Lodsys, LLC v. Brother Int'l Corp.
| Decision Date | 08 March 2012 |
| Docket Number | CASE NO. 2:11-cv-90-JRG |
| Parties | LODSYS, LLC, Plaintiff, v. BROTHER INTERNATIONAL CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Pending before the Court are: (1) Defendant Canon U.S.A., Inc.'s ("Canon") Motion for Partial Dismissal Under Rule 12(b)(6) (Dkt. No. 42); (2) Defendant Lexmark International, Inc.'s ("Lexmark") Motion to Dismiss (Dkt. No. 44); (3) Defendants Samsung Electronics Co., Ltd's, Samsung Electronics America, Inc.'s, and Samsung Telecommunications America, LLC's (collectively, "Samsung") Motion to Dismiss (Dkt. No. 96); and (4) Defendant Hewlett-Packard Company's ("HP") Motion to Dismiss or, in the Alternative, to Sever and Transfer Venue. (Dkt. No. 102.) For the reasons discussed below, each of the foregoing motions is DENIED.
Lodsys, LLC ("Lodsys") brought this patent infringement lawsuit against 12 defendants, accusing each of infringement of U.S. Patent No. 7,620,565 entitled "Customer-Based Product Design Module" ("the '565 patent") and U.S. Patent No. 7,222,078 entitled "Methods and Systems for Gathering Information from Units of a Commodity Across a Network" ("the '078Patent"). Lodsys' Complaint also alleges that Defendants Samsung and Trend Micro Inc. ("Trend Micro") infringe U.S. Patent No. 5,999,908 entitled "Customer-Based Product Design Module" ("the '908 patent"). Lodsys' Complaint alleges direct, indirect, literal, contributory, induced, and/or willful infringement as well as infringement under the doctrine of equivalents with regard to each Defendant.
By written motion, a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Motions to dismiss are purely procedural questions to which the Federal Circuit applies the law of the regional circuit. CoreBrace LLC v. Star Seismic LLC, 566 F.3d 1069, 1072 (Fed. Cir. 2009). In the Fifth Circuit, motions to dismiss under Rule 12(b)(6) are viewed with disfavor and rarely granted. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009); Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997).
When reviewing a motion to dismiss, courts look only to the allegations in the complaint to determine whether they are sufficient to survive dismissal. See Jones v. Bock, 549 U.S. 199, 215 (2007). Rule 8(a) requires that a complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has held that a complaint does not need detailed factual allegations to survive a Rule 12(b)(6) motion to dismiss, but the pleader's obligation to state the grounds of entitlement to relief requires "more than labels and conclusions." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
The Supreme Court has additionally pronounced two guiding principles in determining whether a complaint can survive a motion to dismiss. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009). "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Second, a complaint must state a plausible claim in order to survive a motion to dismiss. Id. This second determination is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. "But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[]' - 'that the pleader is entitled to relief.'" Id. (quoting Fed. R. Civ. P. 8(a)(2)). Relying on Twombly, the Federal Circuit pronounced what is required to state a claim for patent infringement: "a patentee need only plead facts sufficient to place the alleged infringer on notice as to what he must defend. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007).
Because joinder and motions to sever do not involve substantive issues of patent law, precedent from the Fifth Circuit controls. See In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008). Rule 21 allows the court to sever any claim against a party. Fed. R. Civ. P. 21. The district court has broad discretion in deciding whether to sever. Anderson v. Red River Waterway Comm'n, 231 F.3d 211, 214 (5th Cir. 2000). One justification for severance is misjoinder of a party.
A plaintiff may join multiple defendants in a single action if "(a) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (b) any question of law or fact common to all defendants will arise in the action." Fed. R. Civ. P. 20(a)(2). The Federal Rules of Civil Procedure strongly encourage joinder of claims, parties, and remedies.United Mine Workers v. Gibbs, 383 U.S. 715, 724 (1966). "The district court has broad discretion in determining the propriety of joining or continuing a particular party as a defendant." Williams v. Hoyt, 556 F.2d 1336, 1341 (5th Cir. 1977).
The Fifth Circuit has not endorsed a specific test to determine what is "the same transaction or occurrence" under Rule 20(a)(2). Perez v. Grupo TMM, S.A.B., No. H-09-136, 2009 WL 926991, at *4 (S.D. Tex. Apr. 1, 2009). Several district courts in this circuit, however, have applied the Eight Circuit's "logically related" test espoused in Moseley v. General Motors Corp., 497 F.2d 1330, 1332-33 (8th Cir. 1974). See, e.g., Adrain v. Genentech Inc., No. 2:08-cv-423, 2009 WL 3063414, *1 (E.D. Tex. 2009); Perez, 2009 WL 926991, at *4; Akhtar v. U.S. Dep't of Homeland Sec., No. 4:07-cv-421, 2007 WL 4445236, at *4 (N.D. Tex. Dec. 17, 2007); Norwood v. Raytheon Co., No. EP-04-CA-127, 2007 WL 2408480, at *2-3 (W.D. Tex. May 1, 2007); Hanley v. First Investors Corp., 151 F.R.D. 76, 78-79 (E.D. Tex. 1993). As to the second prong of Rule 20(a)(2), regarding common questions of law or fact, it is clear that not all of the facts must be common to every defendant; and joinder is appropriate so long as there is a common question of fact of law among all defendants. See Nor-Tex Agencies, Inc. v. Jones, 482 F.2d 1093, 1100 (5th Cir. 1973).
In its Rule 12(b)(6) motion, Canon moves (1) to dismiss Lodsys' claims against Canon for indirect infringement, inducement of infringement, and contributory infringement of the '565 patent; and (2) to dismiss all of Lodsys' claims against Canon for infringement - direct or otherwise - of the '078 patent. (Dkt. No. 42.) The Court DENIES Canon's Motion in both respects.
Canon states that Lodsys' Complaint does not sufficiently plead indirect infringement because (1) it "fails to provide Canon with any notice as to what act it has performed (and might still be performing) that allegedly give rise to Lodsys' claims for indirect infringement;" and (2) it "fails to identify who the direct infringer is in the case of Canon's alleged indirect infringement." (Dkt. No. 42, at 5.) The Court disagrees. "Neither the patent infringement pleading form nor the holdings from the Federal Circuit require the pleading of each individual element of a claim for indirect infringement." Fotomedia Techs., LLC v. AOL, LLC, No. 2:07-cv-255, 2008 WL 4135906, at *2 (E.D. Tex., Aug. 29, 2008); see also Tune Hunter Inc. v. Samsung Telecom. Am., LLC, No. 2:09-cv-148, 2010 WL 1409245, at *5-6 (E.D. Tex. Apr. 1, 2010).
Further, while Courts in this District generally require a complaint to at least generally identify a direct infringer with respect to indirect infringement claims - see, e.g., Eolas Tech., Inc. v. Adobe Sys., Inc., Case No. 6:09-cv-446, 2010 WL 2026627, at *3 (E.D. Tex. May 6, 2010) (Davis, J.); PA Advisors, LLC v. Google, Inc., 2:07-cv-480-DF, 2008 WL 4136426, at *8 ) (Folsom, J.) - the identity of the direct infringers here can be easily inferred from the complaint, and obviously includes Canon's intermediaries and/or clients. See, e.g., McArdle v. Mattel Inc., 456 F. Supp. 2d 769, 784 (E.D. Tex. 2006) (); Atwater Partners of Texas v. AT&T, Inc., No. 2:10-cv-175, 2011 WL 1004880, at *3 ().
In this case, Lodsys' Complaint pleads sufficient facts to state a plausible claim for relief for indirect infringement. The Complaint contains individualized allegations for each named Defendant, including Canon (see, e.g., Compl. at ¶¶ 16, 27), it alleges how such infringement occurred ("Canon manufacturers, uses, sells, imports and/or offers to sell"), and it identifies an instrumentality alleged to be infringing ("infringing printers"). Therefore, the Court holds that Lodsys' Complaint, particularly in paragraph 16, pleads sufficient facts to state a plausible claim for relief for indirect infringement and DENIES Canon's Rule 12(b)(6) motion to dismiss on such basis.
Canon also argues that Lodsys' description of the accused product which allegedly infringes the '078 patent - "computer server(s) to collect data" - is "far too vague to put Canon on notice" of its allegedly infringing acts. (Dkt. No. 42, at 6.)
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