Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-03582/USCOURTS-cand-3_16-cv-03582-6/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

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

STRAIGHT PATH IP GROUP, INC.,

Plaintiff,

 v.

APPLE INC.,

Defendant. /

No. C 16-03582 WHA

ORDER RE APPLE’S

MOTION TO DISMISS

INDUCEMENT CLAIM

INTRODUCTION 

In this patent infringement action, the accused infringer moves to dismiss the patent

owner’s claim for inducement of infringement. For the reasons stated below, the accused

infringer’s motion is GRANTED IN PART and DENIED IN PART.

STATEMENT

Plaintiff Straight Path IP Group, Inc., is a non-practicing entity that acquired United

States Patent Nos. 6,108,704 (“the ’704 patent”), 6,131,121 (“the ’121 patent”), 6,701,365 (“the

’365 patent”), 7,149,208 (“the ’208 patent”), and 6,009,469 (“the ’469 patent”) via assignment

from non-party NetSpeak Corporation. The patents cover processes for point-to-point

communications between applications on computers connected to a network, facilitating, inter

alia, real-time video conferencing.

In 2014, Straight Path sued defendant Apple Inc. for direct and indirect infringement of

the ’704, ’121, ’365, and ’208 patents, but not of the ’469 patent. Straight Path commenced that

action in this district, where it was assigned to the undersigned judge and given case number

Case 3:16-cv-03582-WHA Document 61 Filed 10/21/16 Page 1 of 7
United States District Court

For the Northern District of California

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14-4302. The complaint accused Apple’s Facetime application, which allowed users of Apple’s

mobile and personal computer devices to make and receive video calls, of infringement.

Also in 2014, Straight Path commenced separate actions against Cisco Systems, Inc.,

and Avaya Inc., asserting the same patents as well as the ’469 patent. Those actions were also

assigned to the undersigned judge pursuant to Patent L.R. 2-1(a).

A joint defense group including Cisco, Avaya, and Apple pursued inter partes review of

the ’704, ’121, ’365, and ’469 patents (but not of the ’208 patent). The Patent Trial and Appeal

Board instituted review of the ’704, ’121, and ’469 patents, but not of the ’365 patent. The

parties in each of the actions stipulated to a stay of the 2014 actions pending the inter partes

review proceedings, but an order denied that request. Straight Path voluntarily dismissed all

three of its actions in January 2015.

In June 2016, following a win in the inter partes review, Straight Path commenced this

action, accusing Apple of direct and indirect infringement of the ’704, ’121, ’365, and ’208

patents (the same four patents asserted in 2014), now asserting the ’469 patent as well (which

had only been asserted against Cisco and Avaya in 2014). Straight Path again filed separate

actions against Cisco and Avaya. Straight Path commenced all three of those actions in this

district, where they were again assigned to the undersigned judge pursuant to Patent L.R. 2-1(a).

Apple moved to dismiss Straight Path’s claims for induced infringement of all five

asserted patents in August. In lieu of a response, Straight Path amended its complaint, and an

order denied Apple’s motion as moot. Apple then made the instant motion to dismiss Straight

Path’s amended claims for induced infringement. This order follows full briefing and oral

argument.

ANALYSIS

“Whoever actively induces infringement of a patent shall be liable as an infringer.” 

35 U.S.C. 271(b). A claim for active inducement under Section 271(b) “requires knowledge

that the induced acts constitute[d] patent infringement.” Global-Tech Appliances, Inc. v. SEB

S.A., 563 U.S. 754, 766 (2011). Induced infringement also requires proof that the accused

inducer “possessed a specific intent to encourage another’s infringement of the patent.” 

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 As a threshold matter, Straight Path may not use this litigation to seek money relief as to

infringement that post-dated the complaint unless it later supplements its complaint. Thus, this order does not

address whether Apple can be charged with knowledge of infringement based on the instant complaint.

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Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009).

Apple contends that Straight Path has failed to plead both the requisite knowledge and

the requisite intent as to each of its claims. This order addresses each issue in turn.

1. KNOWLEDGE.

In Commil USA, LLC v. Cisco Systems, Inc., 575 U.S. __, 135 S. Ct. 1920, 1928 (2015),

the Supreme Court clarified that the knowledge standard set forth in Global-Tech required proof

not only that the accused inducer of infringement had “knowledge of the patent” but also “proof

the defendant knew the acts were infringing.” That is, a claim for induced infringement cannot

lie where the accused inducer reasonably reads the patent’s claims to exclude the induced

conduct, simply because it knew those acts “might infringe” if that reasonable claim

construction was not adopted. Ibid.

Straight Path alleges that Apple knew of the ’704, ’121, ’365, and ’208 patents (but not

the ’469 patent) and that its customers’ use of Facetime infringed those patents based on the

2014 complaint accusing Apple of infringement of those patents. Apple does not deny

knowledge of the patents asserted in 2014 but contends that the 2014 complaint was insufficient

to charge Apple with knowledge that its customers’ use of Facetime infringed those patents.1

Apple cites Neology, Inc. v. Kaspsch Trafficcom IVHS, Inc., No. 13-2052, 2014 WL

4675316, at *3–4 (D. Del. Sept. 19, 2014) (Judge Christopher J. Burke), and Pragmatus AV,

LLC v. Yahoo! Inc., No. 11-902, 2013 WL 2295344, at *1 (D. Del. May 24, 2013) (Judge

Leonard P. Stark), for the proposition that a patent owner cannot plead knowledge of

infringement based solely on allegations that the accused inducer received materials identifying

the patents and the accused products. Those decisions both involved bare-bones allegations that

failed to provide even a summary of the scope of the asserted patents. Straight Path’s 2014

complaint, however, went beyond merely identifying the patents and the accused products and

actually summarized the claim limitations that it contended were met (paraphrasing in a way

that indicated Straight Path’s interpretation of the scope of the patents) and identified the

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product, Facetime, that met those claim limitations (Pl.’s Opp., Exh. 1 ¶¶ 16, 19, 27, 30, 38, 41,

49, 52). Notwithstanding that distinction, Apple contends that Straight Path’s 2014 complaint

still falls short of the materials that could support a claim for induced infringement.

Apple next cites Windy City Innovations, LLC v. Microsoft Corp., No. 16-1729, 2016

WL 3361858, at *4–5 (N.D. Cal. June 17, 2016) (Judge Yvonne Gonzalez-Rogers), wherein the

accused inducers were charged with knowledge that its products infringed the asserted patent

for inducement that occurred after the complaint was filed. The decision in Windy City found

the complaint adequately charged the accused inducers with knowledge of infringement. The

decision did not describe or analyze the complaint in detail, but the complaint walked through

the various claim limitations and pointed to components of the accused products that met each

claim limitation (Pl.’s Opp., Exh. 2 ¶ 30).

Similarly, in Largan Precision Co, Ltd. v. Genius Electronics Optical Co., Ltd., No. 13-

2502, 2013 WL 5934698, at *3 (N.D. Cal. Nov. 4, 2013) (Judge William H. Orrick), the patent

owner provided the accused inducer with a detailed claim chart prior to filing the lawsuit. The

claim chart “appear[ed] to explain in detail how [the accused infringer’s] lenses, incorporated

into the two identified [accused] products, read on the claims of the patents-in-suit.” Id. at *4. 

Straight Path’s 2014 complaint was not so detailed as the materials provided to the

accused infringers in Windy City or Largan. Although it recited claim language and identified

the claim limitations Straight Path contended were met by the accused products, the 2014

complaint did not explain the relationship between those claim limitations and any component

or function of the accused products. On the other hand, the 2014 complaint exceeded the bare

assertions in Neology and Pragmatus. 

Notably, Apple does not contend that the 2016 complaint insufficiently alleged direct

infringement claims under Twombly and Iqbal (which did not apply to Straight Path’s direct

infringement claims in 2014). This order finds that in light of Apple’s immersion in litigation

involving the ’704, ’121, ’365, and ’208 patents beginning in 2014, it is plausible that Apple

performed some analysis of those patents and came to the same conclusions that form the basis

for Straight Path’s direct infringement claims now — allegations Apple declined to challenge as

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 Patent L.R. 3-1 requires the party asserting patent infringement to provide detailed infringement

contentions after the initial case management conference (and thus well after the complaint has been filed). The

Federal Trade Commission recently identified the “early” disclosure required by Patent L.R. 3-1 as one effective

means for controlling the asymmetries in discovery costs in infringement suits brought by patent assertion

entities. FEDERAL TRADE COMMISSION, PATENT ASSERTION ENTITY ACTIVITY 10 n.21 (Oct. 2016). 

This order notes that our Patent Local Rules were drafted before the abrogation of Form 18. Thus, the

full disclosure of infringement contentions may now be appropriate in the initial pleading. Apple does not

challenge the sufficiency of Straight Path’s direct infringement allegations here, so this order does not address

the sufficiency of those allegations.

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insufficient to support a claim for direct infringement. At this stage, Straight Path is entitled to

discovery into Apple’s state of mind as to the patents asserted in 2014.2

The same cannot be said, however, for Apple’s purported knowledge of its infringement

of the ’469 patent, which was never asserted against Apple in the 2014 action. Straight Path

contends that Apple gained knowledge of the ’469 patent and knowledge that its products

infringed that patent by participating in the joint defense group that challenged that patent in an

inter partes review proceeding. It is simply implausible to infer that Apple performed analysis

and concluded that its products infringed the ’469 patent based solely on the fact that Straight

Path had asserted it against others in Apple’s joint defense group but not against Apple. 

Accordingly, Straight Path’s claim for induced infringement of the ’469 patent is DISMISSED.

This order now turns to the intent element as to the remaining patents.

2. INTENT.

To survive a motion to dismiss, a patent owner’s complaint “must contain facts

plausibly showing that [the accused inducer] specifically intended [its] customers to infringe”

the asserted patents. In re Bill of Lading, 681 F.3d 1323, 1339 (Fed. Cir. 2012). The instant

complaint alleges that even after Straight Path accused Apple’s Facetime product in the 2014

action, Apple continued to encourage its customers to use Facetime. Apple contends that

Straight Path’s complaint failed to allege the requisite specific intent. 

Apple offers no explanation for why — assuming it can be charged with knowledge that

use of Facetime infringed the ’704, ’121, ’365, and ’208 patents — it cannot then be charged

with intentionally inducing infringement by marketing that very product. Instead, it relies on

inapposite authorities that simply repackage its arguments about the knowledge element,

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already rejected above.

Apple cites Straight Path IP Group, Inc. v. Vonage Holdings Corp., No. 14-502, 2014

WL 3345618, at *2 (D.N.J. July 7, 2014) (Judge Jose Linares), as an example of our very same

plaintiff’s inadequately pled claim for induced infringement. There, the prior owner of Straight

Path’s patents had sent a competitor a letter identifying the patents and encouraging it to

purchase the patent owner’s products. The letter never accused any product of infringing. 

When Straight Path later acquired the patents and asserted them against the prior owner’s

competitor, it alleged that the competitor had conducted analysis as to whether its products

infringed (or deliberately avoided doing so). The Vonage decision held Straight Path’s

allegations based on a letter that never actually accused anyone of infringement (unlike the

2014 complaint here) were conclusory and thus dismissed the inducement claims.

The Vonage decision discussed its holding as a failure by Straight Path to plead specific

intent, but it ultimately rested on the same issue already addressed above: Whether the accused

inducer knew its products infringed the patents. As stated, the allegations plausibly suggest that

in 2014 Apple was so immersed in litigation in asserting the ’704, ’121, ’365, and ’208 patents

that it conducted an infringement analysis and reached the same conclusion of infringement

now described in greater detail in the instant complaint. 

Apple also cites the undersigned judge’s decision in Logic Devices, Inc. v. Apple, Inc.,

13-2943, 2014 WL 60056, at *1 (N.D. Cal. Jan. 7, 2014). There, the patent owner accused

Apple of inducing others to infringe simply by “developing, programming, modifying,

enhancing, updating, debugging and/or compiling” versions of the accused software. “Other

than identify who committed the alleged direct infringement . . . and how . . . the complaint

[was] devoid of any facts that Apple knew or should have known its activities would induce

actions by others which constituted infringement . . . .” That decision rejected the patent

owner’s argument that the complaint itself provided the requisite knowledge because the patent

had already expired by the time the complaint was filed. Thus, Logic Devices rejected the

induced infringement claims because the patent owner failed on the knowledge element. Logic

Devices is inapposite.

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Here, Apple plausibly became aware that Facetime infringed the ’704, ’121, ’365, and

’208 patents in the manner described in the instant complaint based on its immersion in

litigation involving those patents in 2014. Thus, Apple’s promotion of the Facetime product

since 2014 also plausibly supports the inference that it had the specific intent to encourage its

users to infringe. At the pleading stage, that is sufficient to state a claim for induced

infringement.

CONCLUSION

For the reasons stated above, Apple’s motion is GRANTED as to claims of induced

infringement of the ’469 patent and otherwise DENIED. Straight Path may not seek leave to

amend the dismissed claim due to futility.

IT IS SO ORDERED.

Dated: October 21, 2016. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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