Viatech Techs., Inc. v. Microsoft Corp.

• Decision Date: 18 July 2019
• Docket Number: Civil Action No. 17-570-RGA
• Parties: VIATECH TECHNOLOGIES, INC., Plaintiff; v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Delaware

VIATECH TECHNOLOGIES, INC., Plaintiff; v. MICROSOFT CORPORATION, Defendant.

Civil Action No. 17-570-RGA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

July 18, 2019

MEMORANDUM OPINION

John G. Day & Andrew C. Mayo, ASHBY & GEDDES, Wilmington, DE; Henry C. Bunsow, Denise M. De Mory, Sushila Chanana, & Michael N. Zachary, BUNSOW DE MORY LLP, Redwood City, CA, attorneys for Plaintiff.

Martina Tyreus Hufnal, FISH & RICHARDSON, P.C., Wilmington, DE; Frank E. Scherkenbach, Steven R. Katz, & Whitney Reichel, FISH & RICHARDSON, P.C., Boston, MA, attorneys for Defendant.

ANDREWS, U.S. DISTRICT JUDGE:

Currently pending before the Court is Defendant's Motion to Dismiss (D.I. 38) and Plaintiff's Cross-Motion for Leave to File a Motion for Reconsideration (D.I. 47). The parties have fully briefed the issues. (D.I. 39, 48, 51, 53, 57). For the following reasons, Defendant's Motion is GRANTED-IN-PART and DENIED-IN-PART and Plaintiff's Cross-Motion is DENIED.

I. BACKGROUND

Plaintiff ViaTech Technologies, Inc. previously brought suit against Defendant Microsoft Corporation accusing Windows and Office products of infringing "at least" claims 1-7, 13-15, and 28-32 of the U.S. Patent No. 6,920,567 ("the '567 patent"). (No. 14-1226-RGA, D.I. 1) ("First Action"). On February 10, 2017, Defendant moved for summary judgment of non-infringement. (First Action, D.I. 218). On June 12, 2017, the Court granted Defendant's motion and entered final judgment. (First Action, D.I. 330, 331). That judgment was affirmed by the Federal Circuit on May 23, 2018. ViaTech Tech. Inc. v. Microsoft Corp., 733 F. App'x 542 (2018).

On May 15, 2017, Plaintiff brought the current suit against Defendant accusing various products of infringing claims 8-11 and 26-27 of the same patent as was asserted in the First Action. (D.I. 1). Defendant moved to dismiss Plaintiff's First Amended Complaint under the doctrine of claim preclusion. (D.I. 12). I granted that motion in part, holding that claim preclusion barred Plaintiff from bringing new claims against Windows products for infringement of the '567 patent. (D.I. 25 at 9). Plaintiff has now filed a Second Amended Complaint accusing Microsoft's Play Ready Product Suite of direct and indirect infringement of the '567 patent andadding new infringement claims¹ against Windows for purported infringement post-final judgment of the First Action. (D.I. 37). Defendant has moved to dismiss the Second Amended Complaint on the basis of claim preclusion, issue preclusion, or the Kessler Doctrine. (D.I. 38). Plaintiff has cross-moved for leave to file a motion for reconsideration of the order dismissing the First Amended Complaint. (D.I. 47).

II. LEGAL STANDARD

A. Motion for Leave to File Motion for Reconsideration

The purpose of a motion for reconsideration is to "correct manifest errors of law or fact or to present newly discovered evidence." Max's Seafood Cafe v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). "A proper Rule 59(e) motion . . . must rely on one of three grounds: (1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error of law or prevent manifest injustice." Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010).

Local Rule 7.1.5 provides that motions for reargument "shall be filed within 14 days after the Court issues its opinion or decision." "When an act may or must be done within a specified time, the court may for good cause extend the time . . . on motion made after the time has expired if the party failed to act because of excusable neglect." Fed. R. Civ. P. 6(b)(1)(B).

B. Motion to Dismiss

When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must accept the complaint's factual allegations as true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Rule 8(a) requires "a short and plain statement of theclaim showing that the pleader is entitled to relief." Id. at 555. The factual allegations do not have to be detailed, but they must provide more than labels, conclusions, or a "formulaic recitation" of the claim elements. Id. ("Factual allegations must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)."). Moreover, there must be sufficient factual matter to state a facially plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The facial plausibility standard is satisfied when the complaint's factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. ("Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." (internal quotation marks omitted)).

C. Claim Preclusion

Claim preclusion requires: (1) a final judgment on the merits in a prior suit, (2) where both suits involve the same parties or their privities, and (3) both suits are based on the same cause of action. CoreStates Bank, N.A. v. Huls Am., Inc., 176 F.3d 187, 194 (3d Cir. 1999).

In patent infringement cases, "a cause of action is defined by the transactional facts from which it arises, and the extent of the factual overlap." Senju Pharm. Co. v. Apotex Inc., 746 F.3d 1344, 1348 (Fed. Cir. 2014). The relevant transactional facts are (1) whether both suits involve the same patent, and (2) whether both suits involve accused products that are the same or "essentially the same." Id. at 1349-50. In patent infringement cases, claim preclusion applies even when the plaintiff chooses different patent claims in the second lawsuit. See Brain Life, LLC v. Elekta, Inc., 746 F.3d 1045, 1053 (Fed. Cir. 2014) (applying, on summary judgment, claim preclusion to method claims dismissed without prejudice in first suit). As to the secondfact, two products are "essentially the same" "where the differences between them are merely 'colorable' or 'unrelated to the limitations in the claim of the patent.'" Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1324 (Fed. Cir. 2008). Thus, claim preclusion bars accusing infringing acts "that are accused in [a] first action or could have been made subject to that action." Brain Life, 746 F.3d at 1054 (citing Aspex Eyewear Inc. v. Marchon Eyewear, Inc., 672 F.3d 1335, 1343 (Fed. Cir. 2012)); see also Allen v. McCurry, 449 U.S. 90, 94 (1980) ("Under [claim preclusion], a final judgment on the merits of an action precludes the parties . . . from relitigating issues that were or could have been raised in that action."). However, post-judgment infringing actions "do not involve the same 'claim' for claim-preclusion purposes, even if all of the conduct is alleged to be unlawful for the same reason." Asetek Danmark A/S v. CMI USA Inc., 852 F.3d 1352, 1365 (Fed. Cir. 2017); see also Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1299 (Fed. Cir. 2017).

Claim preclusion is an affirmative defense. It is not generally a basis for dismissal on a Rule 12(b)(6) motion unless "apparent on the face of the complaint." Hoffman v. Nordic Naturals, Inc., 837 F.3d 272, 280 (3d Cir. 2016). "If not apparent, the district court must either deny the [motion] or convert it to a motion for summary judgment . . . ." Id.

D. Issue Preclusion

Issue preclusion requires: "(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the [judgment]; and (4) the party being precluded from relitigating the issue was fully represented in the prior action." Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006). "[A]lthough issue preclusion is an affirmative defense, it may be raised in a motion to dismiss under [] Rule 12(b)(6)." M & M Stone Co. v. Pennsylvania, 388 F. App'x 156, 162 (3d Cir.2010) (citing Connelly Found. v. Sch. Dist. of Haverford Twp., 461 F.2d 495, 496 (3d Cir. 1972)).

E. Kessler Doctrine

The Kessler doctrine is "separate and distinct" from claim and issue preclusion. Brain Life, LLC v. Elekta Inc., 746 F.3d 1045, 1055 (Fed. Cir. 2014). It "fills the gap between these preclusion doctrines, however, allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action." Id. at 1056. It gives the accused infringer "rights with respect to specific products that had been held to be noninfringing, even when the specific acts of infringement would not be barred by claim preclusion because they occurred post-final judgment." Id. at 1057. As the Federal Circuit held in Brain Life,

The principle that, when an alleged infringer prevails in demonstrating noninfringement, the specific accused device(s) acquires the "status" of a noninfringing device vis-à-vis the asserted patent claims is an essential fact of a patent infringement claim. The status of an infringer is derived from the status imposed on the thing that is embraced by the asserted patent claims. And, when the devices in the first and second suits are "essentially the same," the "new" product(s) also acquires the status of a noninfringing device vis-à-vis the same accusing party or its privies.

Id. Thus, where a second suit accuses the same or "essentially the same" product of infringing acts post-final judgment in the first suit, the Kessler doctrine will prevent the suit.

III. DISCUSSION

A. Plaintiff has not Shown Good Cause for Leave to File

Plaintiff cross-moves for leave to file a motion for reconsideration of my order dismissing Plaintiff's First Amended Complaint. I issued that order on August 29, 2018. (D.I. 25). Plaintiff did not file its cross-motion for leave until February 1, 2019, five months after theentry of my previous order. The Local Rules provide a short time window for filing motions for reargument or reconsideration. While I have discretion to allow filings...