Simpson Performance Products, Inc. v. Necksgen Inc.

MOTION to Dismiss for Failure to State a Claim Plaintiff's Amended Complaint

W.D.N.C.January 25, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION SIMPSON PERFORMANCE PRODUCTS, INC., Plaintiff, v. NECKSGEN INC., Defendant. ) ) ) ) ) ) ) ) ) Civil Action: 5:16-cv-00153-RLV-DCK JURY TRIAL DEMANDED DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, Defendant NecksGen, Inc., (“NecksGen”), respectfully moves to dismiss Plaintiff Simpson Performance Products, Inc.’s Amended Complaint (Dkt. 12). This is a patent infringement action.1 Plaintiff filed its one-count Complaint in this matter on August 28, 2016 alleging that Defendant NecksGen (1) directly, 1 Plaintiff simultaneously filed five patent infringement Complaints, including the instant action, each involving the same Patent-in-Suit. All the cases are currently pending before this Court. The other actions include: (1) Simpson Performance Products, Inc. v. HMS Motorsports, Ltd., 5:16-cv-154-RLV-DCK; (2) Simpson Performance Products, Inc. v. Impact Racing, Inc., et. al., 5:16-cv-155-RLV-DCK; (3) Simpson Performance Products, Inc. v. Leatt Corp., 5:16-cv-156-RLV- DCK; and, (4) Simpson Performance Products, Inc. v. Zamp, Inc., 5:16-cv-157-RLV-DCK. Defendant Impact Racing Inc. moved to dismiss Plaintiff’s Amended Complaint on similar grounds to what Defendant NecksGen presents herein (See Dkt. 20 & 21). As of the filing of this Brief, Impact Racing Inc.’s Motion to Dismiss remains pending. Case 5:16-cv-00153-RLV-DCK Document 16 Filed 01/25/17 Page 1 of 5 2 (2) indirectly, and (3) willfully infringed U.S. Patent No. 9,351,529 (the “Patent-in- Suit” or “‘529 Patent”). The Patent-in-Suit issued on May 31, 2016 - less than 90- days before this action was filed. Defendant NecksGen filed a Motion to Dismiss on December 14, 2016. Dkt. 11. Instead of opposing the Motion, Simpson filed an Amended Complaint on December 28, 2016. Dkt. 12. The Amended Complaint continues to allege that Defendant NecksGen (1) directly, (2) indirectly, and (3) willfully infringed the ‘529 Patent. Id. Notwithstanding this being Plaintiff’s second attempt to plead, the Amended Complaint remains fatally defective. The Amended complaint fails to state a claim for direct, indirect, and willful patent infringement. It should therefore be dismissed. Moreover, since Plaintiff has been, and will continue to be, unable to cure the pleading defects, Defendant NecksGen requests that the dismissal of these allegations be with prejudice. To state a claim for direct patent infringement, the Plaintiff must allege facts supporting a plausible inference that the asserted product meets all the elements of the asserted claim(s). Cephalon, Inc. v. Watson Pharms., Inc., 707 F.3d 1330, 1340 (Fed. Cir. 2013). As explained in detail herein, Plaintiff has failed to allege that Defendant NecksGen’s accused product has, among other things, a helmet, which is an essential element of each asserted patent claim in this case. As can be seen in Exhibits B (Dkt. 12-2) and C (Dkt. 12-3) to the Amended Complaint, Case 5:16-cv-00153-RLV-DCK Document 16 Filed 01/25/17 Page 2 of 5 3 Defendant NecksGen sells the Accused Devices known as the REV and REV2LITE, which are restraint devices. Dkt. 12, ¶22. Plaintiff does not allege that Defendant NecksGen sells helmets, see Dkt. 12, ¶¶ 20-21, because it does not. Plaintiff’s omission is fatal to its direct infringement claim because a helmet is a necessary element of the patent claims. Without a helmet there can be no infringement. To state a claim for indirect infringement or willful infringement, Plaintiff must plead facts supporting at least a plausible inference that Defendant NecksGen had knowledge of the Patent-in-Suit before Plaintiff filed its Complaint. Global- Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765 (2011)(indirect infringement); Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016)(willful infringement / enhancement of damages). As explained in greater detail in Defendant NecksGen’s accompanying Brief, Plaintiff fails to allege any facts that would suggest that Defendant NecksGen had any knowledge of the Patent-in-Suit before this action. This omission is fatal to these claims. Accordingly, the Amended Complaint is fatally defective, as a matter of law, on all accounts. Plaintiff’s Amended Complaint should therefore be dismissed with prejudice. Case 5:16-cv-00153-RLV-DCK Document 16 Filed 01/25/17 Page 3 of 5 4 Respectfully submitted this 25 th day of January, 2017. /s/ Luke Anderson Luke Anderson (NC Bar No. 24,919) Atlanta Technology Law (Luke Anderson P.C.) 1230 Peachtree St., NE Suite 1900 Atlanta, Georgia 30309 Telephone 404-991-2241 Facsimile: 404-935-0927 E-Mail: Landerson@atltechlaw.com Counsel for Defendant NecksGen, Inc. Case 5:16-cv-00153-RLV-DCK Document 16 Filed 01/25/17 Page 4 of 5 5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION SIMPSON PERFORMANCE PRODUCTS, INC., Plaintiff, v. NECKSGEN INC., Defendant. ) ) ) ) ) ) ) ) ) Civil Action: 5:16-cv-00153-RLV-DCK JURY TRIAL DEMANDED CERTIFICATE OF SERVICE I hereby certify that on January 25, 2017, I electronically filed the within and forgoing DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) with the Clerk of Court using the CM/ECF system which will automatically send email notification of such filing to the following attorneys of record: Craig N. Killen, Esq. Nelson Mullins Riley & Scarborough, LLP Bank of America Corporate Center Suite 4200 100 North Tryon Street Charlotte, North Carolina 28202 Karl S. Sawyer, Jr., Esq. Nelson Mullins Riley & Scarborough, LLP Bank of America Corporate Center Suite 4200 100 North Tryon Street Charlotte, North Carolina 28202 Gregory R. Everman, Esq. Everman Law Firm, P.A. 6000 Fairview Road, Suite 1200 Charlotte, North Carolina 28210 /s/ Luke Anderson Luke Anderson (NC Bar No. 24,919) Case 5:16-cv-00153-RLV-DCK Document 16 Filed 01/25/17 Page 5 of 5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION SIMPSON PERFORMANCE PRODUCTS, INC., Plaintiff, v. NECKSGEN INC., Defendant. ) ) ) ) ) ) ) ) ) Civil Action: 5:16-cv-00153-RLV-DCK JURY TRIAL DEMANDED DEFENDANT’S BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) Luke Anderson (NC Bar No. 24,919) Atlanta Technology Law (Luke Anderson P.C.) 1230 Peachtree St., NE Suite 1900 Atlanta, Georgia 30309 Telephone 404-991-2241 Facsimile: 404-935-0927 E-Mail: Landerson@atltechlaw.com Counsel for Defendant NecksGen, Inc. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 1 of 30 i Table of Contents Page 1. Summary of Defendant NecksGen’s Argument and Relief Sought ...................................................... 1 2. Citation to Legal Authority and Argument ........................................................................................... 3 A. Plaintiff Must Allege Facts that Make its Claims Plausible ............................................................ 3 B. The Pleading Standard for Direct Infringement ............................................................................... 5 C. Required Elements for Pleading Indirect Infringement and Willful Infringement ......................... 6 i. Indirect Infringement .................................................................................................................. 6 ii. Willful Infringement ................................................................................................................. 7 3. ARGUMENT ........................................................................................................................................ 8 A. Simpson has not Plead a Plausible Claim of Direct Infringement ................................................... 8 i. The Preambles of Independent Claims 1, 8, and 14 also Preclude a Finding of Direct Patent Infringement .............................................................................................................................. 10 B. The Threadbare Allegations in the Amended Complaint Cannot Support Plaintiff’s Claims of Indirect Infringement ..................................................................................................................... 11 i. Plaintiff Failed to Plead Sufficient Facts Alleging that Third-Parties Directly Infringed and Therefore Cannot State a Claim of Indirect Infringement Against Defendant NecksGen ........ 12 ii. Plaintiff’s Induced Infringement Claims Should be Dismissed .............................................. 15 iii. Plaintiff’s Contributory Infringement Claims Should be Dismissed ..................................... 19 C. The Amended Complaint Fails to Recite the Necessary Elements To State a Claim for Willful Infringement .................................................................................................................................... 21 4. CONCLUSION ................................................................................................................................... 24 Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 2 of 30 ii Table of Authority Page(s) Cases Aguirre v. Powerchute Sports, LLC, No. SA-10-cv-0702, 2011 WL 2471299 (W.D. Tex. 2011) ............. 16 Arista Records, LLC v. Doe 3, 604 F.3d 110 (2d Cir. 2010) .................................................................. 4, 14 Ashcroft v. Iqbal, 556 U.S. 622 (2009) ..................................................................................................... 3, 4 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................... 3, 4, 10 Brandywine Comm. Tech., LLC v. T-Mobile USA, Inc., 904 F. Supp. 2d 1260 (M.D. Fla. 2012) ........ 15, 17 Catalina Mktg. Int’l, Inc. v. Coolsavings.com, Inc., 289 F.3d 801 (Fed. Cir. 2002) .................................. 10 Cephalon, Inc. v. Watson Pharms., Inc., 707 F.3d 1330 (Fed. Cir. 2013) ................................................ 2, 5 DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006)(en banc) ................................................ 7, 15 Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263 (Fed. Cir. 2004) ..................................... 12 Eaton Corp. v. Rockwell Int’l Corp., 323 F.3d 1332 (Fed. Cir. 2003) ....................................................... 10 Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) .................................................. 2, 6, 11, 15 Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016) ............................................................ passim In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323 (Fed. Cir. 2012) . passim Intellectual Ventures I LLC v. Bank of America Corp., 2014 WL 868713 (W.D.N.C. Mar. 5, 2014) passim Iodice v. U.S., 289 F.3d 270 (4th Cir. 2002) .................................................................................................. 3 Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770 (Fed. Cir. 1993) ........................................................................ 12 Mallinckrodt, Inc. v. E-Z-Em Inc., 670 F. Supp.2d 349 (D. Del. 2009) ..................................................... 16 Manville Sales Corp. v. Paramount Sys. Inc., 917 F.2d 544 (Fed. Cir. 1990) ............................................ 18 Markman v. Westview Instruments, Inc. 517 U.S. 370 (1996) .................................................................... 10 Miller v. Carolinas Healthcare Sys., 2013 WL 3148605 (W.D.N.C. 2013) ................................................. 3 Nanosys, Inc. v. QD Vision, Inc., 2016 WL 4943006 (N.D. Cal. Sept. 16, 2016) ...................................... 24 Orlando Comms. LLC v. LG Elecs., Inc., No. 6:14-cv-1017, 2015 WL 1246500 (M.D. Fla. Mar. 16, 2015) ................................................................................................................................................................ 17 Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 3 of 30 iii Rembrandt Social Media, LP v. Facebook, Inc., 950 F. Supp. 2d 876 (E.D. Va. 2013)............................. 16 Teve Pharm. U.S., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) ................................................................... 10 Va. Innovation Scis., Inc. v. Samsung Elecs. Co., 983 F. Supp. 2d 700, (E.D. Va. 2013) ................ 8, 21, 22 Varian Medical Sys. Inc. v. Elekta AB, Civil Action No. 15-871 (D. Del., July 12, 2016) .......................... 8 Watkins v. Clerk of Superior Court for Gaston Cnty. No. 3:12-CV-033, 2012 WL5872750 (W.D.N.C., July 10, 2012)............................................................................................................................................ 4 Wyeth v. Sandoz, Inc., 703 F. Supp. 2d 508 (E.D.N.C. 2010) .............................................................. 13, 18 Xpoint Technologies, Inc. v. Microsoft Corp., 730 F. Supp. 2d 349 (D. Del. 2010) .................................. 16 Zamora Radio, LLC v. Last.FM, Ltd., 785 F. Supp. 2d 1242 (S.D. Fla. 2010) .......................................... 16 Statutes 35 U.S.C. §271 .............................................................................................................................................. 6 35 U.S.C. §271(a) ......................................................................................................................................... 5 35 U.S.C. §271(b) ......................................................................................................................................... 6 35 U.S.C.§271(c) .......................................................................................................................................... 6 35 U.S.C. §284 ................................................................................................................................ 21, 22, 24 Rules Rule 12(b)(6) ............................................................................................................................................. 1, 3 Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 4 of 30 1 Defendant NecksGen, Inc. (“NecksGen”), hereby submits this brief in support of its motion to dismiss this action under Rule 12(b)(6) of the Federal Rules of Civil Procedure because Plaintiff’s claims of (1) direct patent infringement; (2) indirect patent infringement (including both contributory and induced infringement); and, (3) willful patent infringement are fatally flawed. 1. Summary of Defendant NecksGen’s Argument and Relief Sought This is a patent infringement action.1 Plaintiff filed its one-count Complaint in this matter on August 28, 2016 alleging that Defendant NecksGen (1) directly, (2) indirectly, and (3) willfully infringed U.S. Patent No. 9,351,529 (the “Patent-in-Suit” or “‘529 Patent”). The Patent-in-Suit issued on May 31, 2016 - less than 90-days before this action was filed. Defendant NecksGen filed a Motion to Dismiss on December 14, 2016. Dkt. 11. Instead of opposing the Motion, Simpson filed an Amended Complaint on December 28, 2016. Dkt. 12. The Amended Complaint continues to allege that Defendant NecksGen (1) directly, (2) indirectly, and (3) willfully infringed the ‘529 Patent. Id. 1 Plaintiff simultaneously filed five patent infringement Complaints, including the instant action, each involving the same Patent-in-Suit. All the cases are currently pending before this Court. The other actions include: (1) Simpson Performance Products, Inc. v. HMS Motorsports, Ltd., 5:16-cv-154-RLV-DCK; (2) Simpson Performance Products, Inc. v. Impact Racing, Inc., et. al., 5:16-cv-155-RLV-DCK; (3) Simpson Performance Products, Inc. v. Leatt Corp., 5:16-cv-156-RLV- DCK; and, (4) Simpson Performance Products, Inc. v. Zamp, Inc., 5:16-cv-157-RLV-DCK. Defendant Impact Racing Inc. moved to dismiss Plaintiff’s Amended Complaint on similar grounds to what Defendant NecksGen presents herein (See Dkt. 20 & 21). As of the filing of this Brief, Impact Racing Inc.’s Motion to Dismiss remains pending. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 5 of 30 2 Notwithstanding this being Plaintiff’s second attempt to plead, the Amended Complaint remains fatally defective. The Amended complaint fails to state a claim for direct, indirect, and willful patent infringement. It should therefore be dismissed. Moreover, since Plaintiff has been, and will continue to be, unable to cure the pleading defects, Defendant NecksGen requests that the dismissal of these allegations be with prejudice. To state a claim for direct patent infringement, the Plaintiff must allege facts supporting a plausible inference that the asserted product meets all the elements of the asserted claim(s). Cephalon, Inc. v. Watson Pharms., Inc., 707 F.3d 1330, 1340 (Fed. Cir. 2013). As explained in detail herein, Plaintiff has failed to allege that Defendant NecksGen’s accused product has, among other things, a helmet, which is an essential element of each asserted patent claim in this case. As can be seen in Exhibits B (Dkt. 12- 2) and C (Dkt. 12-3) to the Amended Complaint, Defendant NecksGen sells the Accused Devices known as the REV and REV2LITE, which are restraint devices. Dkt. 12, ¶22. Plaintiff does not allege that Defendant NecksGen sells helmets, see Dkt. 12, ¶¶ 20-21, because it does not. Plaintiff’s omission is fatal to its direct infringement claim because a helmet is a necessary element of the patent claims. Without a helmet there can be no infringement. To state a claim for indirect infringement or willful infringement, Plaintiff must plead facts supporting at least a plausible inference that Defendant NecksGen had knowledge of the Patent-in-Suit before Plaintiff filed its Complaint. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765 (2011)(indirect infringement); Halo Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 6 of 30 3 Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016)(willful infringement / enhancement of damages). As explained in greater detail herein, Plaintiff fails to allege any facts that would suggest that Defendant NecksGen had any knowledge of the Patent- in-Suit before this action. This omission is fatal to these claims. Accordingly, the Amended Complaint is fatally defective, as a matter of law, on all accounts. Plaintiff’s Amended Complaint should therefore be dismissed. 2. Citation to Legal Authority and Argument A. Plaintiff Must Allege Facts that Make its Claims Plausible To state a claim upon which relief may be granted, a plaintiff must allege and provide factual support for each element of its asserted claims. See Ashcroft v. Iqbal, 556 U.S. 622, 678 (2009)(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)(finding that a “naked assertion” of wrongdoing without “factual enhancement” does not state a claim); see also Miller v. Carolinas Healthcare Sys., 2013 WL 3148605, at *4 (W.D.N.C. June 19, 2013)(“Dismissal of a complaint for failure to state facts supporting each element of a claim is, of course, proper.”)(quoting Iodice v. U.S., 289 F.3d 270, 281(4th Cir. 2002)). Under Iqbal and Twombly, to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 7 of 30 4 defendant is liable for the misconduct alleged.” Id. If a complaint “contains only conclusory statements” of wrongdoing, with no facts alleged that create the ‘reasonable inference that defendant is liable for the misconduct alleged,’” the claim must be dismissed. Watkins v. Clerk of Superior Court for Gaston Cnty., No. 3:12-CV-033, 2012 WL5872750, at *7 (W.D.N.C., July 10, 2012)(quoting Iqbal, 556 U.S. at 678). In applying this standard, the Court accepts as true all well-pled factual allegations, but does not credit "mere conclusory statements" or "[t]hreadbare recitals of the elements of a cause of action." Iqbal, 556 U.S. 662 at 678. (citing Twombly, 550 U.S. at 555). The Court will give "no effect to legal conclusions couched as factual allegations." Twombly, 550 U.S. at 555. A plaintiff may plead facts alleged upon information and belief "where the facts are peculiarly within the possession and control of the defendant" or “where the belief is based on factual information that makes the inference of culpability plausible.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (citations omitted). But, if the Court can infer no more than the mere possibility of misconduct from the factual averments-in other words, if the well-pled allegations of the complaint have not "nudged [plaintiff's] claims across the line from conceivable to plausible"-dismissal is appropriate. Twombly, 550 U.S. at 570 “The Supreme Court explained that the pleading standard should, at a minimum, accomplish two goals: (1) provide a solid basis for the plaintiff’s allegations; and, (2) put the defendant on notice, effectively allowing them a fair opportunity to defend themselves.” Intellectual Ventures I LLC v. Bank of America Corp., 2014 WL 868713, at *2 (W.D.N.C. Mar. 5, 2014)(citing Iqbal, 556 U.S. at 677-78; Twombly, 550 U.S. at 555). Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 8 of 30 5 The Amended Complaint does not achieve either of these goals. Plaintiff’s conclusory claims of direct infringement, indirect infringement (including induced and contributory infringement) and willful infringement fail as a matter of law to meet the Iqbal and Twombly pleading standards. Plaintiff’s Amended Complaint should therefore be dismissed in its entirety. B. The Pleading Standard for Direct Infringement A person directly infringes a patent if he makes, uses, sells, offers for sale, or imports the patented invention in the United States. 35 U.S.C. §271(a). “To prove infringement, the patentee must show that an accused device embodies all limitations of the claim either literally or by the doctrine of equivalents.” Cephalon Inc. v. Watson Pharma., Inc., 707 F.3d 1330, 1340 (Fed. Cir. 2013) (emphasis added). The pleading standard for direct infringement used to be relatively low because a prior version of the Federal Rules included a terse form patent complaint that sufficed under the rules - Rule 84 and Form 18. See, e.g. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012). But the Federal Rules were amended on December 1, 2015 to delete Rule 84 and the Form 18 patent complaint, and instead the Supreme Court’s directives in Twombly and Iqbal apply with full force to pleading direct infringement. See Atlas IP LLC v. Pac. Gas & Elec. Co., 2016 WL 1719545, at *83 (N.D. Cal., Mar. 9, 2016)(applying Twombly and Iqbal standard and dismissing a post-December 2015 complaint). Under the current standard for pleading direct infringement, if “the complaint recites only some of the elements of the sole asserted claim, and provides only a Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 9 of 30 6 threadbare description of the alleged abilities of the accused device,” then it “fails to state a plausible claim for direct infringement.” Atlas IP LLC v. Pac. Gas & Elec. Co., 2016 WL 1719545, at *83 (N.D. Cal., Mar. 9, 2016). Here, Plaintiff fails to allege that each and every limitation of the asserted claims is present in the Accused Devices. Thus, its claim for direct infringement fails as a matter of law and should be dismissed. C. Required Elements for Pleading Indirect Infringement and Willful Infringement Plaintiff has failed, as a matter of law, to state a cause of action for induced or contributory infringement, which are collectively referred to as indirect infringement. Indirect infringement can take two forms under 35 U.S.C. §271: a party may indirectly infringe a patent either (i) by inducing direct infringement, in violation of 35 U.S.C. §271(b); or (ii) by contributing to direct infringement, in violation of 35 U.S.C.§271(c). See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765 (2011). However, a condition precedent exists to proceeding on a claim of indirect infringement (either induced infringement or contributory infringement), a patent owner must allege facts that demonstrate that a third-party directly infringes the patent-in-suit. In re Bill of Lading, 681 F.3d at 1333(“It is axiomatic that ‘[t]here can be no inducement or contributory infringement without an underlying act of direct infringement.”) Here, Plaintiff presents no facts (just terse, conclusory statements) to support a claim of third- party direct infringement. This failure is fatal to Plaintiff’s indirect infringement claims. i. Indirect Infringement Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 10 of 30 7 To state a claim of induced infringement, a plaintiff must allege facts showing that defendant had knowledge of the asserted patent, knowingly induced the infringing acts, and possessed the specific intent to encourage another’s infringement. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304-05 (Fed. Cir. 2006)(en banc). In addition to its failure to plead facts to support a finding of direct infringement by any third-party, Plaintiff failed to allege facts to support a finding that each of the elements of induced infringement are satisfied. Plaintiff’s claims of induced infringement should therefore be dismissed. To state a claim of contributory infringement, a plaintiff must allege facts showing that defendant had knowledge of the asserted patent, that the accused devices are material to practicing the invention, the accused devices have “no substantial non- infringing uses,” and that the defendant knew that its accused devices were “especially made or especially adapted to infringe.” See In re Bill of Lading, 681 F.3d at 1337 (citing 35 U.S.C. §271(c)). Plaintiff’s Amended Complaint fails to meet this standard. Plaintiff fails to allege facts to support a finding that each of the elements of contributory infringement are satisfied. This defect, in conjunction with Plaintiff’s failure to allege facts to support a finding that third parties directly infringe the ‘529 Patent, should compel this Court to dismiss the contributory infringement claims. ii. Willful Infringement To state a claim of willful infringement, a plaintiff must allege facts showing that the defendant had pre-suit knowledge of the asserted patent and engaged in some sort of egregious conduct -beyond typical patent infringement. See Va. Innovation Scis., Inc. v. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 11 of 30 8 Samsung Elecs. Co., 983 F. Supp. 2d 700, 708 (E.D. Va. 2013); see also Halo Elecs., Inc. v. Pulse Elecs. Inc., 136 S.Ct. 1923, 1927 (2016); Varian Medical Sys. Inc. v. Elekta AB, Civil Action No. 15-871, *9 (D. Del., July 12, 2016, Report recommending the dismissal of pre- suit and post-suit willful infringement claim for providing nothing more than a formulaic recitation of the claim elements). Plaintiff does not allege that Defendant NecksGen had pre-suit knowledge of the asserted patent. Dkt. 12, ¶49. Moreover, Plaintiff fails to allege any facts to suggest that Defendant NecksGen’s conduct was egregious. Accordingly, Plaintiff’s willful infringement claims should therefore be dismissed. 3. ARGUMENT A. Simpson has not Plead a Plausible Claim of Direct Infringement Plaintiff’s claim that Defendant NecksGen directly infringed the ‘529 Patent fails as a matter of law because the Amended Complaint does not make a plausible case that the Accused Devices meet each and every limitation of the Patent-in-Suit. In particular, the Accused Devices do not contain a helmet, which is a necessary structural element required in the limitations of each claim of the asserted patent. Independent Claims 1,8, and 14 of the ‘529 Patent each require a restraint device with a system of tethers wherein certain “tethers are jointly attached to the helmet at a single attachment point on each respective side of the helmet.” ‘529 Patent at 11:48-49 (Claim 1)(Dkt. 12, ¶25); 12:23-24 (Claim 8)(Dkt. 12, ¶30); and, 12:56-57 (Claim 14)( Dkt. 12, ¶36). The plain and unambiguous claim language contained in each independent claim of the ‘529 Patent, requires that the tethers of the restrain device be “attached” (past Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 12 of 30 9 tense) to the helmet. The Amended Complaint itself demonstrates that the Accused Devices do NOT include a helmet: NecksGen Rev (Dkt. 12-2 at 2). NecksGen Rev2Lite (Dkt. 12-4 at 2). Moreover, the Amended Complaint is devoid of any allegation whatsoever that Defendant NecksGen sells, or offers to sell, helmets either alone or with the Accused Devices, and there never will be such an allegation because Defendant NecksGen does not sell helmets. See Dkt. 12, ¶¶20, 21. Exhibit B (Dkt. 12-2) contains an image of NecksGen’s REV that appears to be a fair and accurate representation of this Accused Device. The tethers on this device (and the other Accused Device shown in Exhibit D (Dkt. 12-4)) are obviously not sold or offered for sale with a helmet. Without a helmet attached to the tethers, the Accused Devices do not, and cannot, directly infringe the ‘529 Patent. The Amended Complaint does not allege that the Accused Devices contain a helmet, nor does the Amended Complaint allege that the Accused Devices are bundled together with a helmet as a single product. While at most Defendant NecksGen’s website might show the Accused Device in connection with a Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 13 of 30 10 helmet, see Dkt. 12-2 at 5, there is no allegation that Defendant NecksGen sells, or offer to sell, helmets. Accordingly, Plaintiff has failed to plead facts sufficient to support a claim that the Accused Devices directly infringe the’529 Patent. i. The Preambles of Independent Claims 1, 8, and 14 also Preclude a Finding of Direct Patent Infringement Notwithstanding the limitation requiring a helmet present in the body of each of the claims, Plaintiff makes the wholly unpersuasive allegation that “the recitation of a ‘helmet’ in the preamble of claim 1 is not a structural limitation of claim 1, and is not required for direct infringement.” Dkt. 12, ¶25. This is wrong and contrary to well- established black letter law. Moreover, this allegation states a legal conclusion and thus has no effect. Twombly, 550 U.S. at 555. (The Court will give "no effect to legal conclusions couched as factual allegations."); Teve Pharm. U.S., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015)(“The construction of a patent,. . ., is not for a jury but ‘exclusively for the court’ to determine.”)(citing Markman v. Westview Instruments, Inc. 517 U.S. 370 (1996)). Generally, in patent interpretation, a claim preamble will not be seen as limiting unless, as is the case here, it is “necessary to give life, meaning, and vitality to the claim. See Catalina Mktg. Int’l, Inc. v. Coolsavings.com, Inc., 289 F.3d 801, 808 (Fed. Cir. 2002). However, the Federal Circuit has also held that, “[w]hen limitations in the body of the claim rely upon and derive antecedent basis from the preamble, then the preamble may act as a necessary component of the claimed invention.” Eaton Corp. v. Rockwell Int’l Corp., 323 F.3d 1332, 1339 (Fed. Cir. 2003). Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 14 of 30 11 Here, the preambles of independent claims 1, 8, and 14 each recite: “A restraint device having a system of tethers, and a helmet cooperating with the tethers. . .” However, the bodies of Claims 1, 8, and 14 each require (inter alia) that the system of tethers “are jointly attached to the helmet at a single attachment point on each respective side of the helmet.” See Dkt. 12 at ¶¶ 28,34,40. The term “a helmet” in the preamble provides the antecedent basis for, and is necessary to understand, “the helmet” limitations in the body of Claims 1, 8, and 14. Therefore, the requirement of a helmet in the preamble is limiting, thereby requiring that a helmet must be present. Accordingly, both the body and preamble of independent claims 1,8, and 14 require that a helmet be attached to a system of tethers. There are no allegations that the Accused Devices include a helmet. Therefore, the Accused Devices cannot directly infringe any independent claim or any dependent claim of the ‘529 patent. Plaintiff’s allegations of direct infringement therefore fail as a matter of law and should be dismissed. As Plaintiff will be unable to cure this defect, and has now had two opportunities to plead, this Court should dismiss Plaintiff’s direct infringement claims with prejudice. B. The Threadbare Allegations in the Amended Complaint Cannot Support Plaintiff’s Claims of Indirect Infringement Indirect infringement can take two forms: induced infringement or contributory infringement. See Global-Tech, 563 U.S. at 765. However, in order to proceed on a claim of indirect infringement, a patent owner must first establish that a third-party directly infringes the asserted patent. In re Bill of Lading, 681 F.3d at 1332. Plaintiff’s Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 15 of 30 12 Amended Complaint is fatally flawed because it fails to adequately allege third-party direct infringement or that all of the elements required to state a claim for induced and/or contributory infringement are met. This Court should therefore dismiss Plaintiff’s indirect infringement claims. i. Plaintiff Failed to Plead Sufficient Facts Alleging that Third-Parties Directly Infringed and Therefore Cannot State a Claim of Indirect Infringement Against Defendant NecksGen The Amended Complaint contains ample (but ultimately fatally flawed as discussed supra) allegations regarding Defendant NecksGen’s putative direct infringement of the ‘529 Patent. The Amended Complaint, however, contains absolutely no facts or analysis regarding direct infringement of the ‘529 Patent by third-parties. Absent a showing by Plaintiff that third-parties directly infringe the asserted patent, Defendant NecksGen cannot be found liable for indirect infringement. In order to state a claim for indirect infringement (either induced infringement or contributory infringement), a patent owner must allege facts that demonstrate that a third- party directly infringes the asserted claim(s) of the patent-in-suit. In re Bill of Lading, 681 F.3d at 1333 (“it is axiomatic that [t]here can be no inducement or contributory infringement without an underlying act of direct infringement.” (internal quotation omitted); see also Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272 (Fed. Cir. 2004)(“Indirect infringement, whether inducement to infringe or contributory infringement, can only arise in the presence of direct infringement. . .”); Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed. Cir. 1993)(“Liability for either active inducement of infringement or for contributory infringement is dependent upon the existence of direct Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 16 of 30 13 infringement.”); Wyeth v. Sandoz, Inc., 703 F. Supp. 2d 508, 518-19, 522 (E.D.N.C. 2010)(“[T]he patentee must show, first that there has been direct infringement, and second, that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement. . . . Direct infringement is a prerequisite to finding contributory infringement.”) (Citations omitted.) The only analysis in the Amended Complaint concerning direct infringement is solely focused on Defendant NecksGen’s Accused Products and fails to address even a single third-party. There are simply no facts in the Amended Complaint from which the Court can conclude that any third-party directly infringes the ‘529 Patent. The allegations concerning third-party infringement are: Upon information and belief, Defendant offers to sell and/or sells, directly and/or directly through authorized distributors and/or other intermediaries, the Accused Devices to customers and end-users, such as professional and amateur drivers, in the United States, including this judicial district. (Dkt. 12, ¶23)(emphasis added). * * * * * Simpson is informed and believes, and on that basis alleges, that the making, using, importing, offering for sale and/or sale of the Accused Devices by Defendant, its distributors, its intermediaries, its customers and/or end-users, is directly and/or indirectly infringing the ‘529 Patent. (Dkt. 12, ¶24)(emphasis added). * * * * * Resellers and/or end-users of the Accused Devices are also direct infringers of the ‘529 Patent. For example, the end-users necessarily utilize the Accused Devices in conjunction with a helmet as intended. Thus, Simpson also, or in the alternative, has been damaged as a result of direct infringement by others due to the Defendant contributing to and/or inducing infringement of the ‘529 Patent. (Dkt. 12, ¶45). Rote recital of claim elements, based on information and belief, unsupported by any analysis of the actions of resellers and/or end-users as compared to the limitations of Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 17 of 30 14 the ‘529 Patent, cannot support a plausible inference of third-parties’ direct infringement or otherwise satisfy the Iqbal/Twombly standard. Intellectual Ventures I, LLC, 2014 WL 868713, at *2 (“Recital of the elements of a cause of action, supported by conclusory statements are not sufficient to state a plausible claim for relief.”); see also Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2nd Cir. 2010)(The Twombly plausibility standard does not prevent a plaintiff from “pleading facts alleged ‘upon information and belief’” where the facts are peculiarly within the possession and control of the defendant, or where the belief is based on factual information that makes the inference of culpability plausible.) (Internal citations omitted). Here, the essential elements of Plaintiff’s direct infringement by third-parties is based solely on “information and belief”, without pleading a single case specific fact to support its claim. As such these allegations cannot satisfy the Iqbal/Twombly standard. More specifically, third-party use of the Accused Devices is not an element within Defendant NecksGen’s knowledge or control. Thus the first exemption from the Twombly pleading standard articulated by the Arista Records court does not apply. Id. Next, Plaintiff has not plead sufficient facts to make its allegations of third-party infringement plausible. Id. Rather, Plaintiff has merely recited the elements of the claim. Accordingly, in the absence of sufficiently plead allegations of direct infringement by end-users, the Amended Complaint cannot support allegations of indirect infringement against Defendant NecksGen. For this reason, the Court should dismiss the indirect infringement allegations of the Amended Complaint (including allegations of both induced infringement and contributory infringement). Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 18 of 30 15 ii. Plaintiff’s Induced Infringement Claims Should be Dismissed To state a claim for induced infringement, a plaintiff must allege facts showing (1) defendant had knowledge of the asserted patent; (2) knowingly induced the infringing acts; and, (3) possessed the specific intent to encourage another’s infringement of plaintiff’s patents. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304-05 (Fed. Cir. 2006)(en banc). This is in addition to the requirement that the plaintiff alleges facts demonstrating third-party direct infringement (supra). First, the Amended Complaint does not contain sufficient allegations of knowledge of the patent-in-suit. The Supreme Court has ruled that “induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement.” Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2068 (emphasis added). Plaintiff alleges that Defendant NecksGen only learned of the ‘529 Patent via the filing of the Complaint in this action - since August 29, 2016 - “NecksGen became aware of the litigation on or about August 25, 2016. However, the Complaint was not served on NecksGen until November 2, 2016.” Dkt. 12, ¶46. Many jurisdictions, however, have held that knowledge of a patent only acquired via the filing of a complaint for patent infringement is insufficient to support a claim of indirect infringement. “The weight of authority addressing the knowledge required for indirect infringement . . . requires a plaintiff to allege that defendant had pre-suit knowledge of the patents-in-suit.” Brandywine Comm. Tech., LLC v. T-Mobile USA, Inc., 904 F. Supp. 2d 1260, 1267 (M.D. Fla. 2012); see Xpoint Technologies, Inc. v. Microsoft Corp., 730 F. Supp. 2d 349, 357 Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 19 of 30 16 (D. Del. 2010)(dismissing claims of indirect infringement because “knowledge after filing of the present action is not sufficient for pleading the requisite knowledge for indirect infringement”); see also Mallinckrodt, Inc. v. E-Z-Em Inc., 670 F. Supp.2d 349, 354 n.1 (D. Del. 2009)(“The Court is not persuaded by Plaintiff’s contention that the requisite knowledge [to support a claim of indirect infringement] can be established by the filing of Plaintiff’s Complaint.”); Aguirre v. Powerchute Sports, LLC, No. SA-10-cv- 0702, 2011 WL 2471299, *3 (W.D. Tex. 2011)(“To the extent Aguirre relies on knowledge of Aguirre’s patent after the lawsuit was filed, such knowledge is insufficient to plead the requisite knowledge for indirect infringement.”); Zamora Radio, LLC v. Last.FM, Ltd., 785 F. Supp. 2d 1242, 1257 (S.D. Fla. 2010)(granting summary judgment on the claim of induced infringement and concluding there could be no indirect infringement because “[plaintiff] has offered no evidence that Defendants had any pre- suit knowledge of the 399 Patent.”); c.f. Rembrandt Social Media, LP v. Facebook, Inc., 950 F. Supp. 2d 876, 880-81 (E.D. Va. 2013)(allowing the knowledge requirement for indirect infringement to be acquired via the filing of a complaint). Defendant NecksGen is not aware of any decision from this Court addressing this issue. As a matter of first impression, Defendant NecksGen respectfully submits that this Court should require Plaintiff to demonstrate pre-suit knowledge of an asserted patent to state a claim for indirect infringement. “[B]ecause notice of the patent is necessarily provided by a complaint, finding that a complaint provides sufficient knowledge for induced infringement would vitiate the Supreme Court’s holding in Global-Tech that an Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 20 of 30 17 allegation of knowledge of the patent is required to state a claim for induced infringement.” Brandywine, 904 F. Supp. 2d at 1268-69. If notification via the filing of a complaint for indirect patent infringement were sufficient, then the knowledge requirement of indirect infringement would be meaningless - of course alleged infringers have actual knowledge of the asserted patent once they have been sued. See Orlando Comms. LLC v. LG Elecs., Inc., No. 6:14-cv- 1017, 2015 WL 1246500 at *9 (M.D. Fla. Mar. 16, 2015). Absent a ruling requiring pre- suit knowledge of the asserted patent, the Court would create a legal environment whereby a patent owner could file a complaint for induced patent infringement and automatically satisfy the knowledge requirement. Second, the Amended Complaint contains no allegations that Defendant NecksGen knowingly induced the infringing acts. Absent factual allegations that Defendant NecksGen intended its customers to infringe the ‘529 Patent, Plaintiff cannot proceed with its claim of induced infringement. See Intellectual Ventures I LLC, 2014 WL 868716, at *2 (Judge Conrad holding “induced infringement requires a showing that defendant intended for its customers to infringe the paten in question.”) Accordingly, the Amended Complaint does not adequately state a claim of induced infringement. Third, Plaintiff fails to provide the Court with factual allegations that Defendant NecksGen specifically intended to encourage third-party infringement. In this District, Judge Conrad stated, “To survive a motion to dismiss for an induced infringement claim, Plaintiffs’ complaint should have alleged facts that plausibly demonstrated that Defendants not only intended their customers to infringe the asserted patent, but also Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 21 of 30 18 knew that the customers’ acts constituted infringement.” Intellectual Ventures I LLC, 2014 WL 868713, at *2 (emphasis in original); see Wyeth, 703 F. Supp. 2d at 519 (“[A] defendant’s mere ‘knowledge of the acts alleged to constitute inducement’ is not enough.” (citing Manville Sales Corp. v. Paramount Sys. Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)). Plaintiff utterly fails to meet this pleading standard. In its failed attempt to allege that Defendant NecksGen had the requisite specific intent, the Amended Complaint states only the following: With regard to contributing to infringement of the ‘529 Patent, NecksGen knew, or at least now, has knowledge of the ‘529 Patent. The Complaint in this litigation was filed on August 24, 2016. NecksGen became aware of the litigation on or about August 25, 2016. However, the Complaint was not served on NecksGen until November 2, 2016. Thus, NecksGen has knowledge of the ‘529 Patent since at least about August 25, 2016 . . . Dkt. 12, ¶46. * * * * * With regard to inducing infringement, NecksGen knew, or at least now, has knowledge of the ‘529 Patent for the reasons previously discussed with respect to contributory infringement. Furthermore, NecksGen intended to induce direct infringement by end users (e.g. drivers). For example, the Accused Devices are offered for sale and sold through NecksGen’s website for use in conjunction with a helmet by drivers during the operation of a vehicle. Use of the Accused Devices as induced by NecksGen directly infringes the ‘529 Patent. Dkt. 12, ¶47. The bald statement that Defendant NecksGen “intended to induce direct infringement”, unsupported by any additional facts, cannot sustain a claim of induced infringement. Further, selling Accused Devices on a website allegedly “for use in conjunction with a helmet” does not create a plausible inference that Defendant Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 22 of 30 19 NecksGen specifically intend third-parties to infringe the ‘529 Patent or knew that the acts of these third-parties constituted infringement. In light of these glaring shortcomings, Plaintiff’s amended claims for induced infringement should be dismissed. 3. Plaintiff’s Contributory Infringement Claims Should be Dismissed To state a claim of contributory infringement, a plaintiff must allege facts showing (1) defendant had knowledge of the patent; (2) that the accused devices are material to practicing the invention; (3) that the accused devices have “no substantial non-infringing uses”; and, (4) that the defendant knew that its products were especially made or especially adapted to infringe. In re Bill of Lading, 681 F.3d at 1337. This is in addition to the requirement that the plaintiff allege facts demonstrating third-party direct infringement (supra). First, as is argued supra, the Amended Complaint alleges that Defendant NecksGen only acquired knowledge of the patent-in-suit via the filing of the original Complaint in this action. The Court should find that these facts are insufficient to support a finding of the requisite knowledge to support a claim of contributory infringement. Second, the Amended Complaint fails to allege that the Accused Devices are material to practicing the invention contained in the ‘529 Patent. See Intellectual Ventures I LLC, 2014 WL 868713, at *2-3 (Judge Conrad dismissing claim of contributory infringement, stating, “Plaintiffs are required to allege facts plausibly showing the accused products were material to practicing the invention . . .”). This omission, alone, is grounds for dismissing Plaintiff’s contributory infringement claim. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 23 of 30 20 Third, The Amended Complaint fails to include facts to support the contention that the Accused Devices have no substantial non-infringing uses. See Intellectual Ventures I LLC, 2014 WL 868713, at *2-3 (Judge Conrad dismissing claim of contributory infringement, stating, “Plaintiffs are required to allege facts plausibly showing the accused products . . . have no substantial non-infringing uses.”) Instead, Plaintiff baldly states: The Accused Devices are intended to be used and are used only as a restraint device for controlling a driver’s head during operation of a vehicle, and thus, clearly have no substantial non-infringing uses. Dkt. 12, ¶46. Plaintiff’s threadbare, fact-barren, and conclusory allegations of “no substantial non- infringing uses” are, again, insufficient. Fourth, the Amended Complaint fails to include facts to support the contention that the Accused Devices are especially made or especially adapted to infringe and that Plaintiff knew of this. See Intellectual Ventures I LLC, 2014 WL 868713, at *2-3 (Judge Conrad dismissing claim of contributory infringement, stating “[T]he knowledge element in contributory infringement requires a showing that defendant knew that the product offered was especially made or especially adapted for infringement.”) Instead, Plaintiff merely parrots the required legal jargon and follows-up with a conclusory statement, as follows: NecksGen knows that the Accused Devices are especially made or especially adapted to infringe. For example, NecksGen specifically markets both the NecksGen REV head and neck restraint and the NecksGen REV2LITE head and neck restraint on its website for use with a helmet by drivers during operation of a vehicle. . . Dkt. 12, ¶46 (citations omitted). Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 24 of 30 21 As is the case here, rote “[r]ecitals of the elements of a cause of action, supported by conclusory statements are not sufficient to state a plausible claim for relief.” Intellectual Ventures I, LLC, 2014 WL at *2. It is unclear from the Amended Complaint how marketing a device on-line allegedly for use with a helmet could possibly lead to the conclusion that Defendant NecksGen knew the Accused Devices are especially made or especially adapted to infringe the ‘529 Patent.2 Plaintiff failed to allege facts to support a plausible conclusion that each of the elements of contributory infringement are met. Plaintiff’s contributory infringement claim should be dismissed. Moreover, as this is Plaintiff’s second attempt to plead indirect infringement, and it continues to fall far short of the pleading standard, Defendant NecksGen requests that the dismissal of Plaintiff’s claims of indirect infringement in the Amended Complaint be with prejudice. C. The Amended Complaint Fails to Recite the Necessary Elements To State a Claim for Willful Infringement To state a claim for willful patent infringement, a plaintiff must allege (1) pre-suit knowledge of the patent in suit, and (2) something suggesting defendant’s conduct is “egregious . . . beyond typical infringement.” See Va. Innovation Scis., 983 F. Supp. 2d at 708; Halo, 136 S. Ct. at 1935. Plaintiff fails to meet this standard. Plaintiff’s allegations supporting its claim for willful patent infringement (under 35 U.S.C. §284) consist entirely of the following: 2 Plaintiff infringement theory is fatally flawed. Despite the plain language of Claims 1,8, and 14, Plaintiff asserts that a helmet is not required to infringe. Dkt. 12, ¶25. Yet, here, apparently recognizing its flawed logic, Plaintiff acknowledges that a helmet must be present to establish infringement. Dkt. 12, ¶46. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 25 of 30 22 NecksGen’s infringement of the ‘529 Patent is willful because NecksGen continues to make, import, sell, offer of sale, and/or use the Accused Devices and has knowledge that its actions constitute infringement of the ‘529 Patent (at least since being notified thereof by virtue of this lawsuit). In fact, on information and belief, NecksGen has expanded its infringement of the ‘529 Patent since the filing of this lawsuit by subsequently adding the NecksGen REV2LITE head and neck restraint to its product offerings. Accordingly, pursuant to 35 U.S.C. §284, Simpson is entitled to an increase in the damages awarded up to three times the amount found or assessed by this Court or a jury. Dkt. 12, ¶49. A sufficiently-plead claim of willful infringement requires factual allegations of the defendant’s conduct prior to the filing of the complaint, and the plaintiff must allege facts from which the Court can plausibly infer that the defendant had “pre-filing knowledge of the patent-in-suit.” Va. Innovation Scis., 983 F. Supp. 2d at 706.3 Knowledge of the ‘529 Patent acquired thought the filing of the original Complaint in this matter is insufficient to support allegations of willful infringement. See id. The Court must dismiss Plaintiff’s claim for willful infringement because Simpson failed to allege any actual facts to allow the Court to plausibly conclude that Defendant NecksGen had knowledge of the ‘529 Patent prior to the filing of the original Complaint. In fact, there are not allegations of pre-suit knowledge. Instead Plaintiff merely concedes that Defendant NecksGen only learned of the asserted patent “at least since being notified thereof by virtue of this lawsuit.” Dkt. 12, ¶49. Accordingly, Plaintiff’s claim of willful patent infringement must be dismissed. Further, enhanced damages under 35 U.S.C. §284 “are generally reserved for egregious cases of culpable behavior.” Halo, 136 S. Ct. at 1932. According to the 3 The requirement of pre-suit knowledge in the willful infringement claim context is distinct from the indirect infringement context. See Va. Innovation Scis., 983 F. Supp. 2d at 706. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 26 of 30 23 Supreme Court’s 2016 Halo decision, a finding of willful infringement must be reserved for “misconduct beyond typical infringement” such as “the wanton and malicious pirate” who intentionally infringes another’s patent - with no doubts about its validity or any notion of a defense - for no purpose other than to steal the patentee’s business.” Id. at 1935, 1932 (emphasis added). However, the Amended Complaint only contains allegations of conduct found in garden-variety patent infringement cases, i.e., that NecksGen “continues to make, import, sell, offer of sale, and/or use the Accused Devices and has knowledge that its actions constitute infringement of the ‘529 Patent” and, based “on information and belief, NecksGen has expanded its infringement of the ‘529 Patent since the filling of this lawsuit by subsequently adding the NecksGen REV2LITE head and neck restraint to its product offerings.” Dkt. 12, ¶49. Neither of these allegations support a claim of willful infringement. First, continued sale of the Accused Device at a point when infringement is a contested issue does not make this case willful. To allow otherwise would require every defendant in a patent infringement case to stop its allegedly infringing conduct while litigation is pending regardless of the weakness of the claim or strength of the defenses. Thereby, granting a plaintiff a de facto injunction. Notably Plaintiff has not moved this court to enjoin the sale of the Accused Devices during the pendency of this action and only seeks permanent injunctive relief if it should prevail on the merits. Dkt. 12, ¶E. Second, Plaintiff has alleged that Defendant NecksGen’s allegedly “new” product, the REV2LITE, is identical to NecksGen’s REV which was identified in the Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 27 of 30 24 original Complaint. Dkt. 12, ¶22. As such there has been no expansion of NecksGen’s alleged infringement. Accordingly, there are simply no facts alleged in the Amended Complaint to plausibly support a finding that this is an instance of “misconduct beyond typical infringement” or an “egregious case [ ] of culpable behavior.” Halo at 1935; see Nanosys, Inc. v. QD Vision, Inc., 2016 WL 4943006, at *7-8 (N.D. Cal. Sept. 16, 2016)(dismissing willful infringement claim under Halo where plaintiff did not allege more than “mere knowledge” of the patent). Accordingly, Plaintiff’s claim of willful infringement should be dismissed and its prayer for enhanced damages pursuant to 35 U.S.C. §284 should be stricken. Moreover, as this is Plaintiff’s second attempt to plead willful infringement, and it continues to fall far short of the pleading standard, Defendant NecksGen requests that the dismissal of Plaintiff’s claims of willful infringement in the Amended Complaint be with prejudice. 4. CONCLUSION For the foregoing reasons, the allegations in Plaintiff’s single count Amended Complaint relating to direct infringement, indirect infringement, and willful infringement are fatally defective. Defendant NecksGen respectfully requests that the Amended Complaint be dismissed with prejudice. [Signature on next page.] Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 28 of 30 25 Respectfully submitted this 25th day of January, 2017. /s/ Luke Anderson Luke Anderson (NC Bar No. 24,919) Atlanta Technology Law (Luke Anderson P.C.) 1230 Peachtree St., NE Suite 1900 Atlanta, Georgia 30309 Telephone 404-991-2241 Facsimile: 404-935-0927 E-Mail: Landerson@atltechlaw.com Counsel for Defendant NecksGen, Inc. Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 29 of 30 26 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA STATESVILLE DIVISION SIMPSON PERFORMANCE PRODUCTS, INC., Plaintiff, v. NECKSGEN INC., Defendant. ) ) ) ) ) ) ) ) ) Civil Action: 5:16-cv-00153-RLV-DCK JURY TRIAL DEMANDED CERTIFICATE OF SERVICE I hereby certify that on January 25, 2017 I electronically filed the within and forgoing DEFENDANT’S BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) with the Clerk of Court using the CM/ECF system which will automatically send email notification of such filing to the following attorneys of record: Craig N. Killen, Esq. Nelson Mullins Riley & Scarborough, LLP Bank of America Corporate Center Suite 4200 100 North Tryon Street Charlotte, North Carolina 28202 Karl S. Sawyer, Jr., Esq. Nelson Mullins Riley & Scarborough, LLP Bank of America Corporate Center Suite 4200 100 North Tryon Street Charlotte, North Carolina 28202 Gregory R. Everman, Esq. Everman Law Firm, P.A. 6000 Fairview Road, Suite 1200 Charlotte, North Carolina 28210 /s/ Luke Anderson Luke Anderson (NC Bar No. 24,919) Case 5:16-cv-00153-RLV-DCK Document 16-1 Filed 01/25/17 Page 30 of 30