Case 2:22-md-03034-TGB ECF No. 76, PageID.2463 Filed 09/14/22 Page 1 of 11
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
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`MDL Case No.: 2:22-md-3034
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`E.D. Mich. Case No. 2:22-cv-11404
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`Hon. Terrence G. Berg
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`IN RE: NEO WIRELESS, LLC
`--------------------
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`NEO WIRELESS LLC,
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`Plaintiff,
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`v.
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`VOLKSWAGEN GROUP OF
`AMERICA, INC. & VOLKSWAGEN
`GROUP OF AMERICA
`CHATTANOOGA OPERATIONS,
`LLC,
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` Defendants.
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`VOLKSWAGEN DEFENDANTS’ REPLY IN SUPPORT OF
`THEIR MOTION TO DISMISS PURSUANT TO
` FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2464 Filed 09/14/22 Page 2 of 11
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`TABLE OF CONTENTS
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`NEO fails to plausibly allege knowledge of the patents. ............................... 2
`I.
`NEO fails to plausibly allege knowledge of infringement. ............................ 3
`II.
`III. NEO fails to plausibly allege egregious conduct. .......................................... 5
`IV. The Court should dismiss NEO’s willfulness claim with prejudice. ............. 7
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2465 Filed 09/14/22 Page 3 of 11
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`TABLE OF AUTHORITIES
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` Page(s)
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`Cases
`Addiction & Detoxification Institute, L.L.C. v. Aharonov,
`2015 WL 631959 (E.D. Mich. Feb. 13, 2015) ...................................................... 4
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) .......................................................................................... 2, 3
`Bell Atlantic Corp. v. Twombly,
`550 U.S. 554 (2006) .............................................................................................. 2
`Eko Brands, LLC v. Adrian Rivera Maynez Enterprises, Inc.,
`946 F.3d 1367 (Fed. Cir. 2020) ............................................................................ 6
`FluorDx LLC v. Quidel Corp.,
`2020 WL 4464475 (S.D. Cal. Aug. 4, 2020) ........................................................ 3
`Foman v. Davis,
`371 U.S. 178 (1962) .............................................................................................. 7
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`579 U.S. 93 (2016) ................................................................................................ 6
`Innovation Ventures, L.L.C. v. Custom Nutrition Lab’ys, L.L.C.,
`2016 WL 9712013 (E.D. Mich. Jan. 25, 2016) .................................................... 7
`Michigan Motor Techs. LLC v. Volkswagen Aktiengesellschaft,
`472 F. Supp. 3d 377 (E.D. Mich. 2020) ................................................... 1, 2, 5, 7
`The Nielsen Co. (US), LLC v. TVision Insights, Inc.,
`No. 1:21-cv-01592, Dkt. 49 (D. Del. Aug. 10, 2022)........................................... 4
`Tietz v. Corizon Health, Inc.,
`2021 WL 253885 (E.D. Mich. Jan. 26, 2021) ...................................................... 4
`Toshiba Corp. v. Imation Corp.,
`990 F. Supp. 2d 882 (W.D. Wis. 2013) ................................................................ 3
`Other Authorities
`Fed. R. Civ. P. 8 ......................................................................................................... 3
`Fed. R. Civ. P. 12(b)(6) .............................................................................................. 7
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`ii
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2466 Filed 09/14/22 Page 4 of 11
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`This case is on all fours with Michigan Motor Technologies LLC v.
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`Volkswagen Aktiengesellschaft, 472 F. Supp. 3d 377 (E.D. Mich. 2020). There, the
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`plaintiff’s allegations of willfulness consisted of assertions that the defendants
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`(i) received a notice letter advising them of the patents and (ii) continued the
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`infringing conduct after receiving the letter. Id. at 380. Those allegations, Judge
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`Lawson held, were insufficient. A complaint asserting willfulness must plausibly
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`allege both “[p]rior knowledge of the patent and that the conduct is infringing,” id.
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`at 383 (emphasis added), as well as “conduct r[ising] to the level of egregiousness
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`that might support an award of enhanced damages,” id. at 385. “By that measure, the
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`[complaint’s] allegations of willful infringement c[ame] up short,” because there
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`were “too many dots to connect” to arrive at a finding that the defendants knew of
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`the patents, knew they were infringing, and behaved egregiously. Id. at 384–85.
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`The factual allegations here are virtually identical to those in Michigan Motor.
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`NEO alleges that it sent the Volkswagen Defendants’ parent company a letter listing
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`the patents and proclaiming that they “cover certain 3GPP wireless standards”; that
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`Defendants later received the letter; and that Defendants did not take a license to the
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`patents and instead continued their allegedly infringing conduct, Am. Compl. ¶ 69,
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`ECF No. 30, PageID.733. As in Michigan Motor, those allegations are “not
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`sufficient to allege willful infringement [or] support enhanced damages.” 472 F.
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`Supp. 3d at 385. NEO’s “purely conclusory” assertion that Volkswagen received a
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`1
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2467 Filed 09/14/22 Page 5 of 11
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`notice letter is “not entitled to be assumed true,” so NEO has not adequately pleaded
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`knowledge of the patents or of infringement. Id. at 384 (quoting Ashcroft v. Iqbal,
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`556 U.S. 662, 681 (2009)). Moreover, even if receipt of the letter had been plausibly
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`alleged, that would still not be sufficient. That fact—standing alone—does not
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`plausibly suggest intentional infringement or conduct at “the level of egregiousness
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`that might support an award of enhanced damages.” Id. at 384–85. At best, such an
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`allegation is “‘merely consistent with’” willfulness and therefore “‘stops short of the
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`line between possibility and plausibility.’” Iqbal, 556 U.S. at 678 (quoting Bell
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`Atlantic Corp. v. Twombly, 550 U.S. 554, 557 (2006)).
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`I.
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`NEO fails to plausibly allege knowledge of the patents.
`As said, NEO’s conclusory assertion that Volkswagen received its notice
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`letter—which the complaint admits NEO did not send to either named Defendant—
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`is insufficient to plausibly allege that Volkswagen had knowledge of the patents.
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`Michigan Motor, 472 F. Supp. 3d at 384; Op. Br. 2–5, PageID.2129–32. And NEO’s
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`attempt (at 13–14) to distinguish this case from Michigan Motor lacks merit. The
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`key point is that, in both cases, the plaintiff alleged that the defendants received a
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`notice letter on a certain date. Compare Michigan Motor, 472 F. Supp. 3d at 380,
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`with Am. Compl. ¶ 69, ECF No. 30, PageID.733. As in that case, this allegation,
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`without more, is too conclusory to be entitled to a presumption of truth. See
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`Michigan Motor, 472 F. Supp. 3d at 384.
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`2
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2468 Filed 09/14/22 Page 6 of 11
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`II. NEO fails to plausibly allege knowledge of infringement.
`As to knowledge of infringement, NEO relies (at 14, 16–17) on its allegation
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`that the notice letter stated that “the patents-in-suit cover certain 3GPP wireless
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`standards” which, according to NEO’s complaint, are allegedly used in some
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`Volkswagen vehicles. As the Honda and Nissan Defendants have pointed out,
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`however, this “allegation is akin to making the completely implausible claim that
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`any wireless system infringes its patents.” ECF No. 50, PageID.2103. Indeed, courts
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`have held that merely identifying patents and a standard they allegedly cover is
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`insufficient to provide notice of infringement. E.g., Toshiba Corp. v. Imation Corp.,
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`990 F. Supp. 2d 882, 900 (W.D. Wis. 2013).
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`Moreover, even taking this allegation at face value, it tells us only that NEO
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`told Volkswagen that, in NEO’s view, Volkswagen uses infringing technology. It
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`does not plausibly suggest that Volkswagen agreed on that point. See FluorDx LLC
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`v. Quidel Corp., 2020 WL 4464475, *5 (S.D. Cal. Aug. 4, 2020) (allegation that
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`defendant received notice of infringement and did not engage in licensing discussion
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`was insufficient to allege willful infringement because such facts are “equally
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`consistent with a defendant who subjectively believes the plaintiff’s patent
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`infringement action has no merit”); cf. Iqbal, 556 U.S. at 678 (Rule 8 requires
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`allegations that plausibly—not merely possibly—give rise to a claim for relief.).
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`NEO says (at 19) that the lack of allegations going to Volkswagen’s intent
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`3
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2469 Filed 09/14/22 Page 7 of 11
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`should not matter because “[a]dditional evidence of Volkswagen’s subjective intent
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`and egregious behavior . . . must be revealed through discovery.” See also Neo Br.
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`2–3, PageID.2353–54. This assertion reveals what is really going on: NEO hopes to
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`find the evidence of willfulness that it apparently now lacks. That gets things
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`backwards. “Legal conclusions will not carry a complaint past the motion-to-dismiss
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`stage in the absence of supporting factual allegations, and a plaintiff whose
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`complaint is deficient is not entitled to a fishing expedition for facts to support it.”
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`Tietz v. Corizon Health, Inc., 2021 WL 253885, at *4 (E.D. Mich. Jan. 26, 2021).1
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`Finally, NEO’s contention (at 19–21) that the Court can infer the requisite
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`knowledge based on the complaint filing is incorrect for reasons Volkswagen has
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`explained. Op. Br. 4–5, PageID.2131–32. NEO does not engage with the multiple
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`decisions—from this district and others—cited in Volkswagen’s brief holding that a
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`plaintiff cannot bootstrap an infringement complaint into a claim for willfulness on
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`the theory that, once receiving the complaint, the defendant knows it infringes. E.g.,
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`Addiction & Detoxification Institute, L.L.C. v. Aharonov, 2015 WL 631959, at *2
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`(E.D. Mich. Feb. 13, 2015); see also The Nielsen Co. (US), LLC v. TVision Insights,
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`Inc., No. 1:21-cv-01592, Dkt. 49 (D. Del. Aug. 10, 2022) (collecting cases). NEO
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`1 NEO’s admission (at 3 n.2) that it filed “nearly identical pleadings” against
`seven different defendants on a “highly factual” issue, NEO Br. 1, PageID.2352,
`underscores that NEO’s allegations are just boilerplate assertions, unsupported by
`specific facts suggesting that any individual defendant willfully infringed.
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`4
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2470 Filed 09/14/22 Page 8 of 11
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`provides no good reason for this Court to depart from that view.
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`III. NEO fails to plausibly allege egregious conduct.
`Because NEO has not plausibly alleged knowledge of the patents or
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`knowledge of infringement, the Court need not even address whether pleading
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`egregiousness is required to grant Volkswagen’s motion. If the Court does reach the
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`issue, however, NEO’s failure to plead egregious conduct provides a third
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`independent basis for dismissal. Op. Br. 8–11, PageID.2135–38.
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`NEO, candidly admitting (at 8) that it “cannot . . . fully me[e]t” a pleading
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`standard that requires allegations of egregiousness, asserts (at 8–10 & n.3) that a
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`complaint alleging willfulness need only allege that the accused infringer had
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`knowledge of the patents. That argument is flatly inconsistent with Michigan Motor,
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`which—contrary to NEO’s contention (at 10)—squarely held that such a complaint
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`must allege some sort of egregious conduct, such as “deliberate[] cop[ying].” 472 F.
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`Supp. 3d at 385. For the reasons explained in Volkswagen’s opening brief (at 8–9),
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`the Michigan Motor court’s analysis was sound, and this Court should follow it.
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`NEO’s argument also proves far too much. If NEO were correct, a patent-
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`infringement plaintiff could allege willfulness in every single case, since the
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`complaint itself would establish knowledge of the patents and nothing else need be
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`pleaded. NEO. Br. v, PageID.2350 (“To adequately plead willful infringement, the
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`complaint must allege nothing more than the defendant had pre- or post-suit
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`5
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2471 Filed 09/14/22 Page 9 of 11
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`knowledge of the patents.”) (cleaned up). Any complaint alleging induced
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`infringement would automatically allege willfulness too, since knowledge of the
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`patent is an element of inducement. Cf. NEO Br. 21, PageID.2372 (conceding that,
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`absent the requirement of egregious conduct, “the core elements of intent for
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`willfulness and inducement are the same”). That result cannot be reconciled with the
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`Supreme Court’s admonition that enhanced damages “are not to be meted out in a
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`typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’
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`sanction for egregious infringement behavior”—conduct that is “willful, wanton,
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`malicious, bad-faith, deliberate, consciously wrongful, flagrant, or . . . characteristic
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`of a pirate.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 103–04 (2016).
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`Eko Brands, LLC v. Adrian Rivera Maynez Enterprises, Inc., 946 F.3d 1367
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`(Fed. Cir. 2020)—which NEO cites (at 9) for the proposition that “the core question
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`of willfulness itself ‘requires a jury to find no more than deliberate or intentional
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`infringement’”—does not support NEO’s argument. Eko is about the division of
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`labor between judge and jury in determining whether enhanced damages are
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`warranted. Namely, the jury decides whether the infringement was intentional, and
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`(if so) the judge decides whether it was sufficiently egregious to justify enhanced
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`damages. See id. at 1378. The fact remains, however, that under Halo the patentee
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`must ultimately prove egregious behavior in order to award enhanced damages. See
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`id. (citing Halo, 579 U.S. at 106). It follows that a patentee must plausibly allege
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`6
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2472 Filed 09/14/22 Page 10 of 11
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`egregious behavior for a claim for enhanced damages to survive a Rule 12(b)(6)
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`motion. See Michigan Motor, 472 F. Supp. 3d at 384; Op. Br. 8–9, PageID.2135–
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`36. NEO has not done so. Its willfulness allegations should therefore be dismissed.
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`IV. The Court should dismiss NEO’s willfulness claim with prejudice.
`The dismissal, moreover, should be with prejudice. NEO already had one
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`chance to amend (following Volkswagen’s first motion to dismiss) and to put its best
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`willfulness case forward. Neo came up woefully short again. NEO should not receive
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`a third bite at the apple. See Innovation Ventures, L.L.C. v. Custom Nutrition Lab’ys,
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`L.L.C., 2016 WL 9712013, at *4 (E.D. Mich. Jan. 25, 2016) (Berg, J.) (denial of
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`leave to amend is appropriate after “repeated failure to cure deficiencies by
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`amendments previously allowed”) (quoting Foman v. Davis, 371 U.S. 178 (1962)).
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`Dated: September 14, 2022
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`Susan M. McKeever
`Justin B. Weiner
`BUSH SEYFERTH PLLC
`100 West Big Beaver Road
`Suite 400
`Troy, MI 48084
`(248) 822-7800
`mckeever@bsplaw.com
`weiner@bsplaw.com
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`
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`Counsel for Defendants Volkswagen
`Group of America, Inc. and
`Volkswagen Group of America
`Chattanooga Operations, Inc.
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`Respectfully submitted,
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`By: /s/ Daniel E. Yonan
`Daniel E. Yonan
`Deirdre M. Wells
`Ryan C. Richardson
`William H. Milliken
`Anna G. Phillips
`STERNE, KESSLER, GOLDSTEIN & FOX
`P.L.L.C
`1100 New York Ave. NW, Suite 600
`Washington, DC 20005
`(202) 371-2600
`dyonan@sternekessler.com
`dwells@sternekessler.com
`rrichardson@sternekessler.com
`wmilliken@sternekessler.com
`aphillips@sternekessler.com
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`7
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`Case 2:22-md-03034-TGB ECF No. 76, PageID.2473 Filed 09/14/22 Page 11 of 11
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`CERTIFICATE OF SERVICE
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`I hereby certify that on September 14, 2022, I electronically filed the
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`foregoing document with the Clerk of the Court using the CM/ECF system, which
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`will send notification of such filing upon all ECF filing participants.
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`/s/ Daniel E. Yonan
`Daniel E. Yonan
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