Bedrock Computer Technologies, LLC v. Softlayer Technologies, Inc. et al

RESPONSE in Opposition re MOTION to Dismiss for Failure to State a Claim

E.D. Tex.September 24, 2009

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION BEDROCK COMPUTER TECHNOLOGIES, LLC Plaintiff, vs. SOFTLAYER TECHNOLOGIES, INC., et al. Defendants. § § § § § § § § § § § CASE NO. 609 CV 269 Jury Trial Demanded PLAINTIFF’S RESPONSE TO MYSPACE, AMAZON.COM, AOL, CME GROUP, AND YAHOO!’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (DKT. NO. 71) The Complaint here breaks no new ground. Like scores of other patent cases filed in this District, the Complaint here accuses the a group of defendants of patent infringement in the United States, identifies a specific patent, recognizes the Court’s jurisdiction, and prays for damages and injunctive relief. Yet MySpace Inc., Amazon.com Inc., AOL LLC, CME Group Inc., and Yahoo! Inc. (collectively, “Movants”) treat Bedrock Computer Technologies, LLC’s (“Bedrock”) Complaint as something revolutionary, and somehow improper. Movants argue that Twombly and Iqbal changed all the rules and require a detailed pleading standard in patent cases that Bedrock failed to meet in its Complaint. The instant Complaint, which tracks the form patent complaint found in the Federal Rules, does not offend Twombly or Iqbal. The Federal Circuit explicitly considered patent complaints in light of Twombly, and found that compliance with the sample forms in the Federal Rules were sufficient to put a defendant on notice of the claims asserted against him. This Bedrock Computer Technologies, LLC v. Softlayer Technologies, Inc. et al Doc. 84 Dockets.Justia.com 2 conclusion is not surprising: unlike patent cases, the Federal Rules do not provide sample forms⎯or any other explicit guidance⎯for the antitrust and Bivens claims at issue in Twombly and Iqbal. It is hard to imagine that a sample form, provided with the Federal Rules, would fail to comply with the notice standards required by the selfsame rules. These considerations apply with greater force in this Court, where patent holders are forced to tip their hands early in discovery. The Court has ordered Bedrock to provide detailed infringement contentions four days after the status conference. These infringement contentions specifically identify the accused instrumentalities and compare those accused instrumentalities to the asserted claims of the patent-in-suit on an element-by-element basis. While Movants might prefer to receive such information along with the Complaint, such information is not included in the form pleading for patent cases, and is certainly not required to provide “fair notice” of Bedrock’s claims under Rule 8. Bedrock’s Complaint provides fair notice under the Federal Rules; thus, the Court should deny Movants’ Motion to Dismiss in its entirety.1 I. STANDARD OF REVIEW Motions to dismiss are purely procedural questions that do not pertain to patent law. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356 (Fed. Cir. 2007). For this reason, courts apply the law of regional circuits to determine if “in the light most favorable to the plaintiff, the complaint states a valid claim for relief.” Id. at 1356 (citing Copeland v. Wasserstein, Perella & Co., 278 F.3d 472, 477 (5th Cir. 2002)). 1 For the Court’s convenience, Bedrock notes that a very similar issue is presented before the Court in i2 Technologies, Inc., and i2 Technologies US, Inc., v. Oracle Corporation, and Oracle USA, Inc., Civil Action No. 6:09-CV-194-LED (Dkt. Nos. 14, 16, 32, and 33). 3 A motion to dismiss under Rule 12(b)(6) is generally “viewed with disfavor and is rarely granted.” FotoMedia Tech., LLC v. AOL, No. 2:07-CV-255, 2008 WL 4135906, at *1 (E.D. Tex. Aug. 29, 2008) (Ward, J.) (citing Lowrey v. Texas A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997)). Similarly, motions for a more definite statement are “considered in light of the liberal pleading standards of Rule 8(a)” and are “denied if the detail of information sought by the motion . . . is obtainable through discovery.” PA Advisors, LLC v. Google Inc., No. 2:07-CV- 480, 2008 U.S. Dist. LEXIS 71285, *20 (E.D. Tex. Aug. 7, 2008) (Folsom, J.). II. ARGUMENT AND AUTHORITIES A. Rule 8 Requires Only a Short and Plain Statement Showing Entitlement to Relief The Federal Rules include Forms in an appendix that serve as guidelines for drafting complaints, including complaints for patent infringement. FED. R. CIV. P. app. Form 18. The Federal Rules state that these Forms are examples of the brevity and simplicity of the pleading requirements. FED. R. CIV. P. 84. These Rules and Forms have long been relied on by plaintiffs when filing complaints for patent infringement in the Eastern District of Texas and other Federal jurisdictions. For patent cases, the crux of the Complaint requires less than two dozen lines: 4 FED. R. CIV. P. app. Form 18; McZeal, 501 F.3d at 1356-57. The Rules provide that the allegations in the forms are sufficient to state a claim. See Rule 84 (“The forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate.”); McZeal, 501 F.3d at 1356-57 (citing Conley v. Gibson, 355 U.S. 41, 47 (1957) (holding that the forms contained in the appendix to the Federal Rules “plainly demonstrate” the requirements for pleadings)); CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d 1376, 1379-80 (N.D. Ga. 2007) (holding that Rule 84 controls and that the statements in Form 16 are sufficient for pleading direct, indirect, and willful infringement). The Forms conform with the civil case pleading requirements found in Rule 8(a). That rule includes three elements that must be included in claims for relief: 5 (1) a short claim or plain statement of the grounds of the court’s jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief. FED. R. CIV. P. 8(a)(2). Bedrock’s Complaint meets the requirements of Form 18 and Rule 8(a). Specifically, Bedrock alleges that (1) jurisdiction is appropriate in the Eastern District of Texas (Complaint at ¶¶ 12-14); (2) Bedrock owns all rights and interest in the asserted patents (Complaint at ¶¶ 15); (3) “In the course of their business operations, Defendants use the method and apparatus falling within one or more claims of the ’120 Patent” (Complaint at ¶ 16); and (4) “Defendants infringe the Patent-in-Suit directly, contributorily and/or by active inducement by importing, manufacturing, using, marketing, distributing, selling, and/or supporting products and/or services that fall within one or more claims of the ’120 Patent.” (Complaint at ¶¶ 17).2 Bedrock’s Complaint also includes the required prayer for relief. See Complaint at ¶¶ 22-31. Further, in addition to including the required elements in its Complaint, Bedrock attached the patent-in-suit to its complaint. See Complaint, Attachment A. The patents themselves identify the subject matter of the suit. These attachments form part of the Complaint, and must be considered as such. See United States v. St. Luke’s Episcopal Hosp., 355 F.3d 370, 375 (5th Cir. 2004) (“The exhibits attached to the complaint, however, are part of the complaint ‘for all purposes.’ Thus it is not error to consider the exhibits to be part of the complaint for purposes of 2 Movants repeatedly complain that Bedrock did not identify a product. This argument is specious as it ignores that Bedrock does not allege direct infringement for the sale of a product; rather, Bedrock alleges that it is the Movants’ support or use of products that gives rise to liability for direct and indirect infringement. Compare Complaint at ¶ 16 with ¶ 17. 6 a Rule 12(b)(6) motion.”). As Movants and their patent counsel are aware, the claims of these patents define (in much more detail than Form 18) the products and services at issue in this case. Because Bedrock has tracked Form 18, it has satisfied all of the requirements of the Federal Rules, and the Court should deny Movants’ Motion to Dismiss. B. The Patent Infringement Form Pleading Does Not Offend Twombly or Iqbal Furthermore, the patent form pleading has already been tested by Twombly, and passed unscathed. In McZeal v. Sprint Nextel Corp., the Federal Circuit found that pleadings in patent cases are governed by Rule 8(a) and the illustrative Forms included in the Appendix, and that use of those forms still passed muster after Twombly. Id. at 1356-57. The court relied on Form 18 as evidence of the information that should be included in a complaint for patent infringement and noted that “[i]t logically follows that a patentee need only plead facts sufficient to place the alleged infringer on notice as to what he must defend.”3 Id. (citing Twombly, 129 S. Ct. at 1971). “[A] plaintiff in a patent infringement suit is not required to specifically include each element of the claims in the asserted patent” in the pleadings. Id. at 1357. McZeal’s stance has been adopted by district courts in at least the Third, Fourth, Fifth, Seventh, Eighth, and Eleventh Circuits-including courts in the Eastern District of Texas.4 Iqbal noted that while “Rule 8 marks a notable and generous departure from the hyper- technical, code-pleaded regime of a prior era, . . . it does not unlock the doors of discovery for a 3 McZeal refers to “Form 16” instead of “Form 18” in its opinion. The Forms were renumbered in the 2007 amendments to the Federal Rules. Only the form number changed -- the content of “Form 16” and “Form 18” are the same. 4 To the extent that Movants argue that McZeal is not applicable because the plaintiff in McZeal was pro se (and more liberal pleading standards generally apply to pro se litigants), the argument is overcome in the following section because courts in the Third, Fourth, Fifth, Seventh, Eighth, and Eleventh Circuits -- including courts in the Eastern District -- have applied McZeal to cases in which plaintiffs are represented by counsel. 7 plaintiff armed with nothing more than conclusions.” Iqbal, 129 S. Ct. at 1950. “In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. But Iqbal was not a patent case⎯it was a Bivens action accusing federal agents of discriminating against Arab Muslims in detentions following the terrorist attacks of September 11, 2001. Id. at 1951. While Iqbal applies the reasoning in Twombly to “all civil cases,”5 Form 18 clearly defines the requirements for complaints in patent cases. Complaints that track Form 18 satisfy the pleading requirements of the Federal Rules. FED. R. CIV. P. 84. McZeal, 501 F.3d at 1356- 57; CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d at 1379-80. Patent cases are unique because the claims of the asserted patent identifies the apparatus, method, or system that forms the basis of the infringement. Movants are on notice of Bedrock’s infringement allegations because the attached patents define the infringing acts. The attached patent is part of the Complaint and should be considered by the Court. St. Luke’s Episcopal Hosp., 355 F.3d at 375. Nothing more is required to meet the pleading requirements in Form 18 and Rule 8. The Federal Rules do not provide a sample form or any other specific guidance for the antitrust claims in Twombly or the Bivens claims in Iqbal. Thus, Twombly and Iqbal did not abrogate the use of Form 18 in patent cases-nor could they. The Supreme Court recognizes that Federal Rules cannot be amended by judicial interpretation. Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993); CBT Flint Partners, 529 F. Supp. 2d at 1380 (“As a general matter, I am loathe to assume that the Supreme Court [in Twombly] circumvented the normal channels for amending the Federal Rules.”) (citing 5 Iqbal, 129 S. Ct. at 1953. 8 Swierkiewicz v. Sorema, 534 U.S. 506, 515 (2002)). While Twombly and Iqbal may provide guidance for interpreting the Federal Rules, they do not and cannot repeal the specific pleading forms contained therein. C. The Eastern District Has Adopted McZeal and Has Denied Similar Motions Courts in this District have followed McZeal, and have found complaints comparable to the instant complaint as providing sufficient notice. In FotoMedia Technologies, LLC v. AOL, the Court denied a motion to dismiss, relying on Form 18, Rule 8, and McZeal. See No. 2:07- CV-255, 2008 WL 4135906 (E.D. Tex. Aug. 29, 2008) (Ward, J.) (“[T]he Federal Circuit recently considered the issue, albeit in the context of a pro se plaintiff, and rejected the argument that [Twombly] changed the pleading requirements of Rule 8(a) in patent infringement cases.”) Id. at *2-3. The FotoMedia Court noted that neither Rule 8 nor McZeal “require the pleading of each individual element of a claim for indirect infringement.” Id. at *2. A second Eastern District court performed a similar analysis and reached a similar result. In PA Advisors, LLC v. Google Inc., the Court cited McZeal and agreed that Twombly did not change the pleading requirements of Rule 8. No. 2:07-CV-480, 2008 U.S. Dist. LEXIS 71285 at *18-20 (E.D. Tex. Aug. 7, 2008) (Folsom, J.). The court denied defendants’ motion to dismiss, finding that plaintiff “satisfied the liberal standards of Rule 8(a).” Id. at *19.6 Accordingly, Movants are on notice that they have been accused of direct and indirect infringement, and Bedrock has satisfied the provisions of Rule 8(a)(2). As noted in FotoMedia, 6 The court did grant defendants’ motion for a more definite statement, but only as to pleadings of indirect infringement. Id. at *22-23. PA Advisors is inapposite to the present case, however, because plaintiffs failed to cite the specific statutory provisions related to indirect infringement in its complaint. Id. at *4-5 (showing the plaintiffs’ complaint alleged infringement under 35 U.S.C. § 271 but that specific subsections of § 271, including §§ 271(b) and (c), were not specifically identified). In contrast, Bedrock’s Complaint clearly states that Movants infringe the patent-in-suit contributorily and by inducement. 9 the standards for pleading are similar for both indirect and direct infringement, and Movants have failed to cite an Eastern District case that holds otherwise. FotoMedia, 2008 WL 4135906 at *2. Bedrock’s Complaint meets the requirements defined by the Federal Rules, the Federal Circuit, and courts in the Eastern District of Texas. For these reasons, the Court should deny Movants’ Motion to Dismiss in its entirety.7 III. CONCLUSION Bedrock’s Complaint satisfies the notice pleading requirements of the Rule 8(a)(2) and closely tracks the exemplary form provided in the Federal Rules. Both the Federal Circuit and courts in the Eastern District have recognized that the pleading standards set out in the Federal Rules comport with Twombly and Iqbal. Moreover, detailed infringement contentions are a matter of course in the Eastern District of Texas, and Movants will soon receive detailed information concerning its accused instrumentalities. 7 As mentioned above, courts in other Circuits have adopted the Federal Circuit’s holdings in McZeal and the Eastern District holding in FotoMedia in denying similar motions to dismiss and motions for more definite statements. See, e.g., S.O.I.T.E.C. Silicon on Insulator Tech., S.A. v. MEMC Elec. Matls., Inc., No. 08-292-SLR, 2008 U.S. Dist. LEXIS 13155, at *5 (D. Del. Feb. 20, 2009) (citing FotoMedia and holding that “[t]he complaint at bar provides the level of detail suggested by Form 18 and, therefore, passes muster”); Taltwell, LLC v. Zonet USA Corp., No. 3:07cv543, 2007 U.S. Dist. LEXIS 93465, at *39 (E.D. Va. Dec. 20, 2007) (adopting McZeal and denying a motion to dismiss); Edge Capture L.L.C. v. Lehman Bros. Holdings, Inc., No. 08 C 2412, 2008 U.S. Dist. LEXIS 83945, at *3-4 (N.D. Ill. Aug. 28, 2008) (adopting McZeal and denying a motion to dismiss allegations of both direct and indirect infringement); Schwendimann v. Arkwright, Inc., No. 08-162 ADM/JSM, 2008 U.S. Dist. LEXIS 56421, at *5 (D. Minn. July 23, 2008) (denying a motion to dismiss and adopting McZeal as the standard likely to be applied in the Eighth Circuit); CBT Flint Partners, LLC v. Goodmail Sys., Inc., 529 F. Supp. 2d 1376, 1379-81 (N.D. Ga. 2007) (holding that Twombly did not alter pleading standards - especially in the patent context” in view of the Federal Rules, the Forms in the Appendix, and the Local Patent Rules that “require plaintiffs to disclose a great deal of extremely detailed information”); Sikes Cookers & Grill, Inc. v. Vidalia Outdoor Prods., Inc., No. 1:08-CV-0750-JOF, 2009 U.S. Dist. LEXIS 13094, at *6-10 (N.D. Ga. Feb. 19, 2009) (citing FotoMedia, adopting McZeal, and denying a motion to dismiss). 10 For these reasons, Bedrock’s Complaint meets all of the notice requirements in the Federal Rules, and Movants’ Motion to Dismiss should be denied. 11 DATED: September 24, 2009 Respectfully submitted, McKOOL SMITH, P.C. _/s/ Sam F. Baxter_________ Sam F. Baxter, Lead Attorney Texas Bar No. 01938000 McKOOL SMITH, P.C. sbaxter@mckoolsmith.com 104 E. Houston Street, Suite 300 P.O. Box 0 Marshall, Texas 75670 Telephone: (903) 923-9000 Facsimile: (903) 923-9099 Douglas A. Cawley Texas Bar No. 04035500 dcawley@mckoolsmith.com Theodore Stevenson, III Texas Bar No. 19196650 tstevenson@mckoolsmith.com J. Austin Curry Texas Bar No. 24059636 acurry@mckoolsmith.com McKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: 214-978-4000 Facsimile: 214-978-4044 Robert M. Parker Texas Bar No. 15498000 Robert Christopher Bunt Texas Bar No. 00787165 PARKER, BUNT & AINSWORTH, P.C. 100 E. Ferguson, Suite 1114 Tyler, Texas 75702 Telephone: 903-531-3535 Facsimile: 903-533-9687 E-mail: rmparker@pbatyler.com E-mail: rcbunt@pbatyler.com ATTORNEYS FOR PLAINTIFF BEDROCK COMPUTER TECHNOLOGIES 12 CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a) on September 24, 2009. As such, this document was served on all counsel who are deemed to have consented to electronic service. Local Rule CV- 5(a)(3)(A). /s/ Austin Curry Austin Curry