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Technology Licensing Corp. v. Technicolor USA

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA


October 15, 2010

TECHNOLOGY LICENSING CORPORATION, PLAINTIFF,
v.
TECHNICOLOR USA, INC., DEFENDANT.

MEMORANDUM AND ORDER RE: MOTION FOR JUDGMENT ON THE PLEADINGS

Plaintiff Technology Licensing Corporation ("TLC") brought this action against defendant Technicolor USA, Inc., ("Technicolor")*fn1 for patent infringement. Before the court is defendant's motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).

I. Factual and Procedural Background

Plaintiff owns U.S. Patent Nos. RE40,411 E (the "'411 patent") and RE40,412 E (the "'412 patent"), which are July 1, 2008 reissues of U.S. Patent Nos. 5,754,250 (the "'250 patent") and 5,486,869 (the "'869 patent"), respectively. (Pl.'s Second Am. Compl. ("SAC") ¶¶ 6-8, Exs. A-D.) The '411 patent comprises "a method and apparatus for identifying and separating the synchronizing signal component of video like signals by identifying or detecting the arrangement or sequence of the known occurances [sic] of events or patterns of the sync" and the '412 patent "provides a synchronizing signal separation." (Id. Ex. A at 1, Ex. C at 1.) Plaintiff alleges that defendant infringed the '411 and '412 patents directly and indirectly by manufacturing, using, and selling the Thomson Grass Valley 8900 FSS and 8900GEN-SM and the Thomson Broadcast Media Solutions LDK 5301 Viewfinder. (Id. ¶¶ 9-11.) Defendant moves for judgment on the pleadings on plaintiff's claims of inducing and contributory infringement.

II. Discussion

"After the pleadings are closed--but early enough not to delay trial--a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A Rule 12(c) motion may ask for judgment on the basis of plaintiff's "[f]ailure to state a claim upon which relief can be granted." Id. 12(h)(2)(B). Such a motion is essentially equivalent to a Rule 12(b)(6) motion to dismiss, so a district court may "dispos[e] of the motion by dismissal rather than judgment."*fn2 Sprint Telephony PCS, L.P. v. County of San Diego, 311 F. Supp. 2d 898, 902-03 (S.D. Cal. 2004).

Under Federal Rule of Civil Procedure (8)(a)(2), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." "To survive a motion to dismiss, 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, --- U.S. ----, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Supreme Court has explained that the pleading standard rests on two principles. First, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. While showing an entitlement to relief "does not require 'detailed factual allegations,' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (quoting Twombly, 550 U.S. at 555). Second, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 1950. If the pleadings "do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" Id. (quoting Fed. R. Civ. P. 8(a)(2)).

A claim of indirect patent infringement may be predicated on either infringement by inducement or contributory infringement. With respect to infringement by inducement, patent law provides that "[w]hoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). "Inducement requires a showing that the alleged inducer knew of the patent, knowingly induced the infringing acts, and possessed a specific intent to encourage another's infringement of the patent." Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009); see DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1304 (Fed. Cir. 2006) (en banc in relevant part). Direct infringement is a prerequisite to an indirect inducement claim. Alloc, Inc. v. Int'l Trade Comm'n, 342 F.3d 1361, 1374 (Fed. Cir. 2003); C.R. Bard, Inc. v. Advanced Cardiovascular Sys., Inc., 911 F.2d 670, 675 (Fed. Cir. 1990) ("A person induces infringement under § 271(b) by actively and knowingly aiding and abetting another's direct infringement.").

A party is liable for contributory infringement if he or she "offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention," while knowing the component is "especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use." 35 U.S.C. § 271(c).

Direct infringement is also a prerequisite to a contributory infringement claim. Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005). "[T]o succeed on a claim of contributory infringement, in addition to proving an act of direct infringement, plaintiff must show that defendant 'knew that the combination for which its components were especially made was both patented and infringing' and that defendant's components 'have no substantial non-infringing uses.'" Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1320 (Fed. Cir. 2009) (quoting Cross Med. Prods., 424 F.3d at 1312).

The Federal Circuit has addressed the adequacy of a complaint for direct, but not indirect, patent infringement, holding that even conclusory allegations of direct patent infringement were sufficient to survive a motion to dismiss. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). The McZeal court was guided by then-Form 16 of the Federal Rules of Civil Procedure (now Form 18), which "requires essentially nothing more than conclusory statements" to allege direct patent infringement.*fn3 Elan Microelecs. Corp. v. Apple, Inc., No. C 09-01531, 2009 WL 2972374, at *2 (N.D. Cal. Sept. 14, 2009). No adequate justification exists for holding indirect infringement claims, which contain additional elements not found in direct infringement claims, to the standard of McZeal*fn4 and Form 18.*fn5 Thus, the general principles of Twombly and Iqbal must be applied to indirect infringement claims. See Elan Microelecs., 2009 WL 2972374, at *2 ("Both types of indirect infringement include additional elements, none of which Form 18 even purports to address. In the absence of any other form that addresses indirect infringement and is made binding on the courts through Rule 84, the Court must apply the teachings of Twombly and Iqbal.").

Plaintiff has not stated a plausible claim for relief under either § 271(b) or § 271(c). The SAC alleges only that defendant "manufactures, uses and sells products with synchronization signal separation capabilities" and that defendant has infringed "directly, by inducement, and/or by contributing to the infringement" of the '411 and '412 patents by "manufacturing, using, and selling such products." (Compl. ¶¶ 9-11.) These allegations are insufficient to state a claim for indirect infringement. Plaintiff has not alleged third-party direct infringement (required for success on both indirect claims), defendant's knowing inducement and intent to encourage infringement (required for inducement of infringement), or defendant's knowledge of a combination's infringement and lack of substantial non-infringing uses (required for contributory infringement). While detailed factual allegations are clearly not required at the pleading stage, the facts as alleged do not show a plausible entitlement to relief. See Duhn Oil Tool, Inc. v. Cooper Cameron Corp., No. CV-F-05-1411 OWW GSA, 2010 WL 2354411 (E.D. Cal. June 9, 2010) (third-party direct infringement must be pled in order to state a claim for indirect infringement). The court will therefore grant defendant's Rule 12(c) motion.

A court may grant leave to amend in response to a Rule 12(c) motion if the pleadings can be cured by further factual enhancement. See Sprint Telephony PCS, 311 F. Supp. 2d at 903 ("Because the two motions are analyzed under the same standard, a court considering a motion for judgment on the pleadings may give leave to amend and 'may dismiss causes of action rather than grant judgment.'") (quoting Schwarzer et al., California Practice Guide: Federal Civil Procedure Before Trial Ch. 9-E § 341 (The Rutter Group 2003)). Generally, leave to amend is subject to Rule 15(a)(2) of the Federal Rules of Civil Procedure, which provides that "[t]he court should freely give leave [to amend] when justice so requires." However, "[o]nce the district court ha[s] filed a pretrial scheduling order pursuant to Federal Rule of Civil Procedure 16[,] which establishe[s] a timetable for amending pleadings[,] that rule's standards control[]." Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992). Under Rule 16(b), a party seeking leave to amend must demonstrate "good cause." "Rule 16(b)'s 'good cause' standard primarily considers the diligence of the party seeking the amendment," although "the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion." Johnson, 975 F.2d at 609.

Here, any delay in amendment stems from defendant's decision to file a motion for judgment under Rule 12(c) after the pleadings closed instead of a motion to dismiss under Rule 12(b)(6) when the SAC was originally filed; there has been no lack of diligence on plaintiff's part. While defendant was within its rights to bring this motion, the diligence of plaintiff provides good cause to amend. Any prejudice to defendant, which the court does not find, would be the result of its own delay. Since the allegation of other facts could cure the current defects in the SAC, leave to amend will be granted.

IT IS THEREFORE ORDERED that defendant's motion for judgment on the pleadings on plaintiff's claims of inducing and contributory infringement be, and the same hereby is, GRANTED and those claims are hereby DISMISSED.

Following the October 25, 2010, hearing on the parties' pending motions, the court will set a date by which plaintiff may file the amended complaint consistent with this order.


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