Summary
denying defendant's motion for more definitive statement
Summary of this case from McTerrell v. KoenigsmannOpinion
03 Civ. 5866 (SAS)
February 17, 2004
Robert Rando, Esq., Levy Stopol, LLP, Uniondale, New York, for Plaintiffs
Lee F. Grossman, Esq., Eric P. Martin, Esq., Grossman Flight, LLC, Chicago, Illinois, for Defendants
Steven H. Bazerman, Esq., Ramsaran Maharajh Jr., Esq., Bazerman Drangel, PC, New York, New York, for Defendants
OPINION AND ORDER
William Asip and Miklos Bartha bring this action against VNU, Inc. ("VNU") and Nielsen Media Research ("Nielsen") (collectively "defendants") alleging patent infringement. VNU now moves to dismiss the Complaint for failure to state a claim, and Nielsen moves for a more definite statement under Rule 12(e). For the reasons that follow, both motions are denied.
I. BACKGROUND
Plaintiffs are New York residents and holders of Patent No. 4,361,851 ("'851 Patent"). Defendants are owners and operators of television audience measurement estimating systems and devices. Both defendants conduct business in New York and Nielsen is a "division" of VNU.
Complaint ("Compl.") ¶¶ 1, 2, 9.
See Plaintiffs' Memorandum of Law in Opposition to VNU's Rule 12(b)(6) Motion ("Pl. 12(b)(6) Mem.") at 1.
Compl. ¶¶ 3-5; see also VNU's Memorandum of Law in Support of Its Rule 12(b)(6) Motion ("Def. 12(b)(6) Mem.")at 2.
Compl. ¶ 5.
The '851 patent was issued to plaintiffs on November 30, 1982 for their invention of a system that "automatically monitor[s] the selection of a Program Source made by a Subscriber." Specifically, this system enables the transmission (over non-dedicated telephone lines) of channel logs chronicling those channels a subscriber has viewed. Plaintiffs envisioned use of this invention with "cable television systems or over-the-air pay television scrambled systems." But they also noted that the possible applications of this invention "are not restricted to [those relating to] Pay-TV" and could include deployment in activities such as "[o]pinion polling and preference sampling."
'851 Patent, Ex. 1 to Compl. In considering a motion to dismiss, courts may not consider matters outside the pleadings. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). The complaint includes "'any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.'" Id. (quotingInternational Audiotext Network, Inc. v. American Tel. Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995)); see also Fed.R.Civ.P. 10(c). Accordingly, the '851 Patent is treated as part of the Complaint.
See '851 Patent.
Id..
Id.
Plaintiffs' Memorandum of Law in Opposition to Nielsen's Rule 12(e) Motion ("Pl. 12(e) Mem.") at 1.
Plaintiffs allege that defendants have infringed, induced, and/or contributed to the infringement of "at least" Claim One of the '851 Patent. Claim One covers:
Compl. ¶¶ 11, 14. The '851 Patent covers six claims, See '851 Patent.
A television-use monitoring device for direct electrical connection to a telephone line, comprising:
(a) coupling means coupled to said television for detecting when said television is actively receiving a predetermined channel and producing, in response thereto a program selection signal indicating the active reception of a particular program selection;
(b) timer means for providing timing information;
(c) transient memory means responsive to said coupling means to store, in response to a first control signal, said program selection signal associated with a particular program whose active reception has been detected;
(d) second memory means responsive to said transient memory means to receive the output of said transient memory means in response to a second control signal and produce the same at its output in response to a third control signal;
(e) control means responsive to said timer for periodically causing said transient memory means to store any program selection signal present in the system, and reading the contents of said transient memory means, and responsive to said transient memory means to cause said transient memory means to transfer its contents to said second memory means in response to the detection of said program selection at one point in time and a second detection of the same program selection a predetermined period of time thereafter;
(f) interface means, responsive to said control means and said second memory means to encode said program selection signal for transmission; and
(g) transmission coupling means, responsive to said interface means, to couple the output of said interface means to conventional telephone lines and transmit said program selection to a central billing facility.
'851 Patent.
Defendants allegedly knew of and intentionally infringed the '851 Patent by "importing, making, using and/or selling products which use and/or encompass[,] store [,] and forward technology with the use of a telephone line for data transmission in the television industries." Plaintiffs contend that defendants' unlawful conduct began prior to and continued through the '851 Patent's expiration date in January 2000.
Compl. ¶ 10; see also id. ¶¶ 14-16.
Id. 11 10-11, 15.
II. APPLICABLE LAW
1. Rule 12(b)(6)
A. Legal Standard
A motion to dismiss pursuant to Rule 12(b)(6) should be granted only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" "A court's task 'in ruling on a Rule 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.'" Accordingly, courts must construe the complaint liberally, accept all factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor.
Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 514 (2002) (quotingHishon v. King Spalding, 467 U.S. 69, 73 (1984)); see also Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 44 (2d Cir. 2003).
Levitt v. Bear Stearns Co., Inc., 340 F.3d 94, 101 (2d Cir. 2003) (quoting Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998)).
See Chambers, 282 F.3d at 152; Levitt. 340 F.2d at 101.
2. Rule 12(e)
Under Rule 12(e), if a complaint is "so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading." Rule 8(a) provides that a plaintiff need only plead "a short and plain statement of the claim" that will provide the defendant with fair notice of what the plaintiff's claim is and the grounds upon which it rests. "'[I]f [a] complaint complies with the liberal pleading requirements of [Rule 8(a)], then the Rule 12(e) motion should be denied.'" Notably, because the purpose of the Rule is to "strike at unintelligibility rather than want of detail and . . . allegations that are unclear due to a lack of specificity are more appropriately clarified by discovery rather than by an order for a more definite statement." Therefore, "the tendency under the Federal Rules is to discourage motions to compel more definite complaints and to encourage the use of discovery procedures to apprise the parties of the basis for the claims made in the pleadings."
Fed.R.Civ.P. 8(a); see also Conley v. Gibson, 355 U.S. 41, 47 (1957).
Vapac Music Publ'g, Inc. v. Tuff'N'Rumble Mgmt., No. 99 Civ. 10656, 2000 WL 1006257, at *6 (S.D.N.Y. July 19, 2000) (quoting Tom Kelley Studios Inc. v. International Collectors Soc'y Inc., No. 97 Civ. 0056, 1997 WL 598461, at *1 (S.D.N.Y. Sept. 25, 1997)).
Markovic v. New York City Sch. Constr. Auth., No. 99 Civ. 10339, 2000 WL 1290604, at *3 (S.D.N.Y. Sept. 13, 2000) (quotation marks and citation omitted).
Id.; see also Vapac Music Publ'g, 2000 WL 1006257, at *6 (noting that Rule 12(e) motions are disfavored).
B. Patent Infringement
To state a claim for patent infringement, "a patentee need only plead facts sufficient to place the alleged infringer on notice. This requirement ensures that the accused infringer has sufficient knowledge of the facts alleged to enable it to answer the complaint and defend itself." A complaint for patent infringement need only meet the following requirements: alleged ownership of the asserted patent, [(2)] name each individual defendant, [(3)] cite the patent that is allegedly infringed, [(4)] describe the means by which the defendants allegedly infringe, and [(5)] point to the specific sections of the patent law invoked." III. DISCUSSION
Phonometrics, Inc. v. Hospitality Franchise Sys., Inc., 203 F.3d 790, 794 (Fed. Cir. 2000); accord DigiGAN, Inc. v. iValidate, Inc.. No. 02 Civ. 0420, 2004 WL 203010, at *4 (S.D.N.Y. Feb. 3, 2004).
Phonometrics, 203 F.3d at 794; accord DigiGAN, 2004 WL 203010, at *4.
As an initial matter, I note plaintiffs' argument that both Rule 12 motions should be rejected because of defendants' failure to abide by my Individual Rules and Procedures. See Pi. 12(b)(6) Mem. at 9; Pl. 12(e) Mem. at 7. Because parties are expected to be familiar with these rules, defendants are reminded that the rules are available at this Court's website. See Individual Rules and Procedures, http://www.nysd.uscourts.gov/Individual__Practices/Scheindlin.pdf.
The rules clearly state that, prior to bringing a motion to dismiss, "the parties must exchange letters" and "must certify that pre-motion letters were exchanged." Id. at 3 (emphasis added). "The parties should attempt to eliminate the need for these motions based on this exchange of letters," while recognizing that leave to amend will be freely granted.Id. Defendants' failure to follow these rules has led them to engage in what appears to be unnecessary motion practice. This highlights precisely those consequences that the rule is intended to avoid, e.g., needlessly delayed litigation and wasted judicial resources.
A. VNU's Rule 12(b)(6) Motion
The Complaint satisfies the pleading requirements of Rule 8 because it: (1) alleges plaintiffs' joint ownership of the '851 Patent, (2) names VNU and Nielsen as defendants, (3) cites the '851 Patent as the basis for the action, (4) describes the means by which defendants allegedly infringed the "851 Patent, and (5) indicates that their claims are based on defendants' willful acts of direct and indirect infringement. However, VNU argues that the action against it should be dismissed because it has never "engaged in any of the allegedly infringing activities." Rather, VNU contends that those acts were committed by its subsidiary, Nielsen, which was acquired on October 27, 1999, sixty-nine days prior to the expiration of the '851 patent. As VNU puts it, " [its] sole relationship with [Nielsen] as relates to this case is this 69 day period during which it owned the stock of [Nielsen] but had no direct involvement in its operations."
See Compl. ¶ 9.
See id. ¶¶ 3, 5, 10, 11.
See id. ¶¶ 9-15.
See id. ¶¶ 9-11.
See id. UK 10-12. Specifically, patent infringement claims are governed by 35 U.S.C. § 271. Direct infringement occurs when a person, without authority, infringes a patent by making, using, offering to sell, or selling any patented invention. See 35 U.S.C. § 271(a). Indirect infringement occurs when a person induces the infringement of a patent by another or contributes to a patent's infringement through its activities. See 35 U.S.C. § 271(b)-(c).
Def. 12(b)(6) Mem. at 2.
See id.
Id. at 2-3 (alternation in original).
VNU has not demonstrated that plaintiffs cannot prove any set of facts in support of their patent infringement claims. First, plaintiffs' allegations as pled are sufficient because they provide VNU with fair notice as to the claims asserted against it. As plaintiffs correctly point out, VNU's motion is "merely a statement of its belief that it has not engaged in any direct infringement which is more appropriately stated as a denial in answer to the [Complaint]." Second, even if plaintiffs' infringement claims against VNU are premised solely on its status as "a holding company" for subsidiary Nielsen, whether VNU is liable for Nielsen's actions turns on factual considerations (e.g., the degree of control that VNU exercised over Nielsen) that are beyond the scope of the pleadings. Thus, contrary to VNU's argument that "[t]he timing of the dismissal is irrelevant," the fact that VNU brings this motion at the pleading stage is critical.
Pl. 12(b)(6) Mem. at 8.
Not surprisingly VNU submitted a Joint Declaration in an attempt to factually support its arguments. See Joint Declaration of Michael E. Elias and David A. Schwartz-Leeper, Ex. A to Def. 12(b)(6) Mem. But for purposes of a motion brought under Rule 12(b)(6), a court cannot consider documents outside of the pleadings. See Chambers, 282 F.3d at 152.
VNU's Reply Memorandum of Law in Further Support of Its Rule 12(b)(6) Motion at 4.
B. Nielsen's Rule 12(e) Motion
Nielsen argues that because plaintiffs' "'bear-bones' [sic] Complaint" does not identify which of Nielsen's television monitoring devices infringe the '851 Patent, the Complaint fails to satisfy Rule 8's pleading requirements. But the Complaint specifically states that Nielsen "infringed, induced and/or contributed" to the infringement of the '851 Patent by "importing, making, using and/or selling products which use and/or encompass store and forward technology with the use of a telephone line for data transmission in the television industries and continued to do so to, and including, January 2000." These allegations are not "so vague or ambiguous" that Nielsen cannot be "reasonably . . . required to frame a responsive pleading" to the Complaint. As the Complaint provides fair notice of plaintiffs' patent infringement claims, it comports with the pleading requirements set forth in Rule 8.
Nielsen's Memorandum of Law in Support of Its Rule 12(e) Motion ("Def. 12(e) Mem.")at 2.
Compl. ¶ 11.
See supra Part III.A. Moreover, Form 16 of the Appendix of Forms to the Federal Rules of Civil Procedure, which provides a sample patent infringement complaint, states simply that "[d]efendant has for a long time past been and still is infringing [plaintiff's] Letters Patent by making, selling, and using electric motors embodying the patented invention, and will continue to do so unless enjoined by this court." Courts have found that a complaint providing at least as much information as this sample complaint is sufficient to withstand a Rule 12(e) motion.See Dome Patent L.P. v. Permeable Techs., Inc., 190 F.R.D. 88, 90-91 (W.D.N.Y. 1999) (citing OKI Elec. Indus. Co. v. LG Semicon Co., No. 97 Civ. 20310, 1998 WL 101737, at *3-4 (N.D. Cal. Feb. 25, 1998), andSoli-Tech, Inc. v. Halliburton Co., No. 97 Civ. 10232, 1993 WL 315358, at *3 (E.D. Mich. Jan. 26, 1993)). Plaintiffs' allegations of infringement by "products which use and/or encompass store and forward technology with the use of a telephone line for data transmission in the television industries" are at least as specific as those involving "electric motors embodying the patented invention." Compl. ¶ 11.
Nielsen also contends that the doctrine of laches requires plaintiffs to "specifically identify [Nielsen's] allegedly infringing products." In particular, Nielsen argues that plaintiffs' allegations either (1) cover activities that Nielsen has undertaken for the twenty years since the '851 patent was issued and "[b]y definition" the doctrine of laches applies; or (2) Nielsen "must have some new product, or must have modified an old product in a way that allegedly infringes the '851 Patent" and must identify that product. But, at this stage of the proceedings, Neilsen's laches argument is premature. Relief pursuant to the doctrine of laches turns on (1) whether a plaintiff unreasonably delayed the filing of her lawsuit despite having actual or constructive knowledge of the defendant's infringing products and (2) whether that delay resulted in material prejudice to defendant. Where these inquiries cannot be resolved on the face of the complaint, they are questions properly reserved for summary judgment, after discovery has concluded. Here, the laches defense cannot be resolved solely from a review of the Complaint.
Def. 12(e) Mem. at 3.
Id. at 4 (citing A.C. Aukerman Co. v. R.L. Chaides Contr. Co., 960 F.2d 1020 (Fed. Cir. 1992) and Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358 (Fed. Cir. 2001). Notably, both cases upon which Nielsen relies involve the application of the doctrine of laches at the summary judgment stage.
See Ecolab, 264 F.3d at 1371; A.C. Aukerman Co., 960 F.2d at 1032.
IV. CONCLUSION
For the foregoing reasons, both VNU's motion to dismiss and Nielsen's motion for a more definite statement are denied. The Clerk of the Court is directed to close these motions (numbers 13 and 17 on the docket sheet). A conference is scheduled for February 26, 2004, at 2:45 p.m.
SO ORDERED.