IN THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF TEXAS 

AUSTIN DIVISION 

EXAFER LTD., 

Plaintiff, Case No. 1:20-cv-00131-ADA 

v. 

MICROSOFT CORPORATION, Jury Trial Demanded 

Defendant. 

MICROSOFT’S MOTION TO DISMISS 

EXAFER’S CLAIMS FOR INDIRECT INFRINGEMENT 

 

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Exafer’s claims for indirect infringement—specifically, induced infringement—fail for 

two reasons. First, Exafer does not allege that Microsoft had actual knowledge of the Patents-inSuit or its alleged infringement thereof as required to plead a claim of induced infringement. 

Exafer simply alleges that Microsoft knew of the Patents-in-Suit at least as early as the filing and 

service of the Complaint. This Court has consistently held that such post-filing knowledge is 

insufficient to meet the knowledge requirement set forth by the Supreme Court in Global-Tech 

Appliances. Second, Exafer’s induced infringement claims are insufficient under Iqbal and 

Twombly as they present nothing more than generalized allegations and recitations of legal 

conclusions which do not establish the necessary specific intent. For the same reasoning adopted 

by this Court in Parus Holdings Inc. v. Apple Inc., No. 19-cv-00432 (W.D. Tex.), ECF No. 101 

(Jan. 31, 2020), Exafer’s allegations of indirect infringement should be dismissed for failure to 

state a claim under Federal Rule of Civil Procedure 12(b)(6). 

I. FACTUAL BACKGROUND 

On December 4, 2019, Exafer filed suit against Microsoft alleging infringement of U.S. 

Patent Nos. 8,325,733 and 8,971,335 (“Patents-in-Suit”). Exafer alleges that Microsoft “has been 

on notice of the [Patents-in-Suit] at least as early as the filing and service of the Complaint in this 

action.” Compl. ⁋⁋ 98, 120. Exafer further alleges that Microsoft’s Azure Platform directly 

infringes the Patents-in-Suit and/or Microsoft indirectly infringes the Patents-in-Suit via induced 

infringement because “at least since its post-filing knowledge of the [Patents-in-Suit], Microsoft 

knowingly encourage[d], and continues to encourage, customers to directly infringe one or more 

claims of the [Patents-in-Suit], including by Microsoft’s action that include, without limitation, 

instructing and encouraging customers to use the Azure Platform through user guides/manuals, 

advertisements, promotional materials, and instruction.” Compl. ⁋⁋ 100, 121. Exafer includes 

footnotes citing hyperlinks of alleged examples of “user guides/manuals, advertisements, 

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promotional materials, and instruction” that purportedly “instruct and encourage customers to 

use the Azure Platform,” but Exafer provides no explanation of how these materials induce 

infringement of the Patents-in-Suit. Compl. ⁋⁋ 100 n. 26-29, 121 n. 30-33. Exafer does not 

provide any allegations that Microsoft has pre-suit knowledge of the Patents-in-Suit. 

II. LEGAL STANDARDS 

To survive a motion to dismiss, allegations must include “enough factual matter” to, 

when taken as true, “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). “This 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.” Meetrix IP, LLC v. Cisco Sys., Inc., No. 1-18-CV-309-LY, 2018 

WL 8261315, at *1 (W.D. Tex. Nov. 30, 2018) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009)). A conclusory allegation or a “formulaic recitation of the elements of a cause of action 

will not do.” Iqbal, 556 U.S. at 678. 

 “To succeed on its induced infringement claim, Plaintiff must allege facts showing that 

[Defendant]: (1) had actual knowledge of the patent; (2) knowingly induced a third-party to 

infringe the patent; and (3) had specific intent to induce the patent infringement.” Affinity Labs 

of Tex., LLC v. Toyota Motor N. Am., No. W:13-cv-365, 2014 WL 2892285, at *2 (W.D. Tex. 

May 12, 2014) (citing DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (Fed. Cir. 2006)). The 

Supreme Court held that “[i]nduced infringement under § 271(b) requires knowledge that the 

induced acts constitute patent infringement.” Global-Techs Appliances, Inc. v. SEB S.A., 563 

U.S. 754, 765-66 (2011). 

III. ARGUMENT 

The induced infringement claims in the Complaint present the same problems as the 

claims recently dismissed by this Court in Parus Holdings Inc. v. Apple Inc., 6:19-cv-00432-

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ADA (W.D. Tex) (Docket No. 101). Exafer’s allegations of indirect infringement fail to state a 

claim under Rule 12(b)(6) for two reasons. First, Exafer fails to allege pre-suit knowledge of the 

Patents-in-Suit. Second, Exafer fails to set forth any facts plausibly leading to the inference that 

Microsoft had the specific intent and knowledge required to satisfy the basic Iqbal/Twombly

pleading standards for induced infringement. 

A. Exafer Does Not Allege Pre-Suit Knowledge of the Patents-in-Suit.

To survive a motion to dismiss, Exafer must sufficiently allege that Microsoft had 

knowledge of the existence and the alleged infringement of the Patents-in-Suit. The Complaint 

is devoid of such allegations. Instead, Exafer pleads only that Microsoft had knowledge of the 

Patents-in-Suit “at least as early as the filing and service of the Complaint in this action.” Compl. 

⁋⁋ 98, 120. However, “[t]o state a claim for induced infringement, the plaintiff must allege that 

the defendant knew of the patent and that the induced acts constitute patent infringement.” 

Addiction & Detoxification Ins. L.L.C. v. Carpenter, 620 F. App’x 934, 938 (Fed. Cir. 2015). 

In line with the Supreme Court’s holding in Global-Tech Appliances, this Court has 

consistently held that post-filing knowledge is not sufficient to plead indirect infringement, 

which makes sense because a defendant does not instantly acquire the requisite intent for indirect 

infringement at the time a complaint is filed. Less than two weeks ago, the Court dismissed 

claims for induced infringement in Plaintiff’s First Amended Complaint in Parus Holdings Inc. 

v. Apple Inc., 6:19-cv-00432-ADA (W.D. Tex) (Docket No. 101) on that ground, among others. 

Further, in VLSI Technology, LLC v. Intel Corp., No. 6:19-cv-254-ADA (W.D. Tex.) (Docket 

Nos. 50, 52), this Court dismissed claims of indirect infringement for failure to satisfy the 

knowledge requirement where VLSI alleged—just as Exafer alleges here—that “Intel has had 

knowledge of the ’357 Patent and its infringement of the ’357 Patent at least since the filing of 

this Complaint.” See also Aguirre v. Powerchute Sports, LLC, No. SA_10-cv-0702-XR, 2011 

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WL 2471299, at *3 (W.D. Tex. June 17, 2011) (“To the extent Aguirre relied on knowledge of 

Aguirre’s patent after the lawsuit was filed, such knowledge is insufficient to plead the requisite 

knowledge for indirect infringement.”). Accordingly, Exafer’s filing of the Complaint does not 

satisfy the knowledge requirement to plead induced infringement and as such, Exafer’s claims of 

induced infringement should be dismissed. 

B. Exafer Fails to Allege that Microsoft Specifically Intended to Induce 

Infringement of the Asserted Patents 

Exafer’s indirect infringement claims also fail under Iqbal and Twombly. Just as the 

Plaintiff Parus in Parus Holdings LLC v. Apple, Exafer does not set forth any factual allegations 

leading to the inference that Microsoft had the necessary specific intent to induce infringement. 

“[A] claim of induced infringement ‘must contain facts plausibly showing that the defendants 

specifically intended their customers to infringe the asserted patent and knew that the customer’s 

act constituted infringement.” Affinity Labs, 2014 WL 2892285, at *3 (quoting In re Bill of 

Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1321, 1339 (Fed. Cir. 2012)). 

The specific intent element of induced infringement is not satisfied simply by “generalized 

allegations” of induced infringement through “marketing and sales tactics.” Id. at. *7. 

Moreover, induced infringement may not be pled by simply setting forth the conclusory 

allegation that a Defendant “acted with specific intent” or acted to “urge, instruct, [and/or] 

encourage” infringement. Addiction & Detoxification Inst. L.L.C. v. Carpenter, 620 F. App’x 

934, 938 (Fed. Cir. 2015) (affirming dismissal of indirect infringement claims). Instead, an 

inducement claim must include factual allegations showing how inducement occurs. Affinity 

Labs, 2014 WL 2892285, at *7 (“The complaint generally alleges that Toyota induced its 

customers to purchase its vehicles, but fails to allege how Toyota induced its customers to use 

the vehicles in a manner that would avoid the Asserted Patents.”); see also Hypermedia 

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Navigation LLC v. Google LLC, No. 18-CV-01637-HSG, 2019 WL 1455336, at *3 (N.D. Cal. 

Apr. 2, 2019) (“[T]he complaint only states bald conclusions that an end user following 

YouTube instructions results in infringement. In no way does the complaint detail how an end 

user would infringe Hypermedia’s patents.”). 

Here, Exafer’s allegations of induced infringement fall short, and are precisely the type of 

“generalized allegations” that this Court warned against in Affinity Labs: 

On information and belief, at least since its post-filing knowledge of the ʼ773 

patent, Microsoft knowingly encourages, and continues to encourage, 

customers to directly infringe one or more claims of the ʼ773 patent, including 

by Microsoft’s actions that include, without limitation, instructing and 

encouraging customers to use the Azure Platform through user guides/manuals, 

advertisements, promotional materials, and instructions. 

(ECF No. 1, ¶ 100; see also id., ¶ 101 (alleging Microsoft “knows that the acts Microsoft induced 

customers to take constitute patent infringement and Microsoft’s encouraging acts result in direct 

infringement by customers”); id., ¶ 102 (alleging Microsoft “instructs and continues to instruct 

customers to use the Azure Platform”); id., ¶ 104 (alleging Microsoft “has been, at least since its 

post-filing knowledge of the ʼ773 patent, indirectly infringing and continues to indirectly 

infringe . . . by knowingly and specifically intending to induce infringement by others . . . and 

possessing specific intent to encourage infringement”); id., ¶ 121-125 (same allegations 

regarding ʼ335 patent). 

Exafer’s allegations of “instructing and encouraging” mirror the generic recitation of 

“urge, instruct, [and/or] encourage” that the Federal Circuit rejected in Addiction. See 620 F. 

App’x at 938. And in contravention to this Court’s instructions in Affinity Labs, Exafer did not 

include any factual allegations showing how Microsoft allegedly induces infringement. Rather, 

Exafer simply lists, without explanation, “user guides/manuals, advertisements, promotional 

materials, and instructions” (ECF No. 1, ¶ 100), as the “evidence” that Microsoft induces 

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infringement. This is similar to the generic reference to “marketing and sales tactics” that was 

rejected in Affinity Labs. See 2014 WL 2892285, at *7. Exafer’s inducement claims should be 

dismissed because they are nothing more than a conclusory allegation that Microsoft acted with 

specific intent. See, e.g., Addiction, 620 F. App’x at 938. 

Exafer’s reliance on Microsoft’s online materials in the direct infringement sections of 

the Complaint does not cure these deficiencies. An “alleged infringer must be shown to have 

knowingly induced infringement, not merely knowingly induced the acts that constitute direct 

infringement.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (quotation 

marks omitted). As set forth by this Court in Affinity Labs, “[a]llegations that Toyota 

‘encouraged and is encouraging’ its customers to infringe the Asserted Patents . . . may satisfy 

the pleading requirements for direct infringement. However, such unsubstantiated assertions do 

not adequately support the more demanding specific intent requirement for a finding of induced 

infringement.” Affinity Labs, 2014 WL 2892285, at *7. Thus, referencing documents that 

describe how Microsoft’s Azure Platform works is not sufficient to plausibly lead to an inference 

that Microsoft had the specific intent to induce infringement. In other words, Exafer needs to 

plead specific facts showing Microsoft’s “post-knowledge actions teach an infringing use.” 

CyWee Grp. Ltd. v. HTC Corp., 312 F. Supp. 3d 974, 979 (W.D. Wash. 2018); see also MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 937 (2005) (“Ordinary acts incident 

to product distribution, such as offering customers technical support[,]” are insufficient.). 

IV. CONCLUSION 

For the reasons set forth above, Microsoft respectfully requests that the Court dismiss 

Exafer’s claims for indirect infringement. 

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Dated: February 10, 2020 Respectfully submitted, 

 Winston & Strawn LLP 

/s/ Katherine Vidal 

Katherine Vidal 

Admitted Pro Hac Vice 

KVidal@winston.com 

Winston & Strawn LLP 

275 Middlefield Road, Suite 205 

Menlo Park, CA 94025 

Telephone: (650) 858-6500 

Facsimile: (650) 858-6559 

M. Brett Johnson 

Texas State Bar No. 00790975 

MBJohnson@winston.com 

Winston & Strawn LLP 

2121 N. Pearl St., 9th Floor 

Dallas, TX 75201 

Telephone: (214) 453-6500 

Facsimile: (214) 453-6400 

Samantha M. Lerner 

Admitted Pro Hac Vice 

SLerner@winston.com 

Winston & Strawn LLP 

35 W. Wacker Drive 

Chicago, IL 60601 

Telephone: (312) 558-5600 

Facsimile: (312) 558-5700 

COUNSEL FOR DEFENDANT 

MICROSOFT CORPORATION 

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CERTIFICATE OF SERVICE 

 The undersigned hereby certifies that on this February 10, 2020 a true and correct copy of 

the Microsoft’s Motion to Dismiss Exafer’s Claims for Indirect Infringement was electronically 

filed with the Clerk of the Court using the CM/ECF system, which sends notifications of such 

filing to all counsel of record who have consented to accept service by electronic means. 

/s/ Katherine Vidal 

Katherine Vidal 

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