Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-04307/USCOURTS-cand-3_15-cv-04307-5/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LSI CORPORATION, et al.,

Plaintiffs,

v.

FUNAI ELECTRIC COMPANY, LTD., et 

al.,

Defendants.

Case No. 15-cv-04307-EMC 

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS’

MOTION TO DISMISS THIRD 

AMENDED COMPLAINT

Docket No. 82

Plaintiffs in the above-referenced case are LSI Corporation, Agere Systems LLC, and 

Avago Technologies General IP (Singapore) Pte. Ltd. (collectively, “Plaintiffs” or “LSI”). 

Plaintiffs are all affiliated companies. Defendants are Funai Electric Company, Ltd.; Funai 

Corporation, Inc.; Funai Service Corporation; and P&F USA, Inc. (collectively, “Defendants” or 

“Funai”). Like Plaintiffs, Defendants are all affiliated companies. LSI has sued Funai for 

infringement of five different patents: the „087 patent; the „663 patent; the „958 patent; the „867 

patent; and „148 patent. Currently pending before the Court is Funai‟s motion to dismiss the third 

amended complaint (“TAC”). A hearing on the motion was held on December 7, 2015. This 

order memorializes the Court‟s oral rulings and provides additional analysis as necessary.

The motion to dismiss the induced infringement claim is denied. See, e.g., Skyworks 

Solutions Inc. v. Kinetic Techs. Inc., No. C 14-00010 SI, 2014 U.S. Dist. LEXIS 46289, at *10-11 

(N.D. Cal. Apr. 2, 2014) (concluding that plaintiff “alleged both who committed the alleged direct 

infringement (Kinetic‟s customers) and how (by selling, offering to sell, use, or import particular 

LED driver products)”; also concluding that plaintiff “alleged Kinetic‟s specific intent to 

encourage its customers‟ infringement” by “market[ing] its products for use in devices such as 

wireless communication devices”). While Funai may have had a fair contention that the accused 

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United States District Court

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products needed to be identified with more specificity (even under the lax regime of Form 18), 

that problem has effectively been cured because LSI has served infringement contentions in which 

it identifies with more specificity the accused products. Moreover, for purposes of pleading, LSI 

has adequately explained a basis for liability as to each Funai defendant.

The motion to dismiss the willful infringement claim is granted. Courts in this District are 

in general agreement that a claim for willful infringement is not adequately pled if there are simply 

conclusory allegations that the defendant had knowledge of the patents at issue, without any 

substantiating facts. See, e.g., Finjan, Inc. v. Sophos, Inc., No. 14-cv-01197-WHO, 2015 U.S. 

Dist. LEXIS 154767, at *8 (N.D. Cal. Nov. 13, 2015) (distinguishing cases from the case under 

consideration because the former “ each involved a mere boilerplate, conclusory accusation of presuit knowledge, without any accompanying factual details”); Vasudevan Software, Inc. v. Tibco 

Software, Inc., C 11-06638 RS, 2012 U.S. Dist. LEXIS 69952, at *16 (N.D. Cal. May 18, 2012) 

(stating that, “to the extent it relies on an unsupported allegation of actual knowledge, [the 

complaint] fails to state a claim for willful infringement”). Here, with one exception, LSI‟s 

allegations on willfulness are conclusory. 

As to the one allegation that is not conclusory in nature – i.e., that Funai knew of the 

patents at issue (except for the „148 patent) since at least the ITC proceeding but nevertheless 

continued to infringe – it is deficient for an independent reason. According to Funai, the 

allegation is deficient because the ITC complaint was filed on the same day as this lawsuit and 

“allegations of post-filing knowledge are generally insufficient to make out a case for willful 

infringement.” EON Corp. IP Holdings, LLC v. Sensus USA, Inc., No. C-12-1011 EMC, 2012 

U.S. Dist. LEXIS 141965, at *12 (N.D. Cal. Oct. 1, 2012) (citing In re Seagate Tech., LLC, 497 

F.3d 1360, 1374 (Fed. Cir. 2007)). In Seagate, “[t]he Federal Circuit . . . noted that post-filing 

knowledge may be sufficient to support a claim of willful infringement where a defendant violates 

a preliminary injunction secured by the plaintiff. It held, however, that a „patentee who does not 

attempt to stop an accused infringer‟s activities in this manner should not be allowed to accrue 

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enhanced damages based solely on the infringer‟s post-filing conduct.‟”1 Id. at *12-13. This 

Court has previously relied on Seagate to dismiss a claim for willful infringement without 

prejudice because the plaintiff had not moved for a preliminary injunction. See id. 

Other courts in this District, however, have tempered Seagate‟s reach. For example, in 

MyMedicalRecords, Inc. v. Jardogs, LLC, 1 F. Supp. 3d 1020 (C.D. Cal. 2014), the district court 

stated that “the Federal Circuit did not explicitly hold that a plaintiff may never obtain redress for 

willful infringement based on postfiling conduct.” Id. at 1026. The court also indicated 

disagreement with the contention that “the plaintiff must have moved for a preliminary injunction 

in order to establish willful infringement based on conduct that occurred after the filing of the 

original complaint.” Id. It explained that “the defendant should not be able to escape liability for 

conduct occurring after the plaintiff files its complaint” because “[h]olding otherwise would . . . 

give a defendant free rein to willfully infringe a patent of which it is now blatantly aware simply 

because a plaintiff chose not to move for a preliminary injunction. Such a result would eviscerate 

the whole basis behind enhanced damages for willful infringement,” i.e., to punish the 

reprehensible conduct of deliberately infringing a patent. Id.

Judge Chhabria of this District also addressed the reach of Seagate in Monolithic Power 

Sys., Inc. v. Silergy Corp., No. 14-cv-01745-VC, 2015 U.S. Dist. LEXIS 79329 (N.D. Cal. June 

 

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The full text from Seagate is as follows:

[I]n ordinary circumstances, willfulness will depend on an 

infringer‟s prelitigation conduct. It is certainly true that patent 

infringement is an ongoing offense that can continue after litigation 

has commenced. However, when a complaint is filed, a patentee 

must have a good faith basis for alleging willful infringement. So a 

willfulness claim asserted in the original complaint must necessarily 

be grounded exclusively in the accused infringer‟s pre-filing 

conduct. By contrast, when an accused infringer‟s post-filing 

conduct is reckless, a patentee can move for a preliminary 

injunction, which generally provides an adequate remedy for 

combating post-filing willful infringement. A patentee who does 

not attempt to stop an accused infringer‟s activities in this manner 

should not be allowed to accrue enhanced damages based solely on 

the infringer‟s post-filing conduct. Similarly, if a patentee attempts 

to secure injunctive relief but fails, it is likely the infringement did 

not rise to the level of recklessness.

Seagate, 497 F.3d at 1374.

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18, 2015):

A better way to think about the issue is this: a plaintiff can 

state a claim for post-filing willful infringement so long as the 

plaintiff alleges, in an amended complaint and with sufficient 

particularity, that there is an objectively high risk the defendant is 

continuing to infringe and the defendant knows or should know of 

that objectively high risk. That, after all, is what a plaintiff must 

prove to prevail on a willful infringement claim. Whether a plaintiff 

seeks a preliminary injunction has nothing to do with that question, 

and therefore has nothing to do with whether the plaintiff can state a 

claim for willfulness. Rather, the failure to seek a preliminary 

injunction becomes relevant at a later stage, if the plaintiff 

ultimately proves its well-pled allegations of post-filing willful 

infringement. At that point, the court is called upon to exercise its 

discretion whether to award damages for the willful infringement 

found by the jury. And in exercising its discretion on that issue, a 

court may well conclude that the patentee “should not be allowed to 

accrue enhanced damages based solely on the infringer‟s post-filing 

conduct” when the patentee did “not attempt to stop an accused 

infringer‟s activities” during the litigation. 

Id. at *10-11.

The Court finds merit in Judge Chhabria‟s approach, even though, arguably, it does not 

give enough credit to Seagate. See Seagate, 497 F.3d at 1374 (stating that, “when a complaint is 

filed, a patentee must have a good faith basis for alleging willful infringement,” and “[s]o a 

willfulness claim asserted in the original complaint must necessarily be grounded exclusively in 

the accused infringer‟s pre-filing conduct”) (emphasis added). But even under Judge Chhabria‟s 

approach, LSI has still failed to adequately plead willful infringement. In Monolithic, Judge 

Chhabria ultimately evaluated the sufficiency of the willful infringement claim by considering 

whether the plaintiff had adequately pled that the defendant “continues to engage in the accused 

conduct despite knowing of an objectively high likelihood that it is infringing.” Id. at *12-13. 

Here, even if Funai‟s post-filing knowledge could – in principle – support a claim for willful 

infringement (i.e., because it knew about the claim of patent infringement but nevertheless still 

continued to infringe), LSI would still have to allege more ( i.e., that Funai acted in the face of an 

objectively high likelihood of infringement).

The Court therefore grants the motion to dismiss the willful infringement claim but without 

prejudice. LSI has leave to amend to address the deficiency described above. If LSI amends, it 

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must plead facts explaining, inter alia, why Funai knew there was an objectively high likelihood 

of infringement. The amended complaint shall be filed within twenty (20) days of this order.

For the foregoing reasons, the motion is dismiss is GRANTED in part and DENIED in 

part.

This order disposes of Docket No. 28.

IT IS SO ORDERED.

Dated: December 8, 2015

______________________________________

EDWARD M. CHEN

United States District Judge

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