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Vasudevan Software, Inc v. Tibco Software Inc


May 17, 2012


The opinion of the court was delivered by: Richard Seeborg United States District Judge



Defendant TIBCO Software Inc. moves to dismiss plaintiff Vasudevan Software, Inc.'s (VSi) claims for inducement and willful infringement in this patent case. TIBCO argues that VSi 18 has inadequately plead those claims under Federal Rule of Civil Procedure 12(b)(6). VSi opposes 19 the motion. In consideration of the pleadings, the arguments raised at the hearing, and for all the 20 reasons set forth below, TIBCO's motion to dismiss must be granted, but with leave to amend. 21


VSi's First Amended Complaint (FAC) alleges TIBCO's Spotfire Platform infringes U.S. Patent No. 7,167,864 ("the '864 patent"), which was issued on January 23, 2007 for an invention 24 entitled "Multimedia Inspection Database System" (MIDaS). TIBCO acquired Spotfire Inc. in June 25 2007, and with it, the Spotfire Platform. The FAC asserts direct and indirect infringement, in the 26 form of inducement. In support of the latter, VSi alleges TIBCO is "inducing its customers to 27 directly infringe the '864 Patent by providing its customers and others with detailed explanations, 28 instructions, and information as to arrangements, applications, and use of its TIBCO Spotfire

Platform products that promote and demonstrate how to use those products in an infringing 2 manner." FAC ¶ 11. VSi avers it "demonstrated its patented software MIDaS to Spotfire in 2005 3 and notified Spotfire MIDaS was covered by U.S. Patent No. 6,877,006 ('the '006 Patent')." Id. 4

The '864 patent asserted in this case is a continuation of the '006 patent. In "early 2006," according 5 to the FAC, VSi made a "similar presentation" of its MIDaS software to TIBCO. Id. During that 6 presentation, VSi allegedly notified TIBCO that MIDaS was covered by the '006 patent and another 7 pending continuation patent application that later issued as the '864 patent.*fn1 Id. Finally, VSi pleads 8 that TIBCO had actual knowledge of the '864 patent at least by December 23, 2011, the date this 9 suit was filed. 10

portfolio, the FAC asserts TIBCO knew or should have known that its actions induced its customers to infringe directly the '864 patent. Id. On these same factual predicates, VSi also alleges willful 13 and deliberate infringement. Id. at ¶ 12. In the alternative, VSi maintains TIBCO was willfully 14 blind to its alleged infringement, and that of its customers, based on its purported knowledge of 15

VSi's patent portfolio. In support of this allegation, VSi avers TIBCO was familiar with the 16 functionality of the MIDaS software, and similarities between that product and its own Spotfire 17 Platform. According to the FAC, TIBCO nonetheless took unspecified actions to blind itself to the 18 risk of infringement. Id. at ¶ 13.

A complaint must contain "a short and plain statement of the claim showing that the pleader 21 is entitled to relief." Fed. R. Civ. P. 8(a)(2). While "detailed factual allegations are not required," 22 such a complaint must have sufficient factual allegations to "state a claim to relief that is plausible 23 on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 24

550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content 25 that allows the court to draw the reasonable inference that the defendant is liable for the misconduct 26 alleged." Id. (quoting Twombly, 550 U.S. at 556-67).Such a determination is a context-specific 27


On the premise that TIBCO was thus put on notice of the '864 patent and VSi's patent


task requiring the court "to draw on its judicial experience and common sense." Id. at 1950.A 2 claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6) based on the "lack of a 3 cognizable legal theory" or on "the absence of sufficient facts alleged under a cognizable legal 4 theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). When evaluating 5 such a motion, the court must accept all material allegations in the complaint as true, even if 6 doubtful, and construe them in the light most favorable to the non-moving party. Twombly, 550 7

U.S. at 570. "Conclusory allegations of law and unwarranted inferences of fact do not suffice to 8 support a claim." Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998). 9

10 place the alleged infringer on notice as to what he must defend." McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). Thus, for example, a patentee is not required to include specifically each element of the claims of the asserted patent in its complaint for infringement. 13 Phonometrics, Inc. v. Hospitality Franchise Sys., Inc., 203 F.3d 790, 794 (Fed. Cir. 2000); 14 2008). When dismissing a complaint, leave to amend must be granted unless it is clear that the 16 complaint's deficiencies cannot be cured by amendment. Lucas v. Dep't of Corrections, 66 F.3d 17


To state a claim for patent infringement, the "patentee need only plead facts sufficient to

FotoMedia Techs., LLC v. AOL, LLC, No. C 07-0255, 2008 WL 4135906, at *1 (E.D. Tex. Aug. 29, 15 245, 248 (9th Cir. 1995). 18

A. Willful infringement 20

As a general matter, "[i]n order to establish willful infringement, a patentee must show by 22 clear and convincing evidence that the infringer acted despite an objective likelihood that its actions 23 constituted infringement of a valid patent."*fn2 In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. 24

Cir. 2007). This definition of the claim consists of two prongs. First: "[i]nfringement is willful 25 when the infringer was aware of the asserted patent, but nonetheless 'acted despite an objectively 26

1. Actual knowledge

high likelihood that its actions constituted infringement of a valid patent.'" Id. at 860 (quoting 2

Seagate, 497 F.3d at 1371). Second, "[a]fter satisfying this objective prong, the patentee must also 3 show that the infringer knew or should have known of this objectively high risk." Id. 4

Thus, "[t]o willfully infringe a patent, the patent must exist, and one must have knowledge 5 of it." State Indus., Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1986) (emphasis in 6 original). "Hence a party cannot be found to have 'willfully' infringed a patent of which the party 7 had no knowledge. Nor is there a universal rule that to avoid willfulness one must cease 8 manufacture of a product immediately upon learning of a patent, or upon receipt of a patentee's 9 charge of infringement, or upon the filing of a suit." Gustafson, Inc. v. Intersystems Indus. Prods., 10 aware of the asserted patent, but nonetheless acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." i4i Ltd P'ship v Microsoft Corp., 598 F.3d 831, 13

The parties first debate the significance of the presentations VSi made to Spotfire Inc. and TIBCO in 2005 and 2006. TIBCO emphasizes that when VSi made those presentations, the '864 16 patent had not yet issued. At most, TIBCO insists, it was aware of VSi's patent application and the 17

'006 patent, but not the existence of the later-issued '864 patent. VSi is correct on this first issue: 18 knowledge of the '864 patent's existence was quite impossible before it issued, and there is no 19 indication in the FAC how TIBCO may have later discovered it. State Indus., 751 F.2d at 1236. As 20 the Federal Circuit has clearly explained for willfulness claims: "To willfully infringe a patent, the 21 patent must exist and one must have knowledge of it. A 'patent pending' notice gives one no 22 knowledge whatsoever. . Filing an application is no guarantee any patent will issue and a very 23 substantial percentage of applications never result in patents. What the scope of claims in patents 24 that do issue will be is something totally unforeseeable." Id. Accord Sealant Sys. Intern., Inc. v. 25 TEK Gobal, No. C 11-0774, 2012 WL 13662, at *3 (N.D. Cal. Jan. 4, 2012) (knowledge of pending 26 patent application does not support claim of willfulness). 27 28 precisely when the '864 patent was granted, and had advance notice of the claims that were to be Inc., 897 F.2d 508, 511 (Fed. Cir. 1990). Rather, "[i]nfringement is willful when the infringer was 861 (Fed. Cir. 2010) (citing Seagate, 497 F.3d at 1371). 14 Conceivably, the result might be different if VSi was able to allege that TIBCO knew allowed, as in National Presto. National Presto Indus. v. The West Bend Co., 76 F.3d 1185, 1193 2

(Fed. Cir. 1996) (finding knowledge based on awareness of pending application where defendant 3

Absent such facts, however, TIBCO's mere alleged awareness of the '864 patent application does 5 not imply the requisite knowledge of the existence of the later-issued patent. State Indus., 751 F.2d 6 at 1236; Sealant Sys. Intern, 2012 WL 13662, at *3. Like principles apply to VSi's suggestion that 7 knowledge of that patent in suit may be inferred from TIBCO's alleged awareness of the '006 8 patent, or, more generally, VSi's "patent portfolio," whatever it may include. The requisite 9 knowledge of the patent allegedly infringed simply cannot be inferred from mere knowledge of 10 other patents, even if somewhat similar.*fn3

A somewhat closer question is presented by the FAC's pleading that TIBCO possessed

actual knowledge at least by December 23, 2011, the date on which this action was filed. FAC ¶ 11 13 "agreed to receive and was sent a copy of allowed claims" set forth in the Notice of Allowability).

("TIBCO had actual knowledge of the '864 Patent by at least December 23, 2011, when VSi filed its 14 initial complaint"). It is unclear whether or not this averment rests solely on the presentations VSi 15 allegedly made in 2005 or 2006, because there are simply no other supporting facts to be found in 16 the FAC. TIBCO thus argues this allegation is too conclusory to state a claim. The authority on 17 whether such a bare allegation constitutes a sufficient pleading is, admittedly, mixed. Both parties 18 lay claim to supporting case law. Bender v. LG Elecs., No. C 09-2114, 2010 WL 889541, at *5 19

(N.D. Cal. Mar. 11, 2010) (acknowledging "lack of complete uniformity in recent district court 20 authority" concerning pleading willfulness after Twombly and Iqbal). VSi insists that it may 21 proceed under the applicable pleading standard so long as it asserts that TIBCO had notice of, or 22 willfully blinded itself to, the '864 patent.*fn4 Consistent with VSi's position, several cases out of this 23

District, purporting to apply Twombly and Iqbal, have concluded that a "bare" factual assertion of 24

knowledge or "actual notice," without more, is sufficient to state a claim for willful infringement. 2 See, e.g., Oracle Corp. v. DrugLogic, Inc., 807 F. Supp. 2d 885, 902-03 (N.D. Cal. 2011) ("By 3 alleging that Oracle was aware of the '091 patent and had 'actual notice' of DrugLogic's 4 infringement claims, DrugLogic has made out a 'bare' factual assertion that Oracle had knowledge 5 of the '091 patent"), and Rambus v. Nvidia Corp., No. C 08-3343, 2008 WL 4911165, at * (N.D. 6

Cal. Nov. 13, 2008) (finding allegation that defendant's infringement "has been and is willful, 7 deliberate and in disregard of Rambus' patent rights," though not "factually detailed," is sufficient to 8 state a claim). 9 10 assertion of "willful infringement," without supporting facts, does not pass muster. For example, was willful, intentional and with conscious knowing disregard of [P]laintiffs' [sic] patent rights," to 13 be insufficient to state a claim for willful infringement. Avocet Sports Tech., Inc. v. Garmin Intern., 14 District, IpVenture, rejected plaintiff's contention that knowledge of a pending application was 16 sufficient to support a claim of willfulness, holding: 17 (internal citations omitted). In short, while a patentee need only make out the barest factual 22 assertion of knowledge of an issued patent, a "bare recitation of the required legal elements for 23 willful infringement" is inadequate. Id. Accord Avocet Sports Tech., 2012 WL 1030031, at *3. To 24 be fair, the difference between the barest factual assertion of knowledge of an issued patent, and a "bare recitation of the required legal elements for willful infringement" is not exactly easy to draw, 26 given that knowledge of the patent (or willful blindness) is a required element. That said, it simply 27 cannot be that an assertion of "willful infringement" is insufficient to state a claim, whereas an 28 allegation of "actual knowledge," without more, is enough.


Other cases from this District, also applying Iqbal and Twombly, find that a conclusory Avocet Sports Technology recently held the mere allegation that, "The infringement by [D]efendants Inc., 2012 WL 1030031, at *3 (N.D. Cal. Mar. 22, 2012). Likewise, another decision from this 15 Plaintiff's current complaint merely alleges the factual predicate that Defendants had knowledge of Plaintiff's patent application. Because there are no facts to support the claim that Defendants actually had knowledge of the issued patent, and there is merely the bare recitation of the required legal elements for willful infringement, the Court finds that Plaintiff has failed to state a cause of action for willful infringement. IpVenture, Inc. v. Cellco P'ship., No. C 10-04755, 2011 WL 207978, at *2 (N.D. Cal. Jan. 21, 2011) 21

2 court must accept as true all of the allegations contained in a complaint is inapplicable to legal 3 conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory 4 statements, do not suffice." Iqbal, 129 S. Ct. at 1950 (citing Twombly, 550 U.S. at 555); Bradley, 5

Under the familiar pleading standard articulated by Iqbal and Twombly, "the tenet that a 136 F.3d at 1322. Here, the FAC is silent as to whether VSi has any factual bases for its claim, 6 other than the 2005 and 2006 presentations, which, as the foregoing discussion makes clear, are 7 inadequate as a matter of law. VSi's failure to plead any facts directed to showing actual knowledge 8 is hardly a technicality. To proceed, VSi's complaint must at least put TIBCO on sufficient notice 9 to answer the complaint and defend the case. McZeal, 501 F.3d at 1356-57. "Whether an act is 10 willful is by definition a question of the actor's intent, the answer to which must be inferred from all

the circumstances." Gustafson, 897 F.2d at 511. Here, there is no way to discern what constitutes the basis for the averment of actual knowledge. It follows that the FAC, to the extent it relies on 13 actual knowledge, is insufficient to sustain a willfulness claim. 14 15 of this suit alone.*fn5 As TIBCO emphasizes, however, "in ordinary circumstances, willfulness will 16 depend on an infringer's prelitigation conduct," because, while willfulness is an "ongoing offense 17 that can continue after litigation has commenced," a patentee must have a good faith basis for 18 alleging willful infringement in the original complaint. In re Seagate Tech., LLC, 497 F.3d at 137419

(citing Fed. R. Civ. P. 8, 11(b)). Thus, under Seagate, a patentee may move for a preliminary 20 injunction based on a showing of post-filing reckless conduct by defendant, but "[a] patentee who 21 does not attempt to stop an accused infringer's activities in this manner should not be allowed to 22 accrue enhanced damages based solely on the infringer's post-filing conduct." Id. Here, VSi's 23 original complaint alleged that TIBCO and its subsidiary "continue to infringe," Compl. ¶ 12, 24 whereas the FAC alleges "TIBCO's continued infringement" is "willful and deliberate." FAC ¶ 12. 25

Given the foregoing discussion, it is clear that at least up until now, VSi has failed to allege facts to 26 support a claim for willfulness based on TIBCO's pre-litigation conduct. Other than the mere 27 Of course, the claim might still be viable if willfulness could be inferred based on the filing

suggestion that infringement continues, there are no facts in the FAC concerning TIBCO's post-2 filing conduct at all, and certainly none that would support a claim of recklessness. To permit VSi 3 to proceed in this fashion would invite claims of willfulness in every patent suit, as a matter of 4 course, and regardless of the facts. Given the uncertainties that surround patent validity, and the 5 challenges of predicting litigation outcomes generally, such a rule would not comport with reality. 6

Gustafson, 897 F.2d at 511 ("Nor is there a universal rule that to avoid willfulness one must cease 7 manufacture of a product immediately . upon the filing of a suit"). To the extent VSi invokes case 8 law from the Northern District of Illinois to suggest a contrary conclusion, those decisions are, of 9 course, not binding and ultimately unpersuasive. Accordingly, the FAC, at least as it is currently 10 constituted and to the extent it relies on an unsupported allegation of actual knowledge, fails to state

a claim for willful infringement.

2. Willful blindness

In the event it fails to state a claim for knowing willfulness, VSi argues that it has 14 nonetheless adequately pleaded facts reflecting TIBCO's willful blindness. To show willful 15 blindness, as an alternative to actual knowledge, the patentee must plead facts demonstrating the 16 defendant (1) subjectively believed there was a high probability a particular fact existed or was true, 17 and (2) took deliberate actions to avoid learning of that fact. Global-Tech Appliances, Inc. v. SEB 18 S.A., 131 S. Ct. 2060, 2070 (2011). A "finding of knowledge when there is merely a 'known risk'" 19 of infringement and "'deliberate indifference' to that risk," is not sufficient to plead willful 20 blindness. Id. at 2071. Nor will recklessness or negligence suffice. Id. Rather, as Global-Tech 21 clarifies, "a willfully blind defendant is one who takes deliberate actions to avoid confirming a high 22 probability of wrongdoing and who can almost be said to have actually known the critical facts." Id. 23

'006 patent, the '864 patent application, "knew or should have known" of alleged functional 25 similarities between the Spotfire Platform and MIDaS software, and "recognized, or should have 26 recognized," that the two firms were "among only a handful of competitors in the business 27 intelligence software space." FAC ¶ 13. The FAC also pleads that TIBCO took unspecified 28

In this case, VSi again rests its claim on the averments that TIBCO was made aware of the

"deliberate actions" to avoid a "known risk" that VSi possessed the '864 patent, and that TIBCO's 2 customers infringed its claims.

4 blindness. Although it is perhaps a closer question than alleged knowledge of the '864 patent 5 premised on VSi's 2006 disclosure of the pending application, the factual averments in the FAC are 6 insufficient to plead that TIBCO subjectively believed there was a high risk the '864 patent existed, 7 in a final form that would implicate its Spotfire Platform. As the foregoing discussion makes clear, 8 mere knowledge of a pending patent application is of little significance given the prospect that a 9 patent may not ever be issued, or, if issued, be altered or narrowed in scope. State Indus., 751 F.2d 10 at 1236. Ultimately, however that issue need not be decided, because VSi has neglected to identify any affirmative actions taken by TIBCO to avoid gaining actual knowledge of the '864 patent.

Instead, the FAC simply accuses TIBCO of "taking deliberate actions to avoid a known risk." FAC 13

These averments similarly are insufficient to sustain a claim under a theory of willful

¶ 14. In effect, the FAC merely restates the standard articulated by Global-Tech, backed by 14 conclusory statements. This is insufficient to state a claim for relief under the pleading standard set 15 forth in the Federal Rules, as articulated by Iqbal and Twombly, and does not provide the notice 16 required by the Federal Circuit's precedents. Phonometrics,203 F.3d at 794 (notice "requirement 17 ensures that an accused infringer has sufficient knowledge of the facts alleged to enable it to answer 18 the complaint and defend itself"). Accordingly, VSi's claim for willful infringement must be 19 dismissed. 20

21 infringement, it is at least conceivable that, provided the opportunity to amend, it could do so. 22 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). The sufficiency of the 23 pleadings have not yet been litigated in this action, and given the liberal policy of the Federal Rules 24 favoring amendment "when justice so requires," leave to amend is appropriate. 25

Section 271(b) of Title 35 states, "[w]hoever actively induces infringement of a patent shall 27 be liable as an infringer." Under Global-Tech, to state a claim for inducement, the patentee must 28 show that the alleged infringer had "knowledge of the existence of the patent that is infringed." 131

Although plaintiff has failed to state facts sufficient to support a claim for relief for willful

B. Indirect infringement 26

S. Ct. at 2068. DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1304 (Fed. Cir. 2006) (en banc) 2

("The requirement that the alleged infringer knew or should have known his actions would induce 3 actual infringement necessarily includes the requirement that he or she knew of the patent."). To 4 proceed on such a claim, plaintiff must plead specific, supporting facts. Nazomi Commc'ns, Inc. v. 5

Nokia Corp., No. C 10-4686, 2011 WL 2837401, at *3 (N.D. Cal. July 14, 2011). VSi predicates 6 its claim for inducement on the inadequate factual averments already discussed in the context of its 7 willfulness claim. Because there are no factual averments to support plaintiff's allegation that 8

TIBCO was actually aware of the '864 patent, let alone willfully blinded itself to the existence of the 9 patent, the motion to dismiss must be granted as to this claim, as well. Similarly, leave to amend is 10 appropriate for the reasons stated above.


For the reasons stated, defendant's motion to dismiss must be granted with leave to amend 13 on both claims for relief. 14


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