Opinion ID: 4703137
Heading Depth: 2
Heading Rank: 1

Heading: The ’540, ’990, ’988, and ’670 Patents

Text: As noted, the district court dismissed Bot M8’s allegations related to the ’540, ’990, ’988, and ’670 patents for failure to sufficiently state a claim of infringement. On appeal, Bot M8 alleges that the district court erred in sua sponte requiring an amended complaint. Bot M8 also argues that the district court erred in dismissing its FAC and abused its discretion by denying Bot M8 leave to amend the FAC. We address each issue in turn.
At the outset, Bot M8 argues that “the district court erred in sua sponte forcing Bot M8 to replead” its original complaint. Appellant’s Br. 23. We find Bot M8’s arguments unpersuasive. Case: 20-2218 Document: 44 Page: 12 Filed: 07/13/2021 12 BOT M8 LLC v. SONY CORPORATION OF AMERICA First, while the district court made its impression of Bot M8’s original complaint clear, it did not force Bot M8 to replead. The record reveals that, during the November 21, 2019 case management conference, the court told counsel for Bot M8 that it would give Bot M8 “another chance to plead if [it] want[ed] to try again; but, otherwise, [the court was] going to let [Sony] bring a Motion to Dismiss.” J.A. 533 at 3:7–9. Counsel indicated that Bot M8 “would be happy to put in an Amended Complaint with claim charts”—particularly given that it had already “torn down the Sony PlayStation.” Id. at 3:10–12. Bot M8 therefore chose to file an amended complaint rather than defend its original complaint; it was not forced to do so. Second, Ninth Circuit law is clear that “[a] trial court may act on its own initiative to note the inadequacy of a complaint and dismiss it for failure to state a claim” if it “give[s] notice of its intention to dismiss and give[s] the plaintiff some opportunity to respond unless the ‘plaintiffs cannot possibly win relief.’” Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988) (quoting Wong v. Bell, 642 F.2d 359, 361 (9th Cir. 1981)). Accordingly, the district court had the authority to request an amended complaint, and the court’s procedure here was fair—it gave Bot M8 the option to re-plead or respond to any motion from Sony. That Bot M8 agreed to put together the requested claim chart at the case management conference weighs against Bot M8’s objections on appeal. We therefore find no error in the court’s decision directing Bot M8 to file the FAC.
Federal Rule of Civil Procedure 8(a)(2) “generally requires only a plausible ‘short and plain’ statement of the plaintiff’s claim,” showing that the plaintiff is entitled to relief. Skinner, 562 U.S. at 530. To survive a motion to dismiss under Rule 12(b)(6), a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 Case: 20-2218 Document: 44 Page: 13 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 13 U.S. 662, 678 (2009) (quoting Bell v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). “Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. Here, the district court instructed counsel for Bot M8 that it must “explain in [the] complaint every element of every claim that you say is infringed and/or explain why it can’t be done.” J.A. 532 at 2:21–24. We disagree with the district court’s approach and reiterate that a plaintiff “need not ‘prove its case at the pleading stage.’” Nalco, 883 F.3d at 1350 (quoting Bill of Lading, 681 F.3d at 1339). A plaintiff is not required to plead infringement on an element-byelement basis. Id. (“[T]he Federal Rules of Civil Procedure do not require a plaintiff to plead facts establishing that each element of an asserted claim is met.”); see Disc Disease Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir. 2018) (finding that a plaintiff need not plead every element, but must only give the alleged infringer fair notice of infringement). Instead, it is enough “that a complaint place the alleged infringer ‘on notice of what activity . . . is being accused of infringement.’” Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017) (quoting K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013)). To the extent this district court and others have adopted a blanket elementby-element pleading standard for patent infringement, that approach is unsupported and goes beyond the standard the Supreme Court articulated in Iqbal and Twombly. See Twombly, 550 U.S. at 556 (“[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual Case: 20-2218 Document: 44 Page: 14 Filed: 07/13/2021 14 BOT M8 LLC v. SONY CORPORATION OF AMERICA proof of those facts is improbable, and that a recovery is very remote and unlikely.”) (internal quotation marks and citation omitted). The relevant inquiry under Iqbal/Twombly is whether the factual allegations in the complaint are sufficient to show that the plaintiff has a plausible claim for relief. Iqbal, 556 U.S. at 679. “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.” Id. at 678. In other words, a plausible claim must do more than merely allege entitlement to relief; it must support the grounds for that entitlement with sufficient factual content. Id. “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. The level of detail required in any given case will vary depending upon a number of factors, including the complexity of the technology, the materiality of any given element to practicing the asserted claim(s), and the nature of the allegedly infringing device. Accordingly, a plaintiff cannot assert a plausible claim for infringement under the Iqbal/Twombly standard by reciting the claim elements and merely concluding that the accused product has those elements. There must be some factual allegations that, when taken as true, articulate why it is plausible that the accused product infringes the patent claim. While the Supreme Court has said that “[f]actual allegations must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, it has also indicated that “[s]pecific facts are not necessary; the statement need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555). Case: 20-2218 Document: 44 Page: 15 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 15 Having clarified the appropriate standard, we turn to the district court’s decision on Sony’s motion to dismiss. The district court dismissed Bot M8’s claims as to the ’540, ’990, ’988, and ’670 patents for lack of sufficient factual allegations. We review a district court’s Rule 12(b)(6) dismissal under the law of the regional circuit. Juniper Networks, Inc. v. Shipley, 643 F.3d 1346, 1350 (Fed. Cir. 2011). Applying Ninth Circuit law, we review “dismissals for failure to state a claim without deference.” Id. In doing so, “we accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to” Bot M8. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005); see also Bill of Lading, 681 F.3d at 1340. As explained below, while we agree with the district court that Bot M8’s allegations as to the ’540 and ’990 patents were conclusory and at times contradictory, we find that the court erred in dismissing the allegations as to the ’988 and ’670 patents. With respect to the ’988 and ’670 patents, the court simply required too much.
Claim 1 of the ’540 patent requires “a board including a memory in which a game program . . . and an authentication program . . . are stored” separate from “a motherboard” (“the board limitation”). ’540 patent, col. 12, l. 65– col. 13, l. 5. The district court found Bot M8’s allegations insufficient because the FAC “fails to plausibly plead the shared location of the game and authentication programs according to claim 1 of the ’540 patent.” Order on Mot. to Dismiss, 2020 WL 418938, at . On appeal, Bot M8 contends that the FAC describes how the PS4 meets all elements of the ’540 patent with “fourteen pages of factual allegations” and “fifteen pages of claim charts applying the publicly available evidence to the claim elements.” Appellant’s Br. 29. Specifically, Bot M8 argues that its FAC identified three different components that independently satisfy the board limitation: (1) the Case: 20-2218 Document: 44 Page: 16 Filed: 07/13/2021 16 BOT M8 LLC v. SONY CORPORATION OF AMERICA PS4’s internal hard drive; (2) PS4 Blu-ray discs; and (3) PlayStation Network Servers. According to Bot M8, these allegations alone provide Sony with the requisite fair notice of its infringement claim with respect to the ’540 patent. Sony responds that Bot M8’s FAC failed to plausibly plead that the shared location of the game and authentication programs is any of the three components that Bot M8 identified. Sony further submits that the FAC actually alleges away from infringement by asserting that the purported “authentication program” is stored on the PS4 motherboard—an allegation that is inconsistent with Bot M8’s infringement theory. As explained below, because we agree with Sony on its second point, we need not address the first in any detail, except to reiterate that conclusory allegations are insufficient. While a plaintiff need not prove infringement at the pleading stage, here, the FAC contains too much rather than too little, to the point that Bot M8 has essentially pleaded itself out of court. While Bot M8 repeatedly emphasizes the number of pages in its FAC, it is the quality of the allegations, not the quantity, that matters. And unfortunately for Bot M8, its allegations, which take a “kitchen sink” approach to pleading, reveal an inconsistency that is fatal to its infringement case with respect to the ’540 patent. Claim 1 of the ’540 patent requires that a “game program for executing a game” and an “authentication program for authenticating the game program” are stored on the same “board including a memory,” separate from the “motherboard” and its memory. ’540 patent, col. 12, l. 65– col. 13, l. 5. In the FAC, however, Bot M8 asserts that “[t]he authentication program for the PlayStation 4 hard drive, Operating System, and games is stored on PlayStation 4 MX25L25635FMI 256Mb Serial Flash Memory,” which is allegedly in the PS4 “motherboard.” Case: 20-2218 Document: 44 Page: 17 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 17 J.A. 633; see J.A. 630 (“The PlayStation 4 motherboard contains flash memory. The CMOS Serial Flash Memory . . . is a Macronix MX25L25635FMI 256Mb Serial Flash Memory chip.”). That allegation renders Bot M8’s infringement claim not even possible, much less plausible. While claim 1 requires that the game program and authentication program be stored together, separately from the motherboard, the FAC alleges that the authentication program is located on the PS4 motherboard itself. Under Iqbal/Twombly, allegations that are “merely consistent with” infringement are insufficient. Twombly, 550 U.S. at 557. Where, as here, the factual allegations are actually inconsistent with and contradict infringement, they are likewise insufficient to state a plausible claim. 3 As we have said before, while a plaintiff’s pleading obligations are not onerous, it is possible that, in pleading its claims, a plaintiff may find it has pleaded itself out of court. See Nalco, 883 F.3d at 1348–50. We agree with the district court that Bot M8 failed to provide factual allegations supporting a plausible inference that the PS4 infringes claim 1 of the ’540 patent. We therefore find no error in the district court’s decision dismissing Bot M8’s infringement claims as to the ’540 patent.
The ’990 patent describes a “mutual authentication” program for video games. The claims require storing “gaming information including a mutual authentication program” on the same memory, referred to as the “removable storage medium” (“the mutual authentication limitation”). See ’990 patent, col. 17, ll. 6–8. As with the ’540 patent, the district court found that the FAC “fails to allege when or where the game program and mutual authentication 3 Notably, Bot M8’s allegations were not pled in the alternative. Case: 20-2218 Document: 44 Page: 18 Filed: 07/13/2021 18 BOT M8 LLC v. SONY CORPORATION OF AMERICA program are stored together.” Order on Mot. to Dismiss, 2020 WL 418938, at . According to Bot M8, the FAC alleges four different storage components that satisfy the mutual authentication limitation: (1) the PS4’s hard drives; (2) Blu-ray game discs; (3) PlayStation Network Servers; and (4) flash memory on the PS4 console. On appeal, Bot M8 argues that the district court ignored its factual allegations because they were not supported by source-code-level evidence. While we agree with Bot M8 that there is no requirement to provide source code at the pleadings stage, and that the district court was wrong to demand that it do so, we disagree that it was the absence of source code that prompted dismissal. Instead, the district court found that Bot M8 failed to offer factual allegations that support a plausible inference that the PS4 actually stores the gaming information and mutual authentication program together. Id. While Bot M8 points to different storage components in the allegedly infringing devices, it never says which one or ones satisfy the mutual authentication limitation. We find no error in the district court’s analysis as to the ’990 patent. As noted, mere recitation of claim elements and corresponding conclusions, without supporting factual allegations, is insufficient to satisfy the Iqbal/Twombly standard. Although the FAC alleges that the PS4 contains multiple storage media and multiple authentication programs, we agree with the district court that Bot M8’s allegations are conclusory, merely track the claim language, and do not plausibly allege that gaming information and a mutual authentication program are stored together on the same memory. Id. The district court therefore correctly determined that Bot M8’s allegations do not plausibly allege infringement as to the ’990 patent.
The ’988 and ’670 patents require a control device that executes a “fault inspection program” and “completes the Case: 20-2218 Document: 44 Page: 19 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 19 execution of the fault inspection program before the game is started” (the “fault inspection limitation”). ’988 patent, col. 4, l. 64–col. 5, l. 5; ’670 patent, col. 5, ll. 1–7. The district court acknowledged that the FAC “plausibly allege[d] the inspection for both the memory device and the game stored therein,” but nonetheless dismissed the claims related to these patents on grounds that Bot M8’s allegations regarding the timing of the inspection too closely tracked the claim language to be deemed plausible. Order on Mot. to Dismiss, 2020 WL 418938, at  (“[T]he complaint provides no basis to infer the proper timing of the inspection”). On appeal, Bot M8 argues that the district court erred in its dismissal because the FAC “includes specific evidence demonstrating that the PS4 includes a fault inspection program that concludes prior to a game starting.” Appellant’s Br. 43. In particular, the FAC identifies twelve different error codes that the PS4 displays upon boot up and prior to the game starting. According to Bot M8, those codes and error messages “support a plausible inference that the PS4’s fault inspection program can be concluded prior to the start of a game program.” Id. We agree with Bot M8 that the FAC plausibly alleges infringement of the ’988 and ’670 patents. Bot M8 expressly alleges—at least four different times in the FAC— that the fault inspection program completes before the game is started. J.A. 688 (“The PlayStation CPU will execute the fault inspection program when the gaming device is started to operated [sic] and completed before the game is started.”); J.A. 696 (“The PlayStation CPU will execute the fault inspection program when the gaming device is started to operated [sic] and completed before the game is started.”); J.A. 705 (“The PlayStation CPU will execute the boot program before executing of the fault inspection program when the gaming device is started to operate. The CPU will then execute the fault inspection program and complete execution before the game is started.”); J.A. 716 (“The PlayStation CPU will execute the fault inspection Case: 20-2218 Document: 44 Page: 20 Filed: 07/13/2021 20 BOT M8 LLC v. SONY CORPORATION OF AMERICA program when the device is booted up and before the game is started.”). Sony argues that these allegations are conclusory and track the claim language too closely. But the FAC also identifies specific error messages that are displayed by the PS4 when faults are detected. For example, one alleged error code states: “Cannot start the PS4. Cannot access system storage.” J.A. 687 (alleging that the “PlayStation 4 CPU will report various error codes if there is a problem detected while running the fault inspection program to inspect the second memory device during boot up”). Another alleged error message says that “required information to start the application cannot be found”—an error that seemingly must be resolved before the game is started. J.A. 686. These allegations give rise to a reasonable inference that the fault inspection program is completed before a game starts. Sony maintains that the passages Bot M8 relies upon fail to allege that execution of a fault inspection program completes before a game starts. According to Sony, “[a]lthough these allegations may suggest that execution of an alleged fault inspection program commences during startup, they say nothing about whether it completes execution before a game starts.” Appellee’s Br. 52. We find that Sony—like the district court—demands too much at this stage of the proceedings. Bot M8 need not “prove its case at the pleading stage.” Nalco, 883 F.3d at 1350 (citation omitted). The FAC plausibly alleges that the PS4 completes its execution of the fault inspection program before the game is started and supports those assertions with specific factual allegations. Nothing more is required. Accordingly, we find that the district court erred in dismissing Bot M8’s claims as to the ’988 and ’670 patents.
We next address whether the district court properly denied leave to amend. While we have concluded that the Case: 20-2218 Document: 44 Page: 21 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 21 FAC was sufficient as to the ’988 and ’670 patents, we conclude that leave to amend was properly denied as to all four patents. After the district court dismissed the FAC as to the ’540, ’990, ’988, and ’670 patents, Bot M8 sought leave to file another amended complaint and submitted a proposed SAC. Bot M8 maintained that amendment was necessary because the DMCA and other anti-hacking statutes restrained its earlier reverse engineering efforts. The district court denied the motion. In doing so, the court explained that, where the court has imposed a deadline, Rule 16(b)(4) permits modification “only for good cause,” and the central inquiry is “whether the requesting party was diligent in seeking the amendment.” Order Den. Mot. to Amend, 2020 WL 1643692, at . Because Bot M8 did not raise any concerns about its ability to reverse engineer the PS4 until after the district court issued its decision on Sony’s motion to dismiss, the court found that Bot M8 was not diligent. Id. In denying leave to amend, the district court found no authority to support Bot M8’s belated “fear of the DMCA or other anti-hacking statutes” and no explanation for why Bot M8 failed to raise its concerns at the November 21 case management conference where it represented to the court that it had already “torn down the Sony PlayStation.” Id. at . Because it believed the proposed amendments should have been included in Bot M8’s FAC, the court found them untimely. The court subsequently denied Bot M8’s request for reconsideration, noting that it had “directed reverse engineering of the Sony PlayStation 4 at the November 21, 2019, case management conference.” Order Den. Leave to Move for Recons., 2020 WL 1904102, at . On appeal, Bot M8 submits that the district court abused its discretion in denying leave to amend. Bot M8 maintains that it “sought leave to amend in view of new evidence uncovered after obtaining permission to jailbreak the PS4 and then deciphering its software.” Appellant’s Br. Case: 20-2218 Document: 44 Page: 22 Filed: 07/13/2021 22 BOT M8 LLC v. SONY CORPORATION OF AMERICA 47. According to Bot M8, the district court should have reviewed the motion using Rule 15(a)’s liberal amendment policy—not the “good cause” standard of Rule 16—because the court’s order on the motion to dismiss gave until February 13, 2020 to seek leave to amend and Bot M8 complied with that deadline. Bot M8 also argues that, because it filed the motion for leave to amend less than three weeks after the court dismissed the FAC, and “within two weeks of obtaining permission to jailbreak the PS4,” the court abused its discretion in denying the motion. Id. at 49. We apply regional circuit law to district court “procedural decisions that relate to issues not unique to our exclusive jurisdiction, including motions for leave to amend.” Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d 1339, 1354 (Fed. Cir. 2009). Under Ninth Circuit law, a district court’s denial of leave to amend a pleading after the deadline has passed is reviewed for an abuse of discretion. Id. Where, as here, a party seeks leave to amend after the deadline set in the scheduling order has passed, Federal Rule of Civil Procedure 16 applies to motions to amend the pleadings. Id. 4 Rule 16 provides that “[a] schedule may be modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). While the district court perhaps should not have required reverse engineering of Sony’s products as a prerequisite to pleading claims of infringement (a question we would consider on a case-by-case basis), Bot M8 waived its objection to that obligation when it told the court it was happy to undertake that exercise. The court requested reverse engineering at the November 2019 case management 4 After the district court’s November 21, 2019 case management conference, the court issued a case management order setting December 5, 2019 as the deadline for amendment. Bot M8 did not file its motion for leave to amend until February 13, 2020. Case: 20-2218 Document: 44 Page: 23 Filed: 07/13/2021 BOT M8 LLC v. SONY CORPORATION OF AMERICA 23 conference—two weeks before Bot M8 filed its FAC in December 2019 and twelve weeks before Bot M8 moved for leave to amend in February 2020. At that November conference, Bot M8 did not object to reverse engineering, did not suggest that compliance would be difficult, and did not argue that it needed permission. Instead, Bot M8 represented that it had already “torn down” the PS4 and would be “happy to” put its results into claim charts. We, thus, are not reviewing the court’s original reverse engineering order at this stage, but may only review the court’s later conclusion that Bot M8 was not diligent in raising its concerns with the reverse engineering order until its request to file the SAC. That ruling presents us with a close question. Were we reviewing that order under Rule 15’s standards, we might well find that the district court abused its discretion in denying leave to amend. And, were we in the district court’s role and considering the request in the first instance, we likely would have allowed the filing of the SAC. But we are faced with neither of those circumstances. Reviewing the district court order on appeal and under Rule 16, we cannot conclude that the district court abused its discretion. Even if we might have reached a different decision if asked to consider the matter in the first instance, we do not find that the district court abused its discretion in denying leave to amend a second time. See United States v. Ferguson, 246 F.3d 129, 133 (2d Cir. 2001) (“[W]e are mindful that a judge has not abused h[is] discretion simply because [he] has made a different decision than we would have made in the first instance.”). We therefore affirm the district court’s denial of Bot M8’s motion to amend its complaint, and its order denying reconsideration of that decision.