Opinion
Case No. 22-cv-04947-EJD
2023-06-15
KAWASAKI JUKOGYO KABUSHIKI KAISHA, Plaintiff, v. RORZE CORPORATION, et al., Defendants.
James R. Sobieraj, Pro Hac Vice, Eric Moss, Pro Hac Vice, Robert Steven Mallin, Pro Hac Vice, Tadashi Horie, Pro Hac Vice, Crowell & Moring LLP, Chicago, IL, Molly A. Jones, Thomas Francis Koegel, Crowell & Moring LLP, San Francisco, CA, for Plaintiff. John P. Passarelli, Pro Hac Vice, Carol A. Svolos, Pro Hac Vice, James M. Sulentic, Pro Hac Vice, Jonathan I. Baker, Pro Hac Vice, Kutak Rock LLP, Omaha, NE, Aaron A. Myers, Pro Hac Vice, Kutak Rock LLP, Minneapolis, MN, Bradley Paul Boyer, Saundra Kaye Wootton, Kutak Rock LLP, Los Angeles, CA, Jason S. Jackson, Pro Hac Vice, Kutak Rock LLP, Denver, CO, Masao Yoshimura, Chen Yoshimura LLP, Santa Clara, CA, Robin E. Perkins, Pro Hac Vice, Kutak Rock LLP, Kansas City, MO, for Defendants.
James R. Sobieraj, Pro Hac Vice, Eric Moss, Pro Hac Vice, Robert Steven Mallin, Pro Hac Vice, Tadashi Horie, Pro Hac Vice, Crowell & Moring LLP, Chicago, IL, Molly A. Jones, Thomas Francis Koegel, Crowell & Moring LLP, San Francisco, CA, for Plaintiff. John P. Passarelli, Pro Hac Vice, Carol A. Svolos, Pro Hac Vice, James M. Sulentic, Pro Hac Vice, Jonathan I. Baker, Pro Hac Vice, Kutak Rock LLP, Omaha, NE, Aaron A. Myers, Pro Hac Vice, Kutak Rock LLP, Minneapolis, MN, Bradley Paul Boyer, Saundra Kaye Wootton, Kutak Rock LLP, Los Angeles, CA, Jason S. Jackson, Pro Hac Vice, Kutak Rock LLP, Denver, CO, Masao Yoshimura, Chen Yoshimura LLP, Santa Clara, CA, Robin E. Perkins, Pro Hac Vice, Kutak Rock LLP, Kansas City, MO, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS WITH LEAVE TO AMEND
Re: ECF No. 46 EDWARD J. DAVILA, United States District Judge
Plaintiff Kawasaki Jukogyo Kabushiki Kaisha ("Plaintiff" or "Kawasaki") brings this suit against Defendants Rorze Corporation ("RCO") and Rorze Automation, Inc. ("RAI", collectively with RCO, "Defendants" or "Rorze"), alleging direct, induced, and contributory infringement of five patents, namely, U.S. Reissue Patent Nos. RE47,909; RE46,465; RE48,031; RE45,772; and RE47,145 (together, the "Patents-in-Suit"). First Amended Complaint ("FAC"), ECF No. 42. Pending before the Court is Defendants' motion to dismiss in part the FAC for failure to state a claim under Federal Rule of Procedure 12(b)(6). Mot. Dismiss Portions of Plaintiff's FAC ("Motion"), ECF No. 46 ("Mot."). The Court finds the Motion appropriate for decision without oral argument pursuant to Civil Local Rule 7-1(b). Having reviewed the parties' submissions and the relevant law, the Court GRANTS IN PART and DENIES IN PART the Motion to Dismiss, with leave to amend.
I. BACKGROUND
Plaintiff Kawasaki is a Japanese corporation. FAC ¶ 2. Defendant RCO is a Japanese corporation, and Defendant RAI is a California corporation that is the only subsidiary of RCO based in the United States. FAC ¶¶ 3, 4, 6. Kawasaki is the named applicant and assignee of the Patents-in-Suit. See FAC, Ex. A, RE47,909, ECF No. 42-1; FAC, Ex. B, RE46,465, ECF No. 42-2; FAC, Ex. C, RE48,031, ECF No. 42-3; FAC, Ex. D, RE45,772, ECF No. 42-4; FAC, Ex. E, RE47,145, ECF No. 42-5. All of the Patents-in-Suit are titled "Wafer Transfer Apparatus and Substrate Transfer Apparatus." FAC ¶ 1. The Patents-in-Suit all relate to wafer transfer apparatuses for use in semiconductor processing equipment, and to substrate transfer apparatuses for transferring substrates in substrate processing equipment. See, e.g., RE47,909, col. 2 l. 23-28.
Plaintiff filed this lawsuit in August 2022. See Compl., ECF No. 1. Defendants filed a motion to dismiss in November 2022, ECF No. 40, after which Plaintiff filed the FAC. The FAC alleges that Defendants make "wafer handling system products" that infringe the Patents-in-Suit. Id. ¶ 5. It further alleges that RCO sells the allegedly infringing products to RAI, and that RAI imports the products for sale in the United States. Id. ¶ 6. Plaintiff points to Rorze's N2-BWS1600 product—a "purge wafer stocker"—as a product made and sold by Defendants that allegedly infringes at least one claim of each of the Patents-in-Suit. FAC ¶¶ 23, 120-144; FAC Exh. G, ECF No. 42-7. Moreover, the FAC alleges that the infringing products "include stockers, such as [the] N2-BWS Series," and that Plaintiff "reserves the right to obtain facts in discovery of additional" infringing products. Id. ¶ 23. For each of the five Patents-in-Suit, Plaintiff brings claims for direct, induced, contributory, and willful infringement in violation of 35 U.S.C. §§ 271(a), 271(b), 271(c), and 285, respectively. Id. ¶¶ 120-144.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Dismissal of a claim under Rule 12(b)(6) may be based on a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that the claim "is plausible on its face." Twombly, 550 U.S. at 556-57, 127 S.Ct. 1955.
The sufficiency of a direct infringement claim was reviewed under the standard set by Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure. Following a December 1, 2015 amendment to the Rules, the majority of district courts analyzed the sufficiency of direct infringement claims under the Twombly/Iqbal standard. See Novitaz, Inc. v. inMarket Media, LLC, 2017 WL 2311407, at *2 (N.D. Cal. May 26, 2017) (collecting cases). In 2020, the Federal Circuit confirmed that "[a]llegations of direct infringement are subject to the [Twombly/Iqbal] pleading standards." Golden v. Apple Inc., 819 F. App'x 930, 930-31 (Fed. Cir. 2020).
At the motion to dismiss stage, the Court must read and construe the complaint in the light most favorable to the non-moving party. Reese v. BP Exploration (Alaska), Inc., 643 F.3d 681, 690 (9th Cir. 2011). The Court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. "In all cases, evaluating a complaint's plausibility is a context-specific endeavor that requires courts to draw on . . . judicial experience and common sense." Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)) (internal quotation marks omitted).
When deciding whether to grant a motion to dismiss, the Court generally "may not consider material outside the pleadings." Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). However, the Court may consider material submitted as part of the complaint or relied upon in the complaint, and it may also consider material subject to judicial notice. See id. In the event that a motion to dismiss is granted, "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (internal quotation marks omitted).
III. DISCUSSION
Defendants move to dismiss Plaintiff's allegations regarding (1) direct infringement, (2) induced infringement, (3) contributory infringement, and (4) willful infringement. Mot. 8. The Court addresses each in turn.
A. Direct Infringement
To assert a direct infringement claim, a plaintiff must allege that the defendant, without authority, makes, uses, offers to sell, sells, or imports any patented invention within the United States during the term of the patent. 35 U.S.C. § 271(a); see Windy City Innovations, LLC v. Microsoft Corp., 193 F. Supp. 3d 1109, 1113 (N.D. Cal. 2016). Defendants argue that the FAC fails to state a claim for direct infringement in violation of 35 U.S.C. § 271(a) for any product other than the N2-BWS1600. Mot. 9-11. In particular, Defendants assert that Kawasaki has "sought to accuse a vast array of products other than the N2-BWS1600, including all products that fall under the categories of 'wafer handling system products,' 'stockers,' and the 'N2-BWS Series,' " without mapping any claim element from any Patent-in-Suit to these product categories and specifying which patent claims are allegedly infringed. Id. at 9-10. Plaintiff contends that a complaint need not "identify all accused products and provide detailed infringement contentions for each of them" and that fact discovery is necessary to identify other infringing products. Plaintiff's Response to Motion to Dismiss ("Opp'n") 3-5, ECF No. 47.
The Court is not persuaded by Defendants' attempt to limit the FAC to the single N2-BWS1600 product. Contrary to Defendants' argument, plaintiffs are not required to identify all allegedly infringing products in their complaint and map those products to patent claims. See, e.g., Windy City, 193 F. Supp. 3d at 1115 ("[D]efendant's argument that it should be entitled to notice at the pleading stage of which specific products infringed on which specific claims in the patents is belied by both the local patent rules and Federal Circuit authority.") (citations omitted). Rather, the complaint must allege facts permitting a plausible inference that every limitation of at least one representative patent claim is satisfied by a representative product. See Document Sec. Sys., Inc. v. Everlight Elecs. Co., Ltd., 2017 WL 10545081, at *2 (C.D. Cal. Nov. 16, 2017) ("[A]t [the motion to dismiss] stage, a plaintiff only needs to provide sufficient factual allegations regarding how an accused product meets each of a claim's limitations."); Novitaz, Inc. v. inMarket Media, LLC, 2017 WL 2311407, at *3 (N.D. Cal. May 26, 2017) (reasoning that "formal charting of patent claim elements against each accused product is [not] always necessary" if the court may "infer that it is 'plausible' that every element of a patent claim is satisfied by an accused product"); e.Digital Corp. v. iBaby Labs, Inc., 2016 WL 4427209, at *3 (N.D. Cal. Aug. 22, 2016) ("Several courts applying the Twombly pleading standard to claims of direct patent infringement . . . have required plaintiffs to plausibly allege that the accused product practices each of the limitations found in at least one asserted claim.").
Kawasaki has identified one representative claim for each of the five Patents-in-Suit. See FAC ¶¶ 24-39 (claim 15 of the RE909 Patent), 40-51 (claim 15 of the RE465 Patent), 52-69 (claim 29 of the RE031 Patent), 70-88 (claim 1 of the RE772 Patent), 89-108 (claim 15 of the RE145 Patent). As noted above, Defendants concede that Plaintiff has adequately alleged its claims as to the N2-BWS1600 product. See Mot. 11 ("Defendants request the Court expressly limit the accused product in this case to the N2-BWS1600."). The Court agrees and finds that Plaintiff has sufficiently alleged that the N2-BWS1600 product is representative of Defendants' "stocker" products, including the N2-BWS series. See FAC ¶ 23 ("The Accused Products include stockers, such as N2-BWS Series shown in Exhibits F and G."), id. at Exh. G, ECF No. 42-6 (showing BWS1600 product on N2-BWS webpage). The Court is satisfied that Plaintiff's detailed allegations regarding the N2-BWS1600 product permit a plausible inference that Defendants' other stockers, including other stockers in the N2-BWS series, also practice each of the alleged limitations of the representative claims.
Although Defendants argue that the Court should treat the FAC similarly to the complaint at issue in Novitaz, which this Court held had failed to state a claim for direct patent infringement, see Mot. 10, Novitaz is readily distinguishable as to the stocker products. To start, the complaint there was only five pages long, including the caption and signature blocks. See Amended Complaint, Novitaz, Inc. v. inMarket Media LLC, No. 16-cv-06795, 2016 WL 11087058 (N.D. Cal. Mar. 14, 2016), ECF No. 13. The complaint made no allegations about how a group of products operated, how that operation mapped onto any element of any claim, or how the few factual allegations about one product also applied to the broader group of products. Novitaz, 2017 WL 2311407, at *4. Here, by contrast, Plaintiff has included numerous specific allegations explaining how the N2-BWS1600 product operates and how its operation allegedly violates at least one claim of each Patent-in-Suit, and has alleged that the product is one example of a series of stocker products. See generally FAC ¶¶ 23-108.
However, as Defendants note, the FAC defines the infringing products as "wafer handling system products." Id. ¶ 5. Stockers, including the N2-BWS series, are but one category of wafer handling system products; others include atmospheric robots, vacuum wafer robots, aligners, load ports, vacuum platforms, and EFEM/sorters. See id. at Exh. F. Plaintiff has not alleged how the N2-BWS1600 product, which is a stocker, is representative of any other category of wafer handling system products; nor has Plaintiff made allegations regarding any product alleged to be representative of these other categories. Plaintiff is correct that it is not required to "identify all accused products and provide detailed infringement contentions for each of them," Opp'n 5, but it must still provide sufficient allegations from which the Court can plausibly infer that all of Defendants' "wafer handling system products" meet every element of at least one claim of each of the five Patents-in-Suit. See Novitaz, 2017 WL 2311407, at *3; e.Digital Corp., 2016 WL 4427209, at *3. The FAC does not provide such allegations for categories other than stockers.
Accordingly, the Court finds that Plaintiff has stated a claim for direct infringement of the five Patents-in-Suit by Defendants' stocker products, including the N2-BWS series, but that Plaintiff has not stated a claim for direct infringement of any Patent-in-Suit by any other product.
The Court's conclusion does not permit Plaintiff to litigate this action with respect to any product not identified in the Disclosure of Assorted Claims and Infringement Contentions ("Disclosure") that Plaintiff was required to serve on all parties within 14 days of the initial case management conference, which took place on January 19, 2023. See Patent L.R. 3-1. That is, Plaintiff may pursue its direct infringement claim as to the set of products that are stockers and that were identified in Plaintiff's Disclosure.
B. Induced Infringement
Under 35 U.S.C. § 271(b), "[w]hoever actively induces infringement of a patent shall be liable as an infringer." To plead a claim for induced infringement, the plaintiff must show that the alleged inducer (1) knew of the patent, (2) knowingly induced the infringing acts, and (3) possessed a specific intent to encourage another's infringement of the patent. Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009) (citing DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006)). Further, induced infringement is predicated on the existence of direct infringement. See Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272 (Fed. Cir. 2004) ("Indirect infringement, whether inducement to infringe or contributory infringement, can only arise in the presence of direct infringement."). Because the Court has concluded that Plaintiff has failed to state a claim for direct infringement for products other than stockers, its analysis here is limited to induced infringement of stockers.
Defendants argue that the FAC fails onthe specific intent prong because it alleges nothing more than that Defendants provided "service, instructions for use, training, and software upgrades" to customers. See Mot. 11-13 (quoting FAC ¶ 117). Such allegations, Defendants contend, are too generic to plausibly plead an intent to induce infringement. Id. at 12. Plaintiff counters that the FAC sufficiently pleads specific intent based on the allegation that Defendants "advertise[ ] benefits of the Accused Product that can only be obtained by using the patented inventions of the Asserted Patents, including at least '1) accommodate four FOUPs; 2) have four front end FOUP openings; 3) utilize a single fixed robot without a track that meets the limitations of the asserted claims; and 4) allow for a smaller width EFEM.' " Opp'n 6 (quoting FAC ¶ 116). Plaintiff further argues that its allegations about the instructions, training, and software upgrades that Defendants provide to their customers—including that these services are provided "to induce [Defendants'] customers' repeated use of the Accused Products in the United States," FAC ¶ 117—are of the sort that courts "routinely find" sufficient to demonstrate specific intent. Opp'n 7.
Defendants argue that this Court should follow Google LLC v. Princeps Interface Techs. LLC, 2020 WL 1478352 (N.D. Cal. Mar. 26, 2020), and Hypermedia Navigation v. Google LLC, 2019 WL 1455336 (N.D. Cal. Apr. 2, 2019), in finding insufficient allegations of specific intent, but the allegations in both cases were less substantive than those in the FAC. For one, neither case involved allegations that the alleged infringer had advertised benefits only achievable by using the patented product or feature. See Princeps, 2020 WL 1478352, at *3-4; Hypermedia, 2019 WL 1455336, at *2-3. Further, in Princeps, the allegations stated only that the alleged infringer provided "instructional manuals and/or services related to the Accused Instrumentalities." 2020 WL 1478352, at *4 (emphasis added). And in Hypermedia, which involved technology software patents, the court found that the complaint did not explain how the defendant's "instructions and support on how to use the[ ] products" would lead in infringement. 2019 WL 1455336, at *3. Here, by contrast, Plaintiff has alleged that Defendants advertised at least four specific benefits that can only be obtained by using the patented inventions of the Patents-in-Suit. FAC ¶ 116; see Hypermedia, 2019 WL 1455336, at *2 ("Courts instead have found it sufficient 'to cite examples where the accused infringer advertised benefits that can be achieved only through use of the asserted patent.' ") (citation omitted). And the Patents-in-Suit involve hardware capabilities that the FAC alleges are necessarily used to obtain the advertised benefits. FAC ¶¶ 117. This allegation is supported by the prior detailed allegations explaining how components of the N2-BWS1600 infringe claim limitations. Id. ¶¶ 24-108.
Defendants respond that the FAC does not sufficiently allege that the advertised benefits can only be achieved through use of the Patents-in-Suit because the alleged benefits are "generic features" admitted in prior art. Defendants' Reply in Support of Motion to Dismiss ("Reply"), ECF No. 50, 5. Defendants' dispute of whether the benefits can be otherwise achieved is a "factual inquiry not suitable for resolution on a motion to dismiss." See Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1357 (Fed. Cir. 2018).
The Court therefore finds that Plaintiff's allegations that Defendants "advertised the benefits of the Accused Products . . . [that] can only be obtained by using the patented inventions of the Asserted Patents" and "provide[d] service, instructions for use, training and software upgrades to induce their customers' repeated use of the Accused Products" are sufficient to plead specific intent. See Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1355-56 (Fed. Cir. 2018) (finding complaint plausibly showed specific intent to induce infringement where defendants allegedly "provid[ed] instructions, support, and technical assistance for the use" of the allegedly infringing product); Core Optical Techs., LLC v. Juniper Networks Inc., 562 F. Supp. 3d 376, 382 (N.D. Cal. 2021) ("Core Optical's complaint alleges . . . specific intent . . . [by] asserting that Juniper 'provided service, maintenance, technical support, or other active assistance' to customers 'with the specific intent' to encourage acts constituting infringement."); see also In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1341-42 (Fed. Cir. 2012) ("Common sense indicates that advertising that your product can be used [to achieve benefits of asserted patents] gives rise to a reasonable inference that you intend to induce your customers to accomplish these benefits through utilization of the patented method.").
Defendants do not raise any other challenge to Plaintiff's induced infringement claims. See Mot. 11-13; Reply 5-6. Accordingly, the Court finds that Plaintiff has stated a claim for induced infringement of the five Patents-in-Suit by Defendants' stocker products, including the N2-BWS series.
C. Contributory Infringement
"Contributory infringement occurs if a party sells, or offers to sell, 'a component of a patented . . . combination, . . . or a material . . . for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use.' " Nalco, 883 F.3d at 1356 (quoting 35 U.S.C. § 271(c)). "Contributory infringement requires knowledge of the patent in suit and knowledge of patent infringement," but a plaintiff need not plead intent to state a claim for contributory infringement. Id. (quoting Commil USA, LLC v. Cisco Sys., Inc., 575 U.S. 632, 640, 135 S.Ct. 1920, 191 L.Ed.2d 883 (2015)). Like induced infringement, contributory infringement is predicated on the existence of direct infringement. See Dynacore Holdings, 363 F.3d at 1272. The Court's analysis is therefore limited to contributory infringement of Defendants' stocker products, including the N2-BWS series.
The FAC alleges that Defendants' products use a robot (the "Accused Robot"), identified as model number RR736 L4631-0000, that is a "material part of the invention of the claims of the Asserted Patents, not a staple article or commodity of commerce suitable for a substantial noninfringing use," and that Defendants import, sell, and/or offer to sell the accused products in the United States. FAC ¶¶ 118-19. Defendants contend that the FAC does not allege the requisite knowledge, i.e., "that the Accused Robot was made 'knowing the same to be especially made or especially adapted for use in an infringement of such patent.' " Mot. 14 (quoting 35 U.S.C. § 271(c)).
The Court agrees. The knowledge allegations in the FAC relate to Defendants' knowledge that the accused products would be used in the United States and that the accused products infringed on each of the Patents-in-Suit. FAC ¶¶ 111, 113-14. Further, the allegation that the infringing products use the Accused Robot, which is a "material part of the invention of the claims of the Asserted Patents," id. ¶ 118, does not show that the allegedly infringing products were made or adapted for use in infringement of the Patents-in-Suit. Plaintiff argues that the FAC's "detailed allegations regarding the Accused Robot's functionality . . . support the inference that Rorze knew that the Accused Robot was especially made for use in infringement of the Asserted Patents." Opp'n 9. But even after drawing all inferences in Plaintiff's favor, the Court cannot conclude that allegations that the Accused Robot meets the claim limitations of the Patents-in-Suit permit an inference that the Defendants "[knew] the same to be especially made or especially adapted for use in an infringement" of the Patents-in-Suit. If such an inference were permitted, there would be no daylight between pleading a claim for direct infringement and one for contributory infringement. The Court therefore finds that the FAC has not sufficiently alleged contributory infringement. Cf. Core Optical, 562 F. Supp. 3d at 382 (finding complaint alleged contributory infringement where factual allegations described how accused products, when "configured . . . during normal use," were "especially adapted to perform" methods described in the asserted patent).
Having found Plaintiff has not sufficiently alleged contributory infringement, the Court need not and does not analyze Defendants' other arguments.
D. Willful Infringement
Lastly, Defendants move to dismiss Plaintiff's claims for willful infringement of each of the five Patents-in-Suit. Mot. 15-18. "In the patent infringement context, willfulness is relevant to damages calculations." Princeps, 2020 WL 1478352, at *2 (citation omitted). In Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93, 136 S.Ct. 1923, 195 L.Ed.2d 278 (2016), the Supreme Court examined the issue of awarding damages, and particularly enhanced damages, under 35 U.S.C. § 284. It noted the "sound recognition that enhanced damages are generally appropriate under § 284 only in egregious cases," and that such "egregious cases" are "typified by willful misconduct." 579 U.S. at 104, 106, 136 S.Ct. 1923. "Increased damages 'are not to be meted out in a typical infringement case, but are instead designed as a "punitive" or "vindictive" sanction for egregious infringement behavior,' i.e., behavior that is 'willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.' " Princeps, 2020 WL 1478352, at *2 (quoting Halo, 579 U.S. at 103, 136 S.Ct. 1923).
The FAC alleges that Defendants knew of the Patents-in-Suit and that Defendants "were engaged in business discussions" with Plaintiff about the Patents-in-Suit, including about whether Defendants were infringing on any of the Patents-in-Suit. See FAC ¶¶ 112-15, 123-24, 128-29, 133-34, 138-39, 143-44. The FAC further alleges that Defendants informed Plaintiff of a theory of noninfringement, but that Defendants' position was meritless, so that Defendants therefore engaged in egregious conduct because they knew or should have known that their products infringed on the Patents-in-Suit and continued to sell or offer to sell the accused products. See, e.g., id. ¶ 113. Defendants argue that these allegations do not raise a plausible inference of willful infringement because the parties' prior correspondence, as pleaded in the FAC, shows that Defendants subjectively believed that there was no infringement of the Patents-in-Suit. Mot. 16. Plaintiff reiterates that Defendants' noninfringement theory expressed in the parties' prior correspondence lacked merit. Opp'n 11-12.
The Court agrees that the FAC does not allege conduct that rises to the level of egregiousness constituting willful misconduct that the Supreme Court described in Halo. Excluding the conclusory allegations that Defendants' conduct was egregious and that their legal theories were meritless, which the Court need not accept as true, Twombly, 550 U.S. at 555, 127 S.Ct. 1955, the FAC essentially alleges that Defendants, when informed by Plaintiff that their products allegedly infringed the Patents-in-Suit, responded by explaining their reasons for disagreeing with Plaintiff. Therefore, although Plaintiff has alleged facts showing that Defendants were aware of the Patents-in-Suit, Plaintiff has not alleged with specificity that Defendants engaged in egregious conduct by acting in a subjectively "willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, [or] flagrant" manner. Halo, 579 U.S. at 103, 136 S.Ct. 1923; see also Princeps, 2020 WL 1478352, at *2-3 (dismissing willful infringement claim where plaintiff alleged defendants' knowledge of asserted patents and that defendants had implemented software updates "in an attempt to construct a defense of non-infringement"); Finjan, Inc. v. Cisco Sys., 2017 WL 2462423, at *5 (N.D. Cal. June 7, 2017) (holding allegations that defendant knew of plaintiff's patent portfolio and continued to sell the accused products did not plausibly show willful infringement).
Accordingly, the Court finds that the FAC has not sufficiently alleged willful infringement with respect to any of the five Patents-in-Suit.
IV. CONCLUSION
For the foregoing reasons, the Court hereby ORDERS as follows:
1. Defendants' motion to dismiss Plaintiff's claims for direct infringement of each of the five Patents-in-Suit is DENIED as to Defendants' "stocker" products, including the N2-BWS series, and GRANTED with leave to amend as to the remainder of the accused products;
2. Defendants' motion to dismiss Plaintiff's claims for induced infringement of each of the five Patents-in-Suit is DENIED as to Defendants' "stocker" products, including the N2-BWS series, and GRANTED with leave to amend as to the remainder of the accused products;
3. Defendants' motion to dismiss Plaintiff's claims for contributory infringement of each of the five Patents-in-Suit is GRANTED with leave to amend;
4. Defendants' motion to dismiss Plaintiff's claims for willful infringement of each of the five Patents-in-Suit is GRANTED with leave to amend.
5. Plaintiff must amend its pleadings, if at all, within 30 days of the entry of this order.
IT IS SO ORDERED.