Adidas America, Inc et al v. Skechers USA, Inc.

Filing 143

Opinion and Order - Defendant Skecher's Motion to Dismiss Plaintiffs' Willful Infringement Claims (ECF 51 ) is GRANTED. Signed on 6/12/2017 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

ADIDAS AMERICA, INC., a Delaware
corporation; ADIDAS AG, a foreign entity,
Plaintiffs,

Case No. 3:16-cv-1400-SI
OPINION AND ORDER DISMISSING
WILLFUL INFRINGEMENT

v.
SKECHERS USA, INC., a Delaware
corporation,
Defendant.
Stephen M. Feldman, PERKINS COIE LLP, 1120 NW Couch Street, Tenth Floor, Portland, OR
97209; Mitchell G. Stockwell, KILPATRICK TOWNSEND & STOCKTON LLP, 1100 Peachtree Street,
Suite 2800, Atlanta, GA 30309; Matias Ferrario and Michael Morlock, KILPATRICK TOWNSEND
& STOCKTON LLP, 1001 West Fourth Street, Winston-Salem, NC 27101. Of Attorneys for
Plaintiffs.
Kenneth R. Davis II and Parna A. Mehrbani, LANE POWELL PC, 601 SW Second Avenue,
Suite 2100, Portland, OR 97204; Mark A. Samuels, Brian M. Berliner, Andrea LaFountain, and
Sina S. Aria, O’MELVENY & MYERS LLP, 400 S. Hope Street, Suite 1800, Los Angeles, CA
90071; Cameron W. Westin, O’MELVENY & MYERS LLP, 610 Newport Center Drive, 17th Floor,
Newport Beach, CA 92660. Of Attorneys for Defendant.
Michael H. Simon, District Judge.
Plaintiffs adidas America, Inc. and adidas AG (collectively, “adidas”) bring this lawsuit
against Defendant Skechers USA (“Skechers”) for patent infringement. Plaintiffs allege that

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Defendant’s “Mega Blade 2.0” and “Mega Blade 2.5” shoes (collectively, the “Mega Blade
shoes”) infringe on Plaintiffs’ United States Patent Nos. 9,339,079 (the “’079 patent”)
and 9,345,285 (the “’285 patent”) (collectively, the “patents-in-suit”). Pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure, Defendant moves to dismiss Plaintiffs’ claims of willful
infringement. For the reasons stated below, the Court grants Defendant’s motion.
STANDARDS
A motion to dismiss for failure to state a claim may be granted only when there is no
cognizable legal theory to support the claim or when the complaint lacks sufficient factual
allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual
allegations, the court must accept as true all well-pleaded material facts alleged in the complaint
and construe them in the light most favorable to the non-moving party. Wilson v. HewlettPackard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629
F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint
“may not simply recite the elements of a cause of action, but must contain sufficient allegations
of underlying facts to give fair notice and to enable the opposing party to defend itself
effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from
the factual allegations must be drawn in favor of the plaintiff. Newcal Indus., Inc. v. Ikon Office
Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the
plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556
U.S. 662, 678-79 (2009).
A complaint must contain sufficient factual allegations to “plausibly suggest an
entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the
expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial
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plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
BACKGROUND
Adidas AG is the owner by assignment of the patents-in-suit. Adidas America is the
exclusive licensee in the United States under the patents-in-suit. The ’079 patent is titled “Shoe
and Sole.” Issued on May 17, 2016, the ’079 patent describes the invention as including specific
“leaf spring elements” intended to provide cushioning properties that minimize disadvantages
associated with the use of foamed materials, which are typically used in shoe construction.
The ’285 patent also is titled “Shoe and Sole.” Issued on May 24, 2016, the ’285 patent describes
the invention similarly. On July 11, 2016, Plaintiffs filed their complaint against Defendant in
this action, alleging that Defendant’s Mega Blade shoes infringe the patents-in-suit.
Plaintiffs allege that Defendant directly and willfully infringed both patents-in-suit and
that Defendant also infringed on the patents-in-suit indirectly by inducement. As alleged by
Plaintiffs, the ’285 patent application was published on June 16, 2011, and the ’079 patent
application was published nearly five years later, on March 3, 2016. Plaintiffs also allege that
adidas introduced its Springblade shoe in June 2013 and its Springblade Ignite shoe in
February 2015. (Unless otherwise indicated, the Court will refer in this Opinion and Order to
both the Springblade shoe and the Springblade Ignite shoe simply as the “Springblade shoes.”)
Plaintiffs further allege that the Springblade shoes practice the patents.
After publication of a patent application, the claims made, as well as any further changes
in the application, are available for review by the public. According to Plaintiffs, Defendant or its
agents had access to, and allegedly actually accessed, the published applications leading to the
patents-in-suit before the patents issued. Also according to Plaintiffs, Defendant was aware,
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before the filing of this lawsuit and even before the issuance of the patents, of the scope of patent
protection that adidas was seeking—and would later be awarded by the U.S. Patent Office—for
adidas’s Springblade shoe technology. Id.
Plaintiffs further allege that they launched their commercial implementation of the
patents-in-suit in the form of the Springblade shoes before Defendant launched its accused Mega
Blade shoes. According to Plaintiffs, Defendant had access to, and allegedly copied, the features
and technology of Plaintiffs’ Springblade shoes—including the inventions covered by the
patents-in-suit—when Defendant created the Mega Blade shoes. Defendant’s copying is evident,
Plaintiffs assert, from a visual comparison of the parties’ respective shoes. Public reports also
show, according to Plaintiffs, that industry commenters and consumers recognized that Skechers
“copied” the design and features of the Springblade shoes.
DISCUSSION
Defendant moves to dismiss Plaintiffs’ willful infringement claims, asserting that the
Complaint fails to allege that Defendant had pre-suit knowledge of the actual patents-in-suit.
Defendant argues that Plaintiffs’ allegations that Defendant had pre-suit knowledge of the
pending applications for the patents-in-suit are insufficient to state a claim for willful
infringement.
Plaintiffs respond that the Complaint contains plausible allegations that support several
bases for enhanced damages. First, Plaintiffs argue that they have expressly alleged that
Defendant had knowledge of the “patents,” see ECF 1, ¶¶ 41, 48, and that these allegations are
supported by other allegations that Defendant copied adidas’s designs and had knowledge of, and
access to, the published applications and the issued patents before Plaintiffs filed their
Complaint. According to Plaintiffs, all that is required for an award of enhanced damages is
sufficiently “culpable behavior.” Plaintiffs argue that the allegations regarding visual evidence of
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copying, which has been recognized by industry analysts and consumers, sufficiently allege
Defendant’s culpable behavior and requisite knowledge. Second, Plaintiffs argue that Plaintiffs’
allegations that Defendant was “willfully blind” to the patents-in-suit also are independently
sufficient to prove knowledge of a patent and, thus, support Plaintiffs’ claim of willfulness.
A. Enhanced Damages for Willful Infringement
“Section 284 of the Patent Act provides that, in a case of infringement, courts ‘may
increase the damages up to three times the amount found or assessed.’” Halo Elecs., Inc. v. Pulse
Elecs., Inc., 136 S. Ct. 1923, 1928 (2016) (quoting 35 U.S.C. § 284). “[T]here is no precise rule
or formula for awarding damages under §284.” Id. at 1932 (quotation marks omitted). “The sort
of conduct warranting enhanced damages has been variously described in our cases as willful,
wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—
characteristic of a pirate.” Id. “District courts enjoy discretion in deciding whether to award
enhanced damages, and in what amount. But through nearly two centuries of discretionary
awards and review by appellate tribunals, the channel of discretion ha[s] narrowed, so that such
damages are generally reserved for egregious cases of culpable behavior.” Id. (citation and
quotation marks omitted) (brackets in original).
B. Proving Willful Infringement
Whether infringement is “willful” is by definition a question of the infringer’s intent, the
answer to which must be inferred from all of the circumstances. Ortho Pharm. Corp. v. Smith,
959 F.2d 936, 944 (Fed. Cir. 1992); Gustafson, Inc. v. Intersystems Indus. Prods., Inc., 897 F.2d
508, 510-11 (Fed. Cir. 1990)); see also Friedman v. Live Nation Merch., Inc., 833 F.3d 1180,
1186 (9th Cir. 2016) (“A determination of willfulness requires an assessment of a defendant’s
state of mind.”). “Courts consider several factors when determining whether an infringer has

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acted in bad faith and whether damages should be increased.” Liquid Dynamics Corp. v.
Vaughan Co., Inc., 449 F.3d 1209, 1225 (Fed. Cir. 2006). They include:
(1) whether the infringer deliberately copied the ideas or design of
another; (2) whether the infringer, when he knew of the other’s
patent protection, investigated the scope of the patent and formed a
good-faith belief that it was invalid or that it was not infringed; and
(3) the infringer’s behavior as a party to the litigation.
Read Corp. v. Portec Inc., 970 F.2d 816, 827 (Fed. Cir. 1992), superseded on other grounds as
recognized in Hoechst Celanese Corp. v. BP Chems. Ltd., 78 F.3d 1575, 1578 (Fed. Cir. 1996).
Other circumstances that courts consider, “particularly in deciding on the extent of
enhancement,” are: (4) the infringer’s size and financial condition; (5) the closeness of the
case; (6) the duration of the infringer’s misconduct; (7) any remedial action taken by the
infringer; (8) the infringer’s motive to harm; and (9) whether the infringer attempted to conceal
its misconduct. Read, 970 F.2d at 827 (emphasis added).
Knowledge of the patent by the alleged infringer is a prerequisite to proving infringement
and, thus, a prerequisite to proving willful infringement. Gustafson, 897 F.2d at 510-11 (“[A]
party cannot be found to have ‘willfully’ infringed a patent of which the party had no
knowledge.”); accord WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016)
(reaffirming that, following Halo, “[k]nowledge of the patent alleged to be willfully infringed
continues to be a prerequisite to enhanced damages”).
Moreover, [t]o willfully infringe a patent, the patent must exist and one must have
knowledge of it.” State Indus., Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985)
(emphasis removed and emphasis added). Therefore, “a party cannot be held liable for
‘infringement,’ and thus not for ‘willful’ infringement, of a nonexistent patent.” Gustafson, 897
F.2d at 510 (emphasis in original); accord State, 751 F.2d at 1236-37. It follows that an
infringer’s knowledge of the patent application cannot, standing alone, constitute knowledge of
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the resulting, or issued, patent-in-suit. State, 751 F.2d at 1236-37 (explaining that “[f]iling an
application is no guarantee any patent will issue and a very substantial percentage of applications
never result in patents” and that “[w]hat the scope of claims in patents that do issue will be is
something totally unforeseeable”).
C. Pleading Willful Infringement
To avoid dismissal under Rule 12(b)(6), a patentee must plead sufficient facts plausibly
to support the allegation that the infringer had knowledge of the patent-in-suit (as well as the
allegation of infringement). Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284, 1290
(Fed. Cir. 2007); Virginia Innovation Scis. v. Samsung Elecs. Co., Ltd., 983 F. Supp. 2d 700, 708
(E.D. Va. 2013); see also Sentry Protection Prods., Inc. v. Eagle Mfg. Co., 400 F.3d 910, 918
(Fed. Cir. 2005) (holding that under the rule announced by the U.S. Supreme Court in Dunlap v.
Schofield, 152 U.S. 244 (1894), in order to state a claim for willful infringement, a patentee must
allege that the infringer acted “with a knowledge of the patent and of [its] infringement”).
Pleading facts that the infringer merely had knowledge of the patent application is insufficient,
without more, plausibly to support an allegation that the infringer had knowledge of the patentin-suit. See, e.g., Virginia Innovation, 983 F. Supp. 2d at 708-09 (citing State, 751 F.2d at 1236)
(“[I]t is insufficient to allege knowledge of a patent application without further alleging
knowledge of the patent.”).
Plaintiffs have expressly alleged that Defendant had knowledge of the patents-in-suit. See
ECF 1, ¶¶ 41, 48. Plaintiffs, however, offer no additional factual allegations to support that
conclusory assertion. Plaintiffs do not allege, for example, how or when Defendant acquired its
knowledge of the patents-in-suit. As a matter of law, Plaintiffs could not have acquired
knowledge of the patents-in-suit before their issuance in May 2016. Thus, even though Plaintiffs
have alleged the conclusion that Defendant accessed and copied the applications of the patentsPAGE 7 – OPINION AND ORDER DISMISSING WILLFUL INFRINGEMENT

in-suit before their issuance, the earliest dates on which Defendant could have acquired
knowledge of the actual patents-in-suit were May 17, 2016 for the ’079 patent and May 24, 2016
for the ’285 patent.
Plaintiffs, however, do not actually allege that Defendant acquired knowledge of the
issuance of the patents-in-suit. Plaintiffs also do not allege that Defendant actively monitored the
progress of Plaintiffs’ patent applications, so that Defendant would have learned of their issuance
when they issued. Plaintiffs also do not allege that they provided Defendant with any notice that
the patents-in-suit had issued. Nor do Plaintiffs allege that Defendant actually learned of the
issuance of the patents-in-suit before Plaintiff commenced this lawsuit. Plaintiffs merely allege
the relevant dates of application and issuance and the conclusion that Defendant had the requisite
knowledge. In other words, Plaintiffs plead no facts from which the Court may draw the
reasonable inference that Defendant knew of the patents-in-suit either when they issued or any
time before Plaintiffs filed this lawsuit. Iqbal, 556 U.S. at 678. Thus, Plaintiffs’ allegations are
insufficient to state a claim for willful infringement based on Defendant’s conduct before the
lawsuit was filed. See Starr, 652 F.3d at 1216 (allegations in a complaint “may not simply recite
the elements of a cause of action”); Iqbal, 556 U.S. at 678-79 (courts need not credit a plaintiff’s
conclusions that are couched as factual allegations).
The Court next considers whether Plaintiffs have sufficiently stated a claim for willful
infringement based on Defendant’s post-suit conduct. There is no dispute that Plaintiffs’
Complaint provided Defendant with notice of the patents-in-suit, as well as Plaintiffs’ allegations
of infringement. Plaintiffs also allege that after Defendant received that notice, Defendant
continued to make and sell the allegedly infringing Mega Blade. A patentee, however, must have
a good faith basis for alleging willful infringement at the time when the complaint is filed. In re

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Seagate Tech., LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007), abrogated by Halo, 136 S. Ct. 1923
(2016) (citing Fed. R. Civ. Pro. 8, 11(b)); see also Mentor Graphics Corp. v. EVE-USA, Inc., 851
F.3d 1275, 1297 (Fed. Cir. 2017) (“The relevant date for determining which conduct is pre-suit is
the date of the patentee’s affirmative allegation of infringement.”). “So a willfulness claim
asserted in the original complaint must necessarily be grounded exclusively in the accused
infringer’s pre-filing conduct.” Seagate, 497 F.3d at 1374.
In other words, there can be no infringement of a patent, willful or otherwise, until the
patent issues and the defendant learns of its existence and alleged infringement. If the defendant
does not learn of the patent’s existence until the plaintiff files a complaint for infringement, there
is no basis upon which the plaintiff can plead that the defendant’s infringement was willful. Cf.
Power Lift, Inc. v. Lang Tools, Inc., 774 F.2d 478, 482 (Fed. Cir. 1985) (distinguishing between
cases where the “[infringer’s] first notice of the existence of the patent came with the filing of
the infringement suit against it”—and, thus, there was no basis upon which to prove
willfulness—from cases where the “[infringer] had knowledge of the existence of the patent the
day it issued[,]” which was before the filing of the complaint). Thus, Plaintiffs have failed to
state a claim for willful infringement based on Defendant’s post-suit conduct.
D. Willful Blindness
Plaintiffs also argue that allegations in the Complaint that Defendant was “willfully
blind” to the patents-in-suit is independently sufficient to plead knowledge of the patents-in-suit
for purposes of alleging willful infringement. Under the doctrine of willful blindness, a
defendant who “subjectively believe[s] that there is a high probability that a fact exists” and who
“takes deliberate actions to avoid learning of that fact” is “just as culpable as those who have
actual knowledge.” Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 769 (2011). It
is unclear, however, that the doctrine of willful blindness as articulated in Global-Tech, an
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induced infringement case, applies in the direct infringement analysis context. See Nonend
Inventions, N.V. v. Apple, Inc., 2016 WL 1253740, *2 (E.D. Tex. Mar. 11, 2016), report and
recommendation adopted sub nom Nonend Inventions v. Apple, Inc., 2016 WL 1244973 (E.D.
Tex. Mar. 30, 2016) (noting absence of authority supporting application of willful blindness
doctrine in direct infringement context).
Plaintiffs cite no authority to support the contention that it does. Even assuming,
however, that the doctrine of willful blindness does apply to direct infringement cases and that
Defendant subjectively believed there was a high probability that the patents-in-suit had issued,
Plaintiffs fail to allege any facts supporting the assertion that Defendant took any deliberate
action to avoid learning of the issuance of the patents-in-suit. Plaintiffs argue only that the
allegations that Defendant accessed the patent applications and copied the technology of the
Springblade shoes are sufficient to support such a finding. Such conduct, even if true, however,
does not indicate that Defendant took action to avoid learning of the issuance of the patents-insuit.
CONCLUSION
Defendant Skecher’s Motion to Dismiss Plaintiffs’ Willful Infringement Claims (ECF 51)
is GRANTED.
IT IS SO ORDERED.
DATED this 12th day of June, 2017.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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