U.S. Ethernet Innovations, LLC v. Samsung, et al., 6:12cv398 (2/7/13)
Judge: John Love
Holding: Motion to Dismiss Plaintiff's Claims for Indirect Infringement and Willful Infringement Recommended Granted.
Defendant Yamaha filed a motion to dismiss,
contending that USEI’s allegations of inducement, contributory infringement, and willful
infringement in its amended complaint were insufficient.
With respect to the inducement allegations, Judge Love wrote that because Form 18 does not expressly pertain to indirect infringement, the general principles of Twombly and Iqbal apply. Yamaha claimed that the plaintiffs complaint failed to meet the pleading requirements for inducement because it did not allege the requisite intent element or "knowledge that its current customer's acts constituted infringement":
Essentially, USEI argues that a reasonable inference of intent and knowledge can be made from the following allegations in its complaint: (1) Yamaha has actual or constructive knowledge of the asserted patents, yet continues to infringe; (2) Yamaha supplies “infringing systems and components to [its] customers;” and (3) Yamaha’s “customers who purchase systems and components thereof and operate such systems and components thereof in accordance with [Yamaha’s] instructions directly infringe one or more claims.” Here, USEI’s complaint alleges a direct infringer, namely Yamaha’s customers, but nevertheless fails to: (1) recite the elements of an inducement claim; and (2) allege any facts that, if taken as true, establish a plausible inference that Yamaha had the specific intent to induce its customers actions, and knowledge that those actions amounted to infringement. ... USEI’s allegations that Yamaha “supplies” infringing systems and components and provides “instructions” to its customers who allegedly infringe do not create a reasonable inference of inducement. In sum, USEI’s complaint as to its inducement allegations fails to provide Yamaha with adequate notice.
(Internal cite omitted).
With respect to contributory infringement, Judge Love held that the complaint failed to put Yamaha on notice of a claim of contributory infringement because it was "devoid of any allegation from which the court can plausibly infer that any components being sold have 'no substantial non-infringing uses.'"
As to the willful infringement allegations, Judge Love wrote that while a plaintiff need only a good-faith basis for alleging willful infringement, at the pleading stage, the plaintiff alleging willful infringement "should provide enough facts that, when taken as true, show objective recklessness of the infringement risk." Judge Love held that plaintiff had not satisfied the standard because it "fail[ed] to state any facts that could be taken as true to recite a relief–worthy claim for willful infringement." This was because the allegation was devoid of any facts that created an inference of Yamaha's objective recklessness. Instead "it only makes the conclusory assertion that Yamaha had knowledge of the asserted patents and continue to infringe. Without more, USEI's allegation of willful infringement fails to provide adequate notice."
The court granted plaintiff leave to amend its pleadings to correct the identified deficiencies within 14 days.