Albritton v. Acclarent, Inc.

Brief/Memorandum in Support

N.D. Tex.July 5, 2017

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION DR. FORD ALBRITTON IV, Plaintiff, v. ACCLARENT, INC., Defendant. § § § § § § § § § § § § Civil Action No. 3:16-cv-03340-M JURY TRIAL DEFENDANT ACCLARENT, INC.’S BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 1 of 31 PageID 864 TABLE OF CONTENTS Page i INTRODUCTION .......................................................................................................................... 1 LEGAL STANDARD ..................................................................................................................... 2 ARGUMENT .................................................................................................................................. 2 I. Plaintiff fails to state a claim for breach of the NDA (Count One) .................................... 2 A. Count One is barred by the statute of limitations ................................................... 2 B. The NDA does not protect the allegedly misappropriated information .................. 9 C. Acclarent cannot have breached the NDA by failing to assign or list Plaintiff as an inventor to the ‘473 patent ............................................................. 11 II. Plaintiff’s claim for breach of the Consulting Agreement is barred by the statute of limitations (Count Two) ............................................................................................... 12 III. Plaintiff fails to state a claim for fraudulent inducement (Count Three) .......................... 13 A. Plaintiff fails to state a claim for fraudulent inducement of the NDA .................. 13 B. Plaintiff’s fraudulent inducement claim is barred by the statute of limitations ............................................................................................................. 14 IV. Plaintiff’s fraud claim is barred by the statute of limitations (Count Four) ...................... 15 V. Plaintiff fails to state a claim for direct infringement of the ‘412 patent (Count Five) .................................................................................................................................. 15 A. The index finger is not used to manipulate the Accused Products’ alleged working device(s) .................................................................................................. 17 B. The working device is not manipulated “via a portion of the working device immediately adjacent to the handle opening” ........................................... 20 VI. Plaintiff fails to state a claim for indirect infringement of the ‘412 patent (Count Six) .................................................................................................................................... 23 VII. Plaintiff’s request for leave to amend should be denied ................................................... 25 CONCLUSION ............................................................................................................................. 25 Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 2 of 31 PageID 865 TABLE OF AUTHORITIES Page(s) i Cases Acromed Corp. v. Sofamor Danek Group Inc., 253 F.3d 1371 (Fed. Cir. 2001)................................................................................................12 American Vehicular Sci. LLC v. Mercedes-Benz U.S. Int’l, Inc., No. 13-cv-307, 2014 WL 10291478 (E.D. Tex. Feb. 7, 2014) ................................................24 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................................2, 25 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................................2, 25 BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59 (Tex. 2011) ........................................................................................................6 Bradley v. Phillips Petroleum Co., 527 F. Supp. 2d 625 (S.D. Tex. 2007) .......................................................................................4 Brown v. Joseph Cory Holdings, LLC, No. 4:13-cv-044-Y, 2014 WL 12585674 (N.D. Tex. June 30, 2014) ......................................13 Cody Texas, L.P. v. BPL Exploration, Ltd., 513 S.W.3d 522 (Tex. App. 2016) .............................................................................................6 Ferrer v. Chevron Corp., 484 F.3d 776 (5th Cir. 2007) ...............................................................................................2, 19 Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) ......................................................................................................13 Glue-Fold, Inc. v. Slautterback Corp., 98 Cal. Rptr. 2d 661 (Cal. App. 2000) .....................................................................................12 Guidry v. Bank of LaPlace, 954 F.2d 278 (5th Cir. 1992) .....................................................................................................2 Hooks v. Samson Lone Star, LP, 457 S.W.3d 52 (Tex. 2015) ......................................................................................................14 Lone Star Fund V (U.S.) LP v. Barclays Bank PLC, 594 F.3d 383 (5th Cir. 2010) .....................................................................................................3 Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) .................................................................................................................11 Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 3 of 31 PageID 866 TABLE OF AUTHORITIES (continued) Page(s) ii Maxtech Consumer Prods., Ltd. v. Robert Bosch Tool Corp. No. 15-C-5951, 2017 WL 2573033 (N.D. Ill. May 18, 2017) ...............................................7, 8 Meltzer/Austin Res. Corp. v. Benihana Nat’l Corp., No. 11-CV-542-LY, 2013 WL 12093755 (W.D. Tex. Jan. 31, 2013) .....................................14 Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430 (Tex. App.-Fort Worth 1997, pet. denied) ...................................................4 Pan-Islamic Trade Corp. v. Exxon, 632 F.2d 539 (5th Cir. 1980), cert. denied, 454 U.S. 927 (1981) ........................................2, 25 Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315 (Fed. Cir. 2016)................................................................................................23 PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79 (Tex. 2004) ........................................................................................................4 Santanna Nat. Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885 (Tex. App. 1997) .............................................................................................5 Scripps Research Inst. v. Illumina, Inc., No. 16-cv-661, 2016 WL 6834024 (S.D. Cal. Nov. 21, 2016) ..........................................15, 24 Shell Oil Co. v. Ross, 356 S.W.3d 924 (Tex. 2011) ................................................................................................6, 14 Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, LLC., 637 F.3d 604 (5th Cir. 2011) ...............................................................................................3, 12 United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899 (5th Cir. 1997) .....................................................................................................4 Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) ..........................................................................................2, 3, 5, 8 Vita-Mix Corp. v. Basic Holdings, Inc., 581 F.3d 1317 (Fed. Cir. 2009)..........................................................................................24, 25 Wang v. Palo Alto Networks, Inc., No. 121-05579, 2014 WL 1410346 (N.D. Cal. Apr. 11, 2014) .............................................6, 7 WesternGeco v. Ion Geophysical Corp., No. 09-cv-1827, 2009 WL 3497123 (S.D. Tex. Oct. 28, 2009) ................................................6 Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 4 of 31 PageID 867 TABLE OF AUTHORITIES (continued) Page(s) iii Williams v. WMX Techs., Inc., 112 F.3d 175 (5th Cir. 1997) .................................................................................................4, 5 Wright’s Well Control Servs., LLC v. Oceaneering Int’l, Inc., No. 15-1720, 2015 WL 7281618 (E.D. La. Nov. 16, 2015) ................................................9, 10 Statutes 35 U.S.C. § 111(b)(8) ......................................................................................................................3 35 U.S.C. § 112 ..............................................................................................................................11 35 U.S.C. § 271(c) .........................................................................................................................25 Cal. Code Civ. P. § 337..................................................................................................................12 Tex. Civ. Prac. & Rem. Code § 16.004(a)(4) ................................................................................14 Tex. Civ. Prac. & Rem. Code § 16.051 ...........................................................................................2 Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 5 of 31 PageID 868 INTRODUCTION For years, Acclarent, Inc. (“Acclarent”) paid Dr. Albritton to serve as a consultant on its Scientific Advisory Board and suggest improvements to Acclarent devices, improvements the parties’ Consulting Agreement established were to be owned by Acclarent. After Acclarent developed and patented its Relieva Spin Balloon Sinuplasty system, a design very different than the one that Dr. Albritton had conceived of before he began consulting for Acclarent, Dr. Albritton sued Acclarent for what boils down to his assertion that Acclarent incorporated his old ideas into its patent applications and Spin products. Pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), Acclarent respectfully moves to dismiss Plaintiff Dr. Ford Albritton IV’s First Amended Complaint (“FAC”). Despite amending them to avoid Acclarent’s previous motion to dismiss, Plaintiff’s six claims remain fatally flawed. The first four claims should be dismissed as barred by statute of limitations. Also, the claims regarding breach and fraudulent inducement of the 2007 Nondisclosure Agreement (“NDA”), should be dismissed both because the NDA fails to protect the allegedly misused information and because Plaintiff fails to identify with particularity any conduct that could have induced him to sign the NDA. Plaintiff’s fifth and sixth claims, for direct and indirect patent infringement, should be dismissed because they fail to plausibly allege infringement. Rather than alleging facts plausibly supporting direct or indirect infringement, the FAC presents facts proving Plaintiff’s infringement theories have no factual basis. Thus, Acclarent respectfully asks the Court to dismiss the FAC in its entirety under Rules 9(b) and 12(b)(6) without leave to amend. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 6 of 31 PageID 869 2 LEGAL STANDARD To survive a Rule 12(b)(6) motion, “a plaintiff must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). This requires “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. Indeed, dismissal under Rule 12(b)(6) is warranted when the complaint fails to state a claim that is factually plausible and legally viable even when all of its factual allegations are presumed to be true. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The Court need not presume “conclusory allegations, unwarranted factual inferences, or legal conclusions” to be true. Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007). Further, the severe nature of fraud allegations requires they be plead with particularity. Fed. R. Civ. P. 9(b); see also Guidry v. Bank of LaPlace, 954 F.2d 278, 288 (5th Cir. 1992). And a motion to dismiss may be granted without leave to amend where further amendment would be futile. See, e.g., Pan- Islamic Trade Corp. v. Exxon, 632 F.2d 539, 546 (5th Cir. 1980), cert. denied, 454 U.S. 927 (1981). ARGUMENT I. Plaintiff fails to state a claim for breach of the NDA (Count One) Plaintiff’s claim for breach of the NDA should be dismissed for two independent reasons: it is barred by the statute of limitations and the NDA never protected the subject information. A. Count One is barred by the statute of limitations Texas law, which governs the NDA (FAC, Ex. A at 2 [Dkt. 25-1 at 3]), requires that breach of contract claims be brought within four years of the claim accruing (Tex. Civ. Prac. & Rem. Code § 16.051), and “a breach of contract claim accrues when the contract is breached.” Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314-315 (Tex. 2006). But Plaintiff alleges breach of the NDA beginning in 2008, seven years before the filing of the Complaint or the execution of the parties’ Tolling Agreement. See, e.g., FAC ¶ 30 (“Acclarent’s [2008] provisional application Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 7 of 31 PageID 870 3 misappropriates and incorporates the ideas Dr. Albritton shared with Acclarent under the protections of the NDA”); id. ¶ 37 (“Acclarent misappropriated Dr. Albritton’s innovations, incorporating them into the Acclarent Provisional Application”); id. ¶ 60 (2016 Agreement). Thus, to survive this motion, the FAC must sufficiently raise one of the two tolling exceptions available under Texas law: the discovery rule or fraudulent concealment. It does not. 1. The discovery rule does not apply In Texas, the “discovery rule” exception to statutes of limitations applies if “the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable.” Via Net, 211 S.W.3d, at 313. Whether an injury is “inherently undiscoverable” is a legal question “decided on a categorical rather than case-specific basis.” Id. at 314. The Texas Supreme Court has cautioned that application of the discovery rule in breach of contract cases “should be rare, as diligent contracting parties should generally discover any breach during the relatively long four-year limitations period provided for such claims.” Id. at 315. This is not one of those rare cases. The FAC repeatedly cites Acclarent provisional application No. 61/098,157 (“the Acclarent ‘157 Application”), which allegedly “eventually issued as U.S. Patent No. 8,414,473”1 (“the ‘473 patent”) as purported evidence of breach. FAC ¶¶ 30-37. But on April 22, 2010 the United States Patent and Trademark Office (“USPTO”) published the patent application that claimed priority to the Acclarent ‘157 Application and issued as the ‘473 patent. Ex. 1, ‘473 patent at 1 [APPX.0004].2 Plaintiff should have discovered this alleged breach of contract by April 22, 2010 at the latest. See Tewari De-Ox Sys., Inc. v. Mountain 1 Provisional applications cannot issue as U.S. patents. See 35 U.S.C. § 111(b)(8). The ‘473 patent issued on a regular application that claimed priority to the provisional. See Ex. 1 at 1 [APPX.0004]. 2 The ‘473 patent (which Plaintiff requests assignment of as a remedy) may be considered as a document “central to the claim and referenced by the complaint.” See, e.g., Lone Star Fund V (U.S.) LP v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 8 of 31 PageID 871 4 States/Rosen, LLC., 637 F.3d 604, 612 (5th Cir. 2011) (“There can be no dispute that a published patent application, like a patent, is readily available”). 2. Plaintiff has not adequately plead fraudulent concealment Fraudulent concealment has four elements: “(1) the existence of the underlying [claim]; (2) the defendant’s knowledge of the [claim]; (3) the defendant’s use of deception to conceal the [claim]; and (4) the plaintiff’s reasonable reliance on the deception.” Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 439 (Tex. App.-Fort Worth 1997, pet. denied). Plaintiff bears the burden of establishing each element. Id. Plaintiff has not carried its burden. As a subspecies of fraud, fraudulent concealment must be plead with particularity under Rule 9(b). Bradley v. Phillips Petroleum Co., 527 F. Supp. 2d 625, 653 (S.D. Tex. 2007). In the Fifth Circuit, this requires “a plaintiff set forth the ‘who, what, when, where, and how of the alleged fraud.’” United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (citing Williams v. WMX Techs., Inc., 112 F.3d 175, 179 (5th Cir. 1997)). Thus, pleading “fraud with particularity requires a plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Williams, 112 F.3d at 177. Plaintiff’s scattershot allegations fall short. The FAC appears to allege ten Acclarent employees fraudulently concealed this claim from Plaintiff by silence or false statements. See FAC ¶¶ 48-53. But “mere silence is not fraudulent unless there is a duty to disclose,” such as the duty resulting from a fiduciary relationship. PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 98 (Tex. 2004). And Albritton’s reliance on the alleged false statements are mere conclusory allegations that fail to meet Rule 9(b)’s exacting standard. For example, despite accusing ten Acclarent employees of misconduct, not once does the FAC single out an allegedly false or misleading statement, “identify the speaker, state when and Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 9 of 31 PageID 872 5 where the statement[] [was] made, and explain why the statement[]” resulted in fraudulent concealment, i.e., that the speaker knew of the breach, used deception to conceal it, and that Plaintiff reasonably relied on such deception. Williams, 112 F.3d at 177. For the last element, reasonable reliance, the FAC pleads conclusory allegations based on the incorrect legal conclusion that any reliance absolves the duty of diligence. Compare FAC ¶ 100 (“Because he relied on the misrepresentations made by Swei, Harfe, Garfield, Smith, and Goldfarb . . . Dr. Albritton had no reason to review each of Acclarent’s published patent filings to verify that Acclarent had not misappropriated his inventions.”) with Via Net, 211 S.W.3d, at 314 (because “[c]ontracting parties are generally not fiduciaries . . . due diligence requires that each protect its own interests.”) The FAC even undermines its own allegations of deceptive intent because an Acclarent email it cites as evidence of deceptive intent was intentionally forwarded to Plaintiff by Acclarent. The FAC alleges Acclarent employees knew certain statements were “false when made” because they “would have known about Acclarent’s efforts to incorporate Dr. Albritton’s inventions into Acclarent Products,” citing an email from Acclarent employees Dan Harfe to Ryan Clark. FAC ¶ 53 (citing Ex. B). But the FAC earlier pleads that Clark forwarded the same email to Plaintiff. Id. ¶¶ 20-21 (also citing Ex. B), which negates any inference of deceptive intent by Acclarent. 3. Even if it applied, fraudulent concealment could not save this belated claim Even if the FAC had sufficiently plead fraudulent concealment, this “does not extend the statute of limitations indefinitely,” but “merely defers the statute of limitations until the plaintiff learns or in the exercise of reasonable diligence should have learned of the facts that give rise to its cause of action.” Santanna Nat. Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885, 891 (Tex. App. 1997). The FAC leaves no doubt reasonable diligence should have uncovered this cause of action by April 22, 2010. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 10 of 31 PageID 873 6 The FAC characterizes Plaintiff as an “innovator in the field of nasal and sinus surgery for over a decade” familiar with intellectual property law. See FAC ¶¶ 14, 16. Plaintiff was prosecuting his patent-in-suit the entire time Acclarent prosecuted its ‘473 patent. Compare Ex. 1, ‘473 patent [APPX.0004] (Acclarent filed provisional Sept. 18, 2008, patent issued April 9, 2013) with FAC, Ex. D, ‘412 patent [Dkt. 25-1 at 19] (Plaintiff filed provisional May 16, 2008, patent issued April 21, 2015). Texas courts have “repeatedly held that reasonable diligence obliges owners of property interests to make themselves aware of pertinent information available in the public record.” BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 67 (Tex. 2011); see also Shell Oil Co. v. Ross, 356 S.W.3d 924, 928-29 (Tex. 2011) (reasonable diligence required plaintiff to consult “publicly available records at the Texas General Land Office (GLO)” and “prices listed in the publicly- available El Paso Permian Basin Index”). If the plaintiff “could have discovered [defendant’s] wrongdoing by reviewing information available in the public record, or through means other than [defendant’s] representations before limitations expired, it did not exercise reasonable diligence.” Cody Texas, L.P. v. BPL Exploration, Ltd., 513 S.W.3d 522, 540 (Tex. App. 2016). These decisions involving oil and gas rights (i.e., real property) apply equally to intellectual property. Publication of a patent application provides constructive notice to those practicing and patenting in that field. See, e.g., Wang v. Palo Alto Networks, Inc., No. 121-05579, 2014 WL 1410346, at *6-9 (N.D. Cal. Apr. 11, 2014) (“surely publication of patents (and now patent applications) must be deemed, as a matter of law, to place those practicing in the same field and prosecuting their own patent applications in the same field on full notice of all of the contents of the publication.”); WesternGeco v. Ion Geophysical Corp., No. 09-cv-1827, 2009 WL 3497123, at *5 (S.D. Tex. Oct. 28, 2009) (“it is not unreasonable to expect that Ion would examine the public Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 11 of 31 PageID 874 7 records published under the PCT to determine what its colleagues around the world are inventing and accomplishing.”); Maxtech Consumer Prods., Ltd. v. Robert Bosch Tool Corp. No. 15-C-5951, 2017 WL 2573033 (N.D. Ill. May 18, 2017). Maxtech enumerated the circumstances leading to constructive notice as a matter of law, all of which are present here. Maxtech noted the contents of the defendant’s patent application, together with the short delay between the defendant’s receipt of plaintiff’s confidential information and patent application filing “made it obvious that [defendant] was attempting to patent the exact same technology.” See id. at *13; see also Wang, 2014 WL 1410346, at *6 (“it is crystal clear here that the contents of the ‘566 patent application revealed the alleged trade secrets in question.”). Here, the FAC alleges Acclarent “filed for patent protection on the inventions disclosed by Dr. Albritton almost immediately after receiving those inventions from Dr. Albritton” (FAC ¶ 93)3 and that his contributions to Acclarent’s ‘473 patent were substantial and obvious. Compare id. ¶ 31 (alleging Plaintiff contributed “single handed control of the device” to Acclarent’s patent); with id. ¶ 45 (alleging “Acclarent had not developed a single-handed surgical catheter”). Maxtech also pointed to the plaintiff’s own prosecution of his patents at the time when the defendant’s patent application published. 2017 WL 2573033, at *13. Here, Plaintiff was not just prosecuting his ‘412 patent, but also trying to commercialize it, like the plaintiff in Wang. Compare FAC Ex. J (“we need to know whether Acclarent wants to forge on with us to completing the process of IP rights and engineered manufacture or whether we should solicit other med device companies to proceed”) with Wang, 2014 WL 1410346, at *7 (“Wang must be presumed to have 3 The FAC alleges Plaintiff provided his provisional patent application to Acclarent on June 11, 2008, and that Acclarent filed its provisional application on September 18, 2008. Id. ¶¶ 29-30. The FAC fails to note that on June 6, 2008 Plaintiff began consulting under the Consulting Agreement on developing, modifying and improving Acclarent’s products and that under the Consulting Agreement his “designs, inventions, improvements, developments, discoveries and trade secrets” resulting from that work were assigned to Acclarent. FAC, Ex. F § 3.A [Dkt. 25-1 at 37]. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 12 of 31 PageID 875 8 been monitoring patent applications in his own field, for at the time, he was prosecuting his own patent application with the PTO, looking for potential business collaborations, and trying to commercialize and license his technologies.”). Moreover, the unique facts here provide the strongest support for charging Plaintiff with constructive notice of Acclarent’s patent application. Plaintiff alleges “Acclarent initially attempted to procure information from Dr. Albritton without the protection of the NDA, but agreed to sign the NDA when Dr. Albritton refused to share information regarding his innovations without it.” FAC ¶ 93. Plaintiff also alleges Acclarent’s initial draft of the Consulting Agreement “would have given Acclarent a royalty-free license to Dr. Albritton’s pre-existing inventions” but Plaintiff “refused to agree to that provision, in part because of the provisional patent application he had already filed.” Id. ¶ 25. Plaintiff then allegedly provided Greg Garfield with a copy of his provisional patent application on June 11, 2008. Id. ¶ 29. On March 31, 2009, in response to Plaintiff’s email “regarding a license to his pending ‘412 Patent,” Mr. Garfield responded “[m]ore recently, we have also developed another new and unique guide with suction, for which we recently filed an additional patent application,” and “declined to take a license” to any patent rights from Plaintiff. Id. ¶¶ 47-48; FAC, Ex. J at 1-3 [Dkt. 25-1 at 117-19]. In light of these circumstances-Acclarent’s alleged behavior leading up to execution of the NDA and Consulting Agreement, Mr. Garfield’s purported rejection of a license because Acclarent “recently filed an additional patent application,” and the timing of that filing (its proximity to Acclarent’s receipt of Plaintiff’s provisional patent application)-coupled with Plaintiff’s ongoing prosecution of his ‘412 patent, Plaintiff simply “had no good reason not to periodically check for relevant [patent] filings.” Maxtech, 2017 WL 2573033, at *14. And at a minimum, reasonable diligence implored Plaintiff to request a copy of Acclarent’s patent Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 13 of 31 PageID 876 9 application from Mr. Garfield. See Via Net, 211 S.W.3d, at 314 (“failing to even ask for such information is not due diligence.”) B. The NDA does not protect the allegedly misappropriated information Even if Plaintiff’s NDA breach claim were not barred, it still must fail because the NDA fails to cover any of the subject matter allegedly misappropriated for two reasons. First, the NDA carves out from its protection any information Plaintiff later patented. The FAC ignores the NDA’s definition of “Confidential Information,” which excludes “any information which . . . (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party.” FAC, Ex. A § 1 [Dkt. 25-1 at 2]. Under this definition, any information that subsequently “becomes publicly known and made generally available” through no fault of Acclarent is not “Confidential Information” and was never protected by the NDA. A recent decision applying Texas law to a similar provision illustrates this point. See Wright’s Well Control Servs., LLC v. Oceaneering Int’l, Inc., No. 15-1720, 2015 WL 7281618, at *6 (E.D. La. Nov. 16, 2015) (in interpreting similar non-disclosure agreement language, the court held “[i]f, at any point, an informational item ‘falls within the public domain,’ the effect is that the item was never protected by the NDA at all. So the recipient is not merely absolved of an existing contractual duty to protect and keep the item confidential; rather, the recipient never had any such duty in the first place.”). The FAC alleges Acclarent misappropriated information from, or information that was otherwise reflected in, Plaintiff’s provisional patent application No. 61/127,848 (FAC, Ex. C) (“the ‘848 Application”). FAC ¶¶ 32-37. The ‘848 Application became “publicly known and made generally available . . . through no action or inaction” of Acclarent because it was incorporated into Plaintiff’s subsequent non-provisional patent application leading to the ‘412 patent both Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 14 of 31 PageID 877 10 literally4 and by reference. FAC, Ex. D, ‘412 patent at 1:14-18 [Dkt. 25-1 at 23] (incorporating ‘848 Application by reference). And the non-provisional patent application published March 4, 2010, making it publicly available. Wright’s Well Control Servs., 2015 WL 7281618 at *7 (it “is undisputed that ‘a published patent application, like a patent, is readily available.’”). In sum, the ‘848 Application became publicly available as of March 4, 2010, and all information contained within was never protected by the NDA. Second, the consulting agreement signed on “December 18, 2008, with an effective date of June 6, 2008” (FAC ¶ 26) (the “Consulting Agreement”) expressly “supersedes all prior written and oral agreements between the parties” regarding its subject matter, which includes confidentiality. FAC Ex. F, § 10.C [Dkt. 25-1 at 41.] Because the Consulting Agreement-which superseded the NDA-was in effect June 11, 2008 when Plaintiff allegedly provided Acclarent a copy of the ‘848 Application (FAC ¶ 29), the Consulting Agreement provides another reason that the information in Plaintiff’s ‘848 Application was not covered by the NDA. Given these two restrictions on the NDA’s coverage, Count One only survives if the information “regarding Dr. Albritton’s tactile feedback improvements”-the only information the FAC alleges Plaintiff declined to patent (see FAC ¶¶ 29, 38-41)5-was provided to Acclarent before June 6, 2008. But the FAC establishes Plaintiff’s “tactile feedback improvements” were shared with Acclarent during the June 11, 2008 meeting along with the ‘848 Application, leaving 4 Compare FAC, Ex. C, ‘848 Application [Dkt. 25-1 at 7-17] with ‘412 patent [Dkt. 25-1 at 18-26]. 5 The ‘848 Application itself shows that the FAC is incorrect in suggesting that it did not disclose the concept of Plaintiff’s “tactile feedback improvements” by direct access to the working device. See FAC, Ex. C ¶ 12 [Dkt. 25-1 at 12.] (“The fore finger and thumb are left free to manipulate a working device inserted into the opening”); id. at Fig. 5. And the alleged “tactile feedback improvements” feature that Plaintiff contributed during Consulting Agreement work, the “Albritton-hole,” is used only in the Balloon Slider of the Relieva Spin, not the SpinPlus. Compare, e.g., FAC ¶43 and ¶119. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 15 of 31 PageID 878 11 them both outside the NDA’s time window. Id. ¶ 29. Because the NDA fails to cover any of the subject matter allegedly misappropriated, Count One should be dismissed in its entirety. C. Acclarent cannot have breached the NDA by failing to assign or list Plaintiff as an inventor to the ‘473 patent In the event Count One is not dismissed for the reasons above, Plaintiff’s allegations that Acclarent breached the NDA by not assigning the ‘473 patent or listing Plaintiff as a co-inventor to the ‘473 patent must still fail as a matter of law. FAC ¶¶ 70-72. Plaintiff’s allegations in this regard are premised upon the NDA’s provision that upon breach “by using the other party’s Confidential Information in a non-permissible way, any inventions, improvements, or other intellectual property resulting from such non-permissible use will be the property of the non- breaching party.” FAC, Ex. A § 2 [Dkt. 25-1 at 2]. It is axiomatic that the claims of a patent define the scope of the invention. Markman v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996) (“a patent includes one or more ‘claims,’ which ‘particularly poin[t] out and distinctly clai[m] the subject matter which the applicant regards as his invention.”) (quoting 35 U.S.C. § 112). Although the FAC alleges “Acclarent breached the NDA by incorporating Dr. Albritton’s pre-existing intellectual property into the patent applications that eventually issued as the ‘473 patent” (FAC ¶ 70), it never alleges the claims of the ‘473 patent “result[ed] from” Plaintiff’s purported confidential information. Nor could it plausibly have done so, because the ‘473 patent claims require none of Plaintiff’s purported preexisting intellectual property. Indeed, to the extent they specify details, the ‘473 patent claims require using a “slide member,” “device advancing member,” or “guidewire advancing member” to advance the guidewire, which cannot rely on the specification’s disclosure of providing “the index finger and thumb” with “direct access to the guidewire” for “giving full tactile feel.” Compare Ex. 1, ‘473 Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 16 of 31 PageID 879 12 patent at claims 1-32 [APPX.0056-57] with id. at 17:45-57 [APPX.0049]. Thus, any argument that the NDA assigns the ‘473 patent to Plaintiff fails as a matter of law. Likewise, Acclarent could not have breached the NDA by failing to list Plaintiff as a co- inventor on the ‘473 patent. To be a co-inventor, Plaintiff “must have contributed to the conception of the invention.” Acromed Corp. v. Sofamor Danek Group Inc., 253 F.3d 1371, 1379 (Fed. Cir. 2001). Because the FAC fails to plausibly show that Plaintiff contributed to conception of a claimed invention of the ‘473 patent, this aspect of the breach claim fails as a matter of law. II. Plaintiff’s claim for breach of the Consulting Agreement is barred by the statute of limitations (Count Two) California law governs the Consulting Agreement. FAC, Ex. F § 10.A [Dkt. 25-1 at 41]. Like Texas, California has a four-year statute of limitations for breach of contract claims (see Cal. Code Civ. P. § 337), and the statute of limitations begins running when “a cause of action accrues, i.e., all essential elements are present and a claim becomes legally actionable.” Glue-Fold, Inc. v. Slautterback Corp., 98 Cal. Rptr. 2d 661, 668 (Cal. App. 2000). As with the NDA, the FAC alleges breach of the Consulting Agreement as early as 2008, meaning this claim is also barred by the statute of limitations. See, e.g., FAC ¶ 30 (“Acclarent’s provisional application [filed September 18, 2008] misappropriates and incorporates the ideas Dr. Albritton shared with Acclarent under the protections of . . . the Consulting Agreement”); id. ¶ 82 (alleging breach of the Consulting Agreement arising out of “using Dr. Albritton’s confidential information to apply for patent protection”). Count Two is further time-barred in view of the April 22, 2010 publication of the patent application arising from the Acclarent ‘157 Application, and Mr. Garfield’s March 31, 2009 email informing Plaintiff that Acclarent had filed a patent application. See Tewari De-Ox Sys., Inc., 637 F.3d at 612; see also, supra, Section I.A. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 17 of 31 PageID 880 13 III. Plaintiff fails to state a claim for fraudulent inducement (Count Three) Plaintiff’s claim for fraudulent inducement should be dismissed because it is barred by the statute of limitations, and as to the NDA, fails to satisfy the heightened pleading requirements applicable to fraud allegations. A. Plaintiff fails to state a claim for fraudulent inducement of the NDA Nothing identified in the FAC could have fraudulently induced Plaintiff to enter into the NDA because the NDA was executed on June 12, 2007 and Plaintiff previously identified May 19, 2008 as the date “Acclarent began to defraud Dr. Albritton.” Dkt. 17 at 11. Thus, Plaintiff’s fraudulent inducement claim as to the NDA fails as a matter of law. See Brown v. Joseph Cory Holdings, LLC, No. 4:13-cv-044-Y, 2014 WL 12585674, at *6 (N.D. Tex. June 30, 2014) (dismissing fraudulent inducement claim when alleged misrepresentations occurred after plaintiff entered into contract). The FAC, recognizing this error, now alleges Mr. Garfield “agreed to enter the NDA with Dr. Albritton, representing that Acclarent would not use his confidential information for any improper purpose.” FAC ¶ 16. However, this conclusory allegation fails to meet Rule 9(b) because it fails to identify the actual statement6 and state exactly when and where this statement was made. It also fails to identify how this representation-which simply describes the NDA- was fraudulent, given “mere failure to perform a contract is not evidence of fraud.” Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). 6 The FAC’s failure to identify the actual statement made by Mr. Garfield is problematic because it leaves ambiguous whether Plaintiff alleges an actual statement was made, or whether Acclarent’s execution of the NDA was inherently fraudulent. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 18 of 31 PageID 881 14 B. Plaintiff’s fraudulent inducement claim is barred by the statute of limitations Texas law applies to Plaintiff’s fraudulent inducement claim for both the NDA and the Consulting Agreement. Meltzer/Austin Res. Corp. v. Benihana Nat’l Corp., No. 11-CV-542-LY, 2013 WL 12093755, at *3 (W.D. Tex. Jan. 31, 2013) (applying Texas law to “fraud and other tort claims” over provision that “Agreement shall be governed by and construed in accordance with” New York law). Texas applies a four-year statute of limitations to claims based on fraud. Tex. Civ. Prac. & Rem. Code § 16.004(a)(4). While claims typically accrue (and statutes of limitations begin) “when facts come into existence that authorize a claimant to seek a judicial remedy,” for fraud, the statute of limitations “does not start to run until the fraud is discovered or the exercise of reasonable diligence would discover it.” Hooks v. Samson Lone Star, LP, 457 S.W.3d 52, 57 (Tex. 2015) (citations omitted). “The same rule applies to claims of fraudulent inducement” because “[f]raudulent inducement is a subspecies of fraud.” Id. Although what constitutes “reasonable diligence is an issue of fact . . . in some circumstances, we can still determine as a matter of law that reasonable diligence would have uncovered” the fraud. Id. at 58. For instance, when “information is ‘readily accessible and publicly available,’ then, as a matter of law, the accrual of a fraud claim is not delayed.” Id. at 59 (quoting Shell Oil Co., 356 S.W.3d, at 929). Here, Plaintiff’s fraudulent inducement claim relies on Acclarent’s provisional application and corresponding ‘473 patent. See FAC ¶ 95. As explained in Section I.A, the non-provisional application leading to the ‘473 patent was published on April 22, 2010, and reasonable diligence by Plaintiff should have uncovered this application around that timeframe. Thus, Plaintiff’s fraudulent inducement claim should be barred. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 19 of 31 PageID 882 15 IV. Plaintiff’s fraud claim is barred by the statute of limitations (Count Four) Plaintiff’s allegations of fraud similarly depend on subject matter found in Acclarent’s ‘473 patent. Plaintiff alleges Acclarent “was under a duty to disclose any and all use of [Plaintiff’s confidential information,] including in particular the use of such information to apply for patent protection” and “was using [Plaintiff’s confidential information] for Acclarent’s own purposes, namely filing for patent protection.” FAC ¶¶ 102-103 (emphasis added). Plaintiff also alleges Acclarent did not “honor its commitment to list Dr. Albritton as a co-inventor on the Acclarent Provisional Application or the ‘473 patent.” Id. ¶ 103. For the same reasons set forth with respect to fraudulent inducement (see, supra, Section III.B), Plaintiff’s fraud claim is barred by the statute of limitations. Again, the application resulting in the ‘473 patent was published on April 22, 2010, and Mr. Garfield notified Plaintiff on March 31, 2009 that Acclarent had filed a patent application. Reasonable diligence (i.e., examining the public record) would have uncovered then what Plaintiff belatedly alleges now-that Acclarent used Plaintiff’s allegedly confidential information to file for patent protection and that Plaintiff was not listed as a co-inventor on the Acclarent Provisional Application or the ‘473 patent. V. Plaintiff fails to state a claim for direct infringement of the ‘412 patent (Count Five) Under Fed. R. Civ. P. 8(a), a patentee “must plausibly allege that a defendant directly infringes each limitation in at least one asserted claim.” Scripps Research Inst. v. Illumina, Inc., No. 16-cv-661, 2016 WL 6834024, at *5 (S.D. Cal. Nov. 21, 2016). The FAC’s allegations that “the Relieva Devices marketed under the trade names Relieva Spin® and Relieva SpinPlus®” (the “Accused Products”) infringe the ‘412 patent are not plausible. Indeed, the allegations are so flawed they demonstrate why the Accused Products cannot infringe. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 20 of 31 PageID 883 16 The ‘412 patent claims require a handle “configured to allow a position of the guide catheter to be controlled by some or all of three fingers of one hand” (claims 1-7 and 14-20) or “controlling a position of the guide catheter using the handle that is formed to allow the position of the guide catheter to be controlled by some or all of three fingers of a hand” (claims 8-13). The claims also require a handle “adapted to permit the operator to position a thumb and index finger of the hand to manipulate [the, a] working device via a portion of the working device immediately adjacent to the handle opening” (claims 1-7, 14-20) or “manipulating the working device with a thumb and index finger of the hand via a portion of the working device immediately adjacent to the handle opening” (claims 8-13). The ‘412 patent’s specification explains that the “user holds the handle . . . in a hand by some or all of the small finger, ring finger and the middle finger” while the “forefinger and thumb are left free to manipulate a working device inserted into the opening . . . .” ‘412 patent at 4:61- 5:2. The disclosed angled handle “facilitates the user’s manipulation of the working devices with the thumb and forefinger of a hand while grasping the handle with some or all of the remaining fingers of the hand.” Id. at 5:8-13. That is, the angled handle places “the user’s thumb and forefinger in comfortable proximity to the opening . . . and the handle [is] shaped to permit easy motion of the thumb and forefinger towards and away from the opening . . . while securely grasping a working device inserted through the handle . . . .” Id. at 5:13-18. In other words, the ‘412 patent claims all require any infringing product to be adapted to permit an operator to (claims 1-7 and 14-20), or actually be used to (claims 8-13), manipulate a “working device” (1) with “a thumb and index finger of the hand” (2) “via a portion of the working device immediately adjacent to the handle opening.” Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 21 of 31 PageID 884 17 The ‘412 patent’s provisional application shows an example of a surgical device adapted to permit an operator to manipulate “working device” with “a thumb and index finger of the hand” “via a portion of the working device immediately adjacent to the handle opening.” FAC, Ex. C, Figs. 4-5 [Dkt. 25-1 at 16-17]. A. The index finger is not used to manipulate the Accused Products’ alleged working device(s) The FAC fails to plausibly allege that the operator’s thumb and index finger are used to manipulate the working devices. Only five components of the Accused Products are relevant to the present issue: the “Sinus Illumination System,” “Sinus Balloon Catheter,” “Balloon Slider,” “Wire Spinner,” and “Wire Slider.” The FAC and its exhibits show the location and functions of these five components: the Wire Slider and Wire Spinner control the Sinus Illumination System (a fiberoptic light that shines from the tip of the “guidewire”), while the Balloon Slider controls the Sinus Balloon Catheter. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 22 of 31 PageID 885 18 FAC, Ex. H at 2 [Dkt. 25-1 at 111] (Relieva Spin). FAC, Ex. M at 2 [Dkt. 25-1 at 147] (Relieva SpinPlus). The FAC establishes that only the operator’s thumb-never the index finger-controls the position of the Sinus Balloon Catheter and Sinus Illumination System. The Relieva Spin Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 23 of 31 PageID 886 19 Marketing Brochure reproduced in the FAC states the user can “[s]imply steer” the Relieva Spin illumination system “with your thumb.” FAC ¶¶ 116-17, 127, 130, 134-35. Likewise, the Relieva Spin Marketing Brochure describes the Wire Spinner and Wire Slider as an “[e]longated tactile thumb wheel to easily gain thumb purchase” (id. ¶¶ 116, 121, 127, 131, 138), and describes the Relieva SpinPlus sliders as having “[e]nlarged slider surface area for greater thumb purchase.” Id. ¶¶ 118, 130, 136. The FAC also shows the user controlling the SpinPlus Balloon Catheter by applying the thumb to the Balloon Slider (id. ¶¶ 119, 137) and controlling the Relieva Spin Guide Catheter by applying the thumb to the Wire Slider: FAC ¶¶ 119, 137. FAC ¶¶ 43, 122, 124; Ex. H at 1. Acclarent’s original motion to dismiss raised this same issue, and in its second bite at the apple, Plaintiff now makes the conclusory allegation that the “Balloon Slider, Wire Spinner, and Wire Slider of the Relieva Devices are manipulated by the operator’s thumb, the operator’s forefinger, and the operator’s thumb and index finger (simultaneously).” FAC ¶ 122. But this unsupported, conclusory allegation contradicts the marketing materials shown in the FAC and thus carries no weight. See Ferrer, 484 F.3d at 780. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 24 of 31 PageID 887 20 The FAC attempts to support its conclusory allegation by asserting that “even when an operator uses the thumb (as advertised) to manipulate the Balloon Slider or the Wire Slider, the operator also uses his or her forefinger to apply oppositional force and stabilizing force that is part of the manipulation of the working device as illustrated below.” FAC ¶ 122. But Plaintiff’s argument that the forefinger applies “oppositional force and stabilizing force” is just a fancy way of saying that the index finger, along with the other fingers, holds the Accused Product’s handle; the index finger could not apply “oppositional force and stabilizing force” without doing so. The FAC’s images of the Accused Products in use confirm that the index finger contacts the handle- not the working device. Because the FAC shows that the Accused Devices are not “adapted to permit the operator to position a thumb and index finger of the hand to manipulate [the, a] working device via a portion of the working device” (claims 1-7, 14-20) or “manipulating the working device with a thumb and index finger of the hand via a portion of the working device” (claims 8- 13), Plaintiff has again failed to allege a plausible claim of infringement. B. The working device is not manipulated “via a portion of the working device immediately adjacent to the handle opening” The original Complaint failed to even identify the “handle opening” (and by extension, which portion of the working device was manipulated immediately adjacent to such opening), but Plaintiff now contends the “‘Balloon Slider’ and ‘Wire Spinner and Wire Slider’ are examples of a portion of the working device immediately adjacent to the handle opening,” identifying the slot in which they “all travel along and abut” as the handle opening. FAC ¶ 124. Plaintiff contends the image below depicts this handle opening (id.): Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 25 of 31 PageID 888 21 The ‘412 patent claims require “a handle opening” and either a “working device adapted to be insertable through the handle opening into the lumen of the guide catheter” (claims 1-7), “inserting a working device through a handle opening . . . into the lumen of the guide catheter (claims 8-13), or that “the working device is inserted through the handle opening into the lumen of the shaft” (claims 14-20). The patent claims also require that the structure be adapted to permit the user to manipulate, or that the user actually manipulate, “the working device via a portion of the working device immediately adjacent to the handle opening.” The ‘412 patent’s specification gives examples of working devices, such as a guidewire, endoscope, cutter, or balloon catheter (‘412 patent at 3:15-16, 4:8) and handle openings (Fig. 2, designated by 216; Fig. 3, designated by 318), and shows a balloon catheter working device inserted through the handle opening. Id. at Fig. 4; 4:32-33 (“With reference to FIG. 4, a balloon catheter 454 has been inserted into the opening 318”). The ‘412 patent’s provisional application shows an example of a surgical device adapted to permit the user to manipulate the “working Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 26 of 31 PageID 889 22 device” with “a thumb and index finger of the hand” “via a portion of the working device immediately adjacent to the handle opening.” FAC Ex. C, Figs. 4-5 [Dkt. 25-1 at 16-17]. Rather than permitting the user “to manipulate the working device via a portion of the working device immediately adjacent to the handle opening,” the Accused Products interpose implements (the Balloon Slider, Wire Spinner, and Wire Slider) that slide in a track between the working devices and the user’s thumb and forefinger. That the Balloon Slider and the Wire Spinner and Wire Slider are attached to the Balloon Catheter and guidewire, respectively, does not mean they are part of those working devices any more than their being attached to the handle makes them part of the handle. Indeed, the ‘412 patent claims make clear that working devices must be inserted or adapted to be inserted through the handle opening into the lumen of the guide catheter, and the Balloon Slider, Wire Spinner, and Wire Slider are not inserted into the lumen of the guide catheter. See, e.g., ‘412 patent at claims 1-7 (“a working device adapted to be insertable through the handle opening into the lumen of the guide catheter); claims 8-13 (“inserting a working Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 27 of 31 PageID 890 23 device through a handle opening . . . into the lumen of the guide catheter”); claims 14-20 (“the working device is inserted through the handle opening into the lumen of the shaft”). Likewise, the ‘412 patent repeatedly stresses that the forefinger and thumb “manipulate” or “control” the working device, as shown in the provisional application’s Figure 5. See ‘412 patent at 4:67-5:2 (manipulating working device); id. at 5:10-11 (same); id. at 5:26-27 (controlling working device) [Dkt. 25-1 at 24-25]; see also id. at Fig. 5. And this “direct access to the guidewire [with “the index finger and thumb”] giving full tactile feel during advance and steering of the guidewire” is the very “invention” that Plaintiff accuses Acclarent of improperly including in its patent application. FAC ¶ 41 (citing Ex. G ¶ 92). By denying the user direct access to the working device, Acclarent’s Accused Products cannot meet the limitation requiring permitting the user “to manipulate the working device via a portion of the working device immediately adjacent to the handle opening,” and so the Accused Products cannot directly infringe for a second reason. VI. Plaintiff fails to state a claim for indirect infringement of the ‘412 patent (Count Six) Plaintiff fails to state a claim for inducement of infringement or contributory infringement. For inducement, Plaintiff must show “(1) a third party directly infringed the asserted claims of [the ‘412 patent]; (2) [Acclarent] induced those infringing acts; and (3) [Acclarent] knew the acts it induced constituted infringement.” Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315, 1332 (Fed. Cir. 2016). The FAC fails to plausibly allege any of these elements. Plaintiff alleges that Acclarent induces infringement through marketing materials, instructions, etc. that encourage or cause health care professionals to use Accused Products in a manner that infringes the ‘412 patent. FAC ¶ 148; see also id. ¶¶ 147, 149. But contrary to Plaintiff’s allegations, the FAC fails to plead facts giving rise to a reasonable inference that Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 28 of 31 PageID 891 24 Acclarent induced acts of direct infringement, that the Accused Products directly infringe, or that Acclarent knew the acts it induced constituted infringement. First, Count Six should be dismissed as to inducement because Plaintiff fails to plausibly allege that the Accused Products or any user of the Accused Products directly infringes the asserted claims of the ‘412 patent. See, supra, Section V; Scripps Research Inst., 2016 WL 6834024, at *7 (“Because the Court has already concluded that Plaintiff has failed to state a claim for direct infringement, Plaintiff’s claims for induced infringement must fail as well.”). Second, Plaintiff fails to plead facts giving rise to a plausible inference that Acclarent induced others to infringe because nothing in the “instructions for use,” advertising, or marketing materials for Accused Products referenced in the FAC suggests positioning a “thumb and index finger” of a hand to manipulate “a portion of the working device immediately adjacent to the handle opening.” To the contrary, to the extent those documents instruct third parties how to use the Accused Products, they instruct users to manipulate working devices using their thumbs alone, as explained in Section V.A and shown in the images above. Thus, Count Six should be dismissed as to inducement for failing to plead facts giving rise to a plausible inference that Acclarent induced others to infringe. See American Vehicular Sci. LLC v. Mercedes-Benz U.S. Int’l, Inc., No. 13-cv- 307, 2014 WL 10291478, at *4 (E.D. Tex. Feb. 7, 2014) (allegations of inducement stemming from “‘detailed explanations, instructions, and information’ concerning the alleged products” failed to “establish a plausible inference that Defendants had the specific intent to induce its customer’s actions, and knowledge that those actions amounted to infringement.”) Moreover, the threshold for establishing a plausible inference of intent to induce infringement should be especially high here, where the FAC concedes a substantial non-infringing use of the Accused Products. See Vita-Mix Corp. v. Basic Holdings, Inc., 581 F.3d 1317, 1320 (Fed. Cir. 2009) Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 29 of 31 PageID 892 25 (“Especially where a product has substantial non-infringing uses, intent to induce infringement cannot be inferred even when the defendant has actual knowledge that some users of its product may be infringing the patent.”). Plaintiff’s allegations as to contributory infringement (FAC ¶¶ 150-55) fare no better. Similar to its allegations regarding intent for inducement, Plaintiff’s contributory infringement allegations merely recite legal conclusions without alleging any supporting facts. Compare id. ¶ 151 with 35 U.S.C. § 271(c) (statutory provision for contributory infringement). Again, such “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements” are insufficient. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). Moreover, the FAC demonstrates the falsity of Plaintiff’s allegation by identifying only examples of the Accused Products being used in a noninfringing manner, i.e., the manner explained above in Section V. Such uses are substantial noninfringing uses that preclude a finding of contributory infringement. See 35 U.S.C. § 271(c); Vita-Mix Corp., 581 F.3d at 1327 (“non- infringing uses are substantial when they are not unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental”). Thus, Plaintiff’s claim for contributory infringement should also be dismissed. VII. Plaintiff’s request for leave to amend should be denied Plaintiff already has amended in an attempt to cure the very deficiencies identified in this motion, so any request for further amendment would be futile, and should be denied. See, e.g., Pan-Islamic Trade, 632 F.2d at 546 (denying leave to make futile amendment). CONCLUSION Acclarent respectfully requests dismissal of Plaintiff’s FAC without leave to amend. Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 30 of 31 PageID 893 26 Dated: July 5, 2017 Respectfully submitted, COUNSEL FOR DEFENDANT /s/ Andrew Lin William B. Dawson TX State Bar No. 05606300 wdawson@gibsondunn.com Tracey B. Davies TX State Bar No. 24001858 tdavies@gibsondunn.com Andrew Lin TX State Bar No. 24092702 alin@gibsondunn.com GIBSON DUNN & CRUTCHER, LLP 2100 McKinney Ave, Suite 1100 Dallas, Texas 75201 Telephone: 214.698.3100 Facsimile: 214.571.2900 William C. Rooklidge CA State Bar No. 134483 wrooklidge@gibsondunn.com Frank P. Cote CA State Bar No. 204529 fcote@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 3161 Michelson Drive, Suite 1200 Irvine, California 92612 Telephone: 949.451.3800 Facsimile: 949.451.4220 CERTIFICATE OF SERVICE I hereby certify that on the 5th day of July, 2017, a true and correct copy of the foregoing document was served upon all counsel of record via the Court’s ECF system. /s/ Andrew Lin Andrew Lin Case 3:16-cv-03340-M Document 27 Filed 07/05/17 Page 31 of 31 PageID 894