Sonos, Inc. v. Google LLC
| Decision Date | 16 March 2022 |
| Docket Number | C 21-07559 WHA |
| Parties | SONOS, INC., Plaintiff, v. GOOGLE LLC, Defendant. |
| Court | U.S. District Court — Northern District of California |
In this patent infringement action, alleged infringer moves to dismiss patent owner's enhanced damages and indirect infringement claims. To the following extent, the motion is Granted.
This action is yet another pitched battle in the world-wide war between alleged infringer Google LLC and patent owner Sonos Inc. regarding speaker technology. With our parties already embroiled in litigation in this district, the ITC, Canada France, Germany, and Holland, Sonos's counsel sent Google an email alerting that Sonos would be filing an eighty-seven-page patent infringement complaint the next day against the search giant, this time in the District Court for the Western District of Texas, Waco Division. Within twelve hours, Google filed its own thirteen-page complaint for declaratory relief in our district. Early the next day, Sonos filed its Texas action as promised. Sonos, Inc. v. Google LLC, No. C 20-00881 ADA (W.D. Tex. filed Sept. 29, 2020) (Judge Alan D. Albright).
An order stayed Google's declaratory judgment action to allow Judge Albright to rule on Google's motion to transfer the action in Texas to our district . He denied it. The Court of Appeals for the Federal Circuit, however, directed that the case come here. Both cases are now before me. This motion arises in Sonos's action, the one formerly in Texas.
Sonos's second amended complaint alleges that Google infringes five of its patents, U.S. Patent Nos. 9, 344, 206; 9, 967, 615; 10, 469, 966; 10, 779, 033; and 10, 848, 885. The parties recently stipulated to dismissal of the '206 patent from our action (Dkt. No. 151; DJ Dkt. No. 132). As part of its patent infringement claims, Sonos alleges direct and indirect infringement and seeks enhanced damages for alleged willful infringement.
Google now moves to dismiss Sonos's second amended complaint for failing to adequately plead willful infringement and indirect infringement as to the '966, '033, and '885 patents. It does not contest the adequacy of the allegations regarding the '615 patent. This order follows full briefing and oral argument.
To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face, ” where facial plausibility turns on providing enough “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Courts accept well-pled factual allegations in the complaint as true and “construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
The parties disagree over the proper pleading standard for enhanced damages based on willful infringement. Google asserts a patent owner must allege knowledge of the specific patent, knowledge of infringement, and egregious behavior. Sonos asserts allegations of egregiousness are not required. This is a recurring issue in patent litigation, so this order will set forth a comprehensive treatment of the problem and then turn to its application in the instant case.
Section 284 of the Patent Act states that, in cases of infringement, “the court may increase the damages up to three times the amount found or assessed.” In its most recent decision on Section 284, the Supreme Court held that while “there is no precise rule or formula” for meting out enhanced damages, it is “generally reserved for egregious cases of culpable behavior” that has “been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or - indeed - characteristic of a pirate.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 103-04 (2016) (cleaned up). In other words, enhanced damages constitute a “punishment [that] should generally be reserved for egregious cases typified by willful misconduct.” Id. at 106.
The Supreme Court thus recognized the close interrelation between enhanced damages and willfulness. Indeed, patent plaintiffs will usually couch their requests for enhanced damages as claims for willful infringement, and defendants will then often seek to dismiss those claims at the outset. Some district courts in response have treated willful infringement as a distinct claim that can be subject to a motion to dismiss. See Boston Sci. Corp. v. Nevro Corp., 415 F.Supp.3d 482, 493 (D. Del. 2019) (Judge Colm F. Connolly); Novitaz, Inc. v. inMarket Media, LLC, 2017 WL 2311407, at *5 (N.D. Cal. May 26, 2017) (Judge Edward J. Davila).
Since Halo, the Court of Appeals for the Federal Circuit has explained that egregiousness is for the district judge to decide after the verdict:
As the plain language of 35 U.S.C. § 284 makes clear, the issue of punishment by enhancement is for the court and not the jury. Under Halo, the concept of “willfulness” requires a jury to find no more than deliberate or intentional infringement. The question of enhanced damages is addressed by the court once an affirmative finding of willfulness has been made. It is at this second stage at which the considerations of egregious behavior and punishment are relevant. Questions of whether an accused patent infringer's conduct was “egregious behavior” or “worthy of punishment” are therefore not appropriate for jury consideration.
Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (). So, the jury decides whether infringement was willful, and, if it was, then the district judge determines whether it was egregious enough to warrant enhanced damages, and, if so, how much (up to three times the actuals). Willfulness is thus a necessary but not necessarily sufficient predicate, for a finding of egregious misconduct and enhanced damages. See also SRI Int'l, Inc. v. Cisco Sys., Inc., 930 F.3d 1295, 1310 (Fed. Cir. 2019).
To establish willful patent infringement, the patent owner must prove knowledge of the patent and knowledge of infringement. First, “[k]nowledge of the patent alleged to be willfully infringed continues to be a prerequisite to enhanced damages.” WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016). Mere knowledge of a “patent family” or the plaintiff's “patent portfolio” is not enough. Second, the Court of Appeals for the Federal Circuit has stated: “To establish willfulness, the patentee must show the accused infringer had a specific intent to infringe at the time of the challenged conduct.” Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987-88 (Fed. Cir. 2021); see also Eko Brands, 946 F.3d at 1378 ().
But what must be pled at the outset? No post-Halo appellate authority addresses any pleading requirements for enhanced damages, or for that matter, willful infringement. With respect to willfulness, this order agrees that specific intent to infringe be pled with plausibility. This means that knowledge of the patent and knowledge of infringement must be pled with plausibility.
An important practical aspect of our patent system is encouraging the practice of pre-suit notice through a cease-and-desist letter that calls out the patent claims, the accused product, and the way it infringes the claims. This practice is encouraged in order to give the alleged infringer a meaningful opportunity to cease infringement or to get a license, all before any lawsuit commences.
Eko Brands reiterated that the jury must decide the question of willfulness. In general, issues go to the jury only if properly framed by the pleadings. “[T]he factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). This means that willfulness should be plausibly pled in the complaint. See Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 563 F.3d 1358, 1372-74 (Fed. Cir. 2009); see also MasterObjects, Inc. v. Amazon.com, Inc., 2021 WL 4685306, at *2 (N.D. Cal. Oct. 7, 2021); BillJCo, LLC v. Apple Inc., 2022 WL 299733, at *2 (W.D. Tex. Feb. 1, 2022) (Judge Alan D. Albright); Välinge Innovation AB v. Halstead New England Corp., 2018 WL 2411218, at *3-9 (May 29, 2018) (Judge Christopher J. Burke), recommendation and report adopted by 2018 WL 11013901 (D. Del. Nov. 6, 2018) (Judge Leonard P. Stark). In other words, allegations of an infringer's knowledge of the patent and of infringement must raise a plausible inference that the defendant had the specific intent to infringe. Allegations of mere direct infringement are insufficient.
Cease-and-desist letters can efficiently lead to a resolution and save vast resources. Of course, reasonable time must be allowed for the alleged infringer to evaluate the letter and to react. The shorter the timespan allowed before suit, the less it can be said the patent owner had a “good faith basis for alleging willful infringement.” In re Seagate Tech., LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007), abrogated on other grounds by Halo, 579 U.S. 93; cf. Gustafson, Inc. v. Intersystems Indus. Prods., Inc., 897 F.2d 508, 511 (Fed. Cir. 1990).
It is true that Rule 9(b) states that knowledge may be alleged generally and without the specificity required for fraud. But it...
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