Pulse Electronics, Inc. v. U.D. Electronic Corp. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PULSE ELECTRONICS, INC, Case No.: 18-cv-0373-BEN (DEB) 12 Plaintiff, ORDER GRANTING MOTION TO 13 v. DISMISS WITHOUT PREJUDICE AND WITH LEAVE TO AMEND 14 U.D. ELECTRONIC CORP, 15 Defendant. 16 In this patent infringement action, Plaintiff Pulse Electronics, Inc. alleges 17 Defendant U.D. Electronic Corp. infringed its rights under various U.S. Patents. Now 18 before the Court is Defendant’s partial motion to dismiss Plaintiff’s Amended Complaint. 19 For the reasons that follow, the motion is granted without prejudice and with leave to 20 amend. 21 BACKGROUND1 22 Pulse owns patents related to connectors for electronics. U.D.E. manufactures 23 connectors for electronics overseas. Pulse alleges that U.D.E. is infringing on three of its 24 patents. Specifically, Pulse alleges U.D.E. is liable for: (1) direct infringement under 35 25 26 27 1 The following overview of the facts are drawn from the allegations of Plaintiff’s First Amended Complaint, which the Court assumes true for purposes of evaluating 28 1 U.S.C. § 271(a); (2) induced infringement under 35 U.S.C. § 271(b); and (3) contributory 2 infringement under 35 U.S.C. § 271(c). 3 LEGAL STANDARD 4 Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint 5 if, taking all factual allegations as true, the complaint fails to state a plausible claim for 6 relief on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. 7 Twombly, 550 U.S. 544, 556-57 (2007). Dismissal is appropriate if the complaint fails to 8 state enough facts to raise a reasonable expectation that discovery will reveal evidence of 9 the matter complained of, or if the complaint lacks a cognizable legal theory under which 10 relief may be granted. Twombly, 550 U.S. at 556. 11 “A claim is facially plausible ‘when the plaintiff pleads factual content that allows 12 the court to draw the reasonable inference that the defendant is liable for the misconduct 13 alleged.’” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Iqbal, 556 14 U.S. at 678). While the Court must draw all reasonable inferences in the non-movant’s 15 favor, it need not “necessarily assume the truth of legal conclusions merely because they 16 are cast in the form of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 17 F.3d 1136, 1139 (9th Cir. 2003) (internal quotations omitted). “Threadbare recitals of the 18 elements of a cause of action, supported by mere conclusory statements, do not suffice.” 19 Iqbal, 556 U.S. at 678. No party takes issue with these standards. 20 DISCUSSION 21 A. Direct Infringement 22 U.D.E. does not seek dismissal of claims of direct infringement. 23 B. Indirect Infringement 24 1) Induced Infringement 25 U.D.E. moves to dismiss claims of induced and contributory infringement of U.S. 26 Patent No. 6,593,840 and U.S. Patent No. 9,178,318. (Allegations regarding U.S. Patent 27 No. 6,773,302 have been dismissed from the lawsuit.) “Whoever actively induces 28 infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). To state a 1 claim for inducement pursuant to 35 U.S.C. § 271(b), a plaintiff must plausibly allege 2 “first that there has been direct infringement, and second that the alleged infringer 3 knowingly induced infringement and possessed specific intent to encourage another’s 4 infringement.” FootBalance Sys. Inc. v. Zero Gravity Inside, Inc., No. 15-CV-1058-JLS 5 (DHB), 2016 WL 903681, at *3 (S.D. Cal. Feb. 8, 2016) (quoting Kyocera Wireless 6 Corp. v. Int’l Trade Comm’n, 545 F.3d 1340, 1354 (Fed. Cir. 2008)) (additional citation 7 and internal quotation marks omitted). 8 To induce infringement, a defendant must “actively and knowingly” aid and abet 9 another’s direct infringement. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (Fed. 10 Cir. 2006) (quoting Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. 11 Cir. 1988)) (emphasis in original). Simple “knowledge of the acts alleged to constitute 12 infringement” is not sufficient. Id. (quoting Warner–Lambert Co. v. Apotex Corp., 316 13 F.3d 1348, 1363 (Fed. Cir. 2003)) (citation omitted in original). In other words, “[t]he 14 mere knowledge of possible infringement by others does not amount to inducement; 15 specific intent and action to induce infringement must be proven.” Id. (quoting Warner– 16 Lambert, 316 F.3d at 1364) (internal quotation marks omitted). 17 To prove induced infringement there must exist evidence of a person’s intent to 18 encourage infringement. “Evidence of ‘active steps ... taken to encourage direct 19 infringement,’ such as advertising an infringing use or instructing how to engage in an 20 infringing use, show an affirmative intent that the product be used to infringe, and a 21 showing that infringement was encouraged overcomes the law’s reluctance to find 22 liability when a defendant merely sells a commercial product suitable for some lawful 23 use.” Metro–Goldwyn–Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 936 (2005). 24 Assuming that Plaintiff has plausibly alleged direct infringement, the Complaint 25 still lacks specific facts to plausibly allege that Defendant intended to encourage 26 another’s infringement. For the ‘318 Patent, the Complaint contains inducement 27 allegations at paragraphs 100 through 103. Distilled, it alleges: U.D.E. induces by 28 actively inducing (¶ 100); by providing components to its customers listed here (¶ 101); 1 some customers imported into the United States, products from abroad (¶ 102); U.D.E. 2 hired away from Pulse a design engineer named Sunky Shang (¶ 102); and prior to the 3 lawsuit, U.D.E. was told that its products were infringing (¶ 103). The allegations are 4 similar for the ‘840 Patent in paragraphs 119 through 122. Other than its own conclusory 5 allegations, which the Court need not assume true, the Complaint does not allege how 6 Defendant intended to encourage others to infringe Pulse’s patents. Without any facts 7 about the “how,” Pulse does not allege plausibly that Defendant encouraged 8 infringement. Without a factual allegation about the “how,” Pulse plausibly describes 9 nothing more than the innocent act of “merely sell[ing] a commercial product suitable for 10 some lawful use.” Id.; Simpson Performance Products, Inc. v. Impact Racing Inc., 2018 11 WL 2229372 *3 (S.D. Cal. 2018); DR Systems, Inc. v. Avreo, Inc., 2011 WL 4850171 *3 12 (S.D. Cal. 2011) (dismissing for failing to allege the “how” of induced infringement). 13 Accordingly, Defendant’s motion to dismiss the inducement claim is GRANTED. 14 2) Contributory Infringement 15 “Whoever offers to sell or sells within the United States or imports into the United 16 States a component of a patented machine, manufacture, combination or composition, or 17 a material or apparatus for use in practicing a patented process, constituting a material 18 part of the invention, knowing the same to be especially made or especially adapted for 19 use in an infringement of such patent, and not a staple article or commodity of commerce 20 suitable for substantial noninfringing use, shall be liable as a contributory infringer.” 35 21 U.S.C. § 271(c). 22 To state a claim for contributory infringement under 35 U.S.C. § 271(c), a plaintiff 23 must plausibly allege: “1) that there is direct infringement, 2) that the accused infringer 24 had knowledge of the patent, 3) that the component has no substantial noninfringing uses, 25 and 4) that the component is a material part of the invention.” FootBalance, 2016 WL 26 903681, at *3 (quoting Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1326 (Fed. Cir. 27 2010)) (additional citation and internal quotation marks omitted). 28 1 Similar to the claim for inducement, the Court agrees with Defendant that the 2 || Complaint lacks specific factual allegations from which the Court may draw a plausible 3 ||inference of contributory infringement. Again, apart from Pulse’s own conclusory 4 || allegation, the Complaint lacks factual allegations to plausibly establish that the 5 ||connectors have no substantial non-infringing uses and that the component is a material 6 || part of the invention. Simpson Performance Products, 2018 WL 2229372 *4; DR 7 || Systems, 2011 WL 4850171 *4. 8 Accordingly, the Court also GRANTS Defendant’s motion to dismiss Plaintiff’ s 9 || contributory infringement claim. 10 = Timing 11 Plaintiff complains that Defendant has waited too long to urge the motion. While 12 || true to some degree, it is not too late for amendment. No dispositive motions have been 13 || decided and trial has not yet been scheduled. Plaintiff will suffer little prejudice from 14 || amending its Complaint to set out allegations about the “how” which it must ultimately 15 || prove. 16 CONCLUSION 17 For all of the reasons stated above, the Court GRANTS Defendant’s motion to 18 || dismiss without prejudice and with leave to amend. If Plaintiff elects to amend its 19 || pleading, it must file its amended complaint that cures the defects identified above within 20 || ten (10) days of the date this Order is filed. 21 IT IS SO ORDERED. 22 23 || DATED: July 6, 2020 (dye x HON. ROGER T. BENITEZ United States District Judge 25 26 27 28