Bandwidth (“EMB”), a commonly used metric used to grade fibers. (Id. ¶¶ 14, 20). The
measurement data is recorded into documentation associated with each spool of fiber, so the spools
may be selected based on recorded data. (Id. ¶ 21 (citing Corning’s Manufacturing Advantage at
3:50–4:00)). After inspection and testing, the fibers are graded according to TIA performance
criteria and bundled together into cables. (See id. ¶¶ 22–24).
When plaintiff tests and measures its own fibers, the testing equipment performing the
testing of fibers for plaintiff’s cables performs plaintiff’s patented three step process in addition to
industry-standard measurement of DMD. (Id. ¶¶ 25–26). The fibers selected for inclusion in
plaintiff’s cables collectively produce “OM4+” cables, which is not a defined industry standard.
(Id. ¶ 27).
Plaintiff alleges that on information and belief, defendant, alone or with others, sells,
manufactures, imports, uses, offers for sale, has made or selected, or used measurements to select
and/or classify fiber optic materials, including multimode optical fiber, using methods that infringe
plaintiff’s patents. (See id. ¶¶ 29–37). In a video entitled “Corning’s Manufacturing Advantage,”
defendant explains that “[t]hen optical and physical parameters are measured to verify
performance against specification.” (Corning’s Manufacturing Advantage at 3:45). Defendant
“ensure[s] EMB via calculated effective modal bandwidth (minEMBc) for all our ClearCurve
multimode optical fibers. minEMBc is a differential mode delay (DMD) - based bandwidth value
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that best predicts multimode system performance in high-bandwidth laser-based 1 and 10 Gb/s as
well as the future 40 and 100 Gb/s systems.” (Corning ClearCurve Product Information (DE 435) at 2). Corning fiber reels are assigned a unique serial number so that testing data remains
associated with each reel of optical fiber. (Am. Compl. ¶ 34 (citing Corning’s Manufacturing
Advantage at 3:50-4:00)).1
Plaintiff allegedly tested specimens of cables produced by defendant and found that the
fibers within those cables systematically (i.e., all 12 fibers in the cable) exhibited a negative DMD
shift for the low radial region 1-3 microns and high radial region 15-17 microns. (See Am. Compl.
¶ 56).2 Plaintiff alleges on information and belief that its patented method of selection is the only
way to achieve systematic exhibition of a negative DMD shift in those regions. (Id. ¶ 57).
Elaborating on this point, plaintiff explains that even if fibers are drawn from the same preform or
optical fiber blank, lengths of that fiber will have a positive DMD shift, negative DMD shift, and
even zero DMD shift. (Id. ¶ 58). Preforms are divided into approximately seven to eight spools
of 17.6-kilometer length, potentially necessitating multiple different preforms to make a 12-fiber
cable. (Id.; see Corning ClearCurve Multimode Optical Fiber (DE 43-3) at 2). From these facts,
plaintiff alleges that defendant purposefully tested and selected accused fibers using its selection
method. (Id. ¶ 59).
Additional facts pertinent to the instant motion will be discussed below.
1
Employing language from the ’115 and ’027 patents, plaintiff additionally assert defendant “measures the
peak delay for pulses traveling through different radii of a number of multimode optical fibers, subtracts the measured
peak delay at one radius from the peak delay at a second larger radius, and provides an output indicating whether this
subtraction results in a negative number.” (Am. Compl. ¶ 33).
2
Plaintiff alleges defendant has knowledge of the relevant patents and defendant’s infringement by “at least
on or about a December 20, 2017 meeting between Plaintiff and Defendant wherein such was explained to Defendant.”
(Am. Compl. ¶¶ 73, 75, 97, 99).
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DISCUSSION
A.
Standard of Review
A complaint states a claim if it contains “sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Asking for plausible grounds . . . does
not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise
a reasonable expectation that discovery will reveal [the] evidence” required to prove the claim.
Twombly, 550 U.S. at 556. In evaluating the complaint, “[the] court accepts all well-pled facts as
true and construes these facts in the light most favorable to the plaintiff,” but does not consider
“legal conclusions, elements of a cause of action, . . . bare assertions devoid of further factual
enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments.” Nemet
Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). When ruling on
a motion to dismiss, the court may consider the facts as alleged in the complaint, “documents
attached to the complaint, . . . [and documents] attached to the motion to dismiss, so long as they
are integral to the complaint and authentic.” Sec’y of State for Defence v. Trimble Navigation
Ltd., 484 F.3d 700, 705 (4th Cir. 2007) (citations omitted).
B.
Analysis
Defendant argues that plaintiff has failed to sufficiently allege that defendant directly or
indirectly infringed plaintiff’s asserted patents. The court will address each argument in turn
below.
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1.
Direct Infringement
“Direct infringement under § 271(a) occurs where all steps of a claimed method are
performed by or attributable to a single entity.” Akamai Techs., Inc. v. Limelight Networks,
Inc.797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc) (citing BMC Res., Inc. v. Paymentech, L.P.,
498 F.3d 1373, 1379–81 (Fed. Cir. 2007)); 35 U.S.C. § 271(a). “A method patent claims a number
of steps . . . [and] the patent is not infringed unless all the steps are carried out.” Limelight
Networks, Inc. v. Akamai Techs., Inc., 572 U.S. 915, 921 (2014). A plaintiff’s complaint must
“place the alleged infringer on notice of what activity is being accused of infringement.” Lifetime
Indus., Inc. v. Trim–Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017) (citation omitted). There is
no requirement for plaintiff to “prove its case at the pleading stage.” In re Bill of Lading
Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012) (citation
omitted).
Plaintiff’s amended complaint cures the deficiencies noted in the court’s prior order
regarding testing of defendant’s fibers to confirm infringement. Taking the facts alleged in the
complaint as true, tested specimens of OM4+ cables produced by defendant and found that the
fibers within those cables systematically (i.e., all 12 fibers in the cable) exhibited a negative DMD
shift for the low radial region 1-3 microns and high radial region 15-17 microns, which plaintiff
again contends would be a statistical impossibility absent use of its patented method. (See Am.
Compl. ¶ 56). To cross the line from consistency to causality, plaintiff alleges on information and
belief that its patented method of selection is the only way to achieve systematic exhibition of a
negative DMD shift in those regions. (Id. ¶ 57). Elaborating further, plaintiff alleges that fibers
contain lengths with positive DMD shift, negative DMD shift, and zero DMD shift, giving rise to
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a plausible inference that defendant purposefully selected fibers for inclusion in the OM4+ cables
based on their negative DMD shift. (Id. ¶ 58).
Viewing plaintiff’s allegations regarding testing in conjunction with the complaint as a
whole, defendant is on notice as to what process is being accused of infringement. Plaintiff alleges
that, after the draw process but before defendant assigns fibers serial numbers, defendant’s optical
fiber is tested using the equipment performing DMD measurements (such as sampling
oscilloscope, test benches and/or computers) for DMD shift using plaintiff’s patented method.
(Am. Compl. ¶¶ 19-21, 33 (citing Corning’s Manufacturing Advantage at 3:30–3:51; Corning
ClearCurve Product Information (DE 43-5) at 2)). The measurement data is then recorded and
associated with each spool of fiber so that defendant’s fibers may be selected for cabling, allegedly
based on the DMD shift of those fibers. (See id. ¶¶ 21, 24, 34). In addition, plaintiff identifies
defendant’s “OM4+” cables as accused cables incorporating the accused fibers, alleging on
information and belief that selection of fibers according to plaintiff’s patented method is the only
way to achieve the EMB associated with defendant’s “OM4+” designation. (See id. ¶¶ 39-49).
Defendant argues that plaintiff’s testing is invalid, because the 12 fibers in a package
generally have the same properties as a byproduct of how they are manufactured. Defendant also
disputes plaintiff’s assertion that OM4+ cables must have negative DMD profiles. Finally,
defendant argues that plaintiff’s claimed method does not encompass every method which results
in some negative DMD profiles, pointing to industry standard DMD metrics. These arguments are
certainly arguments to be raised after discovery, but at this juncture the court takes plaintiff’s
allegations regarding its testing of defendant’s fibers and the impossibility of other methods of
selection as true.
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Defendant also argues that a significant number of the allegations in plaintiff’s complaint
do not put it on notice because they do not actually involve its processes. “A defendant cannot
shield itself from a complaint for direct infringement by operating in such secrecy that the filing
of a complaint itself is impossible.” K-Tech Telecommunications, Inc. v. Time Warner Cable,
Inc., 714 F.3d 1277, 1286 (Fed. Cir. 2013) (finding that fair inferences can be drawn from
allegations in the complaints regarding the nature of defendants’ businesses, the industry standards
to which they are required to adhere, and the output signals produced). Moreover, “a plaintiff in
a patent infringement suit is not required to specifically include each element of the claims of the
asserted patent.” Id. at 1284 (citing Phonometrics, Inc. v. Hospitality Franchise Sys., Inc., 203
F.3d 790, 794 (Fed.Cir. 2000)). Even so, the complaint must still plead sufficient facts to place
defendant on notice of what activity is accused of infringement. See id.
Unlike the original complaint, plaintiff’s amended complaint explains in detail defendant’s
alleged process of drawing fiber, the point at which DMD shift measurements allegedly are taken,
and the point at which defendant allegedly cables its fiber based on those measurements. (See
Compl. ¶¶ 17-24, 28-37). In support of this description, plaintiff relies upon information a variety
of source material, including defendant and similar companies’ descriptions of creating optical
fiber and subsequently incorporating those fibers into cables. (See Corning’s Manufacturing
Advantage; Corning ClearCurve Multimode Optical Fiber (DE 43-3) at 2; Corning ClearCurve
Product Information (DE 43-5) at 2; OFS Optics: Manufacturing High-Performance Optical Fiber,
Oct. 16, 2013, https://www.youtube.com/watch?v=liKOYbgIC_c [https://perma.cc/U3RPYA9M];
How
It's
Made:
Optical
Fiber
Communications
Cable,
Jan.
18,
https://www.youtube.com/watch?v=fjRqGKU9cUU [https://perma.cc/H39G-X2T5]).
9
2012,
Plaintiff
confirms based on its own processes that its selection of fibers “is done during the optical testing
and measurement step of fiber manufacturing.” (Am. Compl. ¶ 26). In addition, plaintiff provides
descriptions of products that, on information and belief, were impacted by the accused processes.
That plaintiff cannot provide more specifics at this juncture does not defeat the plausibility of its
direct infringement claim. See Disc Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1260
(Fed. Cir. 2018). Defendant’s motion to dismiss plaintiff’s direct infringement claim is denied.
2.
Indirect Infringement
“Whoever actively induces infringement of a patent shall be liable as an infringer.” 35
U.S.C. § 271(b). To state a claim for induced infringement, a plaintiff must allege 1) knowledge
of the patent, 2) specific intent that another party infringe the patent, and 3) knowledge that the
induced acts constitute infringement. See Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920,
1926 (2015); Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1355 (Fed. Cir. 2018). As relevant
here, contributory infringement occurs when a party 1) “sells within the United States . . . a material
or apparatus for use in practicing a patented process,” 2) which “constitut[es] a material part of the
invention,” 3) “knowing the same to be especially made or especially adapted for use in an
infringement of such patent,” and 4) the material or apparatus is “not a staple article or commodity
of commerce suitable for substantial noninfringing use . . . .” 35 U.S.C. § 271(c). “Like induced
infringement, contributory infringement requires knowledge of the patent in suit and knowledge
of patent infringement.” Commil, 135 S. Ct. at 1926.
Additionally, although direct infringement and indirect infringement, in other words
induced infringement or contributory infringement, “are distinct concepts, with distinct standards,”
“liability for indirect infringement of a patent requires direct infringement,” and therefore a
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“complaint[] must plausibly allege that the . . . patent was directly infringed to survive . . . motion
to dismiss.” Bill of Lading, 681 F.3d at 1333; see also Linear Tech. Corp. v. Impala Linear Corp.,
379 F.3d 1311, 1326 (Fed. Cir. 2004) (“There can be no inducement or contributory infringement
without an underlying act of direct infringement.”).
Plaintiff alleges that reels of accused fibers may be cabled by third-parties. (Am. Compl.
¶ 51; see id. ¶¶ 22-24). Defendant allegedly supplied these third-party cablers with recorded
measurement data, including the output of comparison of peak and/or pulse delays, associated with
each spool of accused fiber so the spools may be selected based on the recorded data. (Id. ¶ 52).
Plaintiff also alleges that third-party cables it has tested also systematically exhibit a negative
DMD shift, which it explains could only occur if the third-party cablers selected fibers for inclusion
in its cables based of plaintiff’s patented method. (Id. ¶¶ 56-58). Plaintiff alleges defendant has
knowledge of the relevant patents and defendant’s infringement by “at least on or about a
December 20, 2017 meeting between Plaintiff and Defendant wherein such was explained to
Defendant.” (Id. ¶¶ 73, 75, 97, 99). In view of the facts alleged, the court leaves for ruling on a
more complete record plaintiff’s claims of indirect infringement.
CONCLUSION
Based on the foregoing, defendant’s motion to dismiss (DE 44) is DENIED. Having
disposed of the instant motion, the court hereby LIFTS the stay on this case, and an initial order
on planning and scheduling will follow.
SO ORDERED, this the 7th day of November, 2019.
_________________________
LOUISE W. FLANAGAN
United States District Judge
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