McRO, Inc. v. Namco Bandai Games Am., Inc.

• Decision Date: 11 July 2013
• Docket Number: No. CV 12–10322–GWFFMx.,CV 12–10322–GWFFMx.
• Court: U.S. District Court — Central District of California
• Parties: McRO, INC. v. NAMCO BANDAI GAMES AMERICA, INC.

23 F.Supp.3d 1113

McRO, INC.

v.NAMCO BANDAI GAMES AMERICA, INC.

No. CV 12–10322–GWFFMx.

United States District Court, C.D. California.

Signed July 11, 2013.

John F. Petrsoric, for Plaintiffs.

Tony M. Diab, Lynn S. Herndon, Sonal N. Mehta —by telephone, Benjamin L. Singer, for Defendants.

DEFENDANT NAUGHTY DOG, INC.'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT (filed 06/10/13; Dkt. No. 105)

GEORGE H. WU, District Judge.

Court hears oral argument. The Tentative circulated and attached hereto, is adopted as the Court's final ruling. Defendants' motion is GRANTED IN PART and DENIED IN PART. Defendant Naughty Dog, Inc.'s response to the amended complaint will be due 21 days from the date of this order.

McRO, Inc., d.b.a. Planet Blue v. Naushtv Dog. Inc., Case No. CV–12–10335–GW (FFMx) consolidated with McRO, Inc., d.b.a. Planet Blue v. Namco Bandai Games America, Inc., CV 12–10322–GW (FFMx) (LEAD CASE)

Tentative Ruling on Defendant Naughty Dog's Motions to Dismiss Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6)

I. Background

On December 4, 2012, Plaintiff McRO, Inc., d.b.a. Planet Blue (“Plaintiff” or “Planet Blue”) filed separate Complaints in this district against sixteen videogame companies (collectively, “Defendants”). See, e.g., McRO, Inc., d.b.a. Planet Blue v. Namco Bandai Games America, Inc., No. CV 12–10332–GW (FFMx), Docket No. 1. The Complaints alleged that Defendants directly or indirectly infringed Plaintiff's patents for automatically animating the lip synchronization and facial expressions of 3D characters in video and computer games. Id. All sixteen of the Complaints were identical, with the exception of party names and the presence or absence of (verbatim) indirect infringement claims against certain defendants.¹

Eleven of the sixteen Defendants, not including Naughty Dog, Inc. (“Naughty Dog”), filed or joined in motions to dismiss, which the Court granted on March 4, 2013. See generally Order, Docket No. 41.

In its Order, the Court held that “the Complaints' generic references to methods that automatically animate lip synchronization and facial expression in Defendants' ‘computer and/or videogames' ” were “too conclusory and too vague to state a claim for relief.” Order at 6. The Court indicated that to survive Defendants' motions, Plaintiff must “identify either a targeted product or a reasonably delineated category of products to give ‘fair notice’ of the claims being made.” Id. “In the context of a dispute involving sixteen video and computer game manufacturers, a detailed description of Defendants' products is all the more necessary because Plaintiff does not allege its inventions cover all methods related to synchronizing facial expressions of animated characters in computer or video games.” Id. at 7 (emphasis in original). In dismissing Plaintiff's Complaints with leave to amend, the Court concluded that without a “more detailed description of the allegedly infringing products, Defendants cannot fairly ascertain which of their different implementations of the lip synchronization and facial animation technologies are the ‘accused products' described in Plaintiff's Complaints.” Id.

Following the dismissal, Plaintiff filed First Amended Complaints (“FACs”) and then Second Amended Complaints (“SACs”). See, e.g., Docket Nos. 44, 65. The operative pleadings now provide a list of specific video games as having been made using the patented methods, including the release date and gaming system information for those games. See, e.g., SAC, Docket No. 57–1.² The SACs also allege that Defendants “employ[ ] software methods and processes to automate the animation of lip synchronization and facial expression for its three-dimensional characters during the creation and development of the [identified games]” that infringe “either literally or by equivalents” one or more claims of the patents in suit. SAC ¶ 15. In addition, the SACs further allege that Defendants infringe by using software processes “for automatically performing and animating character lip synchronization using the phonetic structure of the words to be spoken by the characters.” Id. ¶ 17.

On May 6, 2013, Naughty Dog filed a Motion to Dismiss. Docket No. 75.³ On May 17, Plaintiff filed a First Amended Complaint against Naughty Dog. Docket No. 92. Because the amended complaint mooted the Motion to Dismiss, Naughty Dog withdrew it. Docket No. 94. On June 10, 2013, Naughty Dog filed the instant motion to dismiss portions of the First Amended Complaint, arguing that Plaintiff's allegations fail to state plausible claims for either willful infringement or infringement pursuant to 35 U.S.C. § 271(g). See Mot., Docket No. 105.

II. Legal Standard

A. Motion to Dismiss for Failure to State a Claim

A motion to dismiss for failure to state a claim raises a “purely procedural question not pertaining to patent law,” for which courts apply “the law of the regional circuit.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1355–56 (Fed.Cir.2007) ; In re Bill of Lading Transmission & Processing Sys. Patent Litig.,

681 F.3d 1323, 1331 (Fed.Cir.2012) ; Kelora Sys., LLC v. Target Corp., No. C 11–1058 CW, 2011 WL 2149085, at *1 n. 1, 2011 U.S. Dist. LEXIS 58332, at *7 n. 1 (N.D.Cal. May 31, 2011).

Plaintiffs in federal court are required to give only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Under Rule 12(b)(6), a defendant may move to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A complaint may be dismissed for failure to state a claim for one of two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.2008) ( “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.”). A motion to dismiss should be granted if the complaint does not proffer enough facts to state a claim for relief that is plausible on its face. See Twombly, 550 U.S. at 558–59, 127 S.Ct. 1955 ; see also William O. Gilley Enters., Inc. v. Atl. Richfield Co., 588 F.3d 659, 667 (9th Cir.2009) (confirming that Twombly pleading requirements “apply in all civil cases”). “[W]here 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[n]’—‘that the pleader is entitled to relief.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Fed.R.Civ.P. 8(a)(2) ).

B. Infringement under 35 U.S.C. § 271(g)

35 U.S.C. 271(g) provides as follows:

Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—

(1) it is materially changed by subsequent processes; or

(2) it becomes a trivial and nonessential component of another product.

“Congress enacted § 271(g) to create an act of infringement when an entity ‘without authority imports in the United States or sells or uses within the United States a product which is made by a process patented in the United States.’ ” Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1343 (Fed.Cir.2012) (quoting S.Rep. No. 100–83, at 48 (1987)).

C. Timing of Notice Requirement for Willful Patent Infringement

The Federal Circuit has held that an allegation of willful infringement must either be made based on the accused infringer's pre-litigation knowledge, or be maintained only if the patentee seeks a preliminary injunction:

[I]n ordinary circumstances, willfulness will depend on an infringer's prelitigation conduct. It is certainly true that patent infringement is an ongoing offense that can continue after litigation has commenced. However, when a complaint is filed, a patentee must have a good faith basis for alleging willful infringement. Fed. R. Civ. Pro. 8, 11(b). So a willfulness claim asserted in the original complaint must necessarily be grounded exclusively in the accused infringer's pre-filing conduct. By contrast, when an accused infringer's post-filing conduct is reckless, a patentee can move for a preliminary injunction, which generally provides an adequate remedy for combating post-filing willful infringement. See 35 U.S.C. § 283 ; Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.Cir.2001). A patentee who does not attempt to stop an accused infringer's activities in this manner should not be allowed to accrue enhanced damages based solely on the infringer's post-filing conduct. Similarly, if a patentee attempts to secure injunctive relief but fails, it is likely the infringement did not rise to the level of recklessness.

We fully recognize that an accused infringer may avoid a preliminary injunction by showing only a substantial question as to invalidity, as opposed to the higher clear and convincing standard required to prevail on the merits. Amazon.com, 239 F.3d at 1359 (“Vulnerability is the issue at the preliminary injunction stage, while validity is the issue at trial. The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to

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