Preservation Technologies LLC v. MindGeek USA Inc. et al

REPLY In Support Of NOTICE OF MOTION AND MOTION to Dismiss Case 92

C.D. Cal.January 28, 2019

DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VENABLE LLP Sarah S. Brooks (SBN 266292) ssbrooks@venable.com 2049 Century Park East, Suite 2300 Los Angeles, CA 90067 Telephone: (310) 229-9900 Facsimile: (310) 229-9901 VENABLE LLP Frank M. Gasparo (Admitted Pro Hac Vice) Ralph A. Dengler (Admitted Pro Hac Vice) Todd M. Nosher (Admitted Pro Hac Vice) fmgasparo@venable.com radengler@venable.com tmnosher@venable.com 1270 Avenue of the Americas, 24th Floor New York, New York 10020 Telephone: (212) 307-5500 Facsimile: (212) 307-5598 Attorneys for Defendants MindGeek USA Inc. et al. IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA PRESERVATION TECHNOLOGIES LLC Plaintiff, v. MINDGEEK USA, INC., ET AL., Defendants. Case No. 2:17-cv-08906-DOC-JPR Honorable David O. Carter Courtroom 9D DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED COMPLAINT Date: February 11, 2019 Time: 8:30 a.m. Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 1 of 10 Page ID #:2761 1 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants MindGeek USA, Inc.; MindGeek S.a.r.l.; MG Content RK Ltd.; MG Content DP Ltd.; MG Premium Ltd.; MG Cyprus Ltd.; and Licensing IP International S.a.r.l. (collectively “Defendants”) hereby submit the following reply memorandum (“Reply”) in support of its motion to dismiss Plaintiff Preservation Technologies LLC’s (“PT”) Third Amended Complaint (Dkt. No. 80-1) under Rule 12(b)(6). I. INTRODUCTION PT’s Third Amended Complaint (“TAC”) should be dismissed for its failure to adequately plead direct infringement, infringement under the doctrine of equivalents, indirect infringement and willful infringement. The TAC accuses Defendants’ fifty- three websites of infringing eleven patents-in-suit. However, even after its third attempt at pleading, Defendants are no closer to being on notice of how or what aspect of each of the fifty-three websites infringe these patents-in-suit and can only assume that each website in its entirety does not infringe the patents-in-suit. Indeed, the TAC does not provide adequate notice to Defendants in part because it lumps all fifty-three accused websites together without providing the factual allegations sufficient to support these websites being treated similarly for infringement purposes. Although PT alleges that all websites are owned by Defendants, ownership is entirely different than pleading facts that would support the inference that the websites all operate in the same manner or that they use the same software and hardware. PT has provided no facts that would support the allegation that all fifty-three websites operate in the same manner and use the same software and hardware. In short, PT’s TAC is completely lacking in factual support for why all websites should be treated together for infringement purposes. Further, PT’s TAC should be dismissed at least because it does not put Defendants on fair notice as required by Iqbal/Twombly as to each limitation of at least one claim of each patent. For example, PT’s infringement allegations in the TAC include repeated references to “the Accused Systems” which PT loosely defines as including “software and hardware supporting various Internet websites … [and] puts Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 2 of 10 Page ID #:2762 2 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 into use components from Defendants and other parties.” TAC, ¶160. Defendants are left with no notice as to what software or hardware or what components belonging to Defendants or other parties are actually accused. Instead, PT loosely describes the “Accused Systems” as encompassing anything and everything supporting the fifty-three websites that could either be from Defendants or other third parties.1 It is exactly this type of guessing game that Iqbal/Twombly and subsequent case law sought to prevent. Finally, PT mischaracterizes Defendants’ motion to dismiss as requiring claim construction in an attempt to delay this Court’s decision on Defendants motion to dismiss. Defendants’ motion to dismiss simply does not require claim construction. As noted above and explained further below, PT’s TAC lacks factual allegations that would support its claims of infringement and does little more than accuse Defendants fifty- three websites as a whole of patent infringement. No claim construction is needed to determine that PT provides no factual allegations supporting the inference that the fifty- three websites all operate in the same manner nor is claim construction needed to determine the defined “Accused Systems” lacks factual detail that would put Defendants on fair notice of patent infringement. Defendants respectfully ask this Court to grant its motion to dismiss. II. LEGAL ARGUMENT A. The TAC Does Not Properly Plead Direct Infringement Because It Lacks Proper Factual Allegations PT repeatedly argues in its Opposition brief that “evidence” is irrelevant for purposes of a motion to dismiss. Dkt. No. 118 at 4. In fact, “evidence” in the form of 1 PT argues that Defendants Motion to Dismiss was untimely based on a Joint Stipulation to Extend Time (Dkt. No. 68) specifying a reply date of December 3. But that Joint Stipulation pertained to Defendants’ answer to the second amended complaint. See Court Order at Dkt. No. 69. The joint stipulation could only apply to the operative pleading at the time, i.e. the Second Amended Complaint. Thus, Defendants properly waited for PT’s motion for leave to file the TAC to be granted and entered, and timely filed the present Motion. Further, it is PT’s Opposition that was untimely because it was filed on a legal holiday, Martin Luther King Day, and not filed on Friday January 18, 2019 pursuant to Rule 6(a)(1)(C) and (a)(5). Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 3 of 10 Page ID #:2763 3 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “factual support” is key to determining a motion to dismiss. A pleading 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 (2009) (emphasis added). The Plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” TeleSign Corp. v. Twilio, Inc., No. CV 16-2106 PSG (SSx), 2016 WL 4703873, * 2 (C.D. Cal. Aug. 3, 2016) (emphasis added). “[Plaintiff] needs to plead facts that say something about what that view is – about what the accused product contains that meets these claim limitations (and the others) and that helps the Court understand why it is plausible that this is so.” N. Star Innovations, Inc. v. Micron Tech. Inc., 2017 WL 5501489, *2 (D. Del. Nov. 16, 2017). Here, PT’s TAC lacks factual allegations that would support direct infringement by all fifty-three websites. Instead, PT’s Counts 1-11 alleging direct and indirect infringement of each patent-in-suit contain allegations against Defendants “Accused Websites” generally and PornHub.com as an example only. TAC, ¶¶163- 304. PT defines the “Accused Websites” in paragraph 160 of the TAC and allege common ownership, but the TAC is entirely lacking in any factual allegations that would support the inference that all fifty-three websites should be treated the same for infringement purposes. For example, the TAC lacks any factual support showing that all fifty-three websites operate in the same manner, or that they use the same software of hardware. PT argues that separate infringement allegations are not necessary for each Accused Website and cites Cywee Group Ltd. v Huawei Device Co. Ltd. in support of its contention that allegations on a product-by-product basis are not necessary No. 2:17- CV-495-WCB, 2018 WL 3819392 * 5 (E.D. Tex. Aug. 10, 2018); (Dkt. No. 118 at 5). However in Cywee, court could determine that the seven products all operated in the same manner because there were over twenty paragraphs in the complaint of detail regarding the products operating system and other such details. Id. at *5. Not so here. In TeleSign Corp., the Plaintiff, like PT, similarly argued that the products appear to function similarly. 2016 WL 4703873 at n.1. However, Judge Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 4 of 10 Page ID #:2764 4 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gutierrez granted Defendant’s motion to dismiss, noting that there was no allegation in the complaint alleging that the products functioned similarly. Id. Relatedly, PT does not provide factual allegations supporting the alleged infringement by Defendants’ “Accused Systems” which PT loosely defines as including “software and hardware supporting various Internet websites … [and] puts into use components from Defendants and other parties.” TAC, ¶160. PT’s definition of “Accused Systems” does not put Defendants on notice of what aspect of its accused websites infringe. K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013) (“[A] potential infringer [must] be placed on notice of what activity or device is being accused of infringement”). PT’s definition of “Accused Systems” is so broad that it could encompass each website in its entirety, or even Defendants’ entire business; it is so vague that it could even include a component from “other parties” – i.e. a third party or customers. Such broad allegations are improper under established case law. See e.g., Footbalance Sys. v. Zero Gravity Inside, Inc., No. 15-CV-1058 JLS (DHB), 2016 U.S. Dist. LEXIS 32590, at *11 (S.D. Cal. Feb. 8, 2016) (granting motion to dismiss and finding allegations “‘do[] not satisfy Form 18 standards,’ as they ‘encompass[] essentially [ZGI]’s entire business, leaving [Defendants] with no notice as to how [they] allegedly infringe[]’”)(citation and quotation omitted); see also Prism Techs., LLC v. AT&T Mobility, LLC, No. 8:12CV122, 2012 U.S. Dist. LEXIS 126630, at *11-12 (D. Neb. Sept. 6, 2012) (quotation omitted)(granting motion to dismiss and noting that “Prism makes vague allegations that ‘various wireless products and data services’ infringe the patents,” which essentially encompassed AT&T’s entire business); see also Novitaz, Inc. v. inMarket Media, LLC, No. 16-cv-06795-EJD, 2017 WL 2311407, at *4 (N.D. Cal. May 26, 2017) (granting motion to dismiss because allegation parroted claim language and contained “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements”). Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 5 of 10 Page ID #:2765 5 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants respectfully ask this Court to grant its motion to dismiss and dismiss PT’s claims of direct infringement. B. The TAC Does Not Properly Plead Doctrine of Equivalents PT claims that an allegation of doctrine of equivalents (“DoE”) does not require separate pleading or any factual allegations and that pleading direct infringement is sufficient to sustain an allegation of infringement under the doctrine of equivalents. Dkt. No. 118 at 7. PT ignores case law cited by Defendants in which the court notes that in fact an allegation of infringement under DoE does require some specificity. Midwest Athletics & Sports All. LLC v. Xerox Corp., No. 8:17CV478, 2018 WL 1400426, at *4 (D. Neb. Mar. 20, 2018) (noting that “[t]he technical and factual nature of an infringement claim under the [DoE] requires some level of specificity beyond a one- sentence accusation.”). Further in Automated Transaction Corp. v. Bill Me Later, Inc., the court granted Defendants motion to dismiss and required Plaintiff to amend its complaint to pursue a claim for infringement under DoE where Plaintiff does not plead the doctrine of equivalents theory in its complaint. No. 09-61903-CIV- COHN/SELTZER, 2010 U.S. Dist. LEXIS 46101, *7 (S.D. Fla. May 11, 2010); see also Macronix Int’l Co. v. Spansion Inc., 4 F. Supp. 3d 797, 804 (E.D. Va. Mar. 10, 2014) (granting motion to dismiss where complaint “fails adequately to allege infringement under the doctrine of equivalents because [it] merely asserts liability under that doctrine in a bare bones, conclusory form.”) Here, PT’s TAC contains no reference to DoE in the body of the complaint. Rather, PT only mentions the doctrine of equivalents in its Prayer for Relief where it asks the Court to enter judgment that the Defendants have infringed “literally and/or under the doctrine of equivalents.” TAC, p. 200. Clearly under the case law cited above, this bare bones sentence in the Prayer for Relief cannot rise to the level of pleading required to support DoE. Indeed, this complete lack of pleading and a passing mention in its Prayer for Relief is simply inadequate to support a claim for DoE. Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 6 of 10 Page ID #:2766 6 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Thus, Defendants respectfully ask this Court to grant its motion to dismiss and dismiss PT’s claims of infringement under the doctrine of equivalents.2 C. The TAC Does Not Properly Plead Indirect infringement PT argues that it has properly pled indirect infringement by asserting that Defendants have generally encouraged their customers to use the Accused Websites. Dkt. No. 118 at 8-9. This argument highlights the inherent problem with PT’s complaint – it accuses Defendant’s websites as a whole, without providing Defendants with notice as to what or how the Accused Websites are specifically is infringing. Surely, not every aspect of Defendants’ websites infringe the patents-in-suit. However, even after reading a third amended complaint, Defendants cannot discern what aspects or how their fifty- three websites infringe the patents-in-suit. To plead inducement under § 271 (b), a plaintiff must show sufficient facts that “the alleged infringer … possessed specific intent to encourage another’s infringement.” DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (citation and quotation omitted) (en banc). However, PT cannot and has not properly alleged that Defendants knew and had the specific intent to induce others to infringe the patents-in-suit. Indeed, Paragraphs 182-214 of the TAC titled “Induced and Contributory Infringement” allege that “Defendants continue to provide instructions to customers, software and third-parties to operate the Accused Systems in an infringing manner….” as factual support that Defendants had the specific intent to encourage another’s infringement. TAC, ¶ 203. Again, given how broadly Accused Systems is defined, this amounts to a general allegation that Defendants have encouraged their customers to use their websites. This is simply an allegation without any meaning and cannot support PT’s claims for inducement. PT also does not give any factual detail regarding the alleged “instructions” provided from Defendants to their customers. PT also ignores precedent that such generalized allegations regarding induced infringement are not proper. Trans Video Elecs., Ltd. v. Netflix, Inc., No. 12-1743-LPS, 2 PT also wholly fails to defend its 271(f) allegation – this too should be dismissed. Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 7 of 10 Page ID #:2767 7 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2014 U.S. Dist. LEXIS 28337, at *14 (D. Del. Mar. 4, 2014)(“In light of the lack of facts pled linking up any ‘instructions’ with conduct plausibly asserted to amount to direct infringement, the allegations as to this element, then, are insufficient as well.”). PT argues that it has properly plead contributory infringement because it alleges that Defendants systems have no substantial non-infringing use. Dkt. No. 118 at 9. However, the TAC proves that PT merely parrots the statutory language of §271(c): “Upon information and belief, the Accused Systems have no substantial non-infringing use and are especially made and/or adapted so as to infringe the Asserted Patents.” TAC, ¶ 206. To plead contributory infringement under § 271 (c), the plaintiff must plead facts showing, among other requirements, that material or apparatus must have no substantial non-infringing uses. In re Bill of Lading, 681 F.3d 1323, 1337 (Fed. Cir. 2012). Again, PT ignores case law in which such bare bones allegations are insufficient to support a claim of contributory infringement. In Straight Path IP Group, Inc. v. Vonage Holdings Corp., the court dismissed patentee’s claims of contributory infringement where the Plaintiff merely “parroted” the statutory language of the contributory infringement claim and failed to state sufficient facts to support the same. No. 14-502 (JLL), 2014 U.S. Dist. LEXIS 42466, at *9-10 (D. N.J. Mar. 26, 2014). The same result is warranted here. Thus, Defendants respectfully ask this Court to grant its motion to dismiss and dismiss PT’s claims of indirect infringement. D. The TAC Does Not Properly Plead Willful infringement Defendants respectfully ask this Court to grant its motion to dismiss and dismiss PT’s claims of willful infringement based on PT’s inadequately pled direct and indirect infringement allegations. E. The TAC Does Not Plead Plausible Literal Infringement 1. No Plausible Literal Infringement of the ‘014 Patent, ‘499 Patent, ‘080 Patent, ‘495 Patent, ‘537 Patent, ‘060 Patent, ‘527 Patent, ’911 Patent, ‘071 Patent and ‘638 Patent Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 8 of 10 Page ID #:2768 8 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PT alleges that Defendants directly infringe independent claim 21 of the ‘014 Patent, claim 16 of the ‘499 Patent, claim 2 of the ‘080 Patent, claim 13 of the ‘495 Patent, claim 31 of the ‘537 Patent, claim 16 of the ‘060 Patent, claim 15 of the ‘527 Patent, claim 14 of the ‘911 Patent, claim 9 of the ‘071 Patent, and claim 7 of the ‘638 Patent by “making, using, putting into use, offering to sell, and selling the Accused Systems and those of third parties including without limitation customers and CDNs.” TAC, ¶¶ 217, 225, 233, 249, 257, 265, 273, 282, 290, 298. As discussed above, PT’s definition of “Accused Systems” does not put Defendants on notice as to what aspect of its accused websites infringe. Indeed, the definition of “Accused Systems” includes components of third parties and other parties such as customers and CDNs. Such broad allegations devoid of factual support warrant dismissal of the TAC pursuant to the case law discussed above and in Defendants Opening Motion. See e.g., Footbalance Sys. 2016 U.S. Dist. LEXIS 32590, at *11; Prism Techs., LLC, 2012 U.S. Dist. LEXIS 126630, at *11-12; and Novitaz, Inc. 2017 WL 2311407, at *4. 2. No Plausible Literal Infringement of the ‘831 Patent PT also alleges that Defendants directly infringe independent claim 6 of the ‘831 Patent by “making, using, putting into use, offering to sell, and selling the Accused Systems and those of third parties including without limitation customers and CDNs.” TAC, ¶ 241. As noted above, PT’s definition of “Accused Systems” does not put Defendants on notice as to what aspect of its accused websites infringe. Indeed, the definition of “Accused Systems” includes those of third parties, customers and CDNs. With respect to Claim 6 of the ‘831 patent, PT claims that “at least one of the data structure [of the Accused Systems] used by the indexing server containing descriptive information and tags associated with the multimedia portion depicted above and below, among other things, may meet this catalogue limitation. TAC, ¶ 241. In its opening Motion, Defendants argue that there is no literal infringement of the ‘831 patent because PT does not provide any factual information regarding the “data structure.” Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 9 of 10 Page ID #:2769 9 DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS V E N A B L E L L P 2 0 4 9 C E N T U R Y P A R K E A S T , S U IT E 2 3 0 0 L O S A N G E L E S , C A 9 0 0 6 7 3 1 0 -2 2 9 -9 9 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Tellingly, PT does not address this argument in its Opposition or argue that it did in fact provide factual support in its TAC. III. CONCLUSION Defendants respectfully ask this Court to grant its Motion to Dismiss and dismiss PT’s TAC with prejudice in its entirety. DATE: January 28, 2019 VENABLE, LLP By: /s/ Sarah S. Brooks Sarah S. Brooks Frank M. Gasparo (Admitted Pro Hac Vice) Ralph A. Dengler (Admitted Pro Hac Vice) Todd M. Nosher (Admitted Pro Hac Vice) Attorneys for Defendants MindGeek USA Inc. et al. Case 2:17-cv-08906-DOC-JPR Document 122 Filed 01/28/19 Page 10 of 10 Page ID #:2770