`
`
`
`RUSS AUGUST & KABAT
`Brian Ledahl (CA SB No. 186579)
`Neil A. Rubin (CA SB No. 250761)
`Jacob Buczko (CA SB No. 269408)
`Paul A. Kroeger (CA SB No. 229074)
`Timothy T. Hsieh (CA SB No. 255953)
`12424 Wilshire Boulevard 12th Floor
`Los Angeles, California 90025
`Telephone: 310-826-7474
`Facsimile: 310-826-6991
`bledahl@raklaw.com
`nrubin@raklaw.com
`jbuczko@raklaw.com
`pkroeger@raklaw.com
`thsieh@raklaw.com
`
`Attorneys for Plaintiff
`Document Security Systems, Inc.
`
`
`
`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA
`
`Plaintiff,
`
`DOCUMENT SECURITY SYSTEMS,
`INC., a New York corporation,
`
`
`vs.
`
`LITE-ON, INC., a California
`corporation, and LITE-ON
`TECHNOLOGY CORPORATION, a
`Taiwanese corporation,
`
`
`
`
`Defendants.
`
`
`
`
`
`
`
`Case No. 2:17-cv-6050-JVS-JCG
`
`
`PLAINTIFF DOCUMENT
`SECURITY SYSTEMS, INC.’S
`OPPOSITION TO DEFENDANTS’
`MOTION TO DISMISS THE FIRST
`AMENDED COMPLAINT
`
`
`
`
`
`
`
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`
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`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 2 of 20 Page ID #:375
`TABLE OF CONTENTS
`
`
`
`PAGE
`
`I.
`
`INTRODUCTION .............................................................................................. 1
`
`II. BACKGROUND ................................................................................................ 1
`
`III. LEGAL STANDARDS .................................................................................. 3
`
`IV. ARGUMENT .................................................................................................. 5
`
`A. DSS Pleads Willful Infringement Beyond the Required Standard .................... 6
`1. Lite-On Confuses Pleading with Proving Willfulness .................................... 6
`2. DSS Sufficiently Pleads Willfulness Under Halo .......................................... 8
`3. Though Not Necessary at this Stage, DSS Pleads Specific Egregious
`Infringement by Defendants ................................................................................ 10
`
`B. DSS Properly Addressed the Court’s Order (Dkt. No. 44) and Removed the
`Language the Court Deemed a Concession Regarding Willful Infringement ........ 11
`
`C. DSS’s FAC Introduces New Allegations to Support Its Pleading of Willful
`Infringement ............................................................................................................ 12
`
`V. CONCLUSION ................................................................................................ 13
`
`
`
`
`i
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`TABLE OF CONTENTS
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 3 of 20 Page ID #:376
`TABLE OF AUTHORITIES
`
`
`
`PAGE
`
`
`Cases
`
`Advanced Analogic Technologies, Inc. v. Kinetic Technologies, Inc.,
`No. C-09-1360 MMC, 2009 WL 1974602 (N.D. Cal. July 8, 2009).............. 7
`
`Apple Inc. v. Samsung Electronics Co., Ltd.,
`258 F. Supp. 3d 1013 (N.D. Cal. 2017) .......................................................... 9
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ........................................................................................ 3
`
`Bayer Healthcare, LLC v. Baxalta, Inc.,
`No. 16-1122, 2017 U.S. Dist. LEXIS 126904 (D. Del. Aug. 10, 2017) ....... 10
`
`Bell Atlantic Corp. v. Twombly,
`550 U.S. 544 (2007) ........................................................................................ 3
`
`Bio-Rad Labs. Inc. v. Thermo Fisher Sci. Inc.,
`No. CV 16-358-RGA, 2017 WL 438733 (D. Del. Feb. 1, 2017) ............. 6, 10
`
`Bobcar Media, LLC v. Aardvark Event Logistics,
`Inc. No. 16-885, 2017 WL 74729 (S.D.N.Y. Jan. 4, 2017) ...................... 8, 10
`
`Boundaries Sols. Inc. v. CoreLogic, Inc.,
`No. 5:14-CV-00761-PSG, 2014 WL 4954017
`(N.D. Cal. Sept. 29, 2014) .................................................................... 5, 7, 10
`
`Cont’l Circuits LLC v. Intel Corp.,
`No. 16-cv-2026 PHX DGC, 2017 WL 2651709 (D. Ariz. June 19, 2017) .... 8
`
`DermaFocus LLC v. Ulthera, Inc.,
`201 F. Supp. 3d 465 (D. Del. 2016) ............................................................ 6, 9
`
`DRG-International, Inc. v. Bachem Americas, Inc.,
`Case No. CV-15-7276-MWF (SSx), 2016 WL 3460791
`(C.D. Cal. Jan. 5, 2016) .......................................................................... 1, 4, 5
`
`Emblaze Ltd. v. Apple Inc.,
`No. C11-01079 SBA, 2012 WL 5940782 (N.D. Cal. Nov. 27, 2012) .... 1, 5, 7
`
`
`
`
`TABLE OF AUTHORITIES
`
`ii
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`RUSS, AUGUST & KABAT
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`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 4 of 20 Page ID #:377
`TABLE OF AUTHORITIES
`(continued)
`
`
`
`PAGE
`
`Finjan Inc. v. Cisco Sys. Inc.,
`No. 17-cv-00072-BLF, 2017 WL 2462423 (N.D. Cal. June 7, 2017) ............ 8
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`
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`Global–Tech Appliances, Inc. v. SEB S.A.,
`563 U.S. 754 (2011) ...................................................................................... 12
`
`Halo Electronics, Inc. v. Pulse Electronics, Inc.,
`__ U.S. __, 136 S. Ct. 1923, 195 L. Ed. 2d 278 (2016) ......................... passim
`
`IpVenture, Inc. v. Cellco P’ship,
`No. C 10-04755 JSW, 2011 WL 207978 (N.D. Cal. Jan. 21, 2011) .............. 4
`
`Jardin v. Datallegro, Inc.,
`No. 08CV1462-IEG-RBB, 2009 WL 186194 (S.D. Cal. Jan. 20, 2009) .... 5, 7
`
`Manzarek v. St. Paul Fire & Marine Ins. Co.,
`519 F.3d 1025 (9th Cir. 2008) ........................................................................ 3
`
`McZeal v. Sprint Nextel Corp.,
`501 F.3d 1354 (Fed. Cir. 2007) ...................................................................... 8
`
`MobileMedia Ideas LLC v. HTC Corp.,
`No. 2:10-CV-112-TJW, 2011 WL 4347037 (E.D. Tex. Sept. 15, 2011)........ 4
`
`mophie, Inc. v. Shah,
`No. SA CV 13-01321-DMG (JEMx), 2014 WL 10988347
`(C.D. Cal. No. 12, 2014) ............................................................................... 13
`
`Nanosys, Inc. v. QD Vision, Inc.,
`No. 16-cv-01957, 2016 WL 49430006 (N.D. Cal. Sept. 16, 2016) ........ 4, 6, 9
`
`Novitaz, Inc. v. inMarket Media, LLC,
`No. 16-cv-06795-EJD, 2017 WL 2311407 (N.D. Cal. May 26, 2017) ........ 10
`
`Oakley, Inc. v. 5.11, Inc.,
`No. 11CV2173 WQH CAB, 2012 WL 5363245 (S.D. Cal. Oct. 29, 2012) ... 6
`
`Oracle Corp. v. DrugLogic, Inc.,
`807 F. Supp. 2d 885 (N.D. Cal. 2011) ........................................................ 1, 4
`
`
`
`iii
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`
`TABLE OF AUTHORITIES
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 5 of 20 Page ID #:378
`TABLE OF AUTHORITIES
`(continued)
`Progme Corp. v. Comcast Cable Commc'n LLC,
`No. 17-1488, 2017 WL 5070723 (E.D. Pa. Nov. 3, 2017) ......................... 6, 9
`
`PAGE
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`Rambus, Inc. v. Nvidia Corp.,
`No. C 08-3343 SI, 2008 WL 4911165 (N.D. Cal. Nov. 13, 2008) ............. 1, 7
`
`Robert Bosch Healthcare Sys., Inc. v. Express MD Sols., LLC,
`No. C 12-00068 JW, 2012 WL 2803617 (N.D. Cal. July 10, 2012) .............. 8
`
`Shire Viropharma Inc. v. CSL Behring LLC et al.,
`No. 17-414, 2018 WL 326406 (D. Del. Jan. 8, 2018) .................................... 6
`
`Shroyer v. New Cingular Wireless Servs., Inc.,
`622 F.3d 1035 (9th Cir. 2010) ......................................................................... 3
`
`Sony Corp. v. LG Electronics U.S.A., Inc.,
`768 F. Supp. 2d 1058 (C.D. Cal. 2011) .......................................................... 7
`
`Straight Path IP Grp., Inc. v. Apple Inc.,
`No. C 16-03582 WHA, 2017 WL 3967864 (N.D. Cal. Sept. 9, 2017) ....... 4, 9
`
`The Tawnsaura Group, LLC v. Maximum Human Performance, LLC,
`No. CV 12-07189-SJO-(AGRx), 2012 WL 12331032
`(C.D. Cal. Nov. 7, 2012) ............................................................................... 13
`
`Varion Med. Sys., Inc. v. Elekta AB,
`No. 15-cv-871-LPS, 2016 WL 3748772 (D. Del. July 12, 2016) ................... 8
`
`XpertUniverse, Inc. v. Cisco Systems, Inc.,
`No. 17-cv-03848-RS, 2017 WL 4551519 (N.D. Cal. Oct. 11, 2017) ............. 7
`
`Zimmer Surgical, Inc. v. Stryker Corp.,
`No. CV 16-679-RGA-MPT, 2017 WL 3736750 (D. Del. Aug. 30, 2017) ..... 9
`
`Statutes
`
`35 U.S.C. § 284 ................................................................................................. 3, 4, 9
`
`
`
`iv
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`TABLE OF AUTHORITIES
`
`
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 6 of 20 Page ID #:379
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`I.
`
`INTRODUCTION
`
`Defendant Lite-On, Inc. (“Lite-On”) moves
`
`to dismiss
`
`the willful
`
`infringement allegations in plaintiff Document Security Systems, Inc. (“DSS” or
`
`“Plaintiff”)’s First Amended Complaint (“FAC”). Lite-On’s motion (Dkt. No. 42)
`
`mischaracterizes the FAC’s willful infringement allegations and misapplies the
`
`law. Lite-On confuses the standard for pleading willful infringement – the issue
`
`here – with the standard for ultimately proving willful infringement – which is not
`
`at issue in this motion. The standard for pleading willful infringement is
`
`unquestionably not the same as the standard to prove willfulness. DRG-
`
`International, Inc. v. Bachem Americas, Inc., Case No. CV-15-7276-MWF (SSx),
`
`2016 WL 3460791, at *9 (C.D. Cal. Jan. 5, 2016); Emblaze Ltd. v. Apple Inc., No.
`
`C11-01079 SBA, 2012 WL 5940782, at *8 (N.D. Cal. Nov. 27, 2012); Rambus,
`
`Inc. v. Nvidia Corp., No. C 08-3343 SI, 2008 WL 4911165, at *2 (N.D. Cal. Nov.
`
`13, 2008). To plead willful infringement, a party only need only plead “the barest
`
`factual assertion of knowledge of an issued patent.” DRG-International, 2016 WL
`
`3460791, at *9, quoting Oracle Corp. v. DrugLogic, Inc., 807 F. Supp. 2d 885, 902
`
`(N.D. Cal. 2011) (citation omitted). DSS has undoubtedly surpassed and exceeded
`
`the pleading requirements, and Lite-On’s motion must be denied.
`
`II. BACKGROUND
`
`On November 14, 2017, the Court granted (Dkt. No. 35) a stipulated
`
`withdrawal (Dkt. No. 34) of Lite-On’s previous Motion to Dismiss (Dkt. No. 20)
`
`and ordered DSS to file an amended complaint.
`
`On November 16, 2017, DSS filed its FAC alleging that Defendants Lite-On
`
`and Lite-On Technology Corporation (collectively, “Defendants”) infringed the
`
`three patents making up the patents-in-suit: the ‘771 Patent, the ‘087 Patent, and
`
`the ‘486 Patent (Dkt. No. 36). The FAC accuses Defendants of willfully infringing
`
`the ’771, ’087 and ’486 patents. The FAC also alleges Defendants’ knowledge of
`
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`1
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 7 of 20 Page ID #:380
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`the ‘771, ‘087 and ‘486 patents and Defendants’ knowledge that it and its
`
`customers infringed and continued to infringe each patent.
`
`The language of the paragraphs in the FAC that allege willful infringement
`
`and knowledge of the patents-in-suit recite, in pertinent part:
`
`“Defendants have been aware of the [asserted patent] and of its
`infringement as of a date no later than [earliest date and how
`Defendants were notified]. Since that date, Defendants have failed to
`investigate and remedy their infringement of the [asserted patent] and
`thus willfully and egregiously continue to infringe the [asserted
`patent]. On information and belief, Defendants continued to offer
`infringing products without having modified or altered those products
`in a manner that would not infringe the [asserted patent]. Defendants,
`at the very least, have been egregiously and willfully blind to
`infringement of the [asserted patent]. Further evidence of Defendants’
`egregious and willful infringement are the acts of active inducement
`described
`in
`this Complaint. Defendants actively
`induce and
`encourage customers to make, use, sell, offer to sell and/or import the
`[asserted patent] Accused Instrumentalities with knowledge that these
`acts constitute infringement of the [asserted patent], with the purpose
`of, inter alia, developing and serving the United States market for
`Defendants’ LED products and consumer devices that include
`Defendants’ products.”
`
`(Dkt. No. 36 at ¶¶ 21, 31 & 43).
`
`Regarding pre-suit notice, specifically, paragraph 21 of the FAC states that
`
`“Defendants have been aware of the ’771 Patent and of its infringement as of a
`
`date no later than July 5, 2017, when DSS contacted Defendants and provided
`
`Defendants a list of patents that included the ’771 patent and described that
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`Defendants may infringe the ’771 Patent.” (Dkt. No. 36 at ¶ 21). 1
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`Furthermore, paragraph 31 of the FAC states that “Defendants have been
`
`aware of the ’087 Patent and of its infringement as of a date no later than August 6,
`
`2015, when, during the prosecution of Defendants’ U.S. Patent No. 9,202,805, the
`
`
`1 Lite-On, in a footnote within the Background section of their motion (Dkt. No. 42
`at 3, fn.2) appears to argue that the letter sent July 5, 2017 may be insufficient
`notice. Lite-On is again trying to impermissibly argue proving (and the sufficiency
`of proving), not pleading pre-suit knowledge for willfulness. DSS has also
`responded to this argument before (and cited relevant case law) in its Opposition to
`Lite-On’s first Motion to Dismiss (Dkt. No. 27 at 18-20).
`2
`
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 8 of 20 Page ID #:381
`
`
`
`examiner cited the ’087 patent as the first in a “list of References Cited by
`
`Examiner.” Defendants were then again notified of the ’087 patent on July 5, 2017,
`
`when DSS contacted Defendants and provided Defendants a list of patents that
`
`included the ’087 patent and described that Defendants may infringe the ’087
`
`Patent.” Id. at ¶ 31.
`
`In addition, paragraph 43 of the FAC states that “Defendants have been
`
`aware of the ’486 Patent and of its infringement as of a date no later than July 5,
`
`2017, when DSS contacted Defendants and provided Defendants a list of patents
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`that included the ’486 patent and described that Defendants may infringe the ’486
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`Patent.” Id. at ¶ 34.
`
`III. LEGAL STANDARDS
`
`A claim can be dismissed only if there is “no cognizable legal theory” for
`
`the claim or where there is “an absence of sufficient facts alleged to support a
`
`cognizable legal theory.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d
`
`1035, 1041 (9th Cir. 2010). A complaint must state a claim that is “plausible on its
`
`face,” but need not establish that the claim is “probable.” Ashcroft v. Iqbal, 556
`
`U.S. 662, 678 (2009). The complaint “does not need detailed factual allegations”
`
`to state a claim. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
`
`On a motion to dismiss, courts accept as true a plaintiff’s well-pleaded
`
`factual allegations and construe all factual inferences in the light most favorable to
`
`the plaintiff. See Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025,
`
`1031 (9th Cir. 2008). Therefore, as long as a Complaint “pleads factual content
`
`that allows the court to draw the reasonable inference that the defendant is liable
`
`for the misconduct alleged” it is sufficient under Rule 12(b)(6). Iqbal, 556 U.S. at
`
`678 (quoting Twombly, 550 U.S. at 570.)
`
`In Halo Electronics, Inc. v. Pulse Electronics, Inc., __ U.S. __, 136 S. Ct.
`
`1923, 195 L. Ed. 2d 278 (2016), the Supreme Court emphasized that the district
`
`court should exercise its discretion as provided in 35 U.S.C. § 284 to determine
`3
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`
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`
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 9 of 20 Page ID #:382
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`
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`whether to award enhanced damages. The Supreme Court further explained that
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`the patentee must show that the infringement was an “egregious case[] of
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`misconduct beyond typical infringement.” Id. at 1935.
`
`The Halo case replaced the previous “unduly rigid” legal standard for
`
`willful/egregious infringement under 35 U.S.C. § 284 with a “more flexible
`
`standard.” Id. Moreover, “a patent infringement plaintiff does not have to prove
`
`willfulness at the pleading stage.” Straight Path IP Grp., Inc. v. Apple Inc., No. C
`
`16-03582 WHA, 2017 WL 3967864, at *4 (N.D. Cal. Sept. 9, 2017).
`
`The standard for pleading willful infringement is lower than and different
`
`from the standard for proving willful infringement, under, for example, the 2016
`
`U.S. Supreme Court case of Halo. See Nanosys, Inc. v. QD Vision, Inc., No. 16-cv-
`
`01957, 2016 WL 49430006, at *7 (N.D. Cal. Sept. 16, 2016) (“Despite defendants’
`
`assertion [that plaintiffs need to allege more than ‘mere knowledge’ to sustain a
`
`willfulness claim], the Court disagrees that Halo created a special test [for
`
`pleading because it] did not address pleading standards at the motion to dismiss
`
`stage”); DRG-International, 2016 WL 3460791, at *10; see also MobileMedia
`
`Ideas LLC v. HTC Corp., No. 2:10-CV-112-TJW, 2011 WL 4347037, at *2 (E.D.
`
`Tex. Sept. 15, 2011) (“this Court has observed that, much like direct infringement
`
`and its pleading requirements in accordance with Form 18 and Federal Circuit law,
`
`the bar for pleading willful infringement is not high”).
`
`To state a claim for willful infringement, the plaintiff must provide “a
`
`pleading equivalent” to the defendant having “knowledge of the patent and of his
`
`infringement.” Oracle, 807 F. Supp. 2d at 902. “Therefore, to plead willful
`
`infringement, a party must make out ‘the barest factual assertion of knowledge of
`
`an issued patent.’” Id.; IpVenture, Inc. v. Cellco P’ship, No. C 10-04755 JSW,
`
`2011 WL 207978, at *2 (N.D. Cal. Jan. 21, 2011).
`
`Moreover, “[w]here a complaint (1) specifically identifies the accused
`
`products, (2) alleges pre-suit knowledge, (3) alleges the infringing acts are willful,
`4
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`
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`1
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`2
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`3
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`5
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`RUSS, AUGUST & KABAT
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`
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 10 of 20 Page ID #:383
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`intentional and conscious and (4) alleges plaintiff has and will continue to be
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`irreparably harmed by the infringement, that complaint sufficiently states a claim
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`for willful infringement.” DRG-International, 2016 WL 3460791, at *11, quoting
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`Boundaries Sols. Inc. v. CoreLogic, Inc., No. 5:14-CV-00761-PSG, 2014 WL
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`4954017, at *5 (N.D. Cal. Sept. 29, 2014); Emblaze Ltd., 2012 WL 59409782, at
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`*8; Jardin v. Datallegro, Inc., No. 08CV1462-IEG-RBB, 2009 WL 186194, at *7
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`(S.D. Cal. Jan. 20, 2009).
`
`IV. ARGUMENT
`
`The FAC more than sufficiently pleads willful infringement for the ’771,
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`’087 and ‘486 Patents because it provides “a pleading equivalent” to Lite-On
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`having knowledge of those patents and their infringement, makes out the factual
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`basis of Lite-On’s knowledge of those patents, and finally because it: (1)
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`specifically identifies the accused products (See e.g., Dkt. No. 36 at ¶ 14-18, 23-28
`
`& 34-40), (2) alleges pre-suit knowledge (See Dkt. No. 36 at ¶ 21, 31 & 43)2, (3)
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`alleges the infringing acts are willful, intentional and conscious (See Dkt. No. 36 at
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`¶ 21, 31 & 43) and (4) alleges plaintiff has and will continue to be irreparably
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`harmed by the infringement (See Dkt. No. 36 at ¶ 21, 31 & 43).
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`Lite-On attempts to side-step the applicable law by arguing that the willful
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`infringement claims in DSS’s FAC “amount to nothing more than a rewording of
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`the inadequate allegations from its original Complaint.” (Dkt. No. 42 at 7). This
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`mischaracterizes the allegations of the FAC. The FAC adds substantial specific
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`allegations of Defendants’ knowledge of the ’771, ’087 and ’486 patents,
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`knowledge that Defendants and their customers infringed, and, though not
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`required, specific allegations of egregious behavior by the Defendants, including
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`actively inducing and instructing customers to infringe DSS’s patents knowing
`
`
`2 Again, in response to Lite-On’s footnoted arguments in the Background section
`of its motion (Dkt. No. 42 at 3, fn. 2) the proper test under the law is simply
`alleging pre-suit knowledge, not proving the sufficiency of pre-suit knowledge.
`5
`
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 11 of 20 Page ID #:384
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`such actions constitute infringement of DSS’s patents.
`
`A. DSS Pleads Willful Infringement Beyond the Required
`Standard
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`Lite-On argues that the allegations in DSS’s FAC fall short of alleging any
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`facts sufficient to state a plausible willful infringement claim under Halo, which
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`requires willful infringement claims for “egregious cases of misconduct beyond
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`typical infringement.” (Dkt. No. 42 at 10).
`
`1.
`
`Lite-On Confuses Pleading with Proving Willfulness
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`Lite-On confuses the standard for proving willful infringement with the
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`standard for pleading willful infringement. See Shire Viropharma Inc. v. CSL
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`Behring LLC et al., No. 17-414, 2018 WL 326406, at *1 (D. Del. Jan. 8, 2018)
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`(“Defendants' argument seems to conflate the standards for pleading willful
`
`infringement with the standards for proving willful infringement. Even after Halo,
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`broader allegations of willfulness, without a specific showing of egregiousness, are
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`sufficient to withstand a motion to dismiss.”); accord Progme Corp. v. Comcast
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`Cable Commc'n LLC, No. 17-1488, 2017 WL 5070723, at *12 (E.D. Pa. Nov. 3,
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`2017); Bio-Rad Labs. Inc. v. Thermo Fisher Sci. Inc., No. CV 16-358-RGA, 2017
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`WL 438733, at *1 (D. Del. Feb. 1, 2017); DermaFocus LLC v. Ulthera, Inc., 201
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`F. Supp. 3d 465, 473 (D. Del. 2016) (“Under the less rigid standard announced in
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`Halo, however, the court will allow plaintiff’s general allegations of willful
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`infringement to withstand the motion to dismiss”).
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`Many district courts agree that cases like Halo or Seagate do not alter the
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`pleading requirements for a willful infringement claim. See, e.g., Nanosys, 2016
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`WL 49430006, at *7 (“Despite defendants’ assertion [that plaintiffs need to allege
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`more than ‘mere knowledge’ to sustain a willfulness claim], the Court disagrees
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`that Halo created a special test [for pleading because it] did not address pleading
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`standards at the motion to dismiss stage”); see also Oakley, Inc. v. 5.11, Inc., No.
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`11CV2173 WQH CAB, 2012 WL 5363245, at *2 (S.D. Cal. Oct. 29, 2012)
`
`
`
`6
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`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 12 of 20 Page ID #:385
`
`
`
`(“‘[T]he issue at this stage in the proceedings is limited to the sufficiency of the
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`pleadings. The [SAC] complaint identifies the specific products alleged to infringe
`
`and alleges that the Defendants’ had written notice of the issued patents before the
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`action was filed. The Court concludes that [SAC] sufficiently alleges willful
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`infringement.”); Emblaze Ltd., 2012 WL 5940782, at *8; Sony Corp. v. LG
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`Electronics U.S.A., Inc., 768 F. Supp. 2d 1058, 1064 (C.D. Cal. 2011); Advanced
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`Analogic Technologies, Inc. v. Kinetic Technologies, Inc., No. C-09-1360 MMC,
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`2009 WL 1974602, at *2 (N.D. Cal. July 8, 2009); Jardin, 2009 WL 186194, at *7;
`
`Rambus v. Nvidia Corp., No. C 08-3343 SI, 2008 WL 4911165, at *2 (N.D. Cal.
`
`Nov. 13, 2008).
`
`DSS has more than sufficiently pled willful infringement at least because its
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`FAC (1) specifically identifies the accused products (See e.g., Dkt. No. 36 at ¶ 14-
`
`18, 23-28 & 34-40), (2) alleges pre-suit knowledge (See Dkt. No. 36 at ¶ 21, 31 &
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`43), (3) alleges the infringing acts are willful, intentional and conscious (See Dkt.
`
`No. 36 at ¶ 21, 31 & 43) and (4) alleges plaintiff has and will continue to be
`
`irreparably harmed by the infringement (See Dkt. No. 36 at ¶ 21, 31 & 43).
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`Boundaries, 2014 WL 4954017, at *5.
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`Furthermore, the cases that Lite-On cites are inapposite and distinguishable
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`because they involve bare conclusory statements far below the substance that
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`DSS’s FAC provides, or determinations involving the merits of proving, not
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`pleading willful infringement, as described above. See XpertUniverse, Inc. v. Cisco
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`Systems, Inc., No. 17-cv-03848-RS, 2017 WL 4551519, at *6 (N.D. Cal. Oct. 11,
`
`2017)
`
`(“Although XpertUniverse has alleged knowledge and continued
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`infringement, it needs to do more to show that Cisco has engaged in ‘egregious
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`cases of misconduct beyond typical infringement’ that could possibly warrant
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`enhanced damages…Cisco for its part maintains that it accepted the Delaware
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`court's infringement judgment against Remote Expert versions 1.5 and 1.8 and
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`proceeded with a design-around in subsequent versions. Disagreement about the
`7
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`
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`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
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`RUSS, AUGUST & KABAT
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`
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`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 13 of 20 Page ID #:386
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`existence of continued infringement does not necessarily indicate willful or
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`deliberate misconduct.”); Finjan Inc. v. Cisco Sys. Inc., No. 17-cv-00072-BLF,
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`2017 WL 2462423, at *5 (N.D. Cal. June 7, 2017) (“the FAC does not contain
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`factual allegations that would enable the Court to plausibly conclude that Cisco
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`had pre-suit knowledge of any of the Asserted Patents”); Varion Med. Sys., Inc. v.
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`Elekta AB, No. 15-cv-871-LPS, 2016 WL 3748772, at *8 (D. Del. July 12, 2016)
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`(“Plaintiff does little more than provide a formulaic recitation of the pre-Halo
`
`elements of a willful infringement claim”); Cont’l Circuits LLC v. Intel Corp3., No.
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`16-cv-2026 PHX DGC, 2017 WL 2651709, at *8 (D. Ariz. June 19, 2017) (“The
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`second amended complaint adds the word ‘egregious’ to its allegations that
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`Defendants’ ‘infringement of the Patents-in-Suit has been and continues to be
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`egregious, willful, wanton, malicious, in bad faith, deliberate, consciously
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`wrongful, and/or flagrant’…but this is merely a conclusion, which is not
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`sufficient.”). In sum, these cases failed to allege facts of pre-suit knowledge
`
`(beyond a mere conclusory recital). Here there is no dispute that DSS has alleged
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`factually how Defendants obtained knowledge of the patents-in-suit (and the
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`allegations of infringement).
`
`2.
`
`DSS Sufficiently Pleads Willfulness Under Halo
`
`Since the U.S. Supreme Court altered the legal standard for willful/egregious
`
`infringement in in Halo in 2016, there have been few, if any, decisions altering the
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`pleading standard under the new law. See Bobcar Media, LLC v. Aardvark Event
`
`Logistics, Inc. No. 16-885, 2017 WL 74729, at *5-6 (S.D.N.Y. Jan. 4, 2017)
`
`
`3 The cases that Lite-On cites not within the Ninth Circuit are further
`distinguishable because “a motion to dismiss for failure to state a claim upon
`which relief can be granted is a purely procedural question not pertaining to patent
`law” and thus, courts should apply “the law of the regional circuit” in evaluating
`such a motion. Robert Bosch Healthcare Sys., Inc. v. Express MD Sols., LLC, No.
`C 12-00068 JW, 2012 WL 2803617, at *2–4 (N.D. Cal. July 10, 2012), quoting
`McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1355–56 (Fed. Cir. 2007).
`8
`
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 14 of 20 Page ID #:387
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`(Halo’s “effect on the pleading standard for willful infringement remains
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`unclear.”); Nanosys, 2016 WL 4943006, at *8 (“Halo did not address pleading
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`standards at the motion to dismiss stage.”). One recent decision, however, held that
`
`similar, if not less detailed, allegations of willful infringement were sufficient to
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`sustain a willful/egregious infringement claim at the pleading stage. Straight Path
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`IP Grp., Inc. 2017 WL 3967864, at *4. The Northern District of California court
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`reasoned that Halo rejected the previous “unduly rigid” test under 35 U.S.C. § 284
`
`for a more “flexible” inquiry and this affected the pleading requirements for
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`willful/egregious
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`infringement post-Halo. Id. The court accordingly held
`
`allegations a defendant “was aware of the [] asserted patents and their infringement
`
`since at least September 24, 2014, and that [defendant] nonetheless continued to
`
`sell the accused products and induce infringement by its customers after that date”
`
`were sufficient to sustain a willful/egregious infringement claim at the pleading
`
`stage. Id. DSS’s allegations in its FAC go much further than this and more than
`
`sufficiently plead willful infringement because its FAC (1) specifically identifies
`
`the accused products (See e.g., Dkt. No. 36 at ¶ 14-18, 23-28 & 34-40), (2) alleges
`
`pre-suit knowledge (See Dkt. No. 36 at ¶ 21, 31 & 43), (3) alleges the infringing
`
`acts are willful, intentional and conscious (See Dkt. No. 36 at ¶ 21, 31 & 43)4 and
`
`
`4 The FAC alleges specific pre-filing and post-filing willful and egregious conduct.
`Several district courts have held that after Halo, post-filing conduct can also serve
`as a basis for willful infringement. See Apple Inc. v. Samsung Electronics Co.,
`Ltd., 258 F. Supp. 3d 1013, 1027 (N.D. Cal. 2017) (“[Defendant]’s post-filing
`conduct alone can serve as the basis of a jury’s willfulness finding and an award
`of enhanced damages.”); Zimmer Surgical, Inc. v. Stryker Corp., No. CV 16-679-
`RGA-MPT, 2017 WL 3736750, at *2 (D. Del. Aug. 30, 2017) (“I am going to
`conclude, based on the analysis in Apple v. Samsung, that allegations of post-filing
`conduct can support a finding of willfulness.”); Progme Corp. v. Comcast Cable
`Commc'ns LLC, No. CV 17-1488, 2017 WL 5070723, at *12 (E.D. Pa. Nov. 3,
`2017); DermaFocus LLC v. Ulthera, Inc., 201 F. Supp. 3d 465 (D. Del. 2016)
`(“Under the less rigid standard announced in Halo, however, the court will allow
`plaintiff’s general allegations of willful infringement to withstand the motion to
`dismiss.”)
`
`
`
`9
`
`
`
`PLAINTIFF DOCUMENT SECURITY SYSTEMS, INC.’S OPPOSITION
`TO DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`RUSS, AUGUST & KABAT
`
`
`
`Case 2:17-cv-06050-JVS-JCG Document 43 Filed 01/12/18 Page 15 of 20 Page ID #:388
`
`
`