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XimpleWare, Inc. v. Versata Software, Inc.

United States District Court, N.D. California, San Jose Division

November 25, 2014

XIMPLEWARE, INC., Plaintiff,
v.
VERSATA SOFTWARE, INC., et al., Defendants

For XimpleWare, Inc., a California corporation, Plaintiff: Ansel Jay Halliburton, Jack Russo, Computerlaw Group LLP, Palo Alto, CA; Christopher Joseph Sargent, Entrepreneur Law Group LLP, Palo Alto, CA.

For Versata Software, Inc., a Delaware corporation, formerly known as, Trilogy Software, Inc., Trilogy Development Group, Inc., a California corporation, Pacific Life Insurance Company, a Nebraska corporation, Metropolitan Life Insurance Company, a New York corporation, Wellmark, Inc., an Iowa corporation, Aviva USA Corporation, an Iowa corporation, Defendants: Steven John Mitby, LEAD ATTORNEY, Benjamin Francis Foster, Alisa Anne Lipski, Ahmad, Zavitsanos, Anaipakos, Alavi and Mensing P.C., Houston, TX; Amir Alavi, PRO HAC VICE, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., Houston, TX; David C. Bohrer, Valorem Law Group, San Jose, CA.

For Ameriprise Financial, Inc., a Delaware corporation, Ameriprise Financial Services, Inc, a Delaware corporation, Defendants: Gregory Scot Tamkin, LEAD ATTORNEY, Dorsey & Whitney LLP, Denver, CO; Case Collard, Denver, CO; David C. Bohrer, Valorem Law Group, San Jose, CA.

For Aurea Software, Inc., a Delaware corporation, also known as, Aurea, Inc., Defendant: Benjamin Francis Foster, Alisa Anne Lipski, Ahmad, Zavitsanos, Anaipakos, Alavi and Mensing P.C., Houston, TX; David C. Bohrer, Valorem Law Group, San Jose, CA.

For United HealthCare Services, Inc., a Minnesota corporation, Defendant: Clayton Cole James, LEAD ATTORNEY, Hogan Lovells U.S. LLP, Denver, CO; Srecko Vidmar, Hogan Lovells U.S. LLP, San Francisco, CA.

For The Prudential Insurance Company of America, a New Jersey corporation, Defendant: Steven John Mitby, LEAD ATTORNEY, Alisa Anne Lipski, Ahmad, Zavitsanos, Anaipakos, Alavi and Mensing P.C., Houston, TX; David C. Bohrer, Valorem Law Group, San Jose, CA.

For Waddell & Reed Financial, Inc., Defendant: Robert M. Masters, Ryan Doyle Fabre, LEAD ATTORNEY, PRO HAC VICE, Paul Hastings LLP, Washington, DC; Angela Joy Markle, Paul Hastings LLC, San Francisco, CA; Elizabeth Anne Dorsi, Paul Hastings LLP, Litigation, San Francisco, CA; Michael Williams Stevens, San Francisco, CA.

For Ameriprise Financial Services, Inc., a Delaware corporation, Ameriprise Financial, Inc., a Delaware corporation, Counter-claimants: Gregory Scot Tamkin, LEAD ATTORNEY, Dorsey & Whitney LLP, Denver, CO; Case Collard, Denver, CO; David C. Bohrer, Valorem Law Group, San Jose, CA.

For XimpleWare, Inc., a California corporation, Counter-defendants: Ansel Jay Halliburton, Jack Russo, Computerlaw Group LLP, Palo Alto, CA; Christopher Joseph Sargent, Entrepreneur Law Group LLP, Palo Alto, CA.

For Aurea Software, Inc., a Delaware corporation, Counter-claimant: Benjamin Francis Foster, Alisa Anne Lipski, Ahmad, Zavitsanos, Anaipakos, Alavi and Mensing P.C., Houston, TX; David C. Bohrer, Valorem Law Group, San Jose, CA.

For Versata Software, Inc., a Delaware corporation, Trilogy Development Group, Inc., a California corporation, Counter-claimants: Steven John Mitby, LEAD ATTORNEY, Benjamin Francis Foster, Alisa Anne Lipski, Ahmad, Zavitsanos, Anaipakos, Alavi and Mensing P.C., Houston, TX; Amir Alavi, PRO HAC VICE, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., Houston, TX; David C. Bohrer, Valorem Law Group, San Jose, CA.

ORDER GRANTING-IN-PART DEFENDANTS' MOTIONS TO DISMISS (Re: Docket Nos. 89, 90, 91, 93)

PAUL S. GREWAL, United States Magistrate Judge.

Justified or not, customers usually do not take kindly to being sued by their suppliers. And so when Defendant Versata Software, Inc. sued its customer Defendant Ameriprise Financial, Inc. for breach of a software license, Ameriprise was not content merely to defend itself. Ameriprise instead reached out to Plaintiff XimpleWare, Inc., not only to support its defense but also to inform XimpleWare that it had discovered XimpleWare's source code throughout Versata's DCM product, in violation of Ximpleware's GNU General Public License.[1] XimpleWare did not, however, direct its fire against Versata alone. Ximpleware filed this suit against both Versata and Ameriprise, as well as other Versata customers, alleging infringement of Ximpleware's patents.[2]

The court previously dismissed Ximpleware's complaint, but with leave to amend. Now before the court is another round of motions to dismiss Ximpleware's operative complaint, brought by Defendants United HealthCare Services, Inc., [3] Waddell & Reed Financial, Inc., [4] Pacific Life Ins. Co., Metropolitan Life Ins. Co., Wellmark, Inc. and Aviva USA Corp., [5] and Versata Software, Inc., Trilogy Development Group, Inc. and Aurea Software, Inc. (the " Versata Defendants").[6]

The motions are GRANTED, but only IN-PART.

I.

The Patent Act recognizes not just one form of infringement, but several.

There is direct infringement. " In order to be liable for direct infringement, an accused infringer must make, use, offer to sell, or sell a product embodying the patented design in the United States, or import such a product into the United States." [7] To facilitate pleading direct infringement, Congress included in the Federal Rules of Civil Procedure a specific form complaint: Form 18. " Form 18 sets forth a sample complaint for direct patent infringement and requires: (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." [8] Fed.R.Civ.P. 84 provides: " the forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate." " Rule 84, combined with guidance from the Advisory Committee Notes to the 1946 amendment of Rule 84, makes clear that a proper use of a form contained in the Appendix of Forms effectively immunizes a claimant from attack regarding the sufficiency of the pleading." [9] But " Form 18 in no way relaxes the clear principle of Rule 8, that a potential infringer be placed on notice of what activity or device is being accused of infringement." [10]

There is induced infringement. 35 U.S.C. § 271(b) provides that whoever " actively induces infringement of a patent shall be liable as an infringer." " Unlike direct infringement, induced infringement is not a strict liability tort; it requires that the accused inducer act with knowledge that the induced acts constitute patent infringement." [11] Although inducement " requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's" infringement, [12] it " does not require that the induced party be an agent of the inducer or be acting under the inducer's direction or control to such an extent that the act of the induced party can be attributed to the inducer as a direct infringer." [13] " It is enough that the inducer causes, urges, encourages, or aids the infringing conduct and that the induced conduct is carried out." [14]

" An important limitation on the scope of induced infringement is that inducement gives rise to liability only if the inducement leads to actual infringement. That principle, that there can be no indirect infringement without direct infringement, is well-settled." [15] " The reason for that rule is simple: [t]here is no such thing as attempted patent infringement, so if there ...


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