Parallel Networks, LLC v. Adidas America, Inc. et al

Filing 268

MOTION to Dismiss Parallel Networks, LLC's Claims of Induced, Contributory, and Willful Infringement by Eastman Kodak Company, Kodak Imaging Network, Inc.. (Attachments: #1 Text of Proposed Order)(Richardson, Michael)

Parallel Networks, LLC v. Adidas America, Inc. et al

Doc. 268

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF' TEXAS TYLER DIVISION
) PARALLEL NETWORKS. LLC. Plaintiff,
)

v.)
ADIDAS AMERICA, INC., et al.

)
I
)

Case No. 6:10-CV-491-LED

Defendants

) )

DEF'ENDANTS EASTMAN KODAK COMPA¡¡-Y'S AND KODAK IMAGING NET\ryORK,INC.'S MOTION TO DISMISS PARALLEL NETWORKS, LLC'S CLAIMS OF' INDUCED, CONTRIBUTORY. AND TYILLFUL INFRINGEMENT
In Ashcroft v.

Iqbal,l29 S. Ct. 1937 (2009),

the United States Supreme Court made clear

that aplaintiff cannot state a valid claim by merely panoting the legal elements of a cause of action without providing any factual support for its allegations. But this is exactly what plaintiff Parallel Networks, LLC ("Parallel") does in alleging induced, contributory, and

willful

infringement against Eastman Kodak Company and Kodak Imaging Network, Inc. (collectively,

"Kodak"). Each of Parallel's claims of induced, contributory, and willful infringement against
Kodak simply regurgitates the elements of these causes of action without ø single specíJicføct

pertøiníng to Kodøk. ln fact, Parallel's claims against Kodak are copied word-for-word from the
induced, contributory, and willful infringement allegations that Parallel makes against more than

fifty other defendants:

o

In alleging induced infringement against Kodak, Parallel declares without citation or justification that"[Kodak] is and has been commifiing the act of inducing infringement by specifically intending to induce infringement" because it "knew or should have known that through its acts it was and is inducing infringement of the ' I I 1 patent." (Dkt. No. I at ffi 149, 209 .)

Dockets.Justia.com

o

In alleging contributory infringement against Kodak, Parallel simply asserts, without explanation, that "[Kodak] is and has been committing the act of contributory infringement... knowing that [the accused system] is a material part of the invention [and] was made and adapted for infringement of the [patent-in-suít]..." (Id.) And in alleging willful infringement, Parallel lumps Kodak with more than fifty other defendants and, without identiffing a single specific action taken by Kodak, asserts that all of the defendants' alleged infringement "was willful" because defendants "acted...despite an objectively high likelihood that their actions constituted infringement." (Id. at fl 305.)

o

If Parallel's boilerplate allegations against Kodak were suffrcient, every plaintiff in every
patent infringement case could state claims of induced, contributory, and willful patent

infringement by merely repeating the legal elements of these causes of action. This is not and
should not be the law. Parallel's claims of induced, contributory, and willful infringement
against Kodak should be dismissed.

I.

T'ACTUAL BACKGROT]ND
On September 23,2010, Parallel filed the complaint in this action, accusing more than

fifty defendants of infringing U.S. Patent No. 6,446,1 1 1 (the o" lI1. patent"). (Dkt. No.
305.) Parallel
accuses Kodak

1 at

flfl 64-

of: (1) direct infringement; (2) induced infringement; (3)

contributory infringement; and (a) willful infringement. Parallel's claim of induced infringement against Kodak comprises only two sentences:
On information and belief, since becoming aware of the '111 patent, [Kodak] is and has been committing the act of inducing infringement by specifically intending to induce infringement by providing the identified website to its clients and by aiding and abetting its use. On information and belief, [Kodak] knew or should have known that through its acts it was and is inducing infringement of the '111 patent.

(Id. atfT 149, 209.) Parallel does not identifu a single fact supporting this conclusory allegation. In fact, Parallel's inducement claim against Kodak is wordfor word identical to the índucement claim it møkes agøínst eøch of the more than Jiffy defendants in thß cøse. For example,
Parallel st¿tes as follows against defendant Andersen V/indows:

-)

_

On information and belief, since becoming aware of the '1 1 1 patent, ANDERSON V/INDOWS, INC., is and has been committing the act of inducing infringement by specifically intending to induce infringement by providing the identified website to its clients and by aiding and abetting its use. On information and belief ANDERSEN WINDOV/S,INC., knew or should have known that through its acts it was and is inducing infringement of the '111 patent.

(Id. at'||T93.)
Parallel's claim of contributory infringement against Kodak is also only two conclusory
sentences:

On information and belief, [Kodak] is and has been committing the act of contributory infringement by intending to provide the identified website to its clients knowing that it is a material part of the invention, knowing that its use was made and adapted for infringement of the '1 1 1 patent, and further knowing that the system is not a staple article or commodity of commerce suitable for substantially noninfringing use.

(Id. atn49,209.) In asserting contributory infringement against Kodak, Parallel againfails to
provide any factual information specific to Kodak. In fact, Parallel's contributory infringement
allegation against Kodak is again copied exactly from its allegations against the other defendants. For example, Parallel states as follows against defendant Adidas America, Inc: On information and beliet ADIDAS AMERICA, fNC. is and has been committing the act of contributory infringement by intending to provide the identified website to its clients knowing that it is a material part of the invention, knowing that its use \ ias made and adapted for infringement of the '1 I I patent, and further knowing that the system is not a staple article or commodity of commerce suitable for substantially noninfringing use.

(Id. atf 69.)
Parallel's willful infringement allegation is even more generic. Indeed, Parallel does not
make any allegation of willful infringement against Kodak specifically. Instead, it attempts to
accuse each of the more than

fifty defendants in this

case of

willful infringement in the same

single paragraph wíthout provìdíng ønyfactuøl support:

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On information and beliet prior to the filing of the complaint, Defendants' infringement was willful and continues to be willful. On information and belief prior to the filing of this Complaint, Defendants were aware of the '111 patent and knew or should have known that Defendants were infringing at least claim 1 of the '1 1 1 patent. On information and belief, Defendants in their infringing activities acted as they did despite an objectively high likelihood that their actions constituted infringement of a valid patent. The Defendants' infringing activities were intentional and willful in that the risk of infringement was known to Defendants or was so obvious that it should have been known to Defendants.

(td. aLlT30s.)

II.

ARGUMENT It is settled law that a plaintiff
does not state a claim by making unsupported conclusions

or simply restating the legal elements of a cause of action. According to the United States
Supreme Court, "[a] pleading that offers labels and conclusions or a formulaic recitation of the

elements of a cause of action will not do ... Nor does a complaint suffrce

if it tenders

naked

assertion[s] devoid of further factual enhancement." Iqbal,129 S.Ct. at 1949 (internal quotations and citation omitted); see also Nonis v. Hearst Trust, 500 F.3d 454, 464 (5th Cir. 2007) ("a formulaic recitation of the elements of a cause of action will not do") (internal

quotation and citation omifted).
Instead, a plaintiff must provide specificfactual supporl for each element of the allegations in its complaint See lqbal, 129 S. Ct. at 1949 ("To survive a motion to dismiss, a

Complaint must contain sufficient factual matter, accepted as true, to ostate a claim to relief that
is plausible on its face"') (internal citation omitted). As the Supreme Court stated in Bell

Atlantic Corp. v. Twombly, 550 U.S. 544 (2007}

a

plaintiff must include a "statement of

circumstances, occurrences, and events in support of the claim presented." 550 U.S. at 556 n.3

(internal citation and quotation omitted).

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If the plaintiff does not meet this standard, its claims must be dismissed pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. See Twombly,550 U.S. at

570 (claim must be dismissed where plaintiff does not provide any support for elements

of

claim); Iqbal,129 S. Ct. at 1949 ("Theadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.") (internal citation omitted). In

particular, where a plaintiff simply repeats the elements of its cause of action without any factual
support, the claims must be dismissed. See PSKS, Inc. v. Leegin Creative Leather Products, Inc.,
615 F.3d 412,417 (5th Cir. 2010) þleadings must go beyond conclusory statements that are

"'merely consistent with'

a defendant's

liability") (quoting lqbal, 129 S.Ct. at 1949).

A.

Parallel's Induced Infringement Claim Against Kodak Should Be Dismissed.

To state a claim of induced infringement, a plaintiff must allege and provide factual
support showing three elements:

(l)

the defendant knew about the patent at issue before the suit

was filed; (2) the defendant knowingly induced a third party to infringe the patent; and (3) the defendant possessed specific intent to encourage the third party's infringement. See Vita-Mix

Corp. v. Basic Holding, Inc., 581 F.3d l3

17

, 1328 (Fed. Cir. 2009) (induced infringement

requires that "the alleged inducer knew of the patent, knowingly induced the infringing acts, and
possessed a specific intent to encourage another's infringement of the patent").

Parallel does not (and can not) allege any such facts in accusing Kodak of induced

infringement. Instead, it robotically recites the elements of inducement without a single fact
specific to Kodak. In one conclusory parcgraph-ídenticøl to the chørge it makes øgøinst more

thønftfty other defendønts-Parallel

asserts that Kodak

"is and has been committing the act of

inducing infringement by specifically intending to induce infringement by providing the identified website to its clients and by aiding and abetting its use." (Dkt. No. 1 at !l$ A9;209.)
Parallel never states in its inducement allegation that Kodak knew of the '1
1

I

patent before suit

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was filed, does not provide any facts suggesting that Kodak had such knowledge, and does not

provide any facts showing that Kodak had specific intent to encourage infringement. As a result, its claim of induced infringement should be dismissed. See Reøltime Data LLC v. Stanley,No.

6:09-cv-326,2010WL2403779 at*6 (E.D. Tex, June 10,2010) (dismissing indirect
infringement claims for failing to identify facts that establish a plausible claim for relief;; Bender
v. Motorola,lnc., No. C09-1245,2010 WL 726739, at *4 (N.D. Cal. Feb. 26,2010) (dismissing

induced infringement claim because the plaintiff s "conclusory, fact-barren allegation fails to
state a claim for inducement to infringe ..."); XPoint Techs., Inc. v. Microsoft Corp., Civ. No.

09-628-SLR,2010 V/L 3187025 (D. Del. August 12,2010),at*6-7 (dismissing inducement claim where plaintiff does not "allege suffrcient facts that would allow the court to infer that
[defendants] had any knowledge" of the patent-in-suit).
Since the Supreme Court's decision in Iqbal, Federal Courts have routinely dismissed

inducement claims that, like Parallel's claim against Kodak, simply repeat the elements

of

inducement without any facts specific to the defendant's actions. ln Enlink Geoenerglt Services,

Inc. v. Jackson & Sons Drilling & Pump, Inc., for example, the plaintiff, like Parallel, "merely
restate[d] the elements of the infringement causes of action." No. C 09-03524,2010 V/L 1221861, *1-2 (\1.D. Cal. Mar. 24,2010). The Court found that under lqbal andTwombly,

without any specific factual support, the plaintiff s inducement claim must be dismissed:

Plaintiff s claims for indirect infringement ... are equally conclusory and uninformative. To prevail on an inducement claim, the patentee must
establish first that there has been direct infringement, and second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement. Here, Plaintíffføíls to allege øny føcts to support its índucement causes of action against [Defendønt]. Plaíntiffs complaint merely repeats the exact langaøgefrom the støtute withoat addíng ønyfactaøl øllegatíons. Mere conclusory recítøtíons of ø støtute are not sufficÍent under Rule I to pleød a cøuse of øctíon. Therefore, the Court dismisses the inducement claims against [Defendant].

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2010 WL 1221861, *2 (internal citations omitted) (emphasis added). The same result is required
here.

B.

Parallel's Contributory Infringement Claim Against Kodak Should Be
Dismissed.

To state a claim for contributory infringement, the plaintiff must allege and provide factual support for three elements: (1) that a third party directly infringed the patent-in-suit using
a component supplied

by the defendant; (2) thatthe defendant knew of the patent; and (3) that

the component the defendant supplied was "especially designed" for the infringing use. See

Lucent Techs. v. Gateway, Lnc.,580 F.3d 1301, 1320 (Fed Cir. 2009).
Parallel again utterly fails to meet this standard. Its entire contributory infringement allegation against Kodak is a cut-and-paste of the exøct same conclusory allegatíons it møkes agøinst the more

thønftf$ other defendønts in thß cøse. Parallel merely

asserts that Kodak

"is

and has been committing the act of contributory infringement" by operating a website'oknowing

that its use was made and adapted for infringement of the '1 1 1 patent, and further knowing that the system is not a staple article or commodity of commerce suitable for substantially

noninfringing use." (Dkt. No. 1 at flfl 149;209.) Parallel does not (and can not) make any
allegation in its contributory infringement claim that that Kodak knew of the '1 1 1 patent before

this suit was filed, does not state any facts showing that Kodak had this knowledge, and does not provide a single fact suggesting that Kodak specifically designed any product to infringe the '1 I 1 patent. As a result, Parallel's claim for contributory infringement should also be dismissed. See

Iqbal, I27 S.Ct at 1949-50 ("[Courts] are not bound to accept
as a factual

as

true alegal conclusion couched
v.

allegation") (intemal quotation and citation omitted); Clear With Computers LLC

Bergdorf Goodman,.Inc., No. 6:09-cv-481,2010 WL 3155888, at *4 (E.D. Tex. March 29,2010)
(dismissing indirect infringement claims that fail to meet pleading requirements); In re Bill

of

-7

-

Lading Transmission and Processing,695 F.Supp.2d 680,688-89 (S.D. Ohio 2010) (dismissing contributory infringement claim where plaintiff failed to plead requisite knowledge). Parallel's attempt to accuse Kodak of contributory infringement is similar to the claim the Court dismissed inXPoint Techs., Inc. v. Microsoft Corp. The plaintiff inXPoinr, like Parallel,
merely repeated the elements of contributory infringement without identifying any factual support for its allegations. Applying lqbal andTwombly,the Court found that some facts specific to the defendant's actions are required to state a valid claim of contributory

infringement:

Plaintiff proffers virtually no specific allegations of indirect infringement against [three defendants] ... [P]laintiff at bar fails to allege sufficient facts that would allow the court to infer that [defendants] had any knowledge of the [patent] at the time they were coÍrmitting the allegedly infringing activities. Instead, ít resorts tu ø mere recitøtion of the elementsfor índírect infringement, whích is ínsufficient ... Accordíngly, [defendønts'J motíons to dismßs the índírect ìnfríngement claìms shall be granted XPoint Techs., Inc.,2010 WL 3187025 at *6 (internal citation omitted) (emphasis added).
Parallel's contributory infringement allegation against Kodak must be dismissed for the same
reasons.

C.

Parallel's

\ilillfut Infringement Claim Against Kodak Should
a

Be Dismissed.

To state a claim of willful infringement,

plaintiff must allege and

set forth fact showing

that: (1) the defendant was aware of the asserted patent; (2) the defendant acted despite an objectively high likelihood that its actions constituted infringement of the patent; and (3) the
defendant knew or should have known of this objective risk.
,Se¿

i4i Partnership v. Microsoft

Corp.,598 F.3d 831, 860 (Fed. Cir. 2010) (willful infringement requires evidence that the
accused infringer "was aware of the asserted patent, but nonetheless 'acted despite an objectively

high likelihood that its actions constituted infringement of a valid patent."' (quoting In re

8-

Seagate Tech. LLC,497 F.3d 1360,1371 (Fed. Cir. 2007)). The Federal Circuit has made clear

thataplaintiffneeds a factual basis for each of these elements before accusing

a specific

defendant of willful infringement. See Seagate,497 F.3datl374 ("When a complaint is filed, a
patentee must have a good faith basis for alleging

willful infringement") (citing Fed. R. Civ. Pro.

8, 11(b)); Resltime Data, 2010 WL2403779, at *7 ("In discussing the good faith basis for a

willfulness claim, the Federal Circuit specifically requires that apatentee meet the requirements
of Federal Rules 8(a) and 1l(b) at the time the original complaint is filed") (citing Seagate).
Parallel does not come close to meeting this standard. The entirety of Parallel's willfulness allegation is a single paragraph parroting the elements of willful infringement and concluding that more thanJifty defendants-grouped

together-willfully infringed. (Dkt. No. 1 at fl 305). Parallel does not set forth a single
allegation or fact specific to Kodak. It never states that Kodak in particular knew of the '11 I
patent before this suit was filed, never identifies a factual basis to find that Kodak had any such knowledge, never states that Kodak in particular acted despite an objectively high likelihood

of

infringement, and never provides any facts that would support such a conclusion. Parallel's
blanket allegation against morethanJifty companies does not state a valid claim of willful

infringement against Kodak. See Twombly,550 U.S. at 556 n.3 ("Rule 8(aX2) still requires a

'showing,' rather than a blanket assertion, of entitlement to relief'); Cuvillier v. Taylor,503 F.3d 397,401(5th Cir. 2007) (To survive
a

Rule 12(bX6) motion to dismiss, a complaint "must

provide the plaintiffs grounds for entitlement to relief-including factual allegations that when
assumed to be true 'raise a right to relief above the speculative level."') (footnote omitted)

(quoting Twombly,550 U.S. at 555); Bell Helicopter Textron Inc. v. American Eurocopter, LLC, No. 4:09-CV-377-A,2010 V/L 1946336, *8 (N.D.Tex., May 12,2010) (dismissing willtulness

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allegation that included no supporting facts); Clear With Computers, 2010 WL 3155888, at *4

(this Court "expects that a þlaintiff] already has sufficient knowledge of facts that it can include in its complaint that would give Defendants sufficient notice of the claims alleged against them").

III.

CONCLUSION
Parallel cannot state claims of induced, contributory, and willful infringement against

Kodak by merely repeating the elements of these causes of action. Because Parallel fails to identifu a single fact to support its claims of induced, contributory, and willful infringement
against Kodak, these claims should be dismissed.

Dated: November 22. 20110

Respectfully submitted, /s/ David J. Beck David J. Beck State Bar No. 00000070 BpcrReoopN & Secn¡sr l22l McKinney St, Suite 4500 One Houston Center Houston, TX77010-2010 Telephone: [phone] Fax: [phone] Email : dbeck@brsfi rm.com
Of Counsel:

Michael E. Richardson State Bar No. 24002838 Bpcrc R¡opeN & Secn¡sr l22l McKinney St, Suite 4500 One Houston Center Houston, TX770l0-2010 Telephone: [phone] Fax: [phone] Email : mrichardson@brsfirm. com

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Michael J. Summersgill (pro hac vice application pending) Wu,wR, Cuten Prcx¡nNc Hel¡ & Donn 60 State Street Boston, MA 02109 Telephone: [phone] Fax: [phone] Email: [e-mail]

CERTIFICATE OF SERVICE
I, Michael E. Richardson, hereby certify that the foregoing document was filed electronically in compliance with Local Rule CV-5(a) and served on all counsel who have consented to electronic service pursuant to Local Rule CV-5(aX3XA) through the Court's CMÆCF system. Any other counsel of record will be served by first class mail on this date.
Dated: November 22. 2010

/s/ Michael E. Richardson Michael E. Richardson

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