Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 1 of 6 Page ID #:394
`
`Christopher Kao (SBN 237716)
` ckao@velaw.com
`David J. Tsai (SBN 244479)
` dtsai@velaw.com
`Brock S. Weber (SBN 261383)
` bweber@velaw.com
`VINSON & ELKINS L.L.P.
`555 Mission Street, Suite 2000
`San Francisco, CA 94105
`Tel.: 415.979.6900
`Fax: 415.651.8786
`
`Attorneys for Defendant
`Lite-On, Inc.
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`DOCUMENT SECURITY SYSTEMS,
`INC., a New York corporation,
`
`Plaintiff,
`
`vs.
`LITE-ON, INC., a California corporation,
`and LITE-ON TECHNOLOGY
`CORPORATION, a Taiwanese
`corporation,
`
`Defendants.
`
`Case No. 2:17-cv-6050-JVS-JCG
`
`DEFENDANT LITE-ON, INC.’S
`REPLY IN SUPPORT OF ITS
`MOTION TO DISMISS
`PLAINTIFF’S COMPLAINT
`UNDER RULE 12(B)(6)
`Date: February 5, 2018
`Time: 1:30 p.m.
`Courtroom: 10C
`Judge: Honorable James V. Selna
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`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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`Case No. 17-cv-6050-JVS-JCG
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`Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 2 of 6 Page ID #:395
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`Defendant Lite-On, Inc. (“Lite-On”) respectfully submits this reply brief in
`support of its Motion to Dismiss Plaintiff’s Complaint Under Rule 12(B)(6) (Dkt. 42,
`“Motion”) and in response to Plaintiff Document Security Systems, Inc.’s (“DSS’s”)
`Opposition (Dkt. 43, “Opp.”).
`
`I.
`
`INTRODUCTION
`Plaintiff’s Opposition fails to rebut the showing in Lite-On’s Motion to Dismiss
`that the allegations of willful patent infringement in the First Amended Complaint
`(Dkt. 36, “FAC”) are legally deficient. These claims lack any factual support and
`Plaintiff has failed to cure any of the deficiencies in its original Complaint.
`Accordingly, Plaintiff’s claims for willful infringement in the FAC should be
`dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
`ARGUMENT
`PLAINTIFF DOES NOT ADEQUATELY PLEAD WILLFUL
`INFRINGEMENT.
`A.
`Plaintiff Merely Alleges that Lite-On has Acted “Egregiously” by
`Continuing its Previous Activities, Which is Insufficient as a Matter
`of Law.
`As an initial matter, Plaintiff argues in its Opposition that Lite-On confuses the
`standard for proving willful infringement with the standard for pleading willful
`infringement. (Opp. at 6). This is false. As shown in the opening Motion (at 6-7), a
`willful infringement claim is required to meet the factual and plausibility pleading
`requirements just like any other claim, and is therefore “subject to a motion to dismiss.”
`Novitaz, Inc. v. inMarket Media, LLC, No. 16-cv-6795, 2017 WL 2311407, at *5 (N.D.
`Cal. May 26, 2017).
`Here, the FAC simply restates the unexceptional assertion from the original
`Complaint that Plaintiff sued Lite-On, and that Lite-On continued to do what it did
`before the suit. (Motion at 8-10.) Plaintiff has alleged no facts—because there are
`none—to articulate how this could be an “egregious case[] of misconduct beyond
`typical infringement.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1935
`
`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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`Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 3 of 6 Page ID #:396
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`(2016). The bare assertion in the FAC that Lite-On allegedly knew about the patents-
`in-suit before this suit was filed is insufficient to save a willfulness claim from a
`motion to dismiss. See, e.g., Emazing Lights, LLC v. De Oca, No. 15-cv-1561, 2016
`WL 7507765, at *2 (C.D. Cal. June 20, 2016) (dismissing willfulness claim, even
`though plaintiff had provided defendants a written “cease and desist” letter, because
`the complaint failed to include any “plausible allegation” that defendants acted
`egregiously).
`Likewise, the unsupported allegations in the FAC that Lite-On has acted
`“egregiously” by continuing to infringe after purportedly learning of the patents-in-
`suit is insufficient for a willfulness claim as matter of law. See, e.g., XpertUniverse,
`Inc. v. Cisco Sys., Inc., No. 17-cv-03848-RS, 2017 WL 4551519, *6 (N.D. Cal. Oct.
`11, 2017) (dismissing willfulness claim, explaining that, “[a]lthough XpertUniverse
`has alleged knowledge and continued infringement, it needs to do more to show that
`Cisco has engaged in ‘egregious cases of misconduct beyond typical infringement’
`that could possibly warrant enhanced damages.”) (quoting Halo, 136 S. Ct. at 1935);
`Finjan, Inc. v. Cisco Sys. Inc., No. 17-CV-00072-BLF, 2017 WL 2462423, at *5
`(N.D. Cal. June 7, 2017) (dismissing a willfulness claim premised on continued
`infringement because it contained “no specific factual allegations . . . that would
`suggest [the defendant’s] behavior was ‘egregious’”).
`B.
`Plaintiff Fails to Address its Concession in the Original Complaint
`that it Did Not Have a Plausible Willful Infringement Claim Against
`Lite-On.
`
`Plaintiff further argues in its Opposition that it did not concede in the original
`Complaint that it did not have any facts to support a willfulness claim against Lite-On.
`(Opp. at 11-12.) Plaintiff is plainly wrong, as this Court has previously found. The
`original Complaint expressly contained such a concession. For each patent-in-suit, the
`original Complaint attempted to “reserve[] the right to request a finding” of willful
`
`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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`Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 4 of 6 Page ID #:397
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`infringement “[t]o the extent facts learned in discovery” might support such a claim in
`the future:
`To the extent facts learned in discovery show that Defendants’
`infringement of the [] Patent is or has been willful and/or
`egregious, or to the extent that Defendants’ actions subsequent to
`the filing of this Complaint—such as their behavior as litigants or
`their failure to take remedial actions—render their infringement
`egregious, DSS reserves the right to request such a finding at time
`of trial.
`(Motion at 3.) Thus, in granting Defendants OSRAM’s and Seoul Semiconductor’s
`motions to dismiss Plaintiff’s similar willfulness claims, this Court found that “DSS
`concedes at this time, it cannot plead facts sufficient to state a plausible claim for
`willful infringement,” which made the claim deficient according to the standards of
`Iqbal and Twombly. (Case No. 17-5184, Dkt. 44-1 at 17; Case No. 17-981, Dkt. No.
`36-1 at 9-10).
`Despite this, Plaintiff argues that it “did not intend this paragraph to be a
`concession” and that by removing this language from the FAC, it has corrected the
`problem. (Opp. at 11-12.) However, Plaintiff cannot erase its previous pleading with a
`wave of the hand. Plaintiff rightly recognized that it did not have any facts to support a
`claim for willful infringement against Lite-On in its first Complaint, and this Court
`relied upon that express concession in dismissing the claim. Instead of addressing its
`concession that further discovery was needed to plead willfulness and this Court’s
`ruling to that effect, DSS simply removed the concession in the FAC. Plaintiff has
`added nothing in the FAC to support a willfulness claim. Thus, Plaintiff’s willful
`infringement claim is still hollow and should be dismissed.
`C.
`The FAC Does Not Introduce New Allegations to Support its Claims
`for Willful Infringement.
`
`Finally, Plaintiff argues in its Opposition that the FAC “adds considerable
`detail” to the willful infringement claims compared with Plaintiff’s original
`Complaint. (Opp. at 12.) This is not the case. As shown in detail in Lite-On’s
`
`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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`Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 5 of 6 Page ID #:398
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`opening Motion (at 8-9), the original Complaint and the FAC are substantively the
`same, and Plaintiff did not add any actual factual allegations to the FAC. This is not
`surprising, as Plaintiff could not have added anything of substance. When Plaintiff
`filed its FAC on November 16, 2017 (Dkt. 36), no discovery had been conducted on
`the willfulness issue and only two days had passed between the Court’s Order
`directing Plaintiff to file an amended complaint (Dkt. 35) and Plaintiff’s filing of the
`FAC.
`Given the near-identical wording in the original Complaint and the FAC, it is
`simply not true that the FAC “add[ed] considerable detail regarding Defendants’
`willful infringement of the ‘771, ‘087, and ‘486 patents,” as Plaintiff argues. (Opp. at
`12.) Just as in the original Complaint, the FAC alleges no facts to support a plausible
`inference that Lite-On has acted egregiously and is liable for willful infringement.
`(See, e.g., Case No. 17-981, Dkt. No. 36-1 (this Court’s Order dismissing Plaintiff
`DSS’s similar willfulness allegations in the Seoul Semiconductor case) (citing
`Twombly, 550 U.S. at 555).)
`
`CONCLUSION
`For the foregoing reasons and those provided in Lite-On’s opening Motion
`(Dkt. 42), Defendant Lite-On respectfully requests that this Court grant Lite-On’s
`Motion to Dismiss Plaintiff’s Complaint under Rule 12(B)(6).
`
`Dated: January 22, 2018
`
`Respectfully submitted,
`VINSON & ELKINS L.L.P.
`
`By: /s/ Christopher Kao
`Christopher Kao
`Attorneys for Defendant
`Lite-On, Inc.
`
`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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`Case 2:17-cv-06050-JVS-JCG Document 44 Filed 01/22/18 Page 6 of 6 Page ID #:399
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`CERTIFICATE OF SERVICE
`The undersigned certifies that on January 22, 2018, the foregoing document was
`electronically filed with the Clerk of the Court for the UNITED STATES DISTRICT
`COURT, CENTRAL DISTRICT OF CALIFORNIA, using Court’s Electronic Case
`Filing (ECF) system. The ECF system routinely sends a “Notice of Electronic Filing”
`to all attorneys of record who have consented to accept this notice as service of this
`document by electronic means. Any party not receiving the Court’s electronic
`notification will be sent a copy of the foregoing document.
`
`Dated: January 22, 2018
`
`By: /s/ Christopher Kao
`Christopher Kao
`
`Lite-On’s Reply ISO Mtn to Dismiss
`5442119
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