Source: https://www.attornify.com/blog/posts/-the-split-of-opinions-for-motions-to-dismiss-when-pleading-indirect-infringement-in-patent-cases-will-the-complaints-stay-or-might-it-be-forced-to-go
Timestamp: 2019-04-20 13:02:44+00:00

Document:
The split of opinions for motions to dismiss when pleading indirect infringement in patent cases: Will the complaints stay or might it be forced to go?
Home Resources The split of opinions for motions to dismiss when pleading indirect infringement in patent cases: Will the complaints stay or might it be forced to go?
Over the last decade, patent law has experienced its share of significant changes.
Over the last decade, patent law has experienced its share of significant changes. In the context of patent litigation, especially, new patent-specific pleading standards have presented some hot-button issues for patent holders wishing to navigate the already murky morass of Iqbal and Twombly. While pleading standards for direct infringement remain relatively safe, thanks to In re Bill of Lading, the pleading requirements for claims of indirect infringement have become considerably more difficult and unclear for patent holders.
Direct infringement is a strict liability tort where the law requires that each claim limitation read on (literally or through the doctrine of equivalents) an allegedly infringing product. The doctrine of indirect infringement, namely contributory and induced infringement, creates liability in any entity who arguably facilitates direct infringement by another. Because the doctrine of indirect infringement considerably expands the range of potential defendants to an infringement suit, the law mandates that in addition to sufficiently pleading a claim for direct infringement, patent plaintiffs must also plead facts sufficient for a court to infer the defendant had knowledge or intent to induce or contribute to the alleged direct infringement.
For any patent plaintiff, formulating a claim for indirect infringement which satisfies the knowledge requirement is no cake walk. But it is the uncertainty in timing of this requirement that has recently provided defendants with more ammunition for filing a motion to dismiss. Under 35 U.S.C. §§ 271(b) and 271(c) and recent Federal Circuit law, a defendant’s conduct—inducing or contributing to another’s direct infringement— must occur after the defendant knew: (1) of the patent(s) in suit; and (2) that the direct-infringers’ acts constitute patent infringement. Objectively, this makes sense. However, if a defendant must have actual knowledge (or succumb to willful blindness) before its conduct creates liability for indirect infringement, how does this affect the sufficiency of a complaint if a defendant first knew of the patent and its infringement thereof from the filing of a complaint? In other words, does a defendant need to have the requisite knowledge before a lawsuit is filed in order for a patent plaintiff to survive a motion to dismiss? As expected, this hasn’t exactly been an easy question for the federal district courts around the country to answer.
Moreover, there is no legal impediment to having an indirect infringement cause of action limited to post-litigation conduct. Indeed, it is instructive to bear in mind the fundamental purpose of asserting indirect infringement, that is, to ensure that the patentee can recover full compensation for any damages suffered as a result of infringement. The fact that Walker Digital would be prohibited from collecting damages related to indirect infringement for any preknowledge (e.g., pre-filing) conduct is the only substantive consequence of allowing allegations such as those at bar to go forward.
In sum, if a complaint sufficiently identifies, for purposes of Rule 8, the patent at issue and the allegedly infringing conduct, a defendant’s receipt of the complaint and decision to continue its conduct despite the knowledge gleaned from the complaint satisfies the requirements of Global–Tech.
Plaintiff’s argument requires this Court to bootstrap the knowledge Defendants now have based on Plaintiff’s filing of the Complaint onto defendant’s acts before Plaintiff filed its complaint. Yet, a defendant cannot be held liable because it induced or contributed to another’s acts before the defendant had knowledge, because to do so effectively holds a defendant liable for acts it did without knowledge.
Furthermore, requiring a Plaintiff to plead knowledge based on facts other than the filing of the present lawsuit furthers judicial economy and preserves parties’ resources by encouraging resolution prior to filing a lawsuit. Pre-litigation attempts at resolution are especially desirable in patent cases, which are often expensive and thus resolved by settlement. Indeed, Plaintiff could have notified Defendants of their alleged infringement and sought an amicable resolution at any time prior to filing this suit. Defendants should not be punished for Plaintiff’s failure to do so.
Below is a list of excerpts from opinions of other courts which had the opportunity to address the issue as to on when a defendant’s 12(b)(6) motion to dismiss should be granted or denied. The apparent split illustrates the ripeness of this issue for Federal Circuit review.
E.I. Du Pont De Nemours and Co. v. Heraeus Holding GMBH, 2012 WL 4511258, at *6 (D. Del. Sep. 28, 2012) (“[W]hile Twombly and Iqbal require facts to be pled that allow for the plausible inference that the elements of an inducement claim can be met, when it comes to knowledge of the patent-at-issue, a plaintiff’s filing (and a defendant’s receipt) of the complaint are facts that establish such knowledge-at least as of the date of the filing”).
Secured Mail Solutions, LLC v. Advanced Image Direct, LLC, Case No. 8:12-cv-01090-DOC-MLG, p. 11 (C.D. Cal. Jan. 30, 2013) (“Insofar as Plaintiff alleges knowledge of the Patents in Suit based on the filing of the original Complaint in this lawsuit, the holding in Proxyconn controls and Plaintiff has not pled sufficient facts to state a plausible claim for indirect patent infringement”).
Aguirre v. Powerchute Sports, LLC, 2011 WL 2471299, at *3 (W.D. Tex. June 17, 2011) (“To the extent Aguirre relies on knowledge of Aguirre’s patent after the lawsuit was filed, such knowledge is insufficient to plead the requisite knowledge for indirect infringement”).
Zamora Radio, LLC v. Last.FM, Ltd., 758 F.Supp.2d 1242, 1257 (S.D. Fla. 2010) (Finding no indirect infringement because “[plaintiff] has offered no evidence that Defendants had any pre-suit knowledge of the ‘399 Patent”).
WHAT IS THE IMPORT FOR PATENT PLAINTIFFS?
All of this talk begs the question: if patent plaintiffs need these indirect infringement claims so badly (for patent plaintiffs asserting method or system claims, indirect infringement is often times the only avenue of recourse), why not notify potential infringers and then file suit? Well that sounds simple in theory. But for a patent plaintiff wishing to avoid the possibility of defending a declaratory judgment action in an unfavorable jurisdiction, the import of that decision is far reaching.
When the Federal Circuit has the opportunity to opine on this issue, if it decides that actual pre-suit knowledge is a requirement, then most patent holders will need to brush up on their creative writing skills when drafting those lovable enforcement letters. This is because every patent holder and its counsel knows to tread lightly in any pre-litigation interaction with a potential defendant, albeit in a once-written notice letter. Opening the door to declaratory judgment actions and perhaps putting the ball in a defendant’s court can have profound effects on the future course of litigation for a patent plaintiff.
On the other hand, if the Federal Circuit sides with a majority of the district courts in finding a defendant liable for indirect infringement with respect to post-litigation conduct from its knowledge as of the filing of a complaint, patent plaintiffs may ultimately have more control over their choice of venue by avoiding a claim for declaratory judgment based on the need for a pre-filing notice letter before asserting indirect infringement claims. In addition, by eliminating another weapon with which a defendant can attack a complaint, a patent plaintiff has effectively strengthened its case going forward.
 Form 18 of the Federal Rules of Civil Procedure controls the pleading standard for direct infringement and 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. 681 F.3d 1323, 1334 (Fed. Cir. 2012) (quoting McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007)).
 “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)).
 “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)).
 For claims under both induced and contributory infringement, a defendant must have “knowledge of the existence of the patent that is infringed.” Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011) (interpreting “knowing” requirement for inducing infringement claim under 35 U.S.C. § 271(b)); Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 488 (1964) (interpreting “knowing” requirement for contributory infringement under 35 U.S.C. § 271(c)); DSU Med. Corp. v. JMS Co., Ltd., 471 F. 3d 1293, 1305 (Fed. Cir. 2006) (en banc).
 2012 WL 1835680, at *5-6 (C.D. Cal. May 16, 2012).

References: v. 
 v. 
 v. 
 v. 
 v. 
 § 271
 § 271
 § 271
 v. 
 v. 
 § 271
 v. 
 § 271
 v.