Dismissal of Indirect and Joint Infringement Appropriate Where Plaintiff Failed to Plead Sufficient Facts to Establish Knowledge and Control or Direction

July 22, 2011

Plaintiff filed a patent infringement suit against 17 defendants alleging direct, indirect and joint infringement. The defendants moved to dismiss for failure to state a claim. The district court granted the motions to dismiss the joint infringement and indirect infringement claims, but denied the motions to dismiss the direct infringement claims.

The patent-in-suit discloses a data processing station subscriber unit that delivers interactive or television-quality entertainment and informational content to subscribers. Each of the independent claims include a limitation requiring a plurality of sources of video text and television program channels available from a wireless television program communication network.

Defendants asserted that plaintiff's complaint failed to satisfy the pleading requirements for direct infringement, indirect infringement and joint infringement. Defendants argued that the allegations of the complaint did not establish that any individual defendant alone directed the production of all of the components of the purportedly infringing system, that defendants possessed the requisite knowledge and intent to indirectly infringe the patent at the time of the alleged infringement and that any individual defendant directed or controlled the action of other infringing parties.

With respect to the claim for direct infringement, the defendants argued that the complaint failed to allege that any defendant individually makes, uses, or sells the entire claimed invention. The district court held that plaintiff's allegations were sufficient because, on a motion to dismiss, a plaintiff is not required to specifically plead each element of the asserted patent's claims or even identify which claims it is asserting. The district found that plaintiff's complaint meets the standards for Form 18 of the Fed.R.Civ.Pro.: "Plaintiff's second amended complaint sufficiently meets the five elements required by Form 18. Indeed, the complaint exceed Form 18's example for the third element, which identifies just a general category of products and provides no further details."

Turning to indirect infringement, the district court found that plaintiff failed to allege sufficient facts for the district court to infer that defendants had any knowledge of the patent at the time they were committing the allegedly infringing activities. The district court found that plaintiff's allegations that certain of the defendants had licensed a patent that referenced the patent-in-suit too tenuous because the patent-in-suit was just one of many patents cited by the patent that was licensed to the defendants by a third-party. The district court also reject plaintiff's invitation to find that the defendants should have known of the patent-in-suit by virtue of their participation in the interactive television market. Therefore, the motion to dismiss was granted as to indirect infringement. "Without the requisite knowledge element, plaintiff fails to adequately state a claim of indirect infringement."

With respect to joint infringement, plaintiff asserted that it was plausible to infer from the activities of the defendants that some defendants exerted control or direction over the parties allegedly infringing activities and, thus, incurs joint infringement liability. The district court also found these allegations insufficient. "Consistent with this court's heightened pleading requirement for indirect infringement claims, the court will similarly require plaintiff's complaint to satisfy the Federal Circuit's 'control or direction' standard for joint infringement claims on motions to dismiss." The district court then held that "plaintiff's complaint does not provide specific facts explaining any alleged relationships among defendants. Plaintiff fails to identify any defendant as exercising 'control or direction' over the allegedly infringing acts of other parties. Consequently, plaintiff's complaint does not sufficiently state a claim of joint infringement."

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Although the district court allowed the direct infringement claim to move forward based on bare allegations sufficient to comply with Form 18, the district court's decision to dismiss the indirect and joint infringement claims demonstrates the importance of pleading additional facts if a plaintiff wants to proceed on these theories. It also is another reminder for defendants that these theories carry heightened pleading requirement and may be vulnerable to a motion to dismiss if the plaintiff has failed to plead sufficient facts.

Eon Corp. IP Holdings LLC v. Flo TV Inc., Case No. 10-812-SLR (D. Del. July 12, 2011)

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.