Allegations of Inducing Infringement Insufficient Where Plaintiff Failed to Plead Allegations Sufficient to Support an Inference of Intent to Induce Infringement

February 6, 2013

Plaintiff Benjamin Grobler ("Grobler") filed a patent infringement action against Sony Computer Entertainment America LLC ("Sony") alleging direct and indirect (both inducing and contributory) infringement. Grobler subsequently filed an amended complaint that removed the contributory infringement claim and asserted a claim for indirect infringement limited to inducing infringement. Sonly filed a motion dismiss the inducing claim.

As explained by the district court, "Grobler filed this suit against Sony, alleging that Sony infringes the '084 Patent by making, using, importing, offering to sell, and/or selling in the United States, systems for data vending, including the Sony PlayStation Network system. Id. at ¶ 9. Grobler also alleged that Sony infringed one or more claims of the '084 Patent by contributing to and/or inducing its customers' infringement using such systems. Id. Grobler then filed the AC, limiting the indirect infringement claim to a claim that Sony indirectly infringes one or more claims of the '084 Patent by inducing its customers' infringement using the Sony PlayStation Network system. AC at ¶ 10. Sony now moves to dismiss the induced infringement claims for failure to meet the pleading requirements for indirect patent infringement."

The district court then analyzed the standards for induced infringement. "Indirect patent infringement (including inducement) requires an allegation of direct infringement by another. Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1274 (Fed. Cir. 2004). In addition, inducement requires proof that the defendant "possessed the requisite knowledge or intent to be held vicariously liable. Dynacore Holdings, 363 F.3d at 1273 (internal citations omitted). To survive a motion to dismiss, a plaintiff must plead 'facts plausibly showing that the [defendants] specifically intended their customers to infringe the [patent] and knew that the customers' acts constituted infringement.' In re Bill of Lading, 681 F.3d at 1339."

The district court then concluded that Grobler had satisfied the requirement of alleging direct infringement by another in that Grobler had alleged that Sony's customers had committed the acts of direct infringement and that they had done that by downloading rental movies using Playstation devices.

However, the district concluded that there were insufficient allegations to support an inference of intent to induce infringement. "[A] complaint for induced infringement 'must contain facts plausibly showing that [defendants] specifically intended their customers to infringe the . . . patent and knew that the customer's acts constituted infringement.' In re Bill of Lading, 681 F.3d at 1339. A bare allegation that Sony knew of the patent and 'knew or should have known its activities in encouraging and assisting customers in the use of the Playstation Network system . . . would induce its customers' direct infringement.' AC at ¶ 10, does not contain any factual allegations that could plausibly support an inference of intent, and is precisely the type of 'formulaic recitation of a cause of action's elements' that the Supreme Court held insufficient in Twombly, 550 U.S. at 555. Rather, to survive a motion to dismiss, Grobler must include some factual allegations that could establish that Sony knew not just that Grobler had the '084 Patent, but that Sony's customers' downloading of rental movies would infringe the '084 Patent."

Accordingly, the district court granted the motion to dismiss with leave to amend.

Grobler v. Sony Computer Entertainment America LLC, Case No. 5:12-CV-01526-LHK (N.D. Cal. Jan. 25, 2013)

The authors of www.PatentLawyerBlog.com are patent trial 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.