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

Filing 419

RESPONSE in Support re #268 MOTION to Dismiss Parallel Networks, LLC's Claims of Induced, Contributory, and Willful Infringement filed by Eastman Kodak Company, Kodak Imaging Network, Inc.. (Richardson, Michael)

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

Doc. 419

Case 6:10-cv-00491-LED Document 419

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U}I-ITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS TYLER DTVISION

PARALLEL NETWORKS, LLC,

Plaintifi
V.

Case

No.

6: I

0-CV-491-LED

ADIDAS AMERICA, INC., et al.
Defendants.

DEFENDANTS EASTMAN KODAK COMPAIYY'S AND KODAK IMAGING IYETWORK INC.'S REPLY IN ST]PPORT OF MOTION TO DISMISS PLAINTIF'F''S CLAIMS OF INDUCED. CONTRIBIIORY. AND WILLFT]L INT'RINGEMENT
Parallel's Opposition to Kodak's Motion to Dismiss (Dkt. No. 369) does not address the
fundamental flaw in Parallel's Complaint: its failure to allege anyføcts supporting its allegations induced, contributory, and willful infringement against Kodak. lnstead, Parallel spends its

of

Opposition arguing that it need only allege the legal elements of induced, contibutory, and willfi.il

infringement. This argument is wrong as a matter of

law It is now settled that aplaintiff cannot
claim. Indeed, n Bell Atlantic
v.

state a valid claim by merely stating the legal elements of a

Twombly (which Pa¡allel never addresses), the United States Supreme Court held that a plaintiff must provide someføctaal support for its allegations:

[A] plaintiffs obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more thøn løbeß ønd conclusíons, ønd aformulaíc recítation of the elemenß of ø cøuse of øctíon wíll not do...Without somefactual øllegøtíon inthe complaint, it is hard to see how a claimant could satis$i the requirement of providing not only "fair notice" of the nature of the claim, but also 'grounds' on which the
claim rests.
127 S. Ct. 1955, 1964-65,1965 n.3

(2007) (emphasis added) (internal citations omitted).

Parallel does not even contend that it meets this standard. Indeed, Parallel does not dispute

Kodak's assertion that Parallel's Complaint does not contain any føcß to support its allegations of

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induced, contributory, and willful infringement:

. o o o

Parallel never disputes that its induced, contributory, and willfrrl infringement claims against Kodak are copied wordfor wordfrom allegations Parallel makes against more than fifty other defendants; Parallel does not dispute that it fails to provide asinglefact to support its allegation that Kodak "intended" to induce infringement; Parallel does not dispute that it failed to set forth a single føct to support its allegation that Kodak has contributorily infringed the patent-in-suit by "specifically designing" its technology to infringe the patent-in-suit; and Parallel does not dispute that it did not provide a síngle fact to support its allegation that Kodak willfully infringed by making decisions about the accused Kodak website after learning of the patent-in-suit.

Without any of these facts, Parallel's claims of induced, contributory, and willful
infringement fail as a matter of law.

I.

PARALLEL CANNOT STATE VALID CLAIMS WITHOUT FACTUAL SUPPORT
Parallel's princþal argument is that its claims of induced, contributory, and willfirl

infringement were sufficiently pled because its Complaint repeats each of the legal elements of these

claims. (See e.g.,Dkt. No. 369 at 9-10.) Indeed, Parallel claims that it set forth valid claims for
induced, contributory, and willful infringement merely because:

o o o

It "alleged" the required level of intent for an inducement claim (id. at 10-11); It "pleads that Kodak has been'committing the act of contributory infringement"' (id. at
I 1); and

Its

o'complaint clearly accuses Kodak of willful infringemenf' (id.).
v.

Parallel's argument is wrong as a matter of law. In Bell Atlantic v. Twombly and Ashcroft

Iqbal,the Supreme Court held that merely repeating the elements of a claim is not enough to defeøt
a motìon to dísmíss and a

plaintiffmust now set forthsomefacfs to support its claims. InTwombly,

the Supreme Court rejected the assertion that a plaintiff can state a valid claim by merely asserting "a

formulaic recitation of the elements of a cause of action" 127 S. Ct. at1964-65. Instead, the Court

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explained, a plaintiffmust provide "[f]actual allegations" that raise the right to relief "above the
speculative level." Id. at 1965 . In particular, the Supreme Court held that a plaintiff must include in

its Complaint "a statement of círcumstances, occurrences, and evenß in support of the claim presented." Id. atn.3 (internal ciøtions and quotations omitted). Similarly, n Ashcroft v. Iqbal,the
Supreme Court found that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffrce." 129 S. Ct. 1937,1949 (2009). The Court has

specifically held that to overcome a motion to dismiss, the plaintiff must make afacf¿al "showing,"
and not just "a blanket assertion" that it has a valid

claim. Twombly,127 S. Ct. at1965 n.3.

Parallel never addresses the Twombly and lqbal standard. lnstead, it cites case law stating that a court may not dismiss a complaint under Rule 12@)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." @kt.

No. 369

atï.)

o'no set of This is no longer vølíd løw. lnTwombly, the Supreme Court ruled that the

facts" standard no longer govems motions to dismiss:
Conley's "no set of facts" language has been questioned, criÍicized, and explained away long enough. . . fA]fter ptuzlngthe profession for 50 years, thßfømous observøtíon has eurned iß retìrement. 127 S. Ct. at 1969 (emphasis added). See also St. Germain v. Howqrd, 556 F.3d 261,263 n.2 (5th

Cir.2009) ("Twomblyjettisoned the minimum notice pleading requirement of Conley v. Gibson
and instead required thatacomplaint allege enoughfac/s to state a claim thatis plausible

...

onits

face;'); Gauthier v. Union Pacific R,R, Co.,644 F.Supp.2d824,843 @.D. Tex 2009) ("[T]he Conley
mle is not the minimum standard of adequate pleading to govem a complaint's survival") (internal citations and quotations omitted).
I

Parallel also claims that under Fed. R. Civ. P. 9, it can "generally" allege "intent" and
The cases that Parallel cites in its Opposition, including Kaiser Aluminum & Chem. Sales v. Avondale Shipyards,677 F.2d 1045, 1050 (5th Cir. 1982), Campbell v. llells Fargo Bank,7ïl F.2d 440,442 (5th Cir 1986), Phonometrics , Inc. v. Hospitality Franchise Systems,203 F.3d 790,793-94 (Fed. Cir. 2000), and Broolrs v. Blue Cross & Blue Shield of Fla.. Inc., 116F.3d 1364,1368 (l lth Cir. 1997),were decided beþre Twombly.

I

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"knowledge" required for claims of induced and willfi.illy infringement. (Dkt. No. 369 at 10-11.)
But the Supreme Court has also made clear that Rule 9 does not excuse ø pløintífffrom províding speci/ì.cføcß ín support of the allegøtions ín íß claíms:

It is true that Rule 9(b) ... allow[s] '[m]alice, intent, knowledge, and other conditions of a person's mind [to] be alleged generally.' But 'generally' is a relative term ... Rule 9 merely excuses apafty from pleading þowledge or intent] under an elevated pleading standard. It does not give [a plaìntìfJJ license to evade the less rigidthough still operatíve-strictures of Rule I ... Rule I does not empower [ø plaintifJJ to pleød the børe elemenß of hß csuse of øction, øfftx the løbel "generøl øllegafion," ønd expect [íÍsJ complaínt to survìve a motíon to dßmßs. Iqbal, 129 S.Ct. at1954 (emphasis added).
Finally, Parallel claims that it need not allege specific facts supporting its induced, confibutory, and willfi¡l infringement claims against Kodak because Form l8 of the Federal Rules of

Civil Procedwe does not require it to do so. @kt. No. 369 at 9.) This argument is also misplaced.
Form 18 is directed only to allegations of direct infringement. See Realtime Data LLC v. Stanley,
No. 6:09-cv-326,2010WL2403779 aT*6 @.D. Tex, June 10, 2010) ("...Form 18 does not
expressly address indirect infringement claims..."). Form

l8 does not mention induced,

contibutory, or willful infringement and has nothing to do with whether a plaintiffhas properly pled
these claims.

il.

PARALLEL CONCEDES THAT IS HAS NOT ALLEGED AI\IY FACTS IN suPPoRT OF ITS I|IDUCED, CONTRTBUTORY, OR WTLLFUL INFRINGEMENT CLAIMS AGAINST KODAK
Parallel repeatedly misconstrues Kodak's argument. It asserts that Kodak's argument is that

Parallel has failed to allege the legal elements of induced, contributory, and willful infringement.

(Dkt. No. 369 af 2-3,9-I1.) But Kodak's argument is that all Parallel does is allege the legal
elements of these claims because it failed to set forth anyføcts supporting the claims. Parallel never contends otherwise. Indeed, Parallel does not dispute that its Complaint lacks facfual support for
each of its claims of induced, contributory, and

willfi.ll infringement:

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1.

Induced Infringement

Parallel concedes that its entire allegation of induced infringement against Kodak is a single

paragraph-identical to the allegation it makes against fifty other defendants-in which it merely
asserts that Kodak has induced infringement because, "since becoming aware" of the patent-in-suit,

Kodak "specifically intend[ed] to induce infringement." (Dkt. 369 at 6, 10.) Parallel never disputes
that its Complaint fails to provide any facts to support these allegations, such as facts showing: (i) that Kodak actually leamed of the patent-in-suit; (ii) when Kodak allegedly leamed of the patent-in-

suit; (iii) how Kodak had any intent to encourage infringement; or (iv) that Kodak took any actions

with the objective of causing infringement.

2,

Contributory Infringement

Paratlel similarly concedes that its allegation of contributory infringement against

Kodak-a

cut and paste of the allegations its makes against more than fiffy other defendants-is one paragraph in which it asserts that Kodak contributorily infringed the patent-in-suit because, "since becoming awate" of the patent, Kodak has operated a website o'knowing that its use \ilas made and adapted for

infringemenf'and "the system is not a staple article or commodity of commerce suitable for
substantially noninfringing use." (Dkt. No. 369 at 11.) Again, Parallel does not contest that its

Complaint is devoid of any facts to support these allegations, such as facts showing: (i) that Kodak actually leamed of the patent-in-suit; (ii) when Kodak allegedly learned of the patent-in-suit; (iii) that Kodak ever knew of the patent-in-zuit when it designed its website; or (iv) that Kodak knew that its
website is not suitable for substantially noninfringing use.

3.

Willfut Infringement

Parallel admits that its willfi.rlness claim against Kodak is one paragraph in which it lumps

Kodak with fifty other defendants and alleges that "Defendants"-grouped together-knew of the

patent-in-suit'þrior to the filing of this Complainf' and "acted...despite an objectively high
likelihood that their actions constituted infringement." (Dkt.No. 369 at7.) ParcJlel never disputes

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that this blanket allegation lacks a single fact specific to Kodak, including facts showing: (i) that

Kodak in particular (as opposed to the other fifty defendants) knew of the patent-in-suit before this
case was

filed; (ii) when Kodak allegedly leamed of the patent; (iii) that Kodak's actions (and not the

actions of the other fifty defendants) were "objectively unreasonable"; or (iv) that Kodak made any decisions regarding its accused website after leaming of the patent-in-suit.
Just as telling, Parallel's Opposition fails to even

mention-let alone attempt to distinguish-

the established case law holding that induced, contibutory,andwillful infringement claims premised on naked allegations and assertions without any underlying factual support must be dismissed. See

XPoint Techs,, Inc. v. Microsofi Corp,,Civ. No. 09-628-SLR,20I0 V/L 3187025 (D. Del. August
12,2010), at*6-7 (dismissing inducement claim where plaintiff does not "allege sufficient facts that would allow the court to infer that [defendants] had any knowledge" of the patent-in-suit and "resorts to a mere recitation of the elements for indirect infringement"); Realtime 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 identifr facts that establish a plausible claim for relief); Bell Helicopter Textron

Inc. v. American Eurocopter,IZC No. 4:09-CY-377-A,20I0WL 1946336, *8 (N.D.Tex., May 12,
2010) (dismissing willfulness allegation that did not include supporting facts).

III.

CONCLUSION
Parallel does not come close to meeting the requirements for stating a valid claim of induced,

contributory, or willful infringement against Kodak. Without a single fact supporting its allegations,
Parallel merely asserts the legal elements of these claims against Kodak and argues that it has done

enough. The United States Supreme Court has made clear that this is not and should not be the law. Kodak respectfully requests that the Court grant its Motion to Dismiss Parallel's claims of induced,

contibutory, and willful infringement.

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Dated: December

20,2010

Respectfifly submitted,
/s/ DavidJ. Beck

David J. Beck

BarNo. 00000070 BpcrRpooEN & SEcREST
State

OfCounsel:
Michael E. Richardson State BarNo.24002838 BBcrcReooEN& SECREST I22lMcKnney St, Suite 4500 One Houston Center Houston, TX77010-2010 Telephone: [phone] Fax: [phone] Email: [e-mail]

St, Suite 4500 Houston Center One Houston, TX 77010-2010 Telephone: (7 13) 95 I -37 00 Fax: [phone] Email: [e-mail]

l22lMcIlnney

Michael J. Summers gill (pro hac vice application pending) Jordan L. Hirsch (pro hac vice applicalionpending) WILir,trR, Currn PrcKERrNc Hel,e & Donn 60 State Street Boston, MA 02109 Telephone: [phone] Fax: [phone] Email: [e-mail] j ordan.hirsch@wilmerhale. com

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CERTIFICATE OF SERVICE

I, Michael E. Richardson, hereby certifr 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.
Dated: December 20, 2010

/s/ Michael E. Richardson Michael E. Richardson