Windy City Innovations, LLC v. Microsoft Corp.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS RE: DKT. NO. 14

          YVONNE GONZALEZ ROGERS, UNITED STATES DISTRICT COURT JUDGE

         Plaintiff Windy City Innovations, LLC filed this action in the Western District of North Carolina against defendant Microsoft Corp. for alleged infringement of four of plaintiff's patents. (Dkt. No. 1, "Compl.") Based thereon, plaintiff seeks: (i) a declaratory judgment finding that defendant has infringed plaintiff's patents; (ii) a preliminary and permanent injunction preventing defendant from continuing to infringe upon the patents at issue, or in the alternative, a compulsory ongoing licensing fee award; (iii) an award of attorneys' fees; (iv) damages, including supplemental damages for any continuing post-verdict infringement, as well as enhanced damages for willful infringement; (v) costs for pursuing this action; (vi) pre-judgment and post-judgment interest on the damages awarded; and (vi) any other relief the Court may deem just and proper.

         Currently pending before the court is defendant's motion to dismiss the complaint for failure to state a patent infringement claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), filed on July 24, 2015. (Dkt. Nos. 14 & 15, "Mtn.") Plaintiff filed a response in opposition to defendant's motion on August 10, 2015 (Dkt. No. 24, "Opp'n"), and defendant filed a reply on August 20, 2015 (Dkt. No. 27, "Reply"). The case was transferred from the Western District of North Carolina to the Northern District of California on April 6, 2016. (Dkt. No. 30.) Defendant re-noticed the Motion to this Court on May 18, 2016. (Dkt. No. 51.)

         Having carefully reviewed the papers and evidence submitted and the pleadings in this action, and for the reasons set forth more fully below, the Court hereby Grants in Part, and Denies in Part defendant's motion to dismiss plaintiff's complaint.^[1]

         I. BACKGROUND

         Plaintiff Windy City is a limited liability company incorporated in Delaware and maintains its principal place of business in Illinois. (Compl. ¶ 1.) Defendant Microsoft is incorporated and has its headquarters in Washington. (Id. at ¶ 2.) Plaintiff brings this patent infringement action against defendant for the alleged violation of four of its patents: (i) U.S. Patent No. 8, 407, 356, a "Real Time Communications System" patent containing thirty-seven claims; (ii) U.S. Patent No. 8, 458, 245, a "Real Time Communications System" patent containing fifty-eight claims; (iii) U.S. Patent No. 8, 473, 552, a "Communications System" patent containing sixty-four claims; and (iv) U.S. Patent No. 8, 694, 657, a "Real Time Communications System" patent containing 671 claims (collectively, the "Patents"). (Id. at ¶¶ 6-9.)

         According to the complaint, the Patents "generally cover a real time communications system for managing and facilitating communication of digital data, including different media types across networks." (Id. at ¶ 11.) Additionally, the Patents cover a "computer network (i.e., a server network) that arbitrates permissions and distribution of multimedia information messages utilizing, for example, an application program interface (‘API')." (Id.) Specifically, plaintiff describes that the technology in the Patents is used to "create[] a virtual connection among individual computers via the Internet, permits access to the connection in accordance with predefined rules (e.g., user identity), arbitrates communications in accordance with predefined rules, and provides an application programming interface multiplexing and demultiplexing communications by message type." (Id. at ¶ 13.)

         The complaint alleges that "Microsoft offers communications software products that provide for real-time communications over the Internet, including inter alia, instant messaging, online meetings, screen sharing, and voice and video calls." (Id. at ¶ 16.) In particular, plaintiff alleges that certain Microsoft products offer "functionality that enables [] users to create and virtually connect to a network of contacts, share multimedia files with all or some of those contacts, establish private chat groups, customize privacy settings, and communicate in real time via . . . chat, video chat, and messages functionalities, " in violation of the Patents. (E.g. Id. at ¶ 18.) Specifically, plaintiff asserts that the following of defendant's products infringe on the Patents by providing such functionality: "Skype, "^[2] "Lync, "^[3] "Skype for Business, "^[4] "Xbox, "^[5]"Surface Tablets, "^[6] and "Microsoft Mobile Phones"^[7] (collectively, the "Accused Instrumentalities"). (Id. at ¶¶ 18, 20, 22, 23, 27.)

         II. DISCUSSION

         A. Legal Standard

         Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). The complaint must plead "enough facts to state a claim [for] relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79; see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (stating that a court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences").

         "Federal Rule of Civil Procedure 8(a)(2) requires only a ‘short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 554-55 (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original). Even under the liberal pleading standard of Rule 8(a)(2), "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal brackets and quotation marks omitted)). The Court will not assume facts not alleged, nor will it draw unwarranted inferences. Iqbal, 556 U.S. at 679 ("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.").

         B. Analysis

         Plaintiff alleges three claims against defendant: (1) direct infringement; (2) indirect infringement; and (3) contributory infringement. Additionally, plaintiff alleges that defendant infringed willfully, entitling plaintiff to enhanced damages. Defendant moves to dismiss each of those claims and ...