Hologram USA, Inc. et al v. Pulse Evolution Corporation et al

MOTION to Dismiss

D. Nev.June 24, 2014

2 3 4 5 6 7 9 10 11 12 13 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 2~ CAIVIP~EL,I. ~, V~ILLI1-CMS I~OI~TAL,D Je C1~IVIP~ELL,, ESQo (1216) ~~c~ ~bell~r~dvvill~ams,~om ~. ~o~,~~ w~L~,l~~s, ~s~e (~s49) ~vv(c~,~a~pb~llar~d~rill~a~~s. ~~rr~ 700 South Seventh Street L,as ~Iegas, I~Tevada X9101 Telephone: (702) 3 ~2-5222 Facsimile: (702) 382-0540 I,AVELY ~i SINGER PI~OFESSIOI~TAL COOI~TIOI~T ~IA~ZrI'II~T Do SII~C~ER (S~I~T 7~ 166) (p~°o hac pena'ing) rridsin~er~a,lavelysin~r.corn rI'OI~I~ S. EAC~I~I~T (S~I~ 207426) (p~°o hac pending) tea an(a~l~ vel~ger.corn 2049 Cex~tuz~ Park East, Suite 2400 Los Angeles, California 90067-2906 Telephoned (310} 556-3501 Facsimile: (310) 556-3615 Attorneys for Defendants Pulse Entertainment Corporation, Pulse Evolution Corporation and John Tutor ~~~ ~_ ~ _~~ ~~ 1 ` ,, ~ 1 ~1 I~(~LOGIVI ~JSA, II~TC,, a I~elav~are co oration; I~/ILTSIO~T I~AS I-~O OCJ l~I LIMITED, a co~p~o~ration or anized under the laves of the ~Jnited ~~gC~OTYl, ~.11C1 ~~E ~~~5 S, ~.I1 lndivldual, Plaintiffs, vs. ~•.~•. ~ '~ ~ ;~ -~ .; ~ ~ _ ri 1 ~ ~ • , , ~' 1' 1 ~ ~, ~ t ~ ~ 1' ." Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 1 of 19 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 2~ I~/Iichael J. Jackson; lO~IJJ P~ZOI~UCTIOI~IS, II~TCe, a California corporation; 1~It.1SION E~TEI~TS LT'I~., a j LJnited Kingdom~ private corrlpany; j 1VItJSIOI~T 3D L,T'I~., a United I~ingdom pr~vate company; ~TI~.L,IAI~ JAI~iES ~ZOCI~, an individual; IAI~T { individual; and DOES 1 through 10, ` Defendants. Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 2 of 19 2 ~i, 4 5 6 7 9 10 11 12 13 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 2~ PLEASE TAI~.E IoTOTICE that Defendants Pulse Entertainment Corporation, Pulse Evolution Corporation and John T'extor (collectively "I~ef~ndants") hereby move for an order dismissing Plaintiffs Hologram tJSr~, Inc., Mission I~as ~-Iologram Limited and Uwe Maass' (collectivelyy 66Plaintiffs") First Arr~ended Complaint ("FAC99), pursuant to F~ZCP 12(b)(3), 12(b)(6), and the applicable Local Rules of Court, and request a hearing thereon in Courtroom 7-I~ of the above referenced Court. This motion is made on the following grounds: 1 a Plaintiffs' First Claim for Relief for Infringement of Patent Igoe 5, 65,519 (the 666519 Patent"), Second Claim for 1Zelief for Infringement of Patent No. 7,83,212 (the "`212 Patent"), Th1rd Claim for ~Zelief for Willful Infringement of the ̀ 519 and ̀ 212 Patents, Fourth claim for Relief for Active Ir~du~err~er~t of Infrir~gerr~er~t of the ̀ 519 and `212 Patents, and f fifth Claim for ~Zelief for Contributor Infringement of the ̀ 519 and `212 Patents, each fail to state a claim upon ~vhich relief can be granted against Defendants, Each of the clairris for relief against Defendants for direct infringerrient (clairris one, two and three) are based on the sarrle act as the claims for indirect infringerrient (clairris four and f ve), fie ee, infringerr~ent of the ̀ 519 and ̀ 212 patents in connection with a virtual Michael Jackson pe~°forrriance at the 2014 billboard I0/Iusic Awards. It is vaell-established that claims for both direct and indirect patent infringement against a defendant, where based on the sarrie act, are mutually exclusive. Further, Plaintiffs' allegations do not meet the pleading requirements of FRCP ~(a), ~(e) and 10(b)e 2. Venue is improper a.s to Defendant Textor, who is sued as an individual, ~ because he neither resides nor has a regular and established place of business ~n this 3. Alternatively, Defendants hereby move this Court under ~'~ZCP 12(e) for a more definite staterrient, As fully discussed in Defendants' IVlernorandurn of Pots and Authorities submitted herewith, the allegations of the FAC are so vague and ambiguous 1 MOTION TO DISll~IIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 3 of 19 1 2 3 4 I1 5 6! 7 ' 8 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 28 that Defendants cannot reasonably be required to frame a responsive pleading to the current F'AC e 4. Defendants also hove, as a for°rrri of alternative relief, to stay the action pending resolution of an ongoing arbitration in the London Court of International .A.rbltration which involves several parties to the instant action (]Plaintiff ~..Twe IVlaass, and Defendants Ian O'Connell and John Rock) and overlapping issues of fact and law (i, e., rights and assignability of the ̀ 519 and ̀ 212 patents)° In the event that the arbitration award results in a finding that IVlaass and lO~Iusion I~as ~Iologram Limited do not have the legal capability of issuing a license to third parties such as ~Iolograrn IJSA, Inca, then Defendants contend that Plaintiffs will lack standing to proceed with this action altogether. This n1o~lon is r~~.de and based on this I~To~ice, the l~ernorandlxrrn of Points and Authorities filed herewith, any matters of which this Court rr~ay take judicial notice, all papers on file herein, and on such other arguments and evidence as may be presented at t~l~ t1I1'1~ Of t~1~ ~l~a,~'111g OTl ~~11S 121~.tt~~'. Counsel for Defendants will comply with LR I~ 10-2 within 15 days° . ~ ~,, . . .~ ~ F .- _ __., ~ •. ~ ~ •° ~ 2 MOTION TO I~I~IVIIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 4 of 19 1 'TAI.~~ F' Cl~'I'El~'I' 2 Pale ~ I e II~TTI~~I~IJCTIOI~ . e ... e e e...,e,.e.e.00....e..e.e..e.e.e....e.,.e.......,oee.......o.o,oo..e.....ee.e..,...°e,........ 4 IIe LEC.~AI, A~ZC~LTMEI~TTe.,e.e.e..,......e.e,e..,ee.......e......e.oa...aoeo.ee.......ee.a.o.°eo.e.e..ee.soe,.ee°e.,...3 ~ 1~o FAIL.ZJI~ T(~ STATE 1~ CLAIliil IJPOl~ DTI—~IC~I RELIEF CANT~E GI~I~TTEI~ .,..,...o.e..ao..,.....ee.e.......vo..eee..o,e..voe...e.e..eee....e.ve.o......ee°a.oao3 6 7 1 o Claims for Direct Infringement and Indirect Infringement are Mutually Exclusive Then the Claims are based on the Salve Act, Requiring Dismissal of Claims 1-5 ~ g ..e....esae.......e.oo...oee.e,.. 2. The Active Inducerrient Claim for Relief Lacks are 9 Essential Element e..m..eem.eem...o...e.oeo..oe.e.00....e.ae,ae..°ae..e.e.e.em.ee..e....e.e,o°o..oe.., 10 ~o I1~IPROPEI~ VEN~JEeo.a.e.a.v...,.oo.e.,e.e.emo.vo.....ve.e.o,..,aaoo.,...oo..m.m.o.°e.me...mo.e...e..ea.. E 11 ~. ~.L,T'ElZI~Tl~7'I~TEI,Y, I~EFEI ANT'I'S I QT..7~S'T A STAB' Off' TIC1,CTIOI~T ..o,o...00a..°oo.oea°oe.,.o.ooao..mo..o..a°a...e.e...ee.,.e.e...oe.e.e......mee.....00...o....vo. ~ 12 III. COI~TCLLTSIOI~T .mo.o...e...eme°ae.aem..a.m,mo.oomsa..e,e,oe.ee..e........,.o......eo..e...e..oa.....000...em.e..e.mo.1 l 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 2~ i 1VIOTION TO DISMIS6 Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 5 of 19 1 2 3 CASES 4 5 6 7 9 10 11 12 13 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 2~ I' A~°te~ni Ltd. v. ,.S`afe—Strap C'o, Inc. 947 ~. Supp.2d 473 (I~.NoJ. 2013) ..o.m..o.e.emee.o.ae...ovo...e..ee.ve°o.,......e..oemo.o.........e....ee.°ee6 Ashcroft v. Igbal 556 U.S. 662 (2009) °oa.e..e.°o.,..o....e.,.a..o..o....e,ee.eeee.o.e...o.°a..e.e°aee..e.m000.e°0000.o..e.,.e..e...e.a.3 ~alist~°e~°i ve 1'aci~ca Police Dept,, 901 F.2d 696 (9th Ci~°o 1990) o..e...ae....m..o.e.ao.o..a......oe.ee.e..°oe.e..e.....eme.e....o.ee..e.o,.o.00ee..°e3 C'e~Z. Ba~°d, Inc. ve Advanced C'ardiovascula~° ~Sys~e~s, Ince 911 ~'.2d 670 (F'edeCira 1990 em.e,....e,.,.e.........e..e....°e..oae.sov.....e.e.m,,.ee....ee.e.........eee.00..6 C'h~°onicle I'uble C'o. v. hNational ~~°oadcas~ing C'oo, 294 Fold 744 (9t Cirm 1961) memomemem.me,.m,a.a.soe.am.e..ea...o.eoa...o.....a.°e..ae...ao..o.ome4o.eeee.ee.e...1 ~'ollins Radio doe v. ~°~—C°ell—O C°o~p., 467 ~'m2d 995 (~ Cire 1972} ,....ma..a..oee°aee.,,.m.e.oo..eom.e.eovo.°ome....om..voa.o...000..om.ee.....eee....1 I~a~vson Chemical C`o. v. Rohm and Maas C'o. '~ 44~ ~JeSo 176 (190) o,.e...o.a.ae.,...e..o....o....e..oa.,,.ome.o.,eae.m...°o.e...e..ae°e.e~.,eee......eoe...o...oaa.. '~~ Ha~°vey v. aloyce, 199 F.3d 790 (5th Ciro 2000) .o.oe..oe.e,...°e.e...m..a...o.m...o,o.o.o.ese°a.°o....e,..00.e...e....omeao,.....o.e I-~oove~° CT~°oup ,Inc. v, Custom 11~letalc~°aft, Inc. ~4 F.3cl 140 (Fed.Cirm 1996) oa..m..e.e....,e..aoo,..o.o.aoo..00e...°a....e,ee.e..,..o..a.e......mee....,e...ao. Izleto v. CTlock, 349 F.3d 1191 (9t'' Cir. 2003) ....ao.o..o..ee...e.o.o..mae.....m.°e...,.ae.e..maae,.o..a.......mo.oe.oe.00°oao.... Je~°vis B. Webb Co, v. Southe~~z Sys~ten~.~, Inc. 495 ~eSuppo 145 (EeD. IVliche 19~0) ......e°ooe.,mo..a..m.a.oa..°a.00e...e..mmeme......e.o....e..m........,o°o I~e~otest 11~~f~ . C'o. v. C'-0-7'wo ~'i~°e Equip. C'oe, 342 LT.Se 1 ~0 1952 e.e.e....meoee..em.oss.v.mo.ee.o..mem.ae.4...so.a.e.a.,e...m.....ee....e.o.mo..o...o.o..o.o°oee..1 Landis v, ~To~°th Ame~°ican C'o,, 299 LJ.S. 248 (1936)....m.ee.e..ev,e.oo..mem,.omaoeem.a.e.em.e..o.m...ae..e...e.a.,..e...e..v.o.oee..vo...v.meve.e..m 1 Leyvc~ ve C'e~°ti~ed C.~~°o~e~°~ of'C'ali o~°nia, Ltd., 593 F'.2d X57 (9t Cir. 1979 ee..e...°oa...00m.eoe..e.mm..o°eemee.o.e.e...m.......o..e...me......a.m.meoo.00..m..1 1Vlec~zte~~anean Ente~pse Ince ve ,S'sczngyong C`o~p. 70~ F.2d 145 (9~' Cir. 193) ave..,e........o.o.o...00m..0oe..00.0.,0000o..o.mo.ooe...ee,..,eme..va....o.°am,o.1 Me~°~°itt—C'ha man c~ ~S'cott C'o~ v. I~enn.~ylvani~ 7'u~°npike C'ommo'n,S p 1 387 ~2d 76~ (3d Cir. 1967) ...,.e.o.e..°eso....e°a.e..e.e..va...ee,e...ee....o..oe.om..,o.oa.e...e.o..e.oee,..e MOTION TO I~ISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 6 of 19 1 2 J 4 5 6 7 8 9 10 11 12 13' 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 28 i ~ ~ ~ ,'} ~ Nede~°landse E~°ts-Tanke~smaatschapp~ v. Isb~°andtsen C'o., 339 ~'p2c~ 440 ~2~ ~~~°~ 1964) ee,e~„4~,m,e,.ae...,...e.....ee......o.,oo.e...e,,....,e....,.,..,e.eee.oe..00...ee 1 New Hannpshi~°e Ins. Cv. v, R.L. C'haides C'onsto C'o., Inc. X47 F.Supp. 1452 (NoI~. Cale 1994) ooe.....o.e.ee..oe.°e,.....e...oe.ee...v000.e,.eeeee...e.a....ee,,.e...... 1'ieke~° ~nt'l, Inc. v. Varian ~lssocs., Inc. 661 FeSupp.347 (N.I~e Ohio 1987) .e..ee.ae.o,..eo.aeee.......o....o..e.e..,...o.,e,e...,.meeeeee.....00.e.ve Pickholtz v. ~ainbovv Technologies, Inc, 260 ~.Supp,2d 9~0 (I~t.I~. Cal. 2003) ..o°om.e.e...ee.e...e.o,..°a...,....v.oem.ee..e°o...ee.e,°e.ee.e.e°o,..e I-~ieda~zont Label C'o. v. ~S'un CTa~°den Packing C'o. 59~ F.2d 491 (9t Cire 1979) .....ooe..me,.ee,....o.o...oo.mee.e....e...o....meao,aso....oa..aov..°e...e.....,a.°ee P~yne~° v. T~°acto~° Su ~ly C'o, 109 Fe3d 354 ~7 h̀ Cire 1997) e.000.,.eemeo.a°o.....m.e......aea.om.4000.sm...e.e....ea°e.a.o..°a..e...o.o.o.m....00 Salameh v. 7'a~°sadia I—Intel, 726 F.3d 1124 (9t~ Cir. 2013) °oeo.,..e...e.oe.e..oo.oo.o.mmeaoe..e.va...eo.e.m.a...om.avo.omoo....e.ee.°o,.e..°a Se ~v. F"ishe~ C'on~~ol~s C'oe, Inc. , 556 F.2d 62 (9t Cire 1977) e.°oeee.°o.e.e.ae.e.o...ee.o..oae.o.o.om..veo.......oe..e..e..ee.s.a,.a..o...e..e.ee... ,S'tanley T~o~ks ve CTlobemaste~°, Inc. 400 F.Supp. 1325 (I~e IVlassa 1975).,oa..e..oe,......e.e.a..a.ono.....m.e,e...oee..e...e.m....e........00.ee... Stea~°n.~ v. 7'inke~° ~ l~a~o~° 252 F'. 2d 5~9 (9t Ciro 1957) .o...o.eemee.....va,e..ae.....emea,m...a.pa~e.s...,...e.e...e.e.°aeae..mm.o...000m.e Subway Ec~ u~~~ip ,Leasing C'o~p. ve ~'o~°te, 169 F.3d 324 (5 Ciro 1999) ..e.....avo.om..e.ao.maao.oa.a000a.m.......o.o.meee..e.m...m...00.va.a.000.oae..e...e ,Supe~°io~° Indus,, LLC' v. 7'ho~° Global Ente~°s 700 F.3d 127 (FedmCiro 2012) ....emo.e..a.e..m.o..em.oem...name....om.oe....voo.o.e.e,..o..ve..meemm...e.o,.e. ,Su~°eSa e Indust~°zes, Inc, v. C'~1Z 1'ie~° Mfge ~50 FoSu m X69 S.I~.Calo 1993 ...e...e.°a.oa..ao.a.mom..s.e.ee,.e.oe.......as...°oe.,...m.o..00.em..e.e.o..eply U.S', fog Ilse ~ gene~ fzt o~1Ve~vton v. Neumann Ca~°ibbean Intl, Ltd , 750 F.2d 1422 9 Ciro 195 .e....°none.ao.oo.m.e.o.a.ao...m.aoa..a..o...emm.oa..,a..o...em......,ee.e.o,°ee°e.. Wagner v. ,St~°atton Oal~mont, Inc. ~3 ~'.3d 1046 (9t Cirm 1996) .....e..me.....open°°..om,..eemm..a,...o..e,e.me..e...oo.o°oo.o.e..o°oe..e.,o.o..e... 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As alleged in the First Amended Complaint ("F.A.C99), this action arises out of the 2014 billboard Nl~sic A~~r°ds at the NIC~I~ Grand, in which a vir~~al ~chael Jackson performed the previously unreleased song, "Slave to the ~Zhythme" F'AC, ¶3. The performance was the result ofhighly-sophisticated digital animation created and developed by Defendant Pulse Entertainment Corporation ("Pulse Entertainment")m Plaintiffs ~-Iologram USA, Inca ("~-Iologram USA"), IVlusion I~as ~-Iologram Limited ("1Vlusion I~as ~Iolograrri") and LJwe 1!/Iaass ("1V1aaS.S99) allege that the virtual IVlichael Jackson performance vvas displayed at the 2014 billboard Music Advards using a projection technique which infringes on two patents owned or controlled by Plaintiffs, including Patent Moo 5,~6~,519 (the 666 19 I'~tent99), and Patin$ IOTo. 7,~~3,212 (the "`212 Patent"). FAC, ¶¶ 2, 3 a The F'AC alleges six claims for relief against each of the Defendants Pulse Entertainment, ~U1S~ EVOIUt1011 C01"p0~°a~lOI1 (66Pulse Evolution") and John rI'extor ("Textor") (collectively, "Defendants") arising out of the virtual l0~ichael Jackson performance at the 2014 billboard I~/Iusic Awards, including the First Claim for ~Zelief for Infrin~en~ent of the ̀ 5191'~.tent, Second Claim for ~Zelief for Infringement of the ̀ 212 Patent, Third Clairri for Relief for Willful Infringerrient of the ̀ 519 and ̀ 212 Patents, Fou~°th Clairri for ~Zelief for Active Inducerrient of the ̀ 519 and ̀ 212 Patents, f fifth Claim ~'~~ for Relief for Contributory Infringerrient of the ̀ 519 and ̀ 212 Patents and Sixth Clairri for ~r~limin~ry and ~err~an~~~ InJur~ctior~. FAC ¶ 4~-91 e Plaintiffs' purported patents relate to a variation on the "Pepper's Ghost" 111LiS10I1 ~~C~11211C111~ V6~~11C11 ~T~5 ~1~°St CO21C~1V~C1 hundreds of years ague FAC 19 Declaration of Mark Deerri ("I~eerri I~ecl."), ¶2e Defendants submit that Plaintiffs' claims will fail because Defendants did not use, let alone infringe, she obsolete technology covered by the na~rowiy-drawn and specific ̀ 519 and ̀ 212 patents at the 2014 billboard l~/Iusic Awardso 1 1VIOTION TO DISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 9 of 19 1 2 J 4 5 6 7 8 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 2~ ~y this Il~Iotion, Defendants seek dismissal of Plaintiffs' FAC as the first, second, third, fourth and fifth clairrls for relief for failure to state a claim upon which relief can be granted against them, pursuant to FRCP 12(b)(6)e Each of th.e claims for relief against Defendants for direct infringement (claims one, two and three) a~°e based on the same act as the claims for indirect infringement (claims four and five), i.e., lnfringelnent of the `519 and ̀ 212 patents in connection with the virtual I\/Iichael Jackson performance at the 2014 billboard IVlusic Awards. It is well-established that claims for both direct and indirect patent infringement against a defendant, where based on the same act, are mutually exclusive. further, Plaintiffs' allegations do not rrieet the pleading requirements of FRCP ~(a), 8(e) and 10(b).1 Defendant Textor, who is sued individually, also moves pursuant to FRCP 12(b)(3; to dismiss the F1~C on the independent grounds that venue is irriproper in this patent action because he neither resides nor has a regular and established place of business in this district as required for patent actions under 28 ZJ.S.C. § 1400(b)o Defendants also move, as a form of alternative relief, to stay the action. In the FAC, ~Iolograrn LJSA alleles that it acquired exclusive rights to exploit the ̀ 519 and ̀ 212 patents directly frorri I~✓Iusion I~as ~Iolograrr~ and Maass. FAC, 2e ~-Iowever, the issue of whether ~/Iusion I~as Holograrri and Maass were legally capable of licensing the rights in the first place is currently in dispute 1n an arbitration pending in London. Deem Decl., ¶¶2-11 o P~1"~1~S ~O ~~115 ~Ct1011, including Maass, Ian O'Connell and tarries Rock, are parties to the London arbitrations Id. The arbitration av~ard is likely to directly impact Plaintiffs' clairri of rights to the ̀ 519 and ̀ 212 patents. If the arbitration is decided against Io/Iaas, for example, it will directly impact Plaintiffs' standing to proceed with this action altogether, i.e., if it is determined that l~Iusion Das ~-Iologram and I!/Iaass simply did not have the right to license the ̀ 519 and ̀ 212 patents to third parties including 1 Alternatively, Defendants move this Court under FRCP 12(e) for a more definite statement, Aspects of the allegations of the ~'AC are so vague and ambiguous that Defendants cannot reasonably be required to frame a responsive pleading to the current FACe 2 NTOTION TO DISIVIIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 10 of 19 1 2 4 5 6 7 9 10 11 12 1~ 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 2~ (I~ologram US1-~, and that such rights were, in fact, controlled by another unrelated entity, '1 then Plaintiffs dvill lack standing to sue for patent infringement in the instant action. .• • . t; This Court is well-versed in the standards governing dismissal of a Complaint for failure to state a claim upon vvh~ch relief can be granted. 1~ motion to dismiss under F~ZCP 12(b)(6) tests the legal sufficiency of a claim stated in a Complaint. Veto ve Clock, ~ Inc., 349 Fe3d 1191, 1199-1200 (9th Ciro 2003). The court must decide whether the facts ~ alleged9 1~ 1.1 l.l~, would entitle the claimant to relief under the lavvm I~isrnissal can be basec either on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a ~ognizab~e legal t~eorye See ~alzs~°e~i v, ~czcifica Police l~ep~e, 901 F.2d 696, 699 (9th Cir. 1990). Furthermore, "[~] O SU~°~T1V~ ~ 1110 1011 t0 CIlSI111SS, a Complaint must ~!, contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face°" Salarneh v. 7'a~°,~adia I-Iotel, 726 Fe3d 1124, 1129 (9th Cir. 2013) quoting Ashc~°oft ve Igbal, 556 LJ.S, 662, 67~ (2009). "dare assertions are insufficiento" Salamehy SZ~~Y~CZ9 726 F.3d at 11290 T ~ .< ~ .. .~ ~ . ~ • ~ ' .1 ~ ~~ ~ •~~ .. •~ .~ .:, ~ ~~I~ . ~ ~ ,~ Each of the clairris for relief against Defendants for direct infringement (clairris one, two and three) are based on the game act as the clairris for indirect infringement (claims four and five), i.ee, infringerrient of the ̀ 519 and ̀ 212 patents at the 2014 billboard Music Awards. Infringerr~ent by inducerrient and contributory infringement constitute "indirect infringement." It is well-established that claims for both direct and indirect patent infringerrient against a defendant, where based on the same act, are rnutuall~ exclusives See Self vo F'ishe~° C'o~t~°ols Co., Inc°, 566 F.2d 62, 64 (9th Cirm 1977) ("contributory infringement actions are limited to situations where defendant himself has 3 MOTION TO DISMISS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 11 of 19 1 2 -, 4 5 6 7 9 10 11 12 13 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 2~ not directly infringed the patent by making, using or selling the invention, but has induced someone else to infringe the patent99); Picker° Intl, Ince v, Varian ~ssocs., Inc,, 661 FoSupp. 347, 350 (I~oDe Ohio 1987) ("It is well settled that the doctrine of ̀actively inducing infringement' . e . is not available as a separate source of liability against one vvho is also alleged to be a direct infringer."}; ~S'u~°eSafe Industries., Inc, v. C'c~1Z 1'ie~° 11~Ifg., X50 F.Suppe 869, X73 (S.I~.Ca1.1993) (66Since plaintiffs have alleged direct infringerrient, they have no standing to assert inducing or contributory infringement."), see also I-~ickholtz v. Rainbow 7~'echnologies, Inc,, 260 FeSupp.2d 9~0, 9~9-90 (~T.I~. Cale 2003); I~Tew ~Iampshi~°e In,~. C'o, v. IZeL. Chaides C'onste C'o,, Inc., X47 F'e Suppe 1452, 145 (1~,I~e Cale 1994); ~e~°vi,~ ~e T~ebb C'o. v. Southe~°n ,Systems, Ince, 495 F'. Supp. 145, 147 (EoI~. IVlich. 1980). `The contributory inf~ngerrient doctrine exists to protect patent rights from subversion by those who, without directly inf~n~ing the patent therrlselves, engage in acts designed to facilitate infring~rnent b~ ot~er~. ~ativson C'hen~ical C'~. v, Bohm c~nd Haas Coe, 44~ LTeSa 176, 1 ~~ (19~0)e Contributory infr~ngernent of a patent is akin to the ~ tort doctrine of j Dint tortfeasors and vvas developed to enable the patentee to secure protection against those who were riot direct infringers of his patent and is now limited to , situations wherein the alleged contributory infringer vvas dealing with a nonstaple article I! which vvas an integral past of the combination and had no other substantial useo ,Stea~°rzs v. Tinker° ~ IZaso~°, 252 Feld 589, 601 (9th Ciro 1957). The first three claims for direct infringement allege that Defendants infringed the `519 and ̀ 212 patents in connection dvith the virtual IVlicha.el Jackson perforrriance at the 2014 billboard Music Awards. Similarly, each of the clairris for indirect infringement (claims four and five) are based on the same act as the claims for direct infringement, i. e,, infrin~errlent of the ̀ 519 and ̀ 212 patents in connection with the virtual Michael Jackson performance at the 2014 billboard IVlusic Awardsa For example, the Active Inducement claim for relief alleges e /// MOTION TO DI5IVIIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 12 of 19 1 2 ~, J 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1~ 19 20 21 22 23 24 25 26 27 2~ "74. ...The Defendants worked to ether in secret to create a holo ~a hic e~ o~mance o Mic ae Jac son w is was unveiled to t e u is on ive to evision a~ t e 2014 Bi oar Music Away s. A t e De en ants ... inters e to in uce eac of e~° to in ying e the patents at Issue, so that the awa~°ds show and Jackson's newly ~°eleased album -would berme t~ ff~°o~n a spectaculcz~ `live' pe~fo~°Ynance b~y l~lichcc~l ~ackso~ o o . AC, 74e "76.... Texto~ and Pulse wo~°ked tivith Musion, Dock and O'C'onnell to ~ovide and o e~ate the Patented Technolo that was used to c~°eate t e Qlac son o o yam ... ~s wit IZoc , Texto~ vvas personay ~^esent at t e Bi board Music Awards shotiv when the .Iackson ho o~~am was ai~e to a nationa au fence, " FAC, X76. Likewise, the Contributory Infringement claim for relief alleges that: 6682 In particular, based on in~ fo~n~ation and belief, ~'exto~° and I-'ulse worked with Musion Rock and O'Connell to ~°ovide and o e~ate the Patented technolo ghat vas used to create t e .Iackson 0 0 ~°am o~° t e Bi oar usic Ativa~° se " FAC, X82. Moreover, the fourth and f fth claims for relief for indirect infringement incorporate by reference each of the allegations of the first, second and third claims for relief for direct infringexnento F'AC, ¶¶70, 7~a because each of the clairris for relief for indirect infringerrient incorporate by reference each of the allegations of the first three claims for relief for direct infringernenta and because they also allege that the infrin~ernent arises from the same act as the direct infringement claims for relief, i. e,, the alleged infringement of the ̀ 519 and ̀ 212 patents at the 2014 billboard Music Awards featuring a virtual Michael Jackson performance, Plaintiffs fail to state a clalrn for which relief can be granted. Applying the above- referenced authorities, which hold that claims for direct infringement and indirect infringement are mutually exclusive when based on the same act, these clairr~s must be dismissed, •~r•~ To succeed on a clairr~ of patent infringement on an inducement theory, a plaintiff rr~ust prove that the defendant's actions induced infringing acts and that they knew or should have l~nnovvn that their actions would induce actual infringernent9 however, that 5 MOTION TO I~ISMIS, Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 13 of 19 1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 28 defendants have 1{nowledge of the acts alleged to constitute infringement is not enough. T~a~ner-Lambe~°t C'o. v. ~lpotex C'o~p., 316 F'.3d 1348, 1363 (Fade Ciro 2003), In general terrrls, "[a] person induces infrin~errient e . e by actively and 1{nowingly aidzn~ and ~ abetting another's direct infringement," C'.1~. ~a~°d, Inca v. Advanced Ca~°diovascula~° ~ys~ems, Inc., 911 F.2d 670, 675 (F'ed, Cir. 1990). With respect to the claim for induced infringement in the FAC, Plaintiffs plead no ~ facts identifying whom Il~Ioving Defendants allegedly induced to infringe its purported patents, Accordingly, the FAC fails to plead sufficient facts supporting a patent infringement claim based on induced infringement. See ~1~°te~ni Ltc~? v. ,Safe-Strap C'o., Inc., 947 FoSupp.2d 473, 4~0 (DeI~.J. 2013) (patentee's conclusor~y allegation that competitor "actively induced infringement" of its patent vvas insufficient to state plausible claim for indirect infringement, where patentee pled no facts concerning what competitor allegedly did to induce infringement, or ~rhon~ it allegedly induced); see also generally S'upe~io~ Indus., LAC' v. Thos° Global ~nte~°~a, 700 F.3d 12 7, 1295-96 (Fedo Ciro 2012) (concluding that the plaintiff's complaint fell "far short of pleading facts necessary to state a plausible claim for either induced or contributory inf~ngemente"); See also ~~ZCP ~(a), ~(e) and 10(b)o ~Iere in particular, where each of the 12 Defendants are alleged to have engaged in both direct and indirect infringerrient of the ̀ 519 and ̀ 212 patents based on the same act, it is irr~po~sible to discern whorr~ was induced to infringe by I~efendarits. The allegations of the ~'AC are so value and ambiguous that I~efendant~ cannot reasonably be required to frame a responsive pleading, and, at the vet least Plaintiffs must be ordered to file a more definite st~.terr~ent on this claim. ~Tenue is irriproper as to Defendant Textor, who is sued individually. T'he situs of ~ the district court v~herein a patent infringerrient suit rriay be brought is subject to 2~ LJeS.C. § 1400(b), VV~11C11 ~rOV1Cl~Sm /// /// MOTION TO DISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 14 of 19 1 2 -, J 4 5 6 8 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 2~ "Any civil action fog patent in ringement may be bought in the judicial district where the de endant ~°esides, o~° where the defendant has committed acts o in ~°in ement and has a ~egula~° and established lace o business. " ~ .S.~. 1400 b ep .~ ~ 'his section requires that a plaintiff filing an infringement action to establish ~tha~ defendant has cornmitt~d acts of infringement and has a regular and established place of business within the district° It requires more than minirrium contacts necessary for establishing personal a urisdiction or for satisfyin "doing business" test of general venue provisions of ~ 1391 of this title° Stanley Wo~°ks v. Calobemaste~°, Inc., 400 F'.Suppe 1325, 1330 (I). l~/Iass. 1975). Ordinarily, venue must be satisfied as to each defendant in an action° Iloo~e~ C~~°ou~, Inca va C'ustom ~letalc~°czft, Inc°, ~4 F.3d 1408, 1410 (Fed. Cir. 1996)° T'he plaintiff bears the burden of proof in establishing venue° I'ied~nont Label C'oe' v. ,Sun ~a~den Hacking C'o., 59~ Fold 491, 496 (9th Cir. 1979). 6~T'he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of~ustice, t~'~.I1Sf~~' SLiCl1 C~.S~ t0 ~11~ C~1StP1Ct O~' C~1V1S1017 111 which it could have been brought." 2~ U.S.C. § 1406(x). The Federal Rules permit a defendant to raise improper venue by rrnotion pursuant to FRCP 12(b)(3). The FAC does not allege that Textor, an individually-named defendant, resides in loTev~da. Igor does the F1~C allege that Tutor has a regular and established place of business in Nevada (he does not). F'AC, 10. Indeed, the FAC alleges that Textor resides in Florida° Applying the above-referenced legal authorities, absent allegations that T~X~O~' ~lt~l~~° ~'~S1C~~S 111 t~11S C~1Str1Ct, or, alternatively, that he committed acts of infringement and has a regular and established place in this district (which is riot alleged), venue is not proper and this action must be dismissed pursuant to FRCP 12(b)(3) and 2~ ~J.SeC, §§ 1400, 1406° Alternatively, this court may transfer all or part of this action to a district in which it could have been originally brought against T'e~tora /// /// /// 7 MOTION TO DISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 15 of 19 1 ~, J 4 5 6 7 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 2~ 24 25 26 27 2~ ~~I 1~ In this action, T~Iologram LJSA claims it acquired exclusive rights to exploit the `519 and ̀ 212 patents directly from usion Das ~-Iolograrn and 10/Iaass. F'AC, 2. I-however, the issue of whether li/Iusion I~as ~Iologram and l~/Iaass were capable of licensing the rights to I-iologram USA. in the first place is currently in dispute in an ~ arbitration pending in London. Deem II~ecl., ¶¶2-11 e Last year, contractual arbitration was commenced before the London Court of International Arbitration ("I,CIA99) involving parties to this action (O'Connell, ~Zock and ~/Iaass) to determine the scope and extent of exploitation rights to the ̀ 519 and ̀ 212 patents. Deem I~ecla, ¶2-11 o It is proceeding under the terms of an agreement entered ~~~o by Dock, ~' Coririell and Ii~a~.s dated June 25, 2007 er~~l~led ~-leads of l~greement, ~Zeorganization of the Eyeliner business (the "Eyeliner Agreement"), I~eerri I~ecl., ¶5 0 One of the main purposes of the Eyeliner 1~greerrient is to provide for the joint exploitation of certain intellectual property, including the ̀ 519 and ̀ 212 patents, throughout the world. I~eerri I~ecle, ¶4, In particular, the Eyeliner 1~greerrient provides for the grant of exclusive, perpetual and irrevocable licenses to use the ̀ 519 and ̀ 212 ~~~e11~S ~O C~1"t~lll ~Il$1~1~5, 1T1CIL1C~lI1g IVIL1S1011 E~1~I1tS L11~11~~C~ (~. 110%1-~J~.I't~ t0 t~11S ~.Ct1011). Id ~'he arbitration hearing, presently scheduled in London over athree-day period beginning July 1, 2014, will deterrriine the extent and scope of the right which fusion Events Limited has to exploit the ̀ 519 and ̀ 212 patents under the terms of $he Eyeliner .Agreerrlent, Deem I~ecL, ¶7-10. The right of IVluszon Events Limited to exploit the `519 and ̀ 212 patents is expressed in the Eyeliner 1~greernent to b~ exclusive, perpetual and irrevocable, and its rights, assurnin~ they are confined by the London arbitration, would directly irr~pact the quality, te~itorial extent and status of the rights (if any) enjoyed by l~/Iusion I~as ~Iologram and l~/Iaass to the ̀ 519 and ̀ 212 patents. I~eerri I~ecL, ¶7-10. This, in turn, would directly impact the right of 1Vlusion I~as I~ologram and E'3 MOTION TO DISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 16 of 19 1 2 3 4 5 6 7 8 9 10 I1 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 2~ ~/Iaass to license the ̀ 519 and ̀ 212 patents to ~-Iologram USA in the first place, which goes to the heart of this action and would arguably affect the standing of Plaintiffs to brim the instant action. Ide Indeed, if the arbitration determines that 1Vlusion I~as I-hologram and Maass did not have the legal capability to enter into a license agreement with I~ologram LJSA, then Plaintiffs will lack standing to proceed in this action° Accordingly, given the overlap of parties and legal issues pending in the London arbitration, this Court may, 111 l~S C~1SC~`~~1011, stay the instant action until such time as the I,CIA. issues its award, which would be in the interests of judicial economy° If the arbitration concludes such that 1Vlusion I~as ~Iolograrn and I~/Iaass did not hold exploitation rights to the ̀ 519 and ̀ 212 patents at the time they purportedly granted a license to ~Iologram LJSA, then Plaintiffs' claims in this action will fail o I~eern I~ecL, ¶¶7-1 oa A party to a lawsuit pending in either state or federal court may seek a stay of the ~.Ct1011 ~3~11C~111~ aii.~°bltr~l.tlOrl Of OI1~ Off' 2110~°~ 1SSl~~S ~°~.1S~C~ 111 SL1C~1 lltl~~t1011e 9 LTeSmCe § 3; see T~T~agne~ v. S't~°atton Oakmont, Inc. ~3 ~.3d 1046, 104 (9th Ciro 1996)9 Subway Equip. Leasing C'o~p. ve Fo~°te, 169 F.3d 324, 329 (5th Ciro 1999). A party vvho is not a signatory to the arbitration agreerrient may have standing to seek a stay of the court proceeding pending arbitration between other parties if the arbitration would have are 1111~aCt O%1 t~1~ ~°~121~111111g ri011arbltr~bl~ CI~1~1S. IIa~°vey v. ~Ioyce, 199 F.3d 790, 795 (5th Cir. 2000)° The district court has discretion either to proceed with the nonarbitrable clairris or to stay litigation of all claims pending the outcome of the arbitration. ZI S. fog° Use c~ benefit ofl~Tewton v. Neumann ~'a~°ibbean Ia~t'l, Ltd., 750 Feld 1422, 1426 (9th Cir, 195)° P~yne~° v. T~°acto~°,Supply C'o,, 109 F.3d 354, 361 (7th Cir, 1997). "A trial court rnay, ~i11tr1 ~JT`O~JJ~°l~t~, find it is efficient for its oven docket and the fairest course for the parties to enter ~ stay of an action before it, pending resolution of independent proceedings which bear upon the casein This rule applies whether the separate proceedings are judicial, adrriinistrative, or arb~tral in character, and does not require that the issues in such proceedings are necessarily controlling of the action before 1VIC?TION TO DISMIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 17 of 19 1 2 4 5 6 7 9 10 11 12 13 14 15 16 17 l~ 19 20 21 22 23 24 25 26 27 28 the court° In such cases the court may order a stay of the action pursuant to its power to control its docket and calendar and to provide for a just determination of the cases pending before it." Leyvc~ v. C`e~°~ifzed CT~°oce~°s o~C'alifo~°nia, Ltd., 59~ F.2d 857, 863 (9th Cir. 1979) citing Ke~otest Mfg. C'o. v. C'-0-7'vvo Fire equip, C'o., 342 LT.S. 1 ~0 (1952); Landis v. ~To~°th Ajrce~°ican C'oe, 299 LT.S. 24~, 254-55 (1936); Collins 1-Zadio C'o. v, Ex- C'ell-O C'o~p., 467 ~e2d 995-1000 (8th Cir, 1972); ~le~~°itt-Chapman c~ ~S'cott Cope v. Pennsylvania 7'u~°npike C'o~zm'n, 3~7 ~a2d 76~, 773 (3d Cir. 1967); Nede~landse ~~~s- Tanke~smaatschappij ve Isb~°andtsen C'o,, 339 F.2d 440 (2d Cir. 1964); C'h~°onicle Publ. C'o. v. 1Vational B~°oadcasting C'o., 294 F.2d 744 (9th Cir. 1961). See also ~ledite~°~°anean Ente~pse, Inc. v. Ssangyong C'o~p., 70~ Fe2d 145, 1465 (9th Cir.19~3) (same). Presently, in London the issue of exploitation rights to the ̀ 519 and ̀ 212 patents is at issue, which will directly impact IVlusion I~as Hologram and Maass' legal ability to have granted a valid license to I~olograrr~ LJSAo The arbitration was comrrienced in 2013 (long before the Instant ~.ction vas filed by l~aas,1l~Iusion Das ~Iolo~rarn and ~Iolgrarn LTS1~), and it is expected to be concluded in July 20l 4, with an advard issued 3 0 days thereafter. Deem I~ecle, ¶5-11. In the event that the London arbitration determines that 1lilusion I)as I~olograrn and Ii/Iaass lacked authority to grant such a license because those rights are subject to the control of a separate entity, Defendants subrr~it that Plaintiffs will lose standing to proceed with this action, which supports issuance of a stay until the London arbitration issues its award. /// /// /// /// /// /// /// /// 10 1VIOTION TO DISMIS` Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 18 of 19 based on the foregoing, Defendants Pulse Entertainment Corporation, Pulse Evolution Corporation and John Tutor respectfully request that this Cour-~t dismiss the ~'1~C pursuant to ~Zule 12(b)(3) and 12(b)(6) for failure to state a claim upon which relief can be granted and improper venue. 1-alternatively, Defendants seek a more definite statement pursuant to ~Zule 12(e), and also to stay the action pending the completion of the arbitration nova proceeding before the London Court of International Arbitration. Dated: June 24, 2014 I!/IA~ZTI~T Ike SII~TGE~Z TOI~I~ S o EAGAN L,AVEI,Y ~ SII~TGER P~ZOFESSIOl~TAI, COOITIOI~ k~ . ~ t •~ .. ~, ~ ~ ~, ~ 11 MOTION TO DISIVIIS Case 2:14-cv-00772-GMN-NJK Document 54 Filed 06/24/14 Page 19 of 19