Case 1:16-cv-00830-RGA Document 15 Filed 01/20/17 Page 1 of 5 PageID #: 609
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF DELA WARE
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`SIPCO, LLC, IP CO., LLC,
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`Plaintiffs,
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`v.
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`Civil Action No. 16-830-RGA
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`STREETLINE, INC., and KAPSCH
`TRAFFICCOM HOLDING CORP.,
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`Defendants.
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`MEMORANDUM ORDER
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`Defendants' Motion to Dismiss under Rule 12(b)(6) (D.I. 7) is GRANTED, with leave to
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`amend within twenty-one days.
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`Plaintiffs complaint for direct patent infringement against two defendants asserts ten
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`patents in ten counts. Defendants' motion to dismiss raises the issue whether the complaint
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`meets the Twombly/Iqbal pleading standard.
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`The complaint identifies two defendants, Streetline and Kapsch. It alleges that since
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`April 16, 2015, Streetline "operates as a wholly-owned subsidiary" of Kapsch. (D.I. 1, if 5). The
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`complaint does not otherwise mention Kapsch. The complaint gives some history of Plaintiff
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`and its founder, and recites the results of various PTAB proceedings. Other than in the ten
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`counts of the complaint (and from what can be gleaned by looking at the patents, which are
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`attached to the complaint as exhibits), there is nothing in the complaint relevant to the issue of
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`the sufficiency of the pleadings.
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`The counts of the complaint follow one of two formats. Five of them (Counts 2, 3, 5, 8,
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`Case 1:16-cv-00830-RGA Document 15 Filed 01/20/17 Page 2 of 5 PageID #: 610
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`and 10) state that Plaintiff asserts a particular patent issued on a particular date with a particular
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`title. For example, "Plaintiff ... is the owner by assignment of United States Patent No.
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`8,625,496 entitled 'Wireless Network System and Method for Providing Same.' ('the '496
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`patent'). The '496 Patent was duly and legally issued on January 7, 2014. A true and correct
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`copy of the '496 Patent is attached as Exhibit 2." (Id., ii 21 ). There follows one or more
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`allegations of infringement, for example, "Defendants have directly infringed and continue to
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`infringe at least claim 27 of the Patent (literally and/or under the doctrine of equivalents) by
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`making, having had made, using, offering for sale and selling, or offering for use and using, the
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`Streetline smart parking monitoring hardware within the scope of the claims." (Id., ii 22). There
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`follows an allegation of damages. That is it. The other five (Counts 1, 4, 6, 7, and 9) have a
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`slightly more robust format, the difference being that instead of the accused product being "the
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`Streetline smart parking monitoring hardware within the scope of the claims," the accused
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`products are described as:
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`the Streetline smart parking monitoring hardware and software systems in combination
`with one or more of Parker (which guides drivers to available parking spaces), ParkerMap
`(a free service for city merchants that enables them to provide real-time parking
`information to their patrons, and which can be embedded on a merchant's website and
`automatically updates with the latest parking information to ease shoppers' planning
`process), ParkEdge (a self-publishing tool that enables public and private off-street
`parking to publish their parking garage and lot locations, space inventory, rates, hours,
`and availability in real-time), Enforcement (a mobile application that enables the City and
`its enforcement team to improve compliance and achieve optimal turnover), ParkSight
`Analytics (a Software-as-a-service (SaaS) which provides parking data that can be
`accessed 24/7 with a secure login credential via the web) and/or ParkingData (which
`provides access to data for parking locations and availability through two complementary
`APis), within the scope of the claims.
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`(Id., ii 18). 1
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`1 I do not understand what the phrase, "within the scope of the claims," is supposed to
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`mean.
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`Case 1:16-cv-00830-RGA Document 15 Filed 01/20/17 Page 3 of 5 PageID #: 611
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`As noted above, Plaintiff asserts Claim 27 of the '496 patent. It reads:
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`27. In a wireless system comprising a plurality of second nodes and a first node
`configured to implement a first node process, the first node process including receiving
`data packets via a first node wireless radio, sending data packets via said wireless radio,
`communicating with a network, performing node link tree housekeeping functions,
`maintaining a second node link tree having second node link entries representing each of
`the plurality of second nodes, dynamically updating the tree to reflect the current
`operational status of the second nodes, and rerouting data packets around inactive or
`malfunctioning second nodes, a second node in the plurality of second nodes, the second
`node configured to implement a second node process including: sending and receiving
`data packet via a second node wireless radio; maintaining a send/receive data buffer in a
`digital memory; and selecting a link to the first node that is one of a direct link to the first
`node and an indirect link to the first node through at least one of the remainder of the
`plurality of second nodes.
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`Defendants' brief states that only one of the patents has anything to do with
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`parking, which seems to be what Defendants' products are related to. That would be U.S. patent
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`no. 8,223,010, for which, in Count 4, claim 1 is asserted. It reads:
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`1. A vehicle parking monitoring system, comprising: a parking space sensor
`enabled to detect the presence of at least one vehicle in a first parking space of a first
`parking area; and a parking area transceiver in communication with the parking space
`sensor, the parking area transceiver configured to receive information from the parking
`space sensor and transmit the information to a gateway, the parking area transceiver also
`configured to receive information from the gateway, wherein the gateway is connected to
`a wide area network and configured to receive information from the parking area
`transceiver and transmit the information to the wide area network, the gateway also
`configured to receive information from the wide area network and transmit the
`information to the parking area transceiver.
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`The complaint contains no attempt to connect anything in the patent claims to anything
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`about any of the accused products.
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`The issue of what exactly Twombly/Iqbal requires to state a plausible claim of patent
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`infringement is the subject of some debate in the district courts. The latest word from the Federal
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`Circuit is a few months old. See Lyda v. CBS Corp., 838 F.3d 1331 (Fed. Cir. 2016). In Lyda,
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`the Court considered the sufficiency of the allegations of joint infringement. Appellant was not
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`Case 1:16-cv-00830-RGA Document 15 Filed 01/20/17 Page 4 of 5 PageID #: 612
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`arguing that the allegations were sufficient under the Twombly/Iqbal standard, but the Court
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`nevertheless discussed the sufficiency. The Court stated, "[T]he [complaint] must plausibly
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`allege that Defendants exercise the requisite 'direction or control' over the performance of the
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`claim steps, such that performance of every step is attributable to Defendants." Id. at 1340. The
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`Court went on to note the absence of "any factual allegations" to support the allegation of
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`direction or control, including how the direction or control occurred, and the relationship
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`between the Defendants and the third parties who were committing the infringing acts. The
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`Court concluded that there were "no allegations ... that can form the basis of a reasonable
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`inference that each claim step was performed by or should be attributed to Defendants." Id.
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`I do not need to consider at this juncture exactly how much Plaintiff must allege in order
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`to withstand a motion to dismiss. 2 Right now, Plaintiff makes two factual allegations. One, here
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`are ten patents we own. Two, you sell some products, which we have identified. Plaintiff makes
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`a legal conclusion, to wit, the sales of your products infringe out patents. This is insufficient to
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`plausibly allege patent infringement. Clearly, Plaintiff could allege a lot more than it has, as no
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`ethical lawyer would bring this lawsuit if the plaintiff could not allege more. Plaintiff does not
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`have to allege everything it has, but it does have to write a complaint (construing the allegations
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`in the light most favorable to the plaintiff) that makes it plausible to think a defendant has
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`infringed at least one claim of any asserted patent.
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`2 I think Defendants go too far in saying or implying Plaintiff has to produce infringement
`contentions. I also think Defendants go too far in saying that if more than one claim is asserted
`from a patent, there has to be factual support alleged for each such claim. On the other hand, I
`think Defendants are correct that it is insufficient to state as a fact that an infringing defendant
`company is a wholly-owned subsidiary of a second company, and, by virtue of that alone, the
`second company is therefore also liable for infringement.
`That being said, a motion to dismiss for failure to state a claim in a patent case is not the
`place for claim construction or the judge learning the technology that is being asserted.
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`Case 1:16-cv-00830-RGA Document 15 Filed 01/20/17 Page 5 of 5 PageID #: 613
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`Thus, the motion to dismiss is granted. Plaintiff has twenty-one days to file an amended
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`complaint.
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`IT IS SO ORDERED this to day of January 2017.
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