K-Tech Telecomms., Inc. v. Time Warner Cable, Inc.

• Decision Date: 19 August 2013
• Docket Number: 2012–1446.,Nos. 2012–1425,s. 2012–1425
• Citation: 714 F.3d 1277
• Parties: K–TECH TELECOMMUNICATIONS, INC., Plaintiff–Appellant, v. TIME WARNER CABLE, INC., Defendant–Appellee. K–Tech Telecommunications, Inc., Plaintiff–Appellant, v. DirecTV, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

714 F.3d 1277

K–TECH TELECOMMUNICATIONS, INC., Plaintiff–Appellant,

v.TIME WARNER CABLE, INC., Defendant–Appellee.

K–Tech Telecommunications, Inc., Plaintiff–Appellant,

v.DirecTV, Defendant–Appellee.

Nos. 2012–1425, 2012–1446.

United States Court of Appeals,Federal Circuit.

April 18, 2013.

Rehearing and Rehearing En Banc Denied Aug. 19, 2013.

Patrick F. Bright, Wagner, Anderson & Bright, P.C., of Glendale, CA, argued for plaintiff-appellant.

David S. Benyacar, Kaye Scholer, LLP, of New York, NY, argued for defendant-appellee, Time Warner Cable, Inc. With him on the brief was Daniel L. Reisner.

Darin W. Snyder, O'Melveny & Myers, LLP, of San Francisco, CA, argued for the defendant-appellee, DirecTV. With him on the brief was Ryan K. Yagura, of Los Angeles, CA.

Before MOORE, O'MALLEY, and WALLACH, Circuit Judges.

Opinion for the court filed by Circuit Judge O'MALLEY. Concurring opinion filed by Circuit Judge WALLACH.

O'MALLEY, Circuit Judge.

K–Tech Telecommunications, Inc. (“K–Tech”) appeals the district court's orders in K Tech Telecommunications, Inc. v. Time Warner Cable, Inc., CV11–09373 (May 9, 2012 C.D.Cal.) and K Tech Telecommunications, Inc. v. DirecTV, CV11–09370 (May 9, 2012 C.D.Cal.) dismissing K–Tech's First Amended Complaints for patent infringement against Time Warner Cable, Inc. (“TWC”) and DirecTV for failure to state a claim upon which relief can be granted. Given the substantial factual overlap between the two actions, we consolidated the appeals for the purposes of oral argument and issue our ruling in a single opinion. We find that the district court applied the incorrect standard in evaluating the adequacy of K–Tech's complaints. District courts must evaluate complaints alleging direct infringement by reference to Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure (“Form 18”). Applying that standard to the amended complaints at issue in these appeals, we reverse the judgments dismissing these actions with prejudice and remand for further proceedings.

Background

A. Procedural History

On November 9, 2011, K–Tech filed a complaint for patent infringement against DirecTV in the United States District Court for the Central District of California. On the same day, K–Tech filed a similar action against TWC. These complaints named four patents, U.S. Patent 6,785,903 (the “'903 patent”); U.S. Patent 7,487,533 (the “'533 patent”); U.S. Patent 7,761,893 (the “'893 patent”); and U.S. Patent 7,984,469 (the “'469 patent”) (collectively, the “K–Tech patents”) and charged DirecTV and TWC with direct infringement of each. On November 28, 2011, following K–Tech's request, the action against TWC was transferred to Judge R. Gary Klausner, the judge assigned to the lower numbered DirecTV action.

On January 5, 2012, DirecTV and TWC each moved to dismiss the original complaints under Federal Rule of Civil Procedure 12(b)(6), alleging that the respective complaints lacked sufficient factual specificity to state a cause of action for direct patent infringement. At K–Tech's request, the district court consolidated briefing with respect to the defendants' motions to dismiss. On February 21, 2012, the district court dismissed both complaints in substantially similar orders and granted K–Tech leave to amend, stating in pertinent part as follows:

Based solely on this evidence and without any additional factual allegations, Plaintiff seems to suggest that Defendant must operate some product or process in a manner that infringes some of the Asserted Patents, because Defendant is able to achieve the same end-result as that contemplated by the Asserted Patents. Although Plaintiff strongly believes that Defendant “must” be infringing the Asserted Patents, Plaintiff fails to explain the basis of this belief. Plaintiff does not explain why it believes that Defendant is utilizing the methods and products protected by the Asserted Patents to update the digital signals it receives rather than using other noninfringing methods and products.

TWC J.A. 4; DirecTV J.A. 3–4.

On February 28, 2012, K–Tech filed First Amended Complaints against TWC and DirecTV. On March 30, 2012, both TWC and DirecTV moved to dismiss the respective First Amended Complaints, again under Rule 12(b)(6). On May 9, 2012, the District Court dismissed each of the First Amended Complaints, ruling as follows:

On February 21, 2012, the Court granted Defendant's Motion to Dismiss Plaintiff's Complaint for patent infringement on the grounds that Plaintiff failed to allege sufficient factual detail regarding Defendant's accused product and the manner in which it is infringing Plaintiff's patents. The First Amended Complaint (“FAC”) Plaintiff filed on February 28, 2012 does not cure the deficiencies identified in the Court's prior order. Plaintiff has failed to allege facts sufficient to state a plausible claim for patent infringement under the standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 [127 S.Ct. 1955, 167 L.Ed.2d 929] (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). Therefore, for the reasons stated in the Court's February 21st Order, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's FAC.

TWC J.A. 1; DirecTV J.A. 1.

K–Tech timely filed its Notice of Appeal on May 25, 2012. We issued our decision in R+L Carriers, Inc. v. DriverTech LLC ( In re Bill of Lading Transmission & Processing System Patent Litigation ), 681 F.3d 1323 (Fed.Cir.2012), on June 7, 2012.

B. Patented Technology

K–Tech describes its patents as identifying systems and methods for modifying a major channel number, a minor channel number, and/or a carrier frequency to identify a television program. The following claims were specifically identified in each of the First Amended Complaints:

Claim 24 of the '903 patent:

A method of translating a digital television signal, comprising the steps of:

receiving a first digital television signal and generating a digital transport stream from the first digital television signal, the digital transport stream including original PSIP data having RX channel data;

updating the original PSIP data in the digital transport stream by replacing the RX channel data with TX channel data; and

converting the digital transport stream having the updated PSIP data into a second digital television signal,

wherein the RX channel data is associated with the first digital television signal and includes at least one of a major channel number, a minor channel number, and a carrier frequency, and the TX channel data is associated with the second digital television signal and includes at least one of an updated major channel number, an updated minor channel number, and an updated carrier frequency.

Claim 13 of the '533 patent:

A method of translating, comprising

separating a first program information table from video data and audio data contained in a first digital transport stream, the first program information table containing one or more attributes for a virtual channel of a digital television signal carried in the first digital transport stream;

forming a second program information table having one or both of a new carrier frequency and new virtual channel number;

combining the second program information table with the separated video and audio data to form a second digital transport stream;

modulating data from the second digital transport stream; and generating a second digital television RF signal using the modulated data from the second digital transport stream.

Claim 1 of the '893 patent:

A system for translating a first digital transport stream containing one or more digital television programs carried in the first digital transport stream, comprising:

a program information update unit, the program information update unit supplementing one or more attributes for a virtual channel of a digital television program carried in the first digital transport stream; and

a multiplexor, the multiplexor combining the one or more attributes supplemented by the program information update unit and the first digital television program carried on the first digital transport stream to form a second digital transport stream.

Claim 5 of the '469 patent:

A method of translating, comprising:

receiving an ATSC digital television signal over cable;

converting the ATSC digital television signal into a first digital transport stream, the first digital transport stream containing video and audio data of a program and a program information table, the program information table having a major channel number and a minor channel number;

generating a new program information table containing a new channel number, the new channel number identifying the program represented by the major channel number and the minor channel number;

and combining the video and audio data with the new program information table.

In its complaints, K–Tech alleges that TWC and DirecTV infringe the K–Tech patents by “making, selling, and offering to sell, in this judicial district, systems and methods for modifying a major channel number, a minor channel number, and/or a carrier frequency to identify a television program....” DirecTV J.A. 55; TWC J.A. 55–56. According to K–Tech, the Federal Communications Commission requires that all digital television signals in the U.S. follow the Advanced Television Systems Committee (“ATSC”) specifications, which in turn require compliance with Program and System Information Protocol (“PSIP”) specifications that define the information included in a digital television signal (e.g., major channel number, minor channel number, and a carrier frequency). K–Tech identifies broadcast networks, such as CBS, ABC, NBC, and FOX, that transmit digital television signals in accordance with these protocols. Because TWC and DirecTV identify programs broadcast over their cable or satellite systems with a channel number, K–Tech contends that TWC and DirecTV utilize the methods and systems protected by the K–Tech patents to update the digital...