Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 1 of 16 PageID #: 1225
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`C.A. No. 16-830-RGA
`
`))))))))))))))
`
`SIPCO, LLC and IP CO., LLC d/b/a INTUS
`IQ,
`
`Plaintiffs,
`
`v.
`
`STREETLINE, INC., KAPSCH
`TRAFFICCOM HOLDING CORP., and
`KAPSCH TRAFFICCOM U.S. CORP.
`
`Defendants.
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF THEIR
`MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
`
`ROSS ARONSTAM & MORITZ LLP
`Benjamin J. Schladweiler (#4601)
`100 S. West Street, Suite 400
`Wilmington, DE 19801
`(302) 576-1600
`bschladweiler@ramllp.com
`
`Counsel for Defendants Streetline, Inc. and
`Kapsch TrafficCom Holding Corp.
`
`Of Counsel:
`
`Pierre R. Yanney
`Stephen E. Underwood
`STROOCK & STROOCK & LAVAN LLP
`180 Maiden Lane
`New York, NY 10038
`(212) 806-5400
`pyanney@stroock.com
`sunderwood@stroock.com
`
`Dated: March 21, 2017
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 2 of 16 PageID #: 1226
`
`TABLE OF CONTENTS
`
`I.
`
`INTRODUCTION .................................................................................................................. 1
`
`II. ARGUMENT.......................................................................................................................... 2
`
`A.
`
`The FAC Fails to State a Claim for Direct Infringement Against Any Defendant............. 2
`
`1.
`
`2.
`
`3.
`
`4.
`
`B.
`
`C.
`
`D.
`
`E.
`
`‘692 Patent – Claim 1 ..................................................................................................... 2
`
`The Other Nine Patents-in-Suit....................................................................................... 4
`
`SIPCO Fails to Distinguish the Cases Cited by Defendants........................................... 5
`
`SIPCO’s Remaining Direct Infringement Arguments Lack Merit ................................. 7
`
`The FAC Fails to State a Claim Against the Kapsch Defendants....................................... 8
`
`The FAC Fails to State a Claim for Induced Infringement Against Any Defendant.......... 9
`
`The FAC Fails to State a Claim for Induced Infringement Against Kapsch .................... 10
`
`Dismissal With Prejudice Is Proper .................................................................................. 10
`
`-i-
`
`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 3 of 16 PageID #: 1227
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Page(s)
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009)...................................................................................................................1
`
`Atlas IP, LLC v. Exelon Corp.,
`189 F. Supp. 3d 768 (N.D. Ill. 2016) .....................................................................................1, 5
`
`CG Tech. Dev., LLC v. FanDuel, Inc.,
`No. 2:16-CV-00801-RCJ-VCF, 2017 WL 58572 (D. Nev. Jan. 4, 2017) .................................7
`
`Chester Residents Concerned For Quality Living v. Seif,
`944 F. Supp. 413 (E.D. Pa. 1996) ..............................................................................................3
`
`Collabo Innovations, Inc. v. Omnivision Techs., Inc.,
`No. CV 16-197-SLR-SRF, 2017 WL 374484 (D. Del. Jan. 25, 2017)......................................9
`
`e.Digital Corp. v. iBaby Labs, Inc.,
`No. 15-cv-05790-JST, 2016 WL 4427209 (N.D. Cal. Aug. 22, 2016).................................. 6-7
`
`Gen. Elec. Co. v. Sonosite, Inc.,
`568 F. Supp. 2d 983 (W.D. Wis. 2008) ...................................................................................10
`
`Global- Tech Appliances, Inc. v. SEB SA.,
`131 S.Ct. 2060 (2011)................................................................................................................9
`
`Global-Tech LED, LLC v. Every Watt Matters, LLC,
`No. 15-CV-61933, 2016 WL 6682015 ......................................................................................3
`
`Kearns v. Gen. Motors Corp.,
`94 F.3d 1553 (Fed. Cir. 1996)....................................................................................................5
`
`Philips v. ASUSTeK Computer Inc.,
`No. 15-1125-GMS, 2016 WL 6246763 (D. Del. Oct. 25, 2016)...............................................8
`
`Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc.,
`843 F.3d 1315 (Fed. Cir. 2016)................................................................................................10
`
`Raindance Techs., Inc. v. 10X Genomics, Inc.,
`No. 15-152-RGA, 2016 WL 927143 (D. Del. Mar. 4, 2016) ................................................1, 7
`
`Robern, Inc. v. Glasscrafters, Inc.,
`No. CV 16-1815, 2016 WL 3951726 (D.N.J. July 22, 2016)....................................................7
`
`-ii-
`
`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 4 of 16 PageID #: 1228
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`Scripps Research Inst. v. Illumina, Inc.,
`No. 16-cv-661 JLS (BGS), 2016 WL 6834024 (S.D. Cal. Nov. 21, 2016) ...........................5, 6
`
`TeleSign Corp. v. Twilio, Inc.,
`No. 16-2106, 2016 WL 4703873 (C.D. Cal. Aug. 3, 2016) ..................................................1, 6
`
`Wright's Well Control Servs., LLC v. Oceaneering Int'l, Inc.,
`No. CV 15-1720, 2017 WL 568781 (E.D. La. Feb. 13, 2017) ..............................................3, 6
`
`Young v. U.S. Bank Nat. Ass'n,
`No. 3:14CV161-NBB-SAA, 2015 WL 1242046 (N.D. Miss. Mar. 18, 2015)..........................2
`
`Commonwealth of Pa. ex rel. Zimmerman v. PepsiCo, Inc.,
`836 F.2d 173 (3d. Cir. 1988)..................................................................................................2, 3
`
`Fed. R. Civ. P. 8(a) ......................................................................................................................7, 8
`
`Other Authorities
`
`-iii-
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`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 5 of 16 PageID #: 1229
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`I.
`
`INTRODUCTION
`
`When it comes to the pleading requirements for patent infringement, SIPCO is living in
`
`the past. SIPCO repeatedly argues that its complaint only needs to provide “notice” of “what the
`
`case is about.” D.I. 20 at 7, 14. That is no longer true. Rather, now that Twombly and Iqbal apply
`
`to direct patent infringement, the complaint must “plead[] factual content that allows the court to
`
`draw the reasonable inference that the defendant is liable.” Ashcroft v. Iqbal, 556 U.S. 662, 678
`
`(2009) (emphases added). As shown in Defendants’ briefs, SIPCO has utterly failed to meet this
`
`burden.
`
`SIPCO counters that it must have met its burden, because (according to SIPCO) there is
`
`“no [case] where a complaint having the type of detailed allegations as in the [FAC] was held
`
`insufficient” under Twombly/Iqbal. D.I. 20 at 1. That is not true. In many of the cases cited in
`
`Defendants’ Opening Brief, the complaint contained at least as much – and often far more –
`
`detail as there is in SIPCO’s FAC. See Exh. A1 at 6-9 (claim chart matching features of accused
`
`product to claim elements); Exh. B2 at ¶¶ 63-95 (detailed allegations comparing accused
`
`products to claim elements); Exh. C3 at ¶¶ 15-22 (detailed summary of accused product). Yet, in
`
`each of these cases, the court found that the complaint did not satisfy Twombly/Iqbal. Thus, it
`
`would not be “unprecedented” for a complaint “as detailed” as the FAC to be dismissed. To the
`
`contrary, dismissal of the FAC would be entirely in line with what courts around the nation
`
`(including this Court) have been doing with patent complaints, post-Form 18.
`
`1 Exhibit A is the Second Amended Complaint in Atlas IP, LLC v. Exelon Corp., 189 F. Supp. 3d
`768, 775 (N.D. Ill. 2016), which the court found did not satisfy Twombly/Iqbal.
`
`2 Exhibit B is the complaint in TeleSign Corp. v. Twilio, Inc., No. 16-2106, 2016 WL 4703873,
`at *4 (C.D. Cal. Aug. 3, 2016), which the court found did not satisfy Twombly/Iqbal.
`
`3 Exhibit C is the First Amended Complaint in Raindance Techs., Inc. v. 10X Genomics, Inc., No.
`15-152-RGA, 2016 WL 927143 (D. Del. Mar. 4, 2016), which this Court found did not satisfy
`Twombly/Iqbal.
`
`-1-
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 6 of 16 PageID #: 1230
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`II.
`
`ARGUMENT
`
`A.
`
`The FAC Fails to State a Claim for Direct Infringement Against Any Defendant
`
`SIPCO argues that Defendants’ motion should be denied, because Defendants have not
`
`“identif[ied] any [specific] claimed element that cannot be found within . . . the Amended
`
`Complaint.” D.I. 20 at 2. This turns the Twombly/Iqbal framework on its head. Under
`
`Twombly/Iqbal, the burden is on the plaintiff to allege sufficient facts to state a plausible claim
`
`for relief. See Young v. U.S. Bank Nat. Ass'n, No. 3:14CV161-NBB-SAA, 2015 WL 1242046, at
`
`*1 (N.D. Miss. Mar. 18, 2015) (under Twombly/Iqbal, on a properly-filed “motion to dismiss for
`
`failure to state a claim . . . the burden rests on the plaintiff to prove her claim should go
`
`forward.”) The burden is not on the defendant to try to anticipate, and then negate, any possible
`
`set of facts that the plaintiff might conjure to try to save its complaint.
`
`Here, Defendants argued (in their Opening Brief) that the FAC fails to state a claim,
`
`because it does not show how any of the features of the accused products satisfy any of the claim
`
`elements. Once that argument was made, the onus was on SIPCO to identify allegations in the
`
`FAC that showed how the elements of at least one claim of each patent are met by the features of
`
`the accused products. SIPCO has failed to do so. Thus, the FAC must be dismissed.
`
`1.
`
`‘692 Patent – Claim 1
`
`For nine of the ten patents-in-suit, SIPCO does not even attempt to show how the
`
`components of the accused products correspond to the elements of the claims. Rather, SIPCO
`
`only attempts to make such a showing for one claim of one patent – claim 1 of the ‘692 Patent.
`
`See D.I. 20 at 4-6. Even that attempt fails, for several reasons.
`
`First, “it is axiomatic that the complaint may not be amended by the briefs in opposition
`
`to a motion to dismiss.” Commonwealth of Pa. ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d
`
`173, 181 (3d. Cir. 1988). Thus, on a motion to dismiss, courts in this Circuit will “examine the
`
`-2-
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 7 of 16 PageID #: 1231
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`sufficiency of the plaintiffs' pleadings under their original allegations . . . rather than allowing
`
`informal amendment through their response brief.” Chester Residents Concerned For Quality
`
`Living v. Seif, 944 F. Supp. 413, 416 (E.D. Pa. 1996) (emphasis added).
`
`SIPCO’s brief (at pp. 4-6) is a clear attempt to make such “informal amendments.”
`
`Nothing in the FAC made any attempt to tie the accused products to the elements of the claims.
`
`SIPCO now attempts to perform this “tying” in its opposition brief. However, “the legal theories
`
`set forth in [SIPCO’s] brief are helpful only to the extent that they find support in the allegations
`
`set forth in the complaint.” Zimmerman, 836 F.2d at 181. Here, there is no support in the FAC
`
`for any comparison between the claim elements and the accused products. Thus, the “legal
`
`theories set forth in [SIPCO’s] brief” simply cannot cure the deficiencies in the FAC.
`
`SIPCO counters that, allegedly, there is no requirement that the complaint itself include a
`
`comparison between the accused product and the claim elements. See D.I. 20 at 13. Rather,
`
`SIPCO contends, the complaint only needs to allege the technical details of the accused product,
`
`and any “tying” of those details to the claim elements may be done in a brief. Id.
`
`That is incorrect. To Defendants’ knowledge, courts that have addressed this issue (post-
`
`Form 18) have uniformly held that the complaint itself must plausibly tie the accused product’s
`
`features to all the elements of at least one patent claim. See, e.g., Global-Tech LED, LLC v.
`
`Every Watt Matters, LLC, No. 15-CV-61933, 2016 WL 6682015, at *3 (complaint itself must
`
`“sufficiently tie any specific operation [of the accused device] to a patent claim,” because
`
`“Plaintiff may not amend [the] complaint through new allegations raised [in a brief]"); Wright's
`
`Well Control Servs., LLC v. Oceaneering Int'l, Inc., No. CV 15-1720, 2017 WL 568781, at *4
`
`(E.D. La. Feb. 13, 2017) (dismissing complaint because it “makes no attempt to relate the factual
`
`allegations in its complaint to the specific claims contained in its patents”) (emphases added).
`
`-3-
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`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 8 of 16 PageID #: 1232
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`Thus, the portion of SIPCO’s brief that compares claim 1 of the ‘692 patent with the
`
`features of the accused products cannot, as a matter of law, cure the deficiencies in its complaint.
`
`Even if allegations in a brief could (as a procedural matter) cure deficiencies in a
`
`complaint, SIPCO’s allegations would still fail on the merits. At best, SIPCO’s brief identifies
`
`certain physical components of Streetline’s product (e.g., “LTC5800 mote” and “LTP5903
`
`manager”) which allegedly correspond to certain physical components (“wireless transmitter,”
`
`“gateway”) of the claims. See D.I. 20 at 4-6. However, claim 1 of the ‘692 patent does not
`
`simply recite physical components sitting in the ether; rather, it recites components connected
`
`together in a certain way, and transmitting/receiving certain information. SIPCO’s brief does not
`
`identify anything in the accused products that transmits or receives the required information, and
`
`does not cite anything which shows that the components are connected together in the claimed
`
`way. Specifically, SIPCO’s brief fails to show anything in the accused products that corresponds
`
`to, at least, the highlighted elements of ‘692, claim 1 shown at pp. 1-2 of Exhibit D to this brief.4
`
`As shown in Exhibit D, SIPCO has not identified what, if anything, corresponds to the
`
`“select information,” “transmitter identification information,” and “transceiver identification
`
`information” in the accused products; has not identified what, if anything “translates the select
`
`information,” or what that “translated” information represents; and has not identified which
`
`components allegedly transmit and receive these various types of information (as claimed).
`
`Thus, even on the merits, SIPCO’s brief fails to cure the deficiencies in the FAC.
`
`2. The Other Nine Patents-in-Suit
`
`For the remaining nine patents-in-suit, SIPCO’s brief does not even attempt to tie the
`
`elements of any claim to the accused products. Since each patent gives rise to a separate and
`
`4 Exhibit D lists the text of the asserted claims, with bold-type highlighting showing claim
`elements for which there is no support in the FAC’s description of the accused products.
`
`-4-
`
`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 9 of 16 PageID #: 1233
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`independent cause of action (see Kearns v. Gen. Motors Corp., 94 F.3d 1553, 1555 (Fed. Cir.
`
`1996)), any showing of infringement as to the ‘692 Patent cannot, as a matter of law,
`
`automatically establish infringement of the other patents. Thus, even if SIPCO’s brief had
`
`established that the FAC states a claim as to ‘692 claim 1 (which it does not), that would not
`
`establish that it states a claim as to the other nine patents. Since SIPCO has made no attempt (in
`
`the FAC or its brief) to show that any claim of these nine patents is plausibly infringed, SIPCO
`
`has not met its burden under Twombly/Iqbal, and the FAC must be dismissed as to those patents.
`
`Moreover, on the merits, the asserted claims of these nine patents contain numerous
`
`elements which have no corresponding feature in the accused products (as summarized in the
`
`FAC). These include, without limitation, the elements outlined in bold in Exhibit D to this brief.
`
`Thus, even on the merits, SIPCO’s FAC clearly fails to state a claim as to these nine patents.
`
`3. SIPCO Fails to Distinguish the Cases Cited by Defendants
`
`SIPCO tries to distinguish the cases cited by Defendants, but its efforts miss the mark.
`
`First, SIPCO argues that Atlas is inapposite because it involved a “sui generis” situation
`
`in which plaintiff’s infringement arguments were internally inconsistent. See D.I. 20 at 11. Even
`
`if that is true, the Atlas court still held the plaintiff to the burden of showing, in the complaint,
`
`that all elements of an asserted claim were present in the accused product. Indeed, in Atlas, the
`
`plaintiff even provided a claim chart, comparing the claim language to the accused product’s
`
`features. See Exh. A at 6-9. Yet, the court still found that the complaint did not state a claim,
`
`because of the internal inconsistency in plaintiff’s positions. See Atlas, 189 F. Supp. 3d. at 774-
`
`776. Thus, Atlas does not help SIPCO. To the contrary – it demonstrates just how woefully
`
`inadequate SIPCO’s FAC is, compared to the (still-inadequate) complaint in Atlas.
`
`Second, SIPCO notes that the court in Scripps Research Inst. v. Illumina, Inc., No. 16-
`
`cv-661 JLS (BGS), 2016 WL 6834024 (S.D. Cal. Nov. 21, 2016) stated, in dicta, that Twombly
`
`-5-
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`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 10 of 16 PageID #: 1234
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`“does not require a patentee to plead with the specificity required in its infringement
`
`contentions.” Id. at * 6. Despite that statement, however, the Scripps court still held the plaintiff
`
`to the burden of plausibly showing that all elements of a claim were met. Indeed, the Scripps
`
`court dismissed the complaint because “Plaintiff does not explain how [the complaint’s]
`
`description of Defendant's BeadChip product—particularly the general overview of the
`
`bifunctional molecules contained therein—plausibly meets the limitations of . . . Plaintiff's
`
`asserted claims.” Id. (emphasis added). Similarly, here, the “general overview” of Streetline’s
`
`products set forth in Paragraphs 18-21 of the FAC “does not explain how [Streetline’s product]
`
`plausibly meets the limitations” of the claims. Id. Thus, Scripps suggests that SIPCO’s FAC is
`
`inadequate, not that it is adequate (as SIPCO asserts).
`
`Third, SIPCO asserts that Wright’s Well is inapposite because, in that case, “claimed
`
`elements could not be identified in anything pled in the complaint.” D.I. 20 at 12. That does not
`
`help SIPCO, however, because SIPCO’s FAC suffers from the exact same deficiency.
`
`Fourth, SIPCO asserts that Telesign is inapposite because, in that case, the complaint did
`
`not “describ[e] any facts that relate the product to any claim element.” D.I. 20 at 12. Even if that
`
`were true, it would not help SIPCO, because SIPCO’s FAC suffers from the exact same
`
`deficiency. However, SIPCO’s assertion is not true. The complaint in Telesign did attempt to
`
`show, on an element-by-element basis, how each claim element was met in the accused device.
`
`See Exh. B at ¶¶ 63-95. Yet, the court still dismissed the complaint under Twombly/Iqbal,
`
`because it failed to identify exactly which elements were present in each of the accused products.
`
`See Telesign, 2016 WL 4703873 at * 3. Since the Telesign complaint was inadequate, SIPCO’s
`
`FAC (which comes nowhere near the same level of detail) is clearly inadequate as well.
`
`Fifth, SIPCO asserts that e.Digital Corp. v. iBaby Labs, Inc., No. 15-cv-05790-JST, 2016
`
`-6-
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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 11 of 16 PageID #: 1235
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`WL 4427209 (N.D. Cal. Aug. 22, 2016) is inapposite because, there, “nothing in the complaint
`
`could plausibly correspond to a particular claim limitation.” D.I. 20 at 12. That does not help
`
`SIPCO, however, because SIPCO’s FAC suffers from the exact same deficiency (as shown in
`
`Exhibit D).
`
`Finally, SIPCO points out that this Court rejected the complaint in Raindance because,
`
`there, “‘nothing in the complaint could correspond to a [particular] claimed element’ . . . an
`
`‘autocatalytic reaction.’” D.I. 20 at 12-13. However, that does not help SIPCO because, as shown
`
`in Exhibit D, SIPCO’s FAC also fails to support many elements of the asserted claims. Indeed,
`
`Raindance is instructive because the complaint in that case, like SIPCO’s FAC here, merely
`
`provided a general overview of the features of the accused products, without ever comparing
`
`those features to the claim elements. See Exh. C at ¶¶ 15-22. Since the Raindance complaint was
`
`inadequate, the similarly-structured (and similarly-detailed) SIPCO FAC is also inadequate.
`
`Thus, the cited cases support Defendants’ position that the FAC should be dismissed.
`
`4. SIPCO’s Remaining Direct Infringement Arguments Lack Merit
`
`SIPCO argues that it is inappropriate to demand a claim element-by-element analysis in
`
`the complaint, because that level of detail is for “infringement [contention] claim charts, not the
`
`pleadings.” D.I. 20 at 13. Several courts have considered this argument, but rejected it. For
`
`instance, in Robern, Inc. v. Glasscrafters, Inc., No. CV 16-1815, 2016 WL 3951726, at *5
`
`(D.N.J. July 22, 2016), the patentee argued that an element-by-element analysis was not needed
`
`at the pleading stage, because “the New Jersey Local Patent Rules require more detailed
`
`disclosures” in the post-pleading stage. The court rejected that argument5, finding that “New
`
`5 The court reached the same result in CG Tech. Dev., LLC v. FanDuel, Inc., No. 2:16-CV-
`00801-RCJ-VCF, 2017 WL 58572, at *3 (D. Nev. Jan. 4, 2017), finding that “[t]he requirement
`of providing infringement contentions element-by-element under the Local Rules does not
`permit a more flexible application of Civil Rule 8(a) at the dismissal stage” (emphasis added).
`
`-7-
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`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 12 of 16 PageID #: 1236
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`Jersey Local Civil Rules merely supplement, and cannot be inconsistent with, the Federal Rules.”
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`Id. Thus, the court found, the Local Rules “do[] not remove Plaintiff's responsibility to comply in
`
`the first instance with the pleading requirements of Rule 8(a),” as set forth in Twombly. Id.
`
`Accordingly, the fact that Delaware has enacted a “default standard,” which provides for
`
`the exchange of infringement contentions after the close of pleadings, does not change the fact
`
`that SIPCO must still satisfy Twombly/Iqbal in its complaint.
`
`Finally, SIPCO complains that nothing “short of claim charts could possibly satisfy [the]
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`pleading standard” outlined by Defendants. D.I. 20 at 14. That is not true. For instance, in Philips
`
`v. ASUSTeK Computer Inc., No. 15-1125-GMS, 2016 WL 6246763 (D. Del. Oct. 25, 2016), this
`
`Court found that a complaint satisfied Twombly/Iqbal, even though it did not include “claim
`
`charts.” Rather, the complaint (Exhibit E hereto) gave a detailed narrative, in numbered
`
`paragraphs, explaining where each element was met in the accused products. See Exh. E at ¶¶
`
`39-45. SIPCO could have met its Twombly/Iqbal burden by providing such a narrative. It did not.
`
`B.
`
`The FAC Fails to State a Claim Against the Kapsch Defendants
`
`SIPCO concedes that the so-called “advertisements” for Streetline on Kapsch’s6 website
`
`do not, by themselves, constitute sales, or offers for sale, of the Streetline system. See D.I. 20
`
`at 15. Instead, SIPCO argues that the presence of these “advertisements” on Kapsch’s website is
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`“circumstantial evidence, and raises a reasonable inference” that Kapsch itself is actually selling,
`
`or offering to sell, the accused products. Id. This makes no sense.
`
`SIPCO cites no authority for this proposition, because there is none. Simply put, the FAC
`
`does not allege any facts to support a reasonable inference that Kapsch itself (as distinct from
`
`Streetline) is selling, or offering for sale, the accused products. Thus, for this additional reason,
`
`6 SIPCO has not contested the fact, as set forth in footnote 1 of Defendants’ Opening Brief, that
`Kapsch U.S. no longer exists, having been merged into Kapsch Holding. Thus, the complaint
`should be dismissed with prejudice as to the Kapsch U.S. entity.
`
`-8-
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`

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`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 13 of 16 PageID #: 1237
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`the FAC against the Kapsch Defendants should be dismissed.
`
`C.
`
`The FAC Fails to State a Claim for Induced Infringement Against Any Defendant
`
`The FAC fails to state a claim for induced infringement because, inter alia, it fails to
`
`identify the alleged direct infringers. SIPCO argues that the FAC does identify the direct
`
`infringers – namely, “governmental entities.” D.I. 20 at 16. That is incorrect. The FAC only
`
`refers to “governmental entities” in the preamble of the complaint. When it comes to the actual
`
`counts, the FAC does not allege that “governmental entities” have committed direct
`
`infringement. Rather, it alleges that unnamed “persons” have done so. D.I. 16, ¶ 26. Since the
`
`counts of the complaint specifically use the broader term “persons,” rather than the narrower
`
`term “governmental entities,” it is clear that the counts were intended to have the broader
`
`meaning. And, as set forth in Kapsch’s opening brief (D.I. 19 at 14-15), merely identifying
`
`“persons” is insufficient to state a claim. Thus, the FAC fails to state a claim.
`
`SIPCO also argues that it has adequately pled the required mental state, because the
`
`complaint itself gave Defendants notice of the Patents-in-Suit. D.I. 20 at 17-18. A complaint may
`
`provide notice of the Patents-in-Suit, but only for post-filing infringement.7 Thus, by relying on
`
`the complaint to provide notice, SIPCO is limiting its claim to post-filing inducement.
`
`Moreover, induced infringement requires both knowledge of the patents, and knowledge
`
`(or willful blindness) that the induced acts constitute infringement. See Global- Tech Appliances,
`
`Inc. v. SEB SA., 131 S.Ct. 2060, 2068-72 (2011). SIPCO’s FAC does not allege any facts to
`
`show that, at any time, Defendants had actual knowledge (or willful blindness) that the induced
`
`acts constitute infringement. Thus, even after limiting its claim to post-filing conduct, SIPCO has
`
`7 Collabo Innovations, Inc. v. Omnivision Techs., Inc., No. CV 16-197-SLR-SRF, 2017 WL
`374484, at *9 (D. Del. Jan. 25, 2017) (“a plaintiff may plead actual knowledge of the patents-in-
`suit as of the filing of the initial complaint to state a cause of action limited to the defendant's
`post-litigation conduct . . . pre-suit knowledge of the patent must be alleged unless the plaintiff
`limits its cause of action for indirect infringement to post-litigation conduct”) (emphasis added).
`
`-9-
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 14 of 16 PageID #: 1238
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`still failed to state a claim for induced infringement against any Defendant.
`
`D.
`
`The FAC Fails to State a Claim for Induced Infringement Against Kapsch
`
`The only alleged “inducing act” which Kapsch has committed, according to the FAC, is
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`providing “advertisements” for Streetline on Kapsch’s website. SIPCO asserts that this is enough
`
`to state a claim for inducement, because (allegedly) “[a]ny advertisement of an accused product
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`or method may be sufficient to support an induced infringement pleading.” D.I. 20 at 19.
`
`SIPCO distorts the case law. An “advertisement” can only support an induced
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`infringement claim if it “instruct[s] how to use [the] product in [an] infringing manner.” Power
`
`Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315, 1335 (Fed. Cir. 2016)
`
`(emphasis added). If the “advertisement” merely provides a “listing of the [accused product’s]
`
`features . . . [which] do not instruct the customer to perform a particular [infringing] method or
`
`explain how to do anything,” then the advertisement is not a legally-cognizable “inducing act.”
`
`Gen. Elec. Co. v. Sonosite, Inc., 568 F. Supp. 2d 983, 1009 (W.D. Wis. 2008) (emphasis added).
`
`Here, the excerpt from Kapsch’s website quoted in the FAC (D.I. 16, ¶¶ 23-24) is simply
`
`a “listing of the [Streetline Products’] features,” which “do not instruct the customer to perform a
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`particular [infringing] method or explain how to do anything.” Id. Thus, this website excerpt is
`
`not a legally-cognizable inducing act, and SIPCO has failed to state a claim against Kapsch.
`
`E.
`
`Dismissal With Prejudice Is Proper
`
`SIPCO’s only argument against dismissal with prejudice is that, allegedly, it has cured
`
`the deficiencies in its original complaint. See D.I. 20 at 20. As shown above, and in Defendants’
`
`opening brief, that is simply not true. Thus, for the same reasons set forth in Defendant’s
`
`Opening Brief (D.I. 19 at 3-4, 18-19), the FAC should be dismissed with prejudice.
`
`-10-
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 15 of 16 PageID #: 1239
`
`Respectfully submitted,
`
`ROSS ARONSTAM & MORITZ LLP
`
`/s/ Benjamin J. Schladweiler
`Benjamin J. Schladweiler (#4601)
`100 S. West Street, Suite 400
`Wilmington, DE 19801
`(302) 576-1600
`bschladweiler@ramllp.com
`
`Counsel for Defendants Streetline, Inc. and
`Kapsch TrafficCom Holding Corp.
`
`Of Counsel:
`
`Pierre R. Yanney
`Stephen E. Underwood
`STROOCK & STROOCK & LAVAN LLP
`180 Maiden Lane
`New York, NY 10038
`(212) 806-5400
`pyanney@stroock.com
`sunderwood@stroock.com
`
`Dated: March 21, 2017
`
`-11-
`
`

`

`Case 1:16-cv-00830-RGA Document 23 Filed 03/21/17 Page 16 of 16 PageID #: 1240
`
`CERTIFICATE OF SERVICE
`
`I, Benjamin J. Schladweiler, hereby certify that on March 21, 2017, I caused the
`
`foregoing Defendants' Reply Brief in Support of Their Motion to Dismiss the First Amended
`
`Complaint to be served via electronic mail upon the following counsel of record:
`
`George Pazuniak
`Sean T. O'Kelly
`Daniel Patrick Murray
`901 N. Market Street, Suite 1000
`Wilmington, DE 19801
`gp@del-iplaw.com
`sokelly@oeblegal.com
`dmurray@oeblegal.com
`
`Counsel for Plaintiff SIPCO, LLC and
`IP CO., LLC d/b/a INTUS IQ
`
`/s/ Benjamin J. Schladweiler
`Benjamin J. Schladweiler (#4601)
`
`