Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 184

RESPONSE in Opposition re 175 MOTION to Dismiss For Failure to State a Claim filed by Eolas Technologies Incorporated. (Attachments: # 1 Exhibit 1)(McKool, Mike)

Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Doc. 184

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION Eolas Technologies Incorporated, Plaintiff, vs. Adobe Systems Inc., Amazon.com, Inc., Apple Inc., Argosy Publishing, Inc., Blockbuster Inc., CDW Corp., Citigroup Inc., eBay Inc., Frito-Lay, Inc., The Go Daddy Group, Inc., Google Inc., J.C. Penney Company, Inc., JPMorgan Chase & Co., New Frontier Media, Inc., Office Depot, Inc., Perot Systems Corp., Playboy Enterprises International, Inc., Rent-A-Center, Inc., Staples, Inc., Sun Microsystems Inc., Texas Instruments Inc., Yahoo! Inc., and YouTube, LLC Defendants. § § § § § § § § § § § § § § § § § § § § §

Civil Action No. 6:09-CV-00446-LED

JURY TRIAL

PLAINTIFF EOLAS' RESPONSE TO DEFENDANT JPMORGAN'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT

Of the more than twenty defendants named in Plaintiff Eolas' Complaint (see dkt. 1), only one, JPMorgan moved to dismiss it. The reason none of the other defendants moved to dismiss is straightforward: the Complaint here breaks no new ground. Like scores of other patent cases filed in this District (and before this Court), the Complaint here accuses JPMorgan of patent infringement in the United States, identifies specific patents and accused instrumentalities, recognizes the Court's jurisdiction, and prays for damages and injunctive relief. Despite this, JPMorgan treats the Complaint as something revolutionary, and somehow

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improper. JPMorgan argues that Twombly and Iqbal changed the rules, abrogated the longestablished pleading standards in patent cases, did away with the standard form patent complaint found in the Federal Rules and now requires a detailed pleading standard in patent cases that Eolas failed to meet in its Complaint. JPMorgan is mistaken--and the weight of the authority shows its error. The instant Complaint, which tracks the form patent complaint found in the Federal Rules, does not offend Twombly or Iqbal. The Federal Circuit has explicitly considered patent complaints in light of Twombly, and found that compliance with the sample forms in the Federal Rules was sufficient to put a defendant on notice of the claims asserted against him. Like the Federal Circuit, at least three recent cases from the Eastern District (and many more from other courts) have rejected the very arguments JPMorgan makes. These conclusions are not surprising: the Federal Rules offer explicit guidance by providing sample forms for patent claims. In contrast, no such guidance exists for the antitrust and Bivens claims that were at issue in Twombly and Iqbal. It is hard to imagine that a sample form, provided with the Federal Rules, would fail to comply with the notice standards required by the selfsame rules. These considerations apply with greater force in this Court, where patent holders are forced to tip their hands early in discovery. Eolas' infringement contentions will more

specifically identify the accused instrumentalities and compare the accused instrumentalities to the asserted claims of the patents-in-suit on an element-by-element basis. While JPMorgan might prefer to receive such information along with the Complaint, such information is not included in the form pleading for patent cases, and is certainly not required to provide "fair notice" of Plaintiffs' claims under Rule 8.

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Plaintiffs' Complaint provides fair notice under the Federal Rules; thus, the Court should deny JPMorgan's Motion to Dismiss in its entirety. I. STANDARD OF REVIEW Motions to dismiss are purely procedural questions that do not pertain to patent law. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356 (Fed. Cir. 2007). For this reason, courts apply the law of regional circuits to determine if "in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Id. at 1356 (citing Copeland v. Wasserstein, Perella & Co., 278 F.3d 472, 477 (5th Cir. 2002)). "When deciding a motion to dismiss pursuant to Rule 12(b)(6), the complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true." PA Advisors, LLC v. Google, Inc., 2008 U.S. Dist. LEXIS 71285 (E.D. Tex. Aug. 7, 2008) (Folsom, J.) (citing Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004); Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir. 1986)). A motion to dismiss under Rule 12(b)(6) is generally "viewed with disfavor and is rarely granted." FotoMedia Tech., LLC v. AOL, No. 2:07-CV-255, 2008 WL 4135906, at *1 (E.D. Tex. Aug. 29, 2008) (Ward, J.) (citing Lowrey v. Texas A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997)). II. A. ARGUMENT AND AUTHORITIES Rule 8 Requires Only a Short and Plain Statement Showing Entitlement to Relief

The Federal Rules include Forms in an appendix that serve as guidelines for drafting complaints, including complaints for patent infringement. FED. R. CIV. P. app. Form 18. The Federal Rules state that these Forms are examples of the brevity and simplicity of the pleading

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requirements. FED. R. CIV. P. 84. These Rules and Forms have long been relied on by plaintiffs when filing complaints for patent infringement in the Eastern District of Texas and other Federal jurisdictions. For patent cases, the crux of the Complaint requires less than two dozen lines:

FED. R. CIV. P. app. Form 18; McZeal, 501 F.3d at 1356-57. The Rules provide that the allegations in the forms are sufficient to state a claim. See Rule 84 ("The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate."); McZeal, 501 F.3d at 1356-57 (citing Conley v. Gibson, 355 U.S. 41, 47 (1957) (holding that the forms contained in the appendix to the Federal Rules "plainly demonstrate" the requirements for pleadings)); CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d 1376, 1379-80

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(N.D. Ga. 2007) (holding that Rule 84 controls and that the statements in Form 16 are sufficient for pleading direct, indirect, and willful infringement). The Forms conform to the civil case pleading requirements found in Rule 8(a). That rule includes three elements that must be included in claims for relief: (1) a short claim or plain statement of the grounds of the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief. FED. R. CIV. P. 8(a). Eolas' Complaint meets the requirements of Form 18 and Rule 8(a). Specifically, Eolas alleges that (1) jurisdiction is appropriate in the Eastern District of Texas (Complaint at ¶¶ 2528); (2) Eolas has the exclusive right to enforce the asserted patents (among other exclusive rights identified in the Complaint) (Complaint at ¶¶ 29-31); (3) "JPMorgan Chase has directly and/or indirectly infringed (by inducement and/or contributory infringement), and is continuing to infringe, directly and/or indirectly, the '906 Patent and/or the '985 Patent in this District or otherwise within the United States" (Complaint at ¶44); (4) the accused instrumentalities, including "web pages and content to be interactively presented in browsers, including, without limitation, the web pages and content accessible via www.jpmorgan.com, ... software, including, without limitation, software that allows content to be interactively presented in and/or served to browsers, ... computer equipment, including, without limitation, computer equipment that stores, serves, and/or runs any of the foregoing" infringe the asserted patents (Complaint at ¶44); and (5) JPMorgan has received actual notice of infringement (Complaint at ¶ 55). Eolas' Complaint also includes the required prayer for relief. See Complaint at 20-21.

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Because Eolas has tracked Form 18, it has satisfied all of the requirements of the Federal Rules, and the Court should deny JPMorgan's Motion to Dismiss. B. The Patent Infringement Form Pleading Does Not Offend Twombly or Iqbal

Furthermore, the patent form pleading has already been tested by Twombly, and passed unscathed. In McZeal v. Sprint Nextel Corp., the Federal Circuit found that pleadings in patent cases are governed by Rule 8(a) and the illustrative Forms included in the Appendix, and that use of those forms still passed muster after Twombly. Id. at 1356-57. The court relied on Form 18 as evidence of the information that should be included in a complaint for patent infringement and noted that "[i]t logically follows that a patentee need only plead facts sufficient to place the alleged infringer on notice as to what he must defend."1 Id. (citing Bell Atl. Corp. v. Twombly, 129 S. Ct. 1955, 1971 n.10 (2007). "[A] plaintiff in a patent infringement suit is not required to specifically include each element of the claims in the asserted patent" in the pleadings. Id. at 1357. See also Taltwell, LLC v. Zonet USA Corp., 2007 U.S. Dist. LEXIS 93465, at *40 (E.D. Va. Dec. 19, 2007) ("[Plaintiff] need not specify which claims of the [patent] have been performed by the allegedly infringing products."). McZeal's stance has been adopted by district courts in at least the Third, Fourth, Fifth, Seventh, Eighth, and Eleventh Circuits--including courts in the Eastern District of Texas.2 Iqbal noted that while "Rule 8 marks a notable and generous departure from the hypertechnical, code-pleaded regime of a prior era, . . . it does not unlock the doors of discovery for a

McZeal refers to "Form 16" instead of "Form 18" in its opinion. The Forms were renumbered in the 2007 amendments to the Federal Rules. Only the form number changed -- the content of "Form 16" and "Form 18" are the same. To the extent JPMorgan argues that McZeal is not applicable because the plaintiff in McZeal was pro se (and more liberal pleading standards generally apply to pro se litigants), the argument is overcome in the following section because courts in the Third, Fourth, Fifth, Seventh, Eighth, and Eleventh Circuits -- including courts in the Eastern District -- have applied McZeal to cases in which plaintiffs are represented by counsel.
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plaintiff armed with nothing more than conclusions." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). "In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. But Iqbal was not a patent caseit was a Bivens action accusing federal agents of discriminating against Arab Muslims in detentions following the terrorist attacks of September 11, 2001. Id. at 1951. While Iqbal applies the reasoning in Twombly to "all civil actions,"3 Form 18 clearly defines the requirements for complaints in patent cases. Complaints that track Form 18 satisfy the pleading requirements of the Federal Rules. FED. R. CIV. P. 84. McZeal, 501 F.3d at 135657; CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d at 1379-80. Patent cases are unique because the claims of the asserted patents identify the apparatus, method, or system that forms the basis of the infringement. JPMorgan is on notice of Eolas' infringement

allegations because the Complaint specifies the infringing instrumentalities and the patents define the infringing acts. Nothing more is required to meet the pleading requirements in Form 18 and Rule 8. The Federal Rules do not provide a sample form or any other specific guidance for the antitrust claims in Twombly or the Bivens claims in Iqbal. Thus, Twombly and Iqbal did not abrogate the use of Form 18 in patent cases--nor could they. The Supreme Court recognizes that Federal Rules cannot be amended by judicial interpretation. Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993); CBT Flint Partners, 529 F. Supp. 2d at 1379 ("As a general matter, I am loathe to assume that the Supreme Court [in Twombly] circumvented the normal channels for amending the Federal Rules.") (citing

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Swierkiewicz v. Sorema, 534 U.S. 506, 515 (2002)). While Twombly and Iqbal may provide guidance for interpreting the Federal Rules, they do not and cannot repeal the specific pleading forms contained therein. C. The Eastern District Has Adopted McZeal and Has Denied Similar Motions

Courts in this District have followed the Federal Circuit's lead in McZeal on at least three separate occasions, and have uniformly found that complaints comparable to the instant complaint provide sufficient notice. In FotoMedia Technologies, LLC v. AOL, the Court denied a motion to dismiss, relying on Form 18, Rule 8, and McZeal. See No. 2:07-CV-255, 2008 U.S. Dist. LEXIS 109403, at *5 (E.D. Tex. Aug. 29, 2008) (Ward, J.) ("[T]he Federal Circuit recently considered the issue, albeit in the context of a pro se plaintiff, and rejected the argument that [Twombly] changed the pleading requirements of Rule 8(a) in patent infringement cases."). The FotoMedia Court noted that neither Rule 8 nor McZeal "require the pleading of each individual element of a claim for indirect infringement." Id. at *8. A second Eastern District court performed a similar analysis and reached a similar result. PA Advisors, LLC v. Google Inc., No. 2:07-CV-480, 2008 U.S. Dist. LEXIS 71285 (E.D. Tex. Aug. 7, 2008) (Folsom, J.). In PA Advisors, the Court cited McZeal and agreed that Twombly did not change the pleading requirements of Rule 8. Id. at *18-20. The court denied defendants' motion to dismiss, finding that plaintiff "satisfied the liberal standards of Rule 8(a)." Id. at *19. Even more recently, an Eastern District court again denied a motion to dismiss--further rejecting the same arguments advanced by JPMorgan. WIAV Networks v. 3Com Corp., 5:09-cv00101-DF (E.D. Tex. Dec. 15, 2009) (Folsom, J.) (order denying motion to dismiss) (attached hereto as Exhibit 1). Relying upon McZeal, the court denied the defendant's motion to dismiss, noting that heightened fact pleading is not required under Twombly. Id. at 5. The court went on

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to explain that even after Iqbal and Twombly a complaint need not "specifically describe how [the defendant's] products practice the claimed methods or systems." Id. Moreover, absence of a claim construction and evidentiary record weighs heavily against dismissing a patent plaintiff's claims in the Eastern District. See e.g., OLA, LLC v. Builder Homesite, Inc., 2009 U.S. Dist. LEXIS 89766, at *11 (E.D. Tex. Sept. 29, 2009). Eolas' Complaint meets the requirements defined by the Federal Rules, the Federal Circuit, and courts in the Eastern District of Texas. For these reasons, the Court should deny JPMorgan's Motion to Dismiss in its entirety.4 III. CONCLUSION Eolas' Complaint satisfies the notice pleading requirements of the Rule 8(a) and closely tracks the exemplary form provided in the Federal Rules. Both the Federal Circuit and courts in the Eastern District have recognized that the pleading standards set out in the Federal Rules
As mentioned above, courts in other Circuits have adopted the Federal Circuit's holdings in McZeal and the Eastern District holding in FotoMedia in denying similar motions to dismiss and motions for more definite statements. See, e.g., Mark Iv Indus. Corp. v. Transcore, L.P., 2009 U.S. Dist. LEXIS 112069, at *7-9 (D. Del. Dec. 2, 2009) (rejecting the argument that Iqbal heightened pleading requirements for patent infringement plaintiffs, citing McZeal, and denying defendant's motion to dismiss); Sharafabadi v. Univ. of Idaho, 2009 U.S. Dist. LEXIS 110904, at *7 (W.D. Wash. Nov. 27, 2009) (citing McZeal and noting "[t]he Federal Circuit and a range of district courts have concluded that the sample complaint of Form 18 meets the Twombly standard"); Sorenson v. Dorman Prods., 2009 U.S. Dist. LEXIS 109706, at *4 (S.D. Cal. Nov. 24, 2009) (citing McZeal and denying a motion to dismiss); Bender v. Nokia Inc., 2009 U.S. Dist. LEXIS 92482, at *1 (N.D. Cal. Oct. 2, 2009) (citing McZeal and denying a motion to dismiss); Advanced Analogic Techs., Inc. v. Kinetic Techs., Inc., 2009 U.S. Dist. LEXIS 57953, at *2 (N.D. Cal. July 8, 2009) (citing McZeal and denying a motion to dismiss "because the claim is pled in conformity with the Federal Rules of Civil Procedure, Appendix of Forms"); S.O.I.T.E.C. Silicon on Insulator Tech., S.A. v. MEMC Elec. Matls., Inc., No. 08-292-SLR, 2009 U.S. Dist. LEXIS 13155, at *5 (D. Del. Feb. 20, 2009) (citing FotoMedia and holding that "[t]he complaint at bar provides the level of detail suggested by Form 18 and, therefore, passes muster"); Sikes Cookers & Grill, Inc. v. Vidalia Outdoor Prods., Inc., No. 1:08-CV-0750-JOF, 2009 U.S. Dist. LEXIS 13094, at *6-10 (N.D. Ga. Feb. 19, 2009) (citing FotoMedia, adopting McZeal, and denying a motion to dismiss); Edge Capture L.L.C. v. Lehman Bros. Holdings, Inc., No. 08 C 2412, 2008 U.S. Dist. LEXIS 83945, at *3-4 (N.D. Ill. Aug. 28, 2008) (adopting McZeal and denying a motion to dismiss allegations of both direct and indirect infringement); Schwendimann v. Arkwright, Inc., No. 08-162 ADM/JSM, 2008 U.S. Dist. LEXIS 56421, at *5 (D. Minn. July 23, 2008) (denying a motion to dismiss and adopting McZeal as the standard likely to be applied in the Eighth Circuit); Taltwell, LLC v. Zonet USA Corp., No. 3:07cv543, 2007 U.S. Dist. LEXIS 93465, at *39 (E.D. Va. Dec. 20, 2007) (adopting McZeal and denying a motion to dismiss); CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d 1376, 1379-81 (N.D. Ga. 2007) (holding that Twombly did not alter pleading standards - "especially in the patent context" in view of the Federal Rules, the Forms in the Appendix, and the Local Patent Rules that "require plaintiffs to disclose a great deal of extremely detailed information").
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comport with Twombly and Iqbal. Moreover, detailed infringement contentions are a matter of course in the Eastern District of Texas, and JPMorgan will soon receive detailed information concerning the accused instrumentalities identified in Eolas' Complaint. For these reasons, Eolas' Complaint meets all of the notice requirements in the Federal Rules, and JPMorgan's Motion to Dismiss should be denied.

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DATED: January 8, 2010.

Respectfully submitted, MCKOOL SMITH, P.C. /s/ Mike McKool Mike McKool Lead Attorney Texas State Bar No. 13732100 [e-mail] Douglas Cawley Texas State Bar No. 04035500 [e-mail] Luke McLeroy Texas State Bar No. 24041455 [e-mail] MCKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: [phone] Telecopier: [phone] Sam F. Baxter Texas State Bar No. 01938000 [e-mail] McKool Smith, P.C. 104 E. Houston St., Ste. 300 P.O. Box O Marshall, Texas 75670 Telephone: [phone] Telecopier: [phone] Kevin L. Burgess Texas State Bar No. 24006927 [e-mail] Steven J. Pollinger Texas State Bar No. 24011919 [e-mail] Josh W. Budwin Texas State Bar No. 24050347 [e-mail] MCKOOL SMITH, P.C. 300 West Sixth Street, Suite 1700 Austin, Texas 78701 Telephone: [phone] Telecopier: [phone] ATTORNEYS FOR PLAINTIFF EOLAS TECHNOLOGIES, INC.

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CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a). As such, this document was served on all counsel who have consented to electronic services on this the 8th day of January, 2010. Local Rule CV5(a)(3)(A). /s/ Josh Budwin Josh Budwin

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