Opinion
Case No.: 2:21-cv-00332-GMN-EJY
2023-04-27
POWER PROBE GROUP, INC., Plaintiff/Counter-Defendant, v. INNOVA ELECTRONICS CORPORATION, Defendant/Counterclaimant.
James D. Boyle, James Daniel Boyle, Holley Driggs, Ltd., Las Vegas, NV, Joanna Myers, Howard & Howard PLLC, Las Vegas, NV, Lucas D. Garber, Pro Hac Vice, Patrick Blane Horne, Pro Hac Vice, Samuel Alex Long, Pro Hac Vice, Tom BenGera, Pro Hac Vice, Shumaker, Loop & Kendrick, LLP, Charlotte, NC, for Plaintiff/Counter-Defendant. Craig R. Anderson, Marquis & Aurbach, Las Vegas, NV, Jared M. Moser, Marquis Aurbach Chtd., Las Vegas, NV, Richard P. Beem, Pro Hac Vice, Lathrop GPM LLP, Chicago, IL, Alex Shtraym, Pro Hac Vice, Beem Patent Law Firm, Chicago, IL, Kenneth Robert Adamo, Pro Hac Vice, Law Office of KRAdamo, Chicago, IL, for Defendant/Counterclaimant.
James D. Boyle, James Daniel Boyle, Holley Driggs, Ltd., Las Vegas, NV, Joanna Myers, Howard & Howard PLLC, Las Vegas, NV, Lucas D. Garber, Pro Hac Vice, Patrick Blane Horne, Pro Hac Vice, Samuel Alex Long, Pro Hac Vice, Tom BenGera, Pro Hac Vice, Shumaker, Loop & Kendrick, LLP, Charlotte, NC, for Plaintiff/Counter-Defendant. Craig R. Anderson, Marquis & Aurbach, Las Vegas, NV, Jared M. Moser, Marquis Aurbach Chtd., Las Vegas, NV, Richard P. Beem, Pro Hac Vice, Lathrop GPM LLP, Chicago, IL, Alex Shtraym, Pro Hac Vice, Beem Patent Law Firm, Chicago, IL, Kenneth Robert Adamo, Pro Hac Vice, Law Office of KRAdamo, Chicago, IL, for Defendant/Counterclaimant. ORDER Gloria M. Navarro, District Judge
Pending before the Court is the Motion to Dismiss, (ECF No. 147), filed by Defendant Innova Electronics Corporation ("Defendant"). Plaintiff Power Probe Group, Inc. ("Plaintiff") filed a Response, (ECF No. 160), to which Defendant filed a Reply, (ECF No. 167). For the reasons discussed below, the Court DENIES the Motion to Dismiss.
I. BACKGROUND
Plaintiff is the owner of United States Patent No. 7,184,899 (the "'899 Patent"). According to Plaintiff's First Amended Complaint filed on December 8, 2021, the '899 Patent "generally relates to an electrical test device adapted to apply power to and perform a plurality of measurements upon an electrical system." (First Am. Compl. 4:14-15, ECF No. 139). Plaintiff alleges that Defendant "has previously and is presently making, using, selling, offering for sale, and/or importing into the United States . . . products that infringe the '899 Patent." (Id. 7:17-20). Specifically, Plaintiff argues that the Innova Power-Check #5420 (the "Accused Product"), infringes Plaintiff's '899 Patent. (Id.) Plaintiff additionally alleges that Defendant's infringement is willful, and that, among other things, "Defendant had knowledge of the '899 Patent at least as early as December 12, 2019," when Defendant explicitly referred to the '899 Patent in Defendant's U.S. Patent Application No. 16/712,893. (Id. 10:12-15).
On June 2, 2022, Defendant filed the pending Motion to Dismiss and noted, "considering all reasonable inferences in [Plaintiff's] favor, there are insufficient plausible allegations that [Defendant] is infringing or has infringed" Plaintiff's patent. (See Motion to Dismiss ("MTD") 1:5-8, ECF No. 147).
II. LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on which it rests, and although a court must take all factual allegations as true, legal conclusions couched as factual allegations are insufficient. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Accordingly, Rule 12(b)(6) requires "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id.
If a court grants a motion to dismiss for failure to state a claim, leave to amend should be granted unless it is clear that the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the court should "freely" give leave to amend "when justice so requires," and in the absence of a reason such as "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962).
III. DISCUSSION
As a preliminary matter, Plaintiff argues that the Court should deny the Motion to Dismiss because Defendant failed to assert a 12(b) defense against Plaintiff's original complaint, which is nearly identical to its First Amended Complaint. (See Resp. 4:11-26, ECF No. 160). In accordance with the Federal Rules of Civil Procedure ("FRCP"), a party may raise a 12(b) defense prior to filing a responsive pleading. See Fed. R. Civ. Pro. Rule 12(b).
Plaintiff cites two district court orders concluding that a defendant may assert a Rule 12(b) defense against an amended complaint only to the extent the defense challenges "new matter" in the amended complaint. See Brooks v. Caswell, No. 3:14-CV-01232-AC, 2016 WL 866303, at *3 (D. Or. Mar. 2, 2016); Pascal v. Concentra, Inc., No. 19-cv-02559-JCS, 2020 WL 4923974, at *2 (N.D. Cal. Aug. 21, 2020). In response, Defendant contends that Plaintiff's original complaint was "wiped out" and thus its Motion to Dismiss was timely because it was made before any pleading in response to the First Amended Complaint. (See Reply 11:25-12:4, ECF No. 167).
Plaintiff also cites Gilmore v. Shearson/Am. Exp. Inc., 811 F.2d 108 (2d Cir. 1987), overruled on other grounds by McDonnell Douglas Finance Corp. v. Pennsylvania Power & Light Co., 849 F.2d 761 (2d. Cir. 1988) and Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194 (11th Cir. 2011). Neither case is dispositive. Although both cases affirm the general proposition that the filing of an amended complaint does not "automatically revive all defenses or objections that the defendant may have waived" in responding to the initial complaint, see Gilmore, 811 F.2d at 112; Krinsk, 654 F.3d at 1198, these cases considered whether the defendant waived its right to arbitration by proceeding with the litigation. Neither case addressed whether a defendant may assert a 12(b)(6) defense against existing claims in an amended complaint, despite not asserting this defense previously.
Defendant cites authority noting that "an amended complaint supersedes the original complaint and renders it without legal effect." (See Reply 12:5-9 (citing Lacey v. Maricopa County, 693 F.3d 896, 927 (9th Cir. 2012))). But Plaintiff does not dispute that an amended complaint supersedes the original complaint, nor does this fact contest Plaintiff's proposition that the Court should consider only new matter found in Plaintiff's First Amended Complaint when ruling on Defendant's Motion to Dismiss.
It appears the Ninth Circuit has not previously weighed in on this issue. However, several district courts in this circuit have followed the approach Plaintiff requests this Court to adopt. See Brooks, 2016 WL 866303, at *3 (D. Or. Mar 2, 2016) (denying defendant's motion to dismiss amended complaint alleging same causes of action as original complaint and concluding defendant waived its 12(b)(6) defense by failing to assert defense against original complaint); Pascal, 2020 WL 4923974, at *2 (N.D. Cal. Aug. 21, 2020) (same); Best Fresh LLC v. Vantaggio Farming Corporation, No. 3:21-cv-00131-BEN-WVG, 2022 WL 4112231, at *10 (S.D. Cal. Sept. 8, 2022) (holding that entertaining Defendant's "motion to dismiss claims asserted in the original complaint weighs against judicial economy"); Townsend Farms v. Goknur Gida Madderleri Enerji Imalat Ithalat Ihracat Ticaret Ve Sanayi A.S., et al., No. SA CV-15-0837-DOC (JCGx), 2016 WL 10570248, at *6 (C.D. Cal. Aug. 17, 2016) ("Holding that an amended complaint allows a defendant a fresh opportunity to bring a 12(b)(6) motion to dismiss as to claims raised by a prior—answered—complaint would undermine the requirements of the Federal Rule."); see also Sears Petroleum & Transport Corp. v. Ice Ban America, Inc., 217 F.R.D. 305, 307 (N.D.N.Y. 2003) ("While it is true that an amended complaint ordinarily supersedes a prior complaint, and renders it of no legal effect . . . [i]t is also true that if the amended complaint also contains new matter, the defendant may bring a second motion under Rule 12 to object to the new allegations only." (emphasis added)); Internet Products LLC v. LLJ Enterprises, Inc., No. 18-15421 (RBK/AMD), 2020 WL 6883430, at *2 (D. N.J. Nov. 24, 2020) (noting that a plaintiff's amended complaint "does not—and should not—automatically revive any defenses and objections" waived by defendant in response to the original complaint, including a 12(b)(6) defense).
Defendant acknowledges that Plaintiff's First Amended Complaint is "almost an exact replica" of the original complaint. (See MTD 10:1-2). Defendant had an opportunity to assert a 12(b) motion previously; however, Defendant instead filed its Answer and Counterclaim, (ECF No. 22). Interpreting FRCP Rule 12(b) to permit a defendant to submit a post-answer motion to dismiss an amended complaint attacking claims raised in the original complaint would render the 12(b) restriction on post-answer motions meaningless. Accordingly, the Court follows the approach adopted by other district courts in this circuit, and thus reviews the merits of Defendant's Motion to Dismiss only to the extent it challenges new claims raised in Plaintiff's First Amended Complaint.
Plaintiff amended its complaint to include a willful infringement cause of action and to expressly allege that Defendant's Accused Product infringes on the '899 patent "both literally and under the doctrine of equivalents." (First Am. Compl. 12:1-2). Because Plaintiff raised these arguments for the first time in its First Amended Complaint, the Court considers both in turn.
A. Plaintiff's Willful Infringement Claim
To state a claim for willful infringement, a plaintiff must plead sufficient facts to raise a reasonable inference that the defendant "was aware of the asserted patent, but nonetheless acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010) (citation omitted). "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). Both knowledge of the patent and knowledge of infringement must be pled with plausibility.
The Court previously addressed Defendant's argument that Plaintiff failed to adequately plead willful infringement in the Order granting Plaintiff's Motion for Leave to File a First Amended Complaint. (See generally Order, ECF No. 137). Upon reviewing Plaintiff's proposed First Amended Complaint, the Court concluded in its Order that Plaintiff "adequately pleads willful infringement." (Id. 9:4). The Court explained that Plaintiff "does not merely allege knowledge" but additionally pleads "action despite the knowledge of the '899 Patent and the objectively high likelihood Innova's conduct was an infringement on that patent." (Id. 9:17-19). In its Motion to Dismiss, however, Defendant asserts that to adequately plead willful infringement, a party must show that the alleged infringer's conduct is "egregious." (See MTD 21:1-2).
In its opposition brief to Plaintiff's Motion for Leave to File a First Amended Complaint, Defendant argued that Plaintiff's proposed First Amended Complaint "failed to meet the federal pleading standard" and thus the Court should deny Plaintiff's Motion for Leave. (See Opp. Brief 2:18).
District courts are split on whether a patent owner must adequately plead egregiousness as part of its willful infringement claim to survive a 12(b)(6) motion to dismiss. Compare Sonos, Inc. v. Google LLC, 591 F.Supp.3d 638, 644 (N.D. Cal. 2022) (egregious conduct need not be pled); Core Optical Techs., LLC v. Juniper Networks Inc., 562 F.Supp.3d 376, 38-82 (N.D. Cal. 2021) (same); Longhorn Vaccines & Diagnostics, LLC v. Spectrum Sols. LLC, 564 F.Supp.3d 1126, 1146-59 (D. Utah 2021) (same), with Fortinet, Inc. v. Forescout Techs., Inc., 543 F.Supp.3d 814, 840 (N.D. Cal. 2021) (must allege egregious behavior); Finjan, Inc. v. Cisco Sys. Inc., No. 17-cv-00072-BLF, 2017 WL 2462423, at *5 (N.D. Cal. June 7, 2017) (same).
Plaintiff need not "prove its case at the pleading stage." In re Bill of Lading Transmission and Processing System Patent Litigation, 681 F.3d 1323, 1339 (Fed. Cir. 2012) (citing Skinner v. Switzer, 562 U.S. 521, 529-530, 131 S.Ct. 1289, 179 L.Ed.2d 233 (2011)). Rather, the complaint must place the defendant "on notice of what activity . . . is being accused of infringement." K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013). As the district court in Sonos, Inc. noted, "it would be a rare case where the infringer disclosed the full extent of its egregious behavior in advance of litigation, such that the conduct could be fully described in the complaint." Sonos, Inc., 591 F.Supp.3d at 645. The Court agrees with the district court in Sonos, Inc. and finds that Plaintiff was not required to adequately plead egregiousness to sufficiently plead willful infringement under the Twombly and Iqbal pleading standard.
In Plaintiff's factual allegations regarding willful infringement, Plaintiff adequately pleads facts showing that Defendant had knowledge of and was familiar with Plaintiff's products marked with the '899 Patent, that Defendant had knowledge of and was familiar with the '899 Patent itself, and that despite Defendant's knowledge of and familiarity with the '899 Patent, Defendant nonetheless began developing, testing, marketing, and selling the Accused Product. (First Am. Compl. 10:3-24, 11:1-18). Plaintiff does not merely allege knowledge of the '899 Patent, but also pleads sufficient facts to raise the reasonable inference that Defendant "nonetheless acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." i4i Ltd. P'ship, 598 F.3d at 861 (citation omitted).
Accordingly, the Court DENIES Defendant's Motion to Dismiss as to Plaintiff's willful infringement cause of action.
B. Plaintiff's Doctrine of Equivalents Claim
Plaintiff argues that it was not required to plead the doctrine of equivalents as a separate cause of action. (Resp. 3:6-8). This Court previously noted that "[b]ecause a claim under the doctrine of equivalents overlaps with a claim for literal infringement, the doctrine of equivalents is not a separately cognizable cause of action that need be (or can be) separately pled, but a legal theory that may aid a plaintiff in proving his claim." (Order 7:8-16) (citing Telesign Corp. v. Twilio, Inc., No. CV 16-2106 PSG (SSx), 2016 WL 11746746, at **2-3 C.D. Cal. Nov. 7, 2016). District courts within the Ninth Circuit have followed this approach. See Neutrik AG v. ADJ Products, LLC, No. LA CV 19-09937 JAK (AGRx), 2020 WL 6128066, at *4 (C.D. Cal. May 6, 2020) (holding that a "general allegation of patent infringement under the doctrine of equivalents . . . place[s] Defendants on notice that [Plaintiff] maintains patent infringement theories under the doctrine of equivalents"); Pres. Techs. LLC. V. MindGeek USA Inc., No. CV 17-8905 DOC (JPRx), 2019 WL 3213585, at *3 (C.D. Cal. Apr. 2, 2019) ("Plaintiff need not specifically plead infringement under the doctrine of equivalents. The [operative pleading] puts Defendants on sufficient notice.").
Defendant does not directly contest Plaintiff's argument—and this Court's previous holding—that Plaintiff need not separately plead the doctrine of equivalents. Instead, the Defendant misinterprets the case law it cites. Defendant contends that the Court should dismiss Plaintiff's doctrine of equivalents allegations because "a pleading that attempts to assert the [doctrine of equivalents] must make [ ] specific allegations, identifying each allegedly equivalent structure, and it must do so plausibly." (MTD 9:25-27 (citing Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018))). Nalco Co., however, does not stand for the proposition that a party must provide "specific allegations, identifying each allegedly equivalent structure," to withstand a motion to dismiss under the Twombly and Iqbal pleading standard. Rather, the Federal Circuit specifically identified portions of the plaintiff's complaint that put the defendant on adequate notice of the alleged misconduct. See Nalco Co., 883 F.3d at 1354. Nowhere did the Federal Circuit mandate that such specificity, as shown by the plaintiffs in Nalco, be required to survive under the Twombly and Iqbal standard.
Similarly, Defendant cites Golden v. Apple Inc., 819 F.Appx. 930 (Fed Cir. 2020) while contending that "[e]ven a detailed and substantive claim chart attached to a complaint . . . has been judge insufficient for pleading [doctrine of equivalents] in a case presenting complex technology." Yet, upon review of the Federal Circuit's opinion, the court addressed whether the plaintiff had sufficiently pleaded direct infringement and makes no mention of whether the plaintiff had sufficiently pleaded a doctrine of equivalents claim. Id. at 930.
Here, Defendant fails to provide any argument or case law persuading the Court to depart from its original ruling and hold that Plaintiff was required to plead factual allegations specific to the doctrine of equivalents. Accordingly, the Court DENIES the Motion to Dismiss as to Plaintiff's doctrine of equivalents theory.
IV. CONCLUSION
IT IS HEREBY ORDERED that Defendant's Motion to Dismiss, (ECF No. 147), is DENIED.