Driessen v. Sony BMG Music Entertainment et al
Filing
172
MEMORANDUM DECISION granting in part and denying in part 157 Motion to Dismiss. As a result of the parties voluntarily narrowing the claims through the course of the briefing on Defendants Motion to Dismiss, the court GRANTS Defend ants Motion to Dismiss with prejudice Count A with respect to Claims 1 and 6 of the 993 Patent and Count B with respect to Claims 1 and 6 of the 695 Patent. The court also GRANTS Defendants Motion to Dismiss as to Plaintiffs contributory infringement claims. The Motion to Dismiss, however, is DENIED as to Plaintiffs direct infringement and induced infringement claims. Signed by Judge Clark Waddoups on 10/23/2012. (asp)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
JAMES L. DRIESSEN, MARGUERITE A.
DRIESSEN,
MEMORANDUM DECISION
AND ORDER
Plaintiffs,
Case No. 2:09-cv-0140-CW
vs.
Judge Clark Waddoups
SONY MUSIC ENTERTAINMENT, et al.,
Defendants.
I.
INTRODUCTION
Defendants have submitted to the court their joint Motion to Dismiss Pursuant to Fed. R.
Civ. P. 12(b)(6) [Dkt. 157] Plaintiffs’ Third Amended Complaint (“Third Complaint”) [Dkt.
154]. As grounds for dismissal Defendants argue that the Third Complaint is defective based on
vague and implausible pleading which they argue is both insufficient to satisfy the requirements
of Rule 8(a) of the Federal Rules of Civil Procedure and not in compliance with this court’s
Memorandum Decision and Order of January 17, 2012 [Dkt. 153] dismissing without prejudice
Plaintiffs’ Second Amended Complaint. The court has considered the parties’ briefs on this
motion without oral argument and, for the reasons discussed below, orders that Defendants’
Motion to Dismiss be GRANTED in part and DENIED in part.
II.
BACKGROUND
Plaintiffs originally filed their initial Complaint against the Defendants on February 17,
2009. Three years later, on February 17, 2012 and after substantial activity on the docket,
1
Plaintiffs filed their Third Complaint. In their most recent amendment, Plaintiffs allege that
Defendant Sony Music Entertainment’s “Platinum Music Pass” is “a copy of [Plaintiffs’]
invention because it embodied the practicing of the method claims asserted as well as the system
claim asserted” in three patents issued to Plaintiff James L. Driessen or the company Vibme,
LLC which he co-owned with Marguerite A. Driessen: U.S. Patent No. 7,003,500 (the “‘500
Patent”), U.S. Patent No. 7,636,695 (the “‘695 Patent”), and U.S. Patent No. 7,742,993 (the
“‘993 Patent”), referred to collectively by Plaintiffs as the “‘500 Patent Family”. [Dkt. 154 ¶¶49,
36-46.] Through Defendants’ involvement in the manufacture, distribution, and/or sale in the
United States of Defendant Sony Music Entertainment’s Platinum Music Pass and “other
products [that] are being developed, made, manufactured, and offered for sale by Defendants
and/or under Defendants’ direct management or control” containing “electronic sell-through
itemized merchandise”, they are alleged to have engaged in both “[d]irect literal infringement
and indirect literal infringement” of nine independent claims (eight method claims and one
system claim) and 64 dependent claims from the ‘500 Patent Family. [Dkt. 154 ¶¶48-49, 51,
57.] 1 Defendants moved to dismiss all of the claims except those relating to Claim10 of the ‘500
Patent, as to which they filed a Motion for Summary Judgment of Invalidity Based on Lack of
Written Description. See Mem. Supp. Mot. Dismiss at 9 [Dkt. 158].
In the course of the briefing on Defendants’ current Motion to Dismiss, Plaintiffs further
honed their claims down to four independent claims: Claims 1 and 10 of the ‘500 Patent and
Claims 3 and 24 of the ‘993 Patent. Mem. Opp. Mot. Dismiss at 11 [Dkt. 161]; cf. Reply Mot.
Dismiss at 1 [Dkt. 165]. Accordingly, the court GRANTS Defendants’ Motion to Dismiss with
1
“The methods and systems utilized by Sony, Best Buy, Target, and FYE in using, making, selling or offering to
sell the Sony Platinum Music Pass and any of the same or substantially similar named or unnamed instrumentalities,
products, services, or methods used, developed, made, manufactured, sold, or offered for sale by Sony, Best Buy,
Target, and FYE are the basis of both Direct [sic] literal infringement and indirect literal infringement as to the
claims outlined in the Infringement sections VII, IX and X of this Complaint.” Third Complaint ¶57 [Dkt. 154].
2
prejudice Count A with respect to Claims 1 and 6 (but not Claim 5) of the ‘993 Patent and Count
B with respect to Claims 1 and 6 of the ‘695 Patent.
III.
ANALYSIS
In their Third Complaint, Plaintiffs allege both direct and indirect infringement of the
patents in the ‘500 Patent Family. In June of 2012, after briefing on this motion was completed, 2
the Court of Appeals for the Federal Circuit clarified that the pleading standard differs for claims
brought under each of these heads and, accordingly, the court addresses them each separately
below, concluding that Defendants’ Motion to Dismiss should be denied as to Plaintiffs’ direct
infringement claims and induced infringement claims and granted as to Plaintiffs’ contributory
inducement claims. See In re Bill of Lading Transmission and Processing System Patent
Litigation (“In re Bill of Lading”), 681 F.3d 1323 (Fed. Cir. 2012).
A.
Direct Infringement
As in this case, the defendants in In re Bill of Lading filed a motion to dismiss the
plaintiff’s patent infringement claims for failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The defendants argued, as
here, and the district court in In re Bill of Lading agreed, that the plaintiff had failed to “plausibly
allege either direct infringement or indirect infringement” on the face of the complaint under the
pleading standards required by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007) (holding that a complaint must plead “enough factual matter” to “state a claim
that is plausible on its face” when taking all factual, though not merely conclusory, allegations as
2
On September 8, 2012, after completion of briefing but before the scheduled hearing, Plaintiffs submitted their
Notice of Supplemental Authority [Dkt. 168] highlighting the Federal Circuit’s recent holdings in In re Bill of
Lading, 681 F.3d 1323 (Fed. Cir. 2012) and the combined decision in Akamai Technologies, Inc. v. Limelight
Networks, Inc. et al. and McKesson Technologies, Inc. v. Epic Systems Corp., 2012 U.S. App. LEXIS 18532 (Fed.
Cir., August 31, 2012), both of which are controlling for the court’s analysis of Defendants’ current Motion to
Dismiss.
3
true) and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (holding that the “plausibility” standard is
met when “the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged”). In re Bill of Lading, 681 F.3d
at 1331.
The Court of Appeals for the Federal Circuit reversed the district court as to the pleading
standard applicable to the direct infringement claims and found that the plaintiff had adequately
pled direct infringement despite the deficiencies the defendants had identified in the plaintiff’s
complaint. Id. at 1335 (noting the defendants’ argument that “the amended complaints are
deficient because they do not describe precisely how each element of the asserted claims are
practiced by their customers”). In response, the Federal Circuit held that, for a direct
infringement claim, “Form 18 and the Federal Rules of Civil Procedure do not require a plaintiff
to plead facts establishing that each element of an asserted claim is met. Indeed, a plaintiff need
not even identify which claims it asserts are being infringed.” Id. (citing McZeal v. Sprint Nextel
Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007)).
None of the cases that address the civil pleading standards (such as Twombly and Iqbal),
the Federal Circuit explained, “address the sufficiency of a complaint alleging patent
infringement or causes of action for which there is a sample complaint in the Appendix of Forms
to the Federal Rules of Civil Procedure.” Id. at 1334. With reference to Rule 84 of the Federal
Rules of Civil Procedure and the Advisory Committee Notes, 3 the court observed that for such
cases, and in particular for direct infringement claims in patent cases, “a pleading, motion, or
other paper that follows one of the Official Forms cannot be successfully attacked.” Id. (quoting
3
Rule 84 provides that “[t]he forms in the Appendix suffice under these rules and illustrate the simplicity and
brevity that these rules contemplate.” The 1946 Advisory Committee Note reinforces that “the forms contained in
the Appendix of Forms are sufficient to withstand attack under the rules under which they are drawn” such that “the
practitioner using them may rely on them to that extent.”
4
12 Charles A. Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure §
3162 (2d ed. 1997)). Thus, where “parties argue that Twombly and its progeny conflict with the
Forms and create differing pleading requirements, the Forms control” because “any changes to
the Federal Rules of Civil Procedure ‘must be obtained by the process of amending the Federal
Rules, and not by judicial interpretation.’” Id. (quoting Leatherman v. Tarrant Cnty. Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993)).
The In re Bill of Lading court looked, therefore, to Form 18 for the controlling pleading
standard, holding that it requires the following:
(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent;
(3) a statement that defendant has been infringing the patent ‘by making, selling,
and using [the device] embodying the patent’; (4) a statement that the plaintiff has
given the defendant notice of its infringement; and (5) a demand for an injunction
and damages.
Id. (quoting McZeal, 501 F.3d at 1357); see also Arczar, Inc. v. Navico, Inc. 2012 U.S. Dist.
LEXIS 107754 at *7 (N.D. Okla., Aug. 2, 2012); Lonestar Document Mgmt, LLC v. Atalasoft,
Inc., 2012 U.S. Dist. LEXIS 129979 at *5 (E.D. Tex., Sept. 11, 2012).
As in In re Bill of Lading, Arczar, and Lonestar, Plaintiffs in this case meet the pleading
requirements established by In re Bill of Lading under Form 18 for their claims of direct
infringement. Plaintiffs allege jurisdiction [Dkt. 154 ¶¶6-10] and claim ownership of the ‘500
Patent Family. [Id. ¶¶27-35.] Plaintiffs allege that “all Defendants are using, making,
manufacturing, selling, and/or offering the invention to distributors and customers across the
United States” and lists numerous retail locations that are alleged to carry the Platinum Music
Pass within the District of Utah. [Id. ¶55]; see Lonestar, 2012 U.S. Dist. LEXIS 129979 at *8;
Arczar, 2012 U.S. Dist. LEXIS 107754 at *10. Plaintiffs further state that they have given the
Defendants pre-suit notice of their infringement [Dkt. 154 ¶¶19-25], and in any event they
5
comply with Form 18 as to notice because Defendants “received notice of [their] alleged
infringement when [plaintiffs] served them with this lawsuit.” Lonestar, 2012 U.S. Dist. LEXIS
129979 at *9; see also Arczar, 2012 U.S. Dist. LEXIS 107754 at *10 (“The complaint does not
allege that plaintiff gave defendant pre-suit notice of the alleged patent infringement, but courts
have not found this to be a fatal pleading defect, as the filing of the complaint is sufficient to give
a defendant notice of the alleged patent infringement.”). Plaintiffs also demand damages and
injunctive relief. [Dkt. 154 ¶192.] 4
Moreover, this case is distinguishable from Catheter Connection, Inc. v. Ivera Medical
Corp., 2012 U.S. Dist. LEXIS 135720 (D. Utah, Sept. 21, 2012). In Catheter, Judge Campbell
considered a complaint for patent infringement in light of In re Bill of Lading, holding that “even
if Form 18 provides limited requirements for the satisfaction of pleading standards, Plaintiffs’
complaint still fails to meet them.” Id. at *3. Because “even the existence of the [infringing
invention]” was “only pled on ‘information and belief’”, the plaintiffs did not adequately plead
that the defendant “produces a device that achieves the same purpose as Plaintiffs’ patented
device.” Id. at *3-*4. The question of whether that is a deficiency that would be fatal to a
complaint under In re Bill of Lading need not be considered in this case because Plaintiffs have
specifically identified the Platinum Music Pass and other similar products that “are being
developed, made, manufactured, and offered for sale by Defendants and/or under Defendants’
direct management or control” containing “electronic sell-through itemized merchandise” as the
infringing invention. [See, e.g. Dkt. 154 ¶57.]
4
Furthermore, in addition to Plaintiffs’ efforts to comply with the pleading requirements of Twombly and its
progeny by submitting their 91 page Third Complaint attempting to “make each element of each claim . . .
completely inclusive” as required by this court’s Order dated January 17, 2012 at 4 [Dkt. 153], the Third Complaint
also contains discrete paragraphs conforming literally to the notice pleading requirements of Form 18. [See Dkt. 154
¶¶188-191.]
6
The court therefore DENIES Defendants’ Motion to Dismiss as to Plaintiffs’ claims for
direct infringement, including Claim 5 of the ‘993 Patent. 5
B.
Indirect Infringement
In addition to Plaintiffs’ claims for direct infringement, the Third Complaint also brings
claims of both inducement and contributory indirect infringement against Defendants. As to
indirect infringement, “Form 18 should be strictly construed as measuring only the sufficiency of
allegations of direct infringement, and not indirect infringement.” In re Bill of Lading, 681 F.3d
at 1336. “No adequate justification exists for holding indirect infringement claims, which contain
additional elements not found in direct infringement claims, to the standard of McZeal and Form
18. Thus, the general principles of Twombly and Iqbal must be applied to indirect infringement
claims.” Id. at 1336-37 (quoting Tech. Licensing Corp. v. Technicolor USA, Inc., 2010 U.S. Dist.
LEXIS 113292 at *2 (E.D. Cal., Oct. 18, 2010)).
“The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence that
the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally
sufficient to state a claim for which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d
1194, 1201 (10th Cir. 2003) (citations and quotation marks omitted). To survive a motion to
dismiss, a complaint “must plead ‘enough factual matter’ that, when taken as true, ‘states a claim
to relief that is plausible on its face.’” In re Bill of Lading, 681 F.3d at 1331 (quoting Twombly,
550 U.S. at 570)). The plausibility standard “asks for more than a sheer possibility that a
defendant has acted unlawfully” but is not “akin to a probability requirement.” Id. (quoting
5
Defendants also argue that infringement claims relating to Claim 5 of the ‘993 Patent should be dismissed because
“the 91 pages of the Complaint lack any factual allegation against Sony to support such a charge.” Mem. Supp. Mot.
Dismiss at 4 [Dkt. 158]. In their Opposition, Plaintiffs concede that “in their haste to plead every element of every
claim, specific facts were inadvertently omitted from the [Third Complaint] as to Claim 5.” Mem. Opp. Mot.
Dismiss at 3 [Dkt. 161]. However, because under the pleading standard established by In re Bill of Lading “a
plaintiff need not even identify which claims it asserts are being infringed,” much less provide factual allegations
supporting each element of the claim, Claim 5 of the ‘993 Patent is not dismissed.
7
Iqbal, 556 U.S. at 678). In “[d]etermining whether a complaint states a plausible claim for
relief”, which is a “context-specific task,” Iqbal, 556 U.S. at 679, the court must make all
reasonable inferences in the favor of the non-moving party, distinguishing well-pleaded facts
from conclusory allegations. Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002). “This is
not to say that the factual allegations must themselves be plausible; after all, they are assumed to
be true. It is just to say that relief must follow from the facts alleged.” United States v. Ledford,
2009 U.S. Dist. LEXIS 48441 at *9 (D. Colo. 2009).
1.
Indirect Infringement by Inducement
Plaintiffs allege only that Sony—and not the retail Defendants (contrary to Defendants’
apparent continued confusion about this, see Reply Mot. Dismiss at 4 [Dkt. 165])—has engaged
in induced infringement. [Dkt. 154 ¶182(a).] “Whoever actively induces infringement of a patent
shall be liable as an infringer.” 35 U.S.C. § 271(b) (2012). “Liability under § 271(b) requires
knowledge that the induced acts constitute patent infringement.” In re Bill of Lading, 681 F.3d at
1339 (quoting Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011) (internal
quotation marks omitted)). This means that “specific intent and action to induce infringement
must be proven.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (Fed. Cir. 2006) (holding,
en banc, that a “plaintiff has the burden of showing that the alleged infringer’s actions induced
infringing acts and that he knew or should have known his actions would induce actual
infringements”).
More specifically, “inducement requires evidence of culpable conduct, directed to
encouraging another’s infringement, not merely that the inducer had knowledge of the direct
infringer’s activities.” Id. at 1306. But “[w]hile proof of intent is necessary, direct evidence is not
required; rather, circumstantial evidence may suffice.” Id. (quoting Water Technologies Corp. v.
8
Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir. 1988)). And in any event, Plaintiffs do not need to
“prove [their] case at the pleading stage”; rather, on a motion to dismiss, “[a]ll reasonable
inferences” should be drawn from the factual allegations in the complaint in favor of the nonmoving party. In re Bill of Lading, 681 F. 3d 1323 at 1339-1340. In sum, “as long as there are
sufficient facts alleged to render the non-movant’s asserted inferences plausible,” then
“[f]erreting out the most likely reason for the defendants’ actions is not appropriate at the
pleadings stage.” Id. at 1340 (quoting Watson Carpets & Floor Covering, Inc. v. Mohawk Indus.,
648 F.3d 452, 458 (6th Cir. 2011)).
In addition, as alluded to above, “[a]n important limitation on the scope of induced
infringement is that inducement gives rise to liability only if the inducement leads to actual
infringement.” Akamai Techs., Inc. v. Limelight Networks, Inc., 2012 U.S. App. LEXIS 18532 at
*18 (Fed. Cir., Aug. 31, 2012) (citing cases for the “well settled” principle that “there can be no
indirect infringement without direct infringement”). The existence of an “actual infringement”
does not, however, require a single direct infringer. Id. at *32 (noting that “a party may be liable
for inducing infringement even if none of the individuals whose conduct constituted
infringement would be liable, as direct infringers, for the act of infringement that was induced”).
This rule—that “induced infringement can be found even if there is no single party who
would be liable for direct infringement,” id. at *47—differs substantially from the rule laid out in
BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) that was controlling at the
time of this court’s Order dated January 17, 2012. [Dkt. 153.] In that Order, the court quoted
BMC for the rule that “[i]ndirect infringement requires, as a predicate, a finding that some party
amongst the accused actors has committed the entire act of direct infringement.” Order at 2 [Dkt.
153] (quoting BMC, 498 F.3d at 1379). Even under that rule, however, the Court of Appeals for
9
the Federal Circuit clarified in June 2012 (i.e. subsequent to this court’s Order) that “a plaintiff
need not identify a specific direct infringer,” in a claim for induced infringement, “if it pleads
facts sufficient to allow an inference that at least one direct infringer exists.” In re Bill of Lading,
681 F.3d at 1336 (emphasis in original). But in Akamai, the Federal Circuit went further on
August 31, 2012, expressly overruling BMC on the basis that its holding that a single party direct
infringer was necessary as a predicate to a claim of induced infringement “is wrong as a matter
of statutory construction, precedent, and sound patent policy.” 2012 U.S. App. LEXIS 18532 at
*11.
In overruling BMC, the Federal Circuit in Akamai held that “all steps of a claimed
method must be performed in order to find induced infringement, but that it is not necessary to
prove that all the steps were committed by a single entity.” Id. at *11-12. The court reasoned that
“[i]f an entity has induced conduct that infringes a patent, there is no justification for immunizing
the inducer from liability simply because no single party commits all of the components of the
appropriative act.” Id. at *40. Examining the legislative history, general tort principles, and prior
caselaw, the court explained that “[i]t is unlikely that Congress intended to endorse the ‘single
entity rule’, at least for the purpose of induced infringement, which would permit ready evasion
of valid method claims with no apparent countervailing benefits.” Id. at *49. 6 Instead, the inquiry
now focuses on the predicate existence of an “actual infringement” that has been induced rather
than an induced single direct infringer; “an obvious infringement should be remediable, even
though there is no [single] direct infringer.” Id. at *26 (internal quotations omitted). Also,
parenthetically, the court in Akamai observed that “inducement does not require that the induced
party be an agent of the inducer or be acting under the inducer’s direction or control to such an
6
“At the end of the day, we are persuaded that Congress did not intend to create a regime in which parties could
knowingly sidestep infringement liability simply by arranging to divide the steps of a method claim between them.”
Id. at *48.
10
extent that the act of the induced party can be attributed to the inducer as a direct infringer.” Id.
at *17.
Stated succinctly, then, after Akamai, liability for induced infringement is now premised
on a showing that (1) the alleged inducer knew of the patent, (2) it induced the performance of
the steps of the method claimed in the patent or, alternatively, it performed some or all but one of
the steps of the method claimed in the patent and induced another party or parties (including endusers) to perform additional step(s) of the claimed method, and (3) those steps were performed
such that an actual infringement occurred. Id. at *49-50. The court addresses each of these
elements in reverse order below.
Drawing all reasonable inferences from the factual allegations in the Third Complaint in
favor of the non-moving party persuades the court that, for purposes of surviving the motion to
dismiss, Plaintiffs have sufficiently pled a claim for induced infringement. See Iqbal, 556 U.S. at
678 (“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more
than a sheer possibility that a defendant has acted unlawfully.”). The inferences of liability
available based on the factual allegations must be plausible, not the factual allegations
themselves. Ledford, 2009 U.S. Dist. LEXIS 48441 at *9 (“This is not to say that the factual
allegations must themselves be plausible; after all, they are assumed to be true. It is just to say
that relief must follow from the facts alleged.”).
First, the allegations of the Third Complaint give rise to the plausible inference that,
either between the Retailers and the end-users collectively or on the part of each of the Retailers
individually, an actual infringement has occurred. In evaluating Plaintiffs’ factual allegations,
references to any control exerted by Sony over the Retailers in setting up an underlying direct
infringement may be ignored as gratuitous in interpreting the Third Complaint. Akamai, 2012
11
U.S. App. LEXIS 18532 at *17 (clarifying that, under the new rule, theories of vicarious
liability, agency, or control are neither necessary nor particularly relevant for claims of induced
infringement though they still may be relevant for direct infringement analysis). Specifically,
Plaintiffs allege that “a Music Pass product, with Sony’s name on it” became “available for
presentation and vending in Retailer’s stores.” [Dkt. 154 ¶182(a)(iii)(4).] Plaintiff James
Driessen was then “able to purchase accused infringing devices at the Retailers locations,”
essentially putting him in the shoes of an innocently directly infringing end-user. [Dkt. 154
¶182(a)(vi).] In addition, Plaintiffs refer to both the end-user’s use of the Platinum Music Pass to
download online digital rights and to the Retailers’ “inclusion of the retail component into [the
Platinum Music Pass’s] online digital rights ownership systems and services” (or their use or
offer for sale of the Platinum Music Pass) in their allegations as to an underlying direct
infringement. [Dkt. 154 ¶182(a)(iii)(2); ¶182(a)(v)] compare Lone Star, 2012 U.S. Dist. LEXIS
129979 at *10 (generic allegation that “end users in the Eastern District of Texas” are underlying
direct infringers “is sufficient to survive a Motion to Dismiss”).
Second, Plaintiffs’ descriptions and allegations of Sony’s actions relating to the
manufacture, use and offer/sale of the Platinum Music Pass to the Retailers allow the court to
draw a reasonable inference that Sony induced the similarly inferable actual infringement
discussed above. “Sony intends that which is the natural and probable consequences of its acts,
to incorporate and encourage the retail component of online digital rights ownership to retailers
knowing that such activities will infringe Plaintiffs’ patents.” [Dkt. 154 ¶182(a)(iii)(1).] But
Plaintiffs do not stop with “naked assertions devoid of further factual enhancement” in pleading
Sony’s specific intent and actions to induce infringing acts. Iqbal, 556 U.S. at 678. Rather,
Plaintiffs provide supporting factual allegations that the court finds sufficient to “unlock the
12
doors of discovery,” id., or, at a minimum, claim construction for purposes of Defendants’
pending Motions for Summary Judgment. See Fujitsu Ltd. v. Belkin Int’l, Inc., 782 F. Supp. 2d
868, 890 (N.D. Cal. 2011) (noting that “[a] motion to dismiss is not the proper time to initiate
claim construction”).
Plaintiffs allege that “Sony has demonstrated specific intent to induce through
encouragement to use retail presentations.” [Dkt. 154 ¶182(a)(ii).] Sony does this by providing
the Retailers with the Platinum Music Pass and encouraging them to offer and sell it to endusers. [Dkt. 154 ¶182(a)(iii)(2), (3); ¶182(a)(viii), (vix).] Specifically, “[e]ncouragement of the
Retailers by Sony was evinced through at least their announcement of the ‘authorized’ Retailers
in Sony’s 2008 press releases about the launch of the Music Pass products. The press releases
also described how the authorized Retailers were going to sell the Music Passes.” [Dkt. 154
¶182(a)(iii)(4).] “It is enough that the inducer causes, urges, encourages, or aids the infringing
conduct and that the induced conduct is carried out.” Akamai, 2012 U.S. App. LEXIS 18532 at
*17 (internal alterations and quotations omitted).
Finally, the Third Complaint alleges facts sufficient to allow the court to draw the
reasonable inference that Sony “knew or should have known” that its actions in manufacturing
and promoting the Platinum Music Pass to Retailers, and encouraging them to present and sell it
to customers, would “induce actual infringements.” DSU Med. Corp., 471 F.3d at 1305. Such an
inference is premised in the requirement that Sony knew (or should have known) of Plaintiffs’
patent(s). Akamai, 2012 U.S. App. LEXIS 18532 at *49-50. As to this knowledge, the Third
Complaint alleges that “Plaintiffs sent letters, emails, and made phone calls to Sony informing
them about the patent along with a proposal to abate infringement and Sony continued to market,
sell, and distribute the Sony Platinum Music Pass. Therefore Sony Music Entertainment, knew
13
(or reasonably should have known) about the ‘500 Patent Family at that time.” [Dkt. 154
¶182(a)(vii).] More factual detail is provided as to this allegation of knowledge in previous
paragraphs of the Third Complaint that are expressly incorporated by reference into paragraph
182, including but not limited to paragraphs 19-25 and 61(b). Also, Sony “knew of the patent(s)
at issue herein at least as early as the filing of this lawsuit,” [Dkt. 154 ¶182(a)(vii)], by which it
would appear that Plaintiffs are referring to the original filing of the lawsuit in February 2009,
[cf. Dkt. 154 ¶¶24, 61(b)].
Defendants, however, argue that Plaintiffs only ever mention specific communications
about the ‘500 Patent or employ “the vague phrase ‘500 Patent Family.” Mem. Supp. Mot.
Dismiss at 8 [Dkt. 158]. Defendants also argue that Plaintiffs are being “intentionally vague” in
using the phrase “the Sony Group” at various places in the Third Complaint with reference to
Sony’s knowledge about the Plaintiffs patents. Id. at 9. The court finds these arguments
unpersuasive to negate a reasonable inference that Sony knew or should have known of the
patents based on the allegations in the Third Complaint.
Paragraph 19 alleges that Plaintiffs contacted specifically Sony Music Entertainment in
August of 2000 “notifying them of the [‘500] patent application and the key inventive steps and
properties of its usefulness.” Paragraph 20 further alleges that Plaintiffs sent Sony another letter
in February 2006 “notifying them that Plaintiff James Driessen had received a notice of issue for
the ‘500 Patent and inviting Defendants to license under the ‘Vibeme’ brand owned by
Plaintiffs.” Plaintiffs also allege that they sent other communications about the patents to
Defendants. [Dkt. 154 ¶¶21-22.] Paragraph 24 alleges Plaintiffs again sent Defendants a
warning/invitation to license letter on February 18, 2009 (including specifically to Sony Music
Entertainment). In fact, Plaintiffs allege that Defendants each responded with correspondence
14
confirming they had reviewed Plaintiff’s February 18, 2009 letter. [Dkt. 154 ¶25.] In sum, these
allegations allow the court to draw the reasonable inference that “all Defendants knew of the
‘500 Patent and ‘500 Patent Family no later than the date of the original filing of this lawsuit.”
[Dkt. 154 ¶61(b)]; cf. In re Bill of Lading, 681 F3d 1323 at 1345 (holding that an allegation in
the complaint that defendant “became aware of the [patent], at the latest, in March of 2009 when
it was served with the complaint” was sufficient for plaintiff to survive a motion to dismiss a
claim of induced infringement).
For the reasons discussed above, the court DENIES Defendants’ Motion to Dismiss
Plaintiffs’ claims for induced infringement.
2.
Contributory Infringement
Plaintiffs have failed to meet the pleading standards required by Twombly and its progeny
in their claim for contributory infringement. “Contributory infringement occurs if a party sells or
offers to sell, a material or apparatus for use in practicing a patented process, and that ‘material
or apparatus’ is material to practicing the invention, has no substantial non-infringing uses, and is
known by the party ‘to be especially made or especially adapted for use in an infringement of a
patent.” In re Bill of Lading, 681 F.3d at 1337 (quoting 35 U.S.C. § 271(c)). “For purposes of
contributory infringement, the inquiry focuses on whether the accused products can be used for
purposes other than infringement.” Id. at 1338 (emphasis in original). The Third Complaint,
however, does not “plead facts that allow an inference that the components sold or offered for
sale have no substantial non-infringing uses.” Id. at 1337. Rather, the Third Complaint merely
provides the single conclusory allegation that “the retail presentation of specific online digital
rights component (i.e. wherever Music Pass standard products are sold at retail) has no
substantial non-infringing uses.” [Dkt. 154 ¶182(b)(iv).] “Threadbare recitals of the elements of
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a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. 678.
Thus, whether this “naked assertion devoid of further factual enhancement” is in fact true will
not be tested in this lawsuit because, standing alone, it cannot “unlock the doors of discovery”
for Plaintiffs, id., particularly in light of this court’s previous Order that “this will be Plaintiffs’
last attempt to modify their complaint.” Order dated January 17, 2012 at 3 [Dkt. 153].
Defendants’ Motion to Dismiss as to Plaintiffs’ claims for contributory infringement is
therefore GRANTED. Moreover, the contributory infringement claims are dismissed with
prejudice in keeping with the court’s previous Order. [Dkt. 153 at 4.]
CONCLUSION
As previously stated, Defendants’ Motion to Dismiss [Dkt. 157] is GRANTED in part
and DENIED in part. As a result of the parties’ voluntarily narrowing the claims through the
course of the briefing on Defendants’ Motion to Dismiss, the court GRANTS Defendants’
Motion to Dismiss with prejudice Count A with respect to Claims 1 and 6 of the ‘993 Patent and
Count B with respect to Claims 1 and 6 of the ‘695 Patent. The court also GRANTS Defendants’
Motion to Dismiss as to Plaintiffs’ contributory infringement claims. The Motion to Dismiss,
however, is DENIED as to Plaintiffs’ direct infringement and induced infringement claims.
DATED this 23rd day of October, 2012.
BY THE COURT:
______________________________
Clark Waddoups
United States District Court Judge
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