LBS Innovations, LLC v. Nokia USA Inc. et al

Filing 103

MEMORANDUM OPINION AND ORDER - Nokia Corporation (See Amended Complaint dkt #54) and Nokia USA Inc. terminated., Attorney Allison H Altersohn and Allen Franklin Gardner terminated.. Signed by Judge Rodney Gilstrap on 06/21/2016. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
§
§
§
§ No. 2:15-cv-1972-JRG
v.
§
NOKIA USA INC., NOKIA CAPITAL, INC., §
HERE HOLDING CORPORATION, HERE §
NORTH AMERICA LLC, NOKIA APPS
§
LLC, AND YAHOO! INC.,
§
Defendants.
§
§
LBS INNOVATIONS, LLC,
Plaintiff,

MEMORANDUM OPINION AND ORDER
Before the Court is the motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) filed by
Defendants Nokia Corporation’s and Defendant Nokia USA Inc.’s (the “Nokia Defendants”) (Dkt.
No. 48). For the reasons stated below the Motion is GRANTED IN PART. The claims against
the Nokia Defendants are DISMISSED WITHOUT PREJUDICE.
I.

BACKGROUND
The following facts come from the Second Amended Complaint (the “Complaint”) (Dkt. No.

91), which on a motion to dismiss are assumed to be true. Bustos v. Martini Club, Inc., 599 F.3d
458, 461 (5th Cir. 2010).1
Plaintiff LBS Innovations, LLC (“LBSI”) is a Texas limited liability company with its
principal place of business in Austin, Texas. (Complaint at ¶ 1.) Plaintiff is the owner by
assignment of United States Patent No. 6,091,956 (“the ’956 Patent”) entitled “Situation
Information System.” (Id. at ¶ ¶ 19, 20.)

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On May 10, 2016, Plaintiff filed the Second Amended Complaint. Pursuant to stipulation, the parties agree that the
briefing on the Motion applies fully to Plaintiff’s Second Amended Complaint. (Dkt. No. 90 at 2.)

Defendant Nokia Corporation is a Finnish corporation with its principal place of business in
Espoo, Finland. (Id. at ¶ 2.)

Defendant Nokia USA Inc. (“Nokia USA”) is a Delaware

Corporation with its principal place of business located in Sunnyvale, California. (Id. at ¶ 3.)
Nokia USA is a wholly owned subsidiary of Nokia Corporation. (Id.)
Defendants HERE North America LLC, HERE Apps LLC, and HERE Holding Corporation,
are Delaware entities with principal places of business in Chicago, Illinois (collectively, the “Here
Defendants”). (Id. at ¶ ¶ 4–6.) HERE Apps LLC and HERE Holding Corporation LLC are wholly
owned subsidiaries of HERE Holding Corporation. (Id.) HERE Holding Corporation is a wholly
owned subsidiary of Microsoft Mobile Inc., which up until April 25, 2014, was a wholly owned
subsidiary of Nokia Corporation under its previous name, Nokia Inc. (Id.)
Plaintiff alleges that the Nokia Defendants have infringed Claim 11 of the `956 Patent by
making, using, selling, or offering for sale various systems and devices that employed mapping
and location based services. According to Plaintiff, the Nokia Defendants infringe Claim 11 as
part of a joint enterprise it calls “the Nokia Group,” which it defines as “Nokia Corporation, Nokia
USA, Nokia, Inc., HERE Holding, HERE North America and HERE Apps.” (Id. at ¶¶ 11, 21,
22.) According to the Complaint, since at least 2010, the Nokia Group operated as a joint
enterprise in connection with the activities alleged to constitute infringement of Claim 11 of the
`956 Patent. (Id. at ¶ 11.) Claim 11 is a method claim.
In 2006, Nokia Corporation acquired a German company engaged in the mapping and
location information business called “gate5.” (Id. at ¶ 9.) Between 2007 and 2008, Nokia
Corporation acquired a company called NAVTEQ Corporation (“NAVTEQ”), a company also
engaged in the mapping and location information business. (Id.)

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From 2010 to 2015, Nokia Corporation implemented a business strategy involving the use of
its mapping and location services which was implemented by the Nokia Group. In 2010, using
the assets and operations of NAVTEQ and Nokia gate5, as well as other entities owned and
controlled by it, Nokia Corporation, through a subsidiary Nokia, Inc., began to offer mapping and
location services under the name “Ovi Maps.” (Id. at ¶ 9.) In 2011, Nokia Corporation changed
the name of this business segment to “Nokia Maps.” (Id.) In 2012, Nokia Corporation renamed
NAVTEQ to HERE Holding Corporation and changed the name of its mapping and location
services business segment to “HERE.” (Id.)
Throughout this period, the Nokia Group controlled these mapping and location services
through a group of senior executives called the “Nokia Group Leadership Team” (formerly the
“Nokia Leadership Team” and the “Group Executive Board”). (Id. at ¶ 12.) During the allegedly
infringing period, the Nokia Group Leadership Team conducted the overall business operations of
Nokia Corporation and its subsidiaries under the name “Nokia.” (Id.)
On March 18, 2016, the Nokia defendants filed a motion to dismiss under Rule 12(b)(6).
II.

LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint if the

complaint “fail[s] to state a claim upon which relief can be granted.” The court may consider “the
complaint, any documents attached to the complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.)
L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). While the court must accept all
well-pleaded facts as true, and view those facts in the light most favorable to the plaintiff, Bustos,
599 F.3d at 461, the Court need not accept as true conclusory allegations and allegations

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contradicted by other allegations within Plaintiff’s own complaint, Rosas v. Bexar Cty., No.
5:14-CV-1082-DAE, 2015 WL 1955406, at *5 (W.D. Tex. Apr. 29, 2015).
The Court must then consider whether those alleged facts state a claim for relief that is
“plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is
plausible on its face when the facts pleaded, accepted as true, allow 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). “Determining whether a complaint states a plausible claim for relief
will . . . be a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
“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).

Typically, to adequately state a claim for direct

infringement of a method claim, the complaint must allege that the accused infringer performed
each step of the claimed method. Where the actions of multiple entities combine to perform every
step of a claimed method, the claim is directly infringed by an entity only if (1) that entity “directs
or controls” the performance of others or (2) the entities comprise a “joint enterprise” such that
they act as if they were a single entity with respect to the allegedly infringing activity. Id. at 1013.
To prove the existence of a joint enterprise, Plaintiff must show: (1) an agreement, express or
implied, among the members of the group; (2) a common purpose to be carried out by the group;
(3) a community of pecuniary interest in that purpose among the members and (4) an equal right to
a voice in the direction of the enterprise, which gives an equal right of control. Id.

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III.

ANALYSIS
Plaintiff does not argue that it has alleged either (1) that Nokia Corporation or Nokia USA

performs each step of Claim 11 or (2) that the performance of each step of the claim of Claim 11
can be attributed to either entity individually. Instead it asserts that it has adequately pled that the
Nokia Defendants, as part of the Nokia Group, jointly infringe the ‘956 Patent pursuant to the joint
enterprise doctrine, and that pursuant to the joint enterprise doctrine, it need not plead facts
identifying which particular defendants were responsible for which acts of infringement. (Dkt.
No. 84 at 20.) According to Plaintiff, it is sufficient at this stage to allege facts showing that the
Nokia Group as a joint enterprise engaged in acts of direct and indirect infringement. (Id.)
The Nokia Defendants argue that Plaintiff has not pled any facts that would plausibly lead
to the conclusion that the Nokia Defendants, Nokia Inc., and the HERE Defendants formed a joint
enterprise. The Court agrees. In particular, Plaintiff has failed to plausibly set forth a joint
enterprise theory of divided infringement because (1) the Complaint does not establish the
plausibility of an enterprise in which the members share an equal right of control and (2) the
Complaint fails to include any facts in its pleading suggesting a community of pecuniary interest.2
First, Plaintiff argues that its allegation that the “Nokia Group Leadership Team” comprises

senior executives from the various business segments establishes the plausibility of, among other
things, an equal right of control among the members of the enterprise. Plaintiff is mistaken. At
most, Plaintiff’s allegation establishes that the Nokia Group Leadership Team represented the
interests of different business segments within the Nokia corporate structure. However, Plaintiff
does not allege that this leadership team comprises persons representing the interests of each
defendant. Thus, what is missing is any allegation that these business segments align with the
2

In light of the deficiencies identified in this Opinion and Order, the Court does not address the Nokia Defendants’
other arguments for dismissal at this time.

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different corporate entities that comprise the alleged joint enterprise. Absent such an allegation,
the Court cannot draw the reasonable inference that each member of the alleged joint enterprise
had an equal voice, let alone any voice, in directing the conduct of the Nokia Group.
In fact, the notion that a parent corporation and its subsidiaries would share an equal right
of control of an executive board responsible for conducting the overall business operations is
questionable on its face. Here, that questionable notion is further undercut by Plaintiff’s own
allegations. For example, Plaintiff alleges that Nokia Corporation “as well as other entities
owned and controlled by Nokia Corporation began to offer mapping and location services under
the name ‘Ovi Maps’.” (Complaint ¶ 9) (emphasis added). Nokia Corporation “controlled the
operations” of Ovi Maps, later renamed “Nokia Maps” in 2011 and “HERE” in 2012. (Id.) These
allegations are certainly consistent with a “direct and controls” theory of divided, direct
infringement; they are not, however, consistent with the joint enterprise theory Plaintiff now
espouses.
Second, the Complaint fails to sufficiently allege a community of pecuniary interest. To
establish this element, Plaintiff relies exclusively on the truth of statements in material extrinsic to
the Complaint, namely, SEC filings attached to its opposition. The Court declines to do the same.
See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1018 (5th Cir. 1996). While the Court
could judicially notice the fact that Nokia’s consolidated financial statements contain both the
accounts of Nokia’s parent and its subsidiary companies, see id., that fact alone would still fall
well short of plausibly establishing a community of pecuniary interest among the members of the
Nokia Group.3 Plaintiff does not identify any other allegations in its Complaint to support a
community of pecuniary interest among the Nokia Group. Indeed, there are none.

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Were the Court consider the statements in the SEC Filings, the Court notes that they do not appear to support

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Finally, the Court notes that if the allegations in this Complaint were sufficient to state a
plausible claim of divided infringement under the joint enterprise doctrine, nearly every corporate
family having an executive board controlling the overall business operations of its subsidiaries
could, at the pleading stage, plausibly be characterized a joint enterprise under 35 U.S.C. § 271(a).
That is plainly not the thrust of Akamai.

There may be circumstances in which a parent

corporation and one or more of its subsidiary corporations might join together to form a joint
enterprise, and then subsequently jointly infringe a patent during the operation of the joint
enterprise. Assuming such a case, Plaintiff must come forward and plead facts concerning the
alleged joint enterprise beyond that which could be said for innumerable conglomerate or large
multinational corporations.

However, merely identifying a parent corporation, subsidiary

corporations, and the existence of an executive board responsible for conducting the overall
business of the corporate group, as Plaintiff does here, will not suffice. See, e.g., Pureworks, Inc. v.
Brady Corp., No. 3:09-CV-983, 2010 WL 3724229, at *10 (M.D. Tenn. Sept. 15, 2010).
Plaintiff’s direct and indirect infringement claims against the Nokia Defendants rely on the
plausibility of a joint enterprise. Since the Court finds that Plaintiff’s joint enterprise theory fails,
so must the Complaint.
IV.

CONCLUSION
For the reasons set forth herein, the Motion is GRANTED IN PART and the claims

against the Nokia Defendants are DISMISSED WITHOUT PREJUDICE. Because the Court
has dismissed all claims against the Nokia Defendants, the Court does not consider the other issues
raised in the Motion.

Plaintiff’s joint enterprise theory. “The Group” referenced by the SEC filings does not appear to be co-extensive with
the Nokia Group as alleged in the Complaint. Rather, as the Nokia Defendants point out, the Group refers to the
overall Nokia corporate group, which includes all of its businesses, and not merely the members of the Nokia Group.

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SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 21st day of June, 2016.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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