`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`
`
`
`
`
`PLAINTIFF NEO WIRELESS, LLC’S RESPONSE TO DEFENDANT
`MERCEDES-BENZ USA, LLC’S MOTION TO DISMISS PURSUANT TO
`FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6)
`
`
`
`
`2:22-MD-03034-TGB
`
`HON. TERRENCE G. BERG
`
`
`
`2:22-cv-11769-TGB
`
`HON. TERRENCE G. BERG
`
`
`JURY TRIAL DEMANDED
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`
`§
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`§
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` §
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`§
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`
`IN RE NEO WIRELESS, LLC
`PATENT LITIG.
`
`
`NEO WIRELESS, LLC,
`
`
`
`
`
`MERCEDES-BENZ USA, LLC,
`
`
`
`Plaintiff,
`
`
`
`v.
`
`Defendant.
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`
`
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`
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2691 Filed 10/03/22 Page 2 of 32
`
`TABLE OF CONTENTS
`
`
`INTRODUCTION .............................................................................................. 1
`I.
`II. ALLEGED WILLFULNESS AND INDUCEMENT FACTS .......................... 2
`III. APPLICABLE STANDARD ............................................................................. 4
`IV. ARGUMENT ..................................................................................................... 4
`A. Neo’s Factual Allegations Support Its Legal Conclusions of Willful and
`Indirect Infringement. ................................................................................... 4
`B. Mercedes’s Pre-Suit Knowledge and Subsequent Actions Allow the
`Court to Plausibly Infer Mercedes Willfully Infringed. ............................... 8
`1. Neo Plausibly Alleged Mercedes Received Pre-Suit Notice of the
`Asserted Patents. ...................................................................................... 9
`2. In Addition to Pre-Suit Knowledge, Neo Alleges Additional Facts
`that Allow the Court to Infer Mercedes’s Culpability. .......................... 14
`3. At a Minimum, Neo Plausibly Alleged Intentional (and Thereby
`Egregious) Infringement Since the Filing of the Complaint. ................ 17
`C. Neo Adequately Pleaded Mercedes Had Knowledge of And Encouraged
`Others to Directly Infringe the Asserted Patents. ....................................... 18
`1. Neo Sufficiently Alleged Mercedes Had Pre-Suit and Post-Suit
`Knowledge of the Asserted Patents. ...................................................... 18
`2. Neo Sufficiently Alleged Mercedes Intended to Induce Infringement
`Through Numerous Concrete Facts and Examples. .............................. 20
`D. In the Alternative, Neo Requests Leave to Amend. .................................... 23
`V. CONCLUSION ................................................................................................ 24
`
`
`
`
`
`
`
`i
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`
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2692 Filed 10/03/22 Page 3 of 32
`
`TABLE OF AUTHORITIES
`
`
`Cases
`Acqis LLC v. Lenovo Group
` No. 6:20- cv-00967, 2022 WL 2705269 (W.D. Tex. July 12, 2022) ................... 10
`
`Addiction & Detox. Inst., LLC v. Aharonov
` No. 14-10026, 2015 WL 631959 (E.D. Mich. Feb. 13, 2015) ............................. 13
`
`Ashcroft v. Iqbal
` 556 U.S. 662 (2009) ..................................................................................... passim
`
`Bayer Healthcare LLC v. Baxalta Inc.
` 989 F.3d 964 (Fed. Cir. 2021) ................................................................................ 9
`
`Brice Env. Servs. Corp. v. Arcadis U.S., Inc.
` No. 3:21-CV-00141, 2022 WL 1032930 (D. Alaska Apr. 6, 2022) .................... 15
`
`DSU Med. Corp. v. JMS Co., Ltd.
` 471 F.3d 1293 (Fed. Cir. 2006) ...................................................................... iv, 20
`
`Eko Brands, LLC v. Adrian Rivera Maynez Enter., Inc.
` 946 F.3d 1367 (Fed. Cir. 2020) .............................................................................. 8
`
`FluorDX LLC v. Quidel Corp.
` No. 19-CV-1998, 2020 WL 4464475 (S.D. Cal. Aug. 4, 2020) .......................... 15
`
`Georgetown Rail Equip. Co. v. Holland L.P.
` 867 F.3d 1229 (Fed. Cir. 2017) .............................................................................. 8
`
`Halo Elecs., Inc. v. Pulse Elecs., Inc.
` 579 U.S. 93 (2016) .................................................................................... 8, 13, 17
`
`In re Bill of Lading Transmission & Processing Sys. Pat. Litig.
` 681 F.3d 1323 (Fed. Cir. 2012) ..................................................................... 16, 18
`
`
`
`
`ii
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2693 Filed 10/03/22 Page 4 of 32
`
`IOENGINE, LLC v. PayPal Holdings, Inc.
` 2019 WL 330515 (D. Del. Jan. 25, 2019) ...................................................... iv, 13
`
`JDS Technologies, Inc. v. Avigilon USA Corp.
` No. 15-10385, 2015 WL 3603525 (E.D. Mich. June 5, 2015) ................ 12, 13, 19
`
`John Keeler & Co.,Inc. v. Heron Point Seafood, Inc.
` 2016 WL 6839615 (N.D. Ohio July 8, 2016) ....................................................... 13
`
`Lifetime Indus., Inc. v. Trim–Lok, Inc.
` 869 F.3d 1372 (Fed. Cir. 2017) ............................................................................ 18
`
`Malibu Boats, LLC v. MasterCraft Boat Co.
` No. 3:16-cv-82-TAV-HBG, 2016 WL 8286158 (E.D. Tenn. Oct. 28, 2016) ...... 13
`
`Mengelkamp v. Lake Metro. Hous. Auth.
` 549 F. App’x 323 (6th Cir. 2013) ........................................................................... 7
`
`Mentor Graphics Corp. v. EVE-USA, Inc.
` 851 F.3d 1275 (Fed. Cir. 2017) ............................................................................ 16
`
`Michigan Motor Techs. LLC v. Volkswagen Aktiengesellschaft
` 472 F. Supp. 3d 377 (E.D. Mich. 2020) ....................................................... passim
`
`Mobile Telecomms. Techs., LLC v. BlackBerry Corp.
` No. 3:12-cv-1652, 2016 WL 1642927 (N.D. Tex. Apr. 26, 2016) ...................... 11
`
`Nalco Co. v. Chem-Mod, LLC
` 883 F.3d 1337 (Fed. Cir. 2018) ..................................................................... 18, 21
`
`Nat’l Inst. for Strategic Tech. Acquisition and Commercialization v.
` Nissan of N. Am.
` No. 11-11039, 2012 WL 3600289 (E.D. Mich. 2012) ................................. passim
`
`Rhodes v. R & L Carriers, Inc.
` 491 F. App’x 579 (6th Cir. 2012) .......................................................................6, 7
`
`
`
`
`iii
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2694 Filed 10/03/22 Page 5 of 32
`
`Serv. Sols. U.S., LLC v. Autel U.S. Inc.
` No. 13-10534, 2013 WL 5701063 (E.D. Mich. Oct. 18, 2013) ........................... 19
`
`Sony Corp. v. LG Elecs. U.S.A., Inc.
` 768 F. Supp. 2d 1058 (C.D. Cal. 2011) ................................................................ 13
`
`Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc.
` 648 F.3d 452 (6th Cir. 2011) ................................................................................ 16
`
`WCM Indus., Inc. v. IPS Corp.
` 721 Fed. Appx. 959 (Fed. Cir. 2018) .............................................................. 8, 16
`
`Statutes
`35 U.S.C. § 271(b) (2012) ....................................................................................... 18
`
`Other Authorities
`Edward A. Hartnett, Taming Twombly, Even After Iqbal
` 158 U. Pa. L. Rev. 473 (2010) ................................................................................ 5
`
`Rules
`Fed. R. Civ. P. 12(b)(6) ..................................................................................... 15, 24
`Fed. R. Civ. P. 8 ......................................................................................................... 6
`
`
`
`
`
`iv
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2695 Filed 10/03/22 Page 6 of 32
`
`1.
`
`STATEMENTS OF ISSUES PRESENTED
`
`To adequately plead willful infringement, the complaint must allege nothing
`more than the defendant had pre- or post-suit “knowledge of the patent[s].”
`IOENGINE, LLC v. PayPal Holdings, Inc., 2019 WL 330515, at *7 (D. Del.
`Jan. 25, 2019) (Bryson, J.). Neo pleaded detailed allegations of Defendant’s
`pre-suit knowledge of the Asserted Patents and its infringement, and
`subsequent actions implying deliberate wrongdoing. Taking these facts as true
`and construing them in Neo’s favor, can this Court infer Neo’s willfulness
`claims are plausible?
`Answer: Yes.
`To adequately plead inducement, the complaint must allege the defendant had
`2.
`knowledge of the Asserted Patents and took “active steps taken to encourage
`direct infringement.” DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306
`(Fed. Cir. 2006). Neo pleaded detailed allegations of Defendant’s pre-suit
`knowledge of the Asserted Patents, its infringement, and its encouragement
`for customers to directly infringe the Asserted Patents through, among others,
`technical materials, “how to” webpages, instructions, advertisements, and
`training. Can this Court plausibly infer Defendant is liable for inducement?
`Answer: Yes.
`
`
`
`
`
`
`v
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2696 Filed 10/03/22 Page 7 of 32
`
`MOST APPROPRIATE AND CONTROLLING AUTHORITIES
`
`Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93 (2016).
`
`Ashcroft v. Iqbal, 556 U.S. 662 (2009).
`
`Eko Brands, LLC v. Adrian Rivera Maynez Enter., Inc., 946 F.3d 1367 (Fed. Cir.
`2020).
`
`WCM Indus., Inc. v. IPS Corp., 721 Fed. Appx. 959, 969 (Fed. Cir. 2018).
`
`In re Bill of Lading Transmission & Processing Sys. Pat. Litig., 681 F.3d 1323
`(Fed. Cir. 2012).
`
`DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006).
`
`
`Rhodes v. R & L Carriers, Inc., 491 F. App’x 579 (6th Cir. 2012).
`
`Michigan Motor Techs. LLC v. Volkswagen Aktiengesellschaft, 472 F. Supp. 3d
`377 (E.D. Mich. 2020).
`
`IOENGINE, LLC v. PayPal Holdings, Inc., 2019 WL 330515 (D. Del. Jan. 25,
`2019).
`
`Addiction & Detox. Inst., LLC v. Aharonov, No. 14-10026, 2015 WL 631959 (E.D.
`Mich. Feb. 13, 2015).
`
`JDS Technologies, Inc. v. Avigilon USA Corp., No. 15-10385, 2015 WL 3603525
`(E.D. Mich. June 5, 2015).
`
`Serv. Sols. U.S., LLC v. Autel U.S. Inc., No. 13-10534, 2013 WL 5701063 (E.D.
`Mich. Oct. 18, 2013).
`
`Nat’l Inst. for Strategic Tech. Acquisition and Commercialization v. Nissan of N.
`Am., No. 11-11039, 2012 WL 3600289 (E.D. Mich. 2012).
`
`Fed. R. Civ. P. 12(b)(6).
`
`
`
`
`vi
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2697 Filed 10/03/22 Page 8 of 32
`
`I.
`
`INTRODUCTION
`In moving to dismiss Neo’s willful infringement and inducement claims,1
`
`Defendant Mercedes-Benz USA, LLC’s (“Mercedes” or “Defendant”), like
`
`Honda, Nissan, and Volkswagen before it, imposes a heightened pleading
`
`standard for both willfulness and inducement more akin to the “probability
`
`requirement” the Supreme Court explicitly rejected in Iqbal,2 and selectively
`
`ignores the factual allegations in Neo’s Complaint. Those allegations indicate:
`
`Mercedes’s knowledge of the Asserted Patents and their relationship to cellular
`
`standards Mercedes employs in its products; the fact that the standardized
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`technology claimed in the Asserted Patents is a core part of communications on
`
`LTE networks; Mercedes’s active decision to continue infringing the Asserted
`
`Patents despite knowledge of their infringement; and concrete examples of
`
`Mercedes’s active encouragement of others via providing technical materials,
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`advertising, training materials, user manuals, product support, marketing
`
`
`
` 1
`
` Mercedes’s Motion sets forth nearly identical arguments to Volkswagen’s Motion
`to Dismiss (Dkt. 53) and Honda and Nissan’s Motion to Dismiss (Dkt. 50). As a
`result, Neo incorporates by reference its Responses to Volkswagen’s Motion to
`Dismiss (Dkt. 67) (“Volkswagen Response”) and Honda and Nissan’s Motion to
`Dismiss (Dkt. 68) (“Honda/Nissan Response”). Nevertheless, except where
`otherwise specified, Neo has reiterated most of its (nearly identical) responsive
`argument in this motion to apply it directly to the facts in the Mercedes Complaint
`and avoid confusion.
`
` 2
`
`
`
` Ashcroft v. Iqbal, 556 U.S. 662 (2009).
`1
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2698 Filed 10/03/22 Page 9 of 32
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`materials, website advertisements for how to use the infringing instrumentalities,
`
`among others, to its dealerships, customers, end users, and the like, to directly
`
`infringe the patents-in-suit. These are not “naked assertions” that defendant “was
`
`willful” or “induced infringement”; rather, Neo’s Complaint pleads the above
`
`facts with specificity.
`
`While discovery may uncover many additional facts about Mercedes’s
`
`internal decisions, analysis, and response to receiving Neo’s letter, the pleaded
`
`factual allegations alone allow the court to draw the reasonable inference that
`
`Mercedes willfully infringed the Asserted Patents. Similarly, Neo’s letter and its
`
`numerous factual allegations of how Mercedes encourages others to directly
`
`infringe meets the baseline standard for pleading induced infringement.
`
`II. ALLEGED WILLFULNESS AND INDUCEMENT FACTS
`Excluding allegations discussing portions of the legal standard, Neo
`
`pleaded the following purely factual allegations:
`
`• Mercedes provides 4G LTE connectivity to the Accused Products via the
`Mercedes Me Connect system. ECF. No. 1 (“Compl.”) at ¶ 45.
`• Building on these 4G LTE capabilities, Mercedes developed and currently
`utilize the Mercedes Me Connect app, which allows its customers to
`interact with their vehicles from their cellular devices, using the cellular
`connectivity of the vehicles. Features on the Mercedes Me Connect app
`include the ability to remotely start, lock, unlock, or locate the vehicle, or
`to access vehicle data diagnostics. Id. at ¶ 46.
`• Neo sent a letter to Mercedes’s parent company on November 23, 2021. Id.
`at ¶ 64.
`
`
`
`2
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`
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2699 Filed 10/03/22 Page 10 of 32
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`• Mercedes’s parent company received the letter no later than November 26,
`2021. Id.
`• Neo’s letter was an attempt to initiate commercial licensing discussions
`with Mercedes’s parent company. Id.
`• Neo’s letter informed Mercedes’s parent company of Neo Wireless’s
`relevant patent portfolio, including listing the Asserted Patents and how the
`Asserted Patents cover certain 3GPP wireless standards. Id.
`• Mercedes’s products employ those 3GPP wireless standards. E.g., id. at
`¶¶ 44–50.
`• Each of the Asserted Patents reads on portions of those 3GPP standards
`that are, for example, “a core part of communications on an LTE network,”
`“integral to the establishment of connections between Mercedes’s Accused
`Products and the serving base stations,” “central to the operation of the
`mobile devices within an LTE network[,]” “important to maintain accurate
`signaling between the mobile device and the serving cells in the LTE
`network,” and/or “particularly important for highly mobile devices, such as
`those implemented in Mercedes’s Accused Products.” Id. at ¶¶ 72, 79, 86,
`93, 100, 107.
`• On information and belief, Defendant was informed of Neo’s patents by its
`parent company and thereby obtained actual knowledge of Neo’s patents
`and its infringement of the same. Id. at ¶ 65.
`• Defendant continued infringing the patents despite its knowledge. Id.
`• Mercedes’s advertising, sales, design, development, and/or technical
`materials related to the 3GPP 4G/LTE and/or 5G/NR standards associated
`with the Accused Products did and continue to encourage customers and
`other third parties to directly infringe the Asserted Patents. Id. at ¶ 57.
`• Similarly, Mercedes’s advertising, sales, development, and technical
`materials related to the 3GPP 4G/LTE and/or 5G/NR standards associated
`with the Accused Products contained and continue to contain instructions,
`directions, suggestions, and/or invitations that encourage customers to
`directly infringe the Asserted Patents. Id. at ¶ 58.
`
`
`
`3
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2700 Filed 10/03/22 Page 11 of 32
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`• Mercedes engaged in inducement to promote sales of the Accused Products
`(e.g., through user manuals, product support, marketing materials,
`technical materials, training materials), and to actively induce end users of
`the Accused Products to infringe the Asserted Patents. Id. at ¶ 59.
`• For example, Mercedes, through its website, advertises the Mercedes Me
`Connect system to entice sales and use of the Accused Products. Such
`advertisements further describe to a customer or end user how to use the
`infringing instrumentalities of the Accused Products. Id. at ¶ 60.
`• Mercedes further advertises and provides its customers and end users with
`specifications describing the infringing instrumentalities and how they are
`used in the Accused Products. Id. at ¶ 61.
`III. APPLICABLE STANDARD
`Neo incorporates by reference Section III of the Volkswagen Response.
`
`IV. ARGUMENT
`A. Neo’s Factual Allegations Support Its Legal Conclusions of
`Willful and Indirect Infringement.
`As a threshold matter, one somewhat unique—though still slightly
`
`overlapping—aspect of Mercedes’s Motion relative to the other defendants’ is the
`
`level to which Mercedes wrongly calls Neo’s allegations “conclusory,”
`
`employing that word fourteen times in its brief. Yet in doing so, Mercedes
`
`conflates legal conclusions with alleged facts supporting a legal conclusion.
`
`First, Mercedes selectively quotes only the portions of Neo’s Complaint
`
`referring to the legal standard, while disregarding the detailed factual allegations
`
`(laid out above in Section II) that allowed Neo to reach its conclusions. See e.g.,
`
`Mot. at 5 (“The only reference to intent is a conclusory pleading that MBUSA
`
`
`
`4
`
`
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2701 Filed 10/03/22 Page 12 of 32
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`[sic] ‘has deliberately and wantonly continued to infringe on Neo’s patent
`
`rights.’”) and 7 (“Neo makes only a threadbare, conclusory pleading that
`
`‘[MBUSA’s] infringement of the Asserted Patents has been willful and
`
`egregious.”). There is nothing wrong with Neo including allegations that embody
`
`the relevant legal standards in its Complaint, since “legal conclusions can provide
`
`the complaint’s framework….” Iqbal, 556 U.S. at 679. But contrary to the picture
`
`Mercedes paints, Neo’s conclusions were also “supported by factual allegations,”
`
`as required. Id.
`
`Had Mercedes actually grappled with the factual allegations made by Neo,
`
`it would have been clear that these are not “threadbare recitals of a cause of
`
`action’s elements” or “mere conclusions [that] are not entitled to the assumption
`
`of truth.” Id. at 664. Though lines may blur between what is a factual allegation
`
`and a legal conclusion, one notion remains clear: Courts “judge [the conclusory
`
`nature of an allegation] in the context of a particular right of action” to assess
`
`whether the factual allegations support a legal claim or merely recite that legal
`
`claim.” See Edward A. Hartnett, Taming Twombly, Even After Iqbal, 158 U. Pa.
`
`L. Rev. 473, 492 (2010). Neo’s allegations clearly inhabit the former category.
`
`For example, the Sixth Circuit in Rhodes v. R & L Carriers, Inc. rejected
`
`defendant’s “conclusory” cries and reversed the Southern District of Ohio’s
`
`dismissal for “demanding such detailed factual content to survive a motion to
`
`
`
`5
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2702 Filed 10/03/22 Page 13 of 32
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`dismiss.” 491 F. App’x 579, 583 (6th Cir. 2012). In Rhodes, the plaintiff alleged
`
`the defendant was liable for an FMLA retaliation claim by discriminating against
`
`“women in hiring and salary; applicants based on apparent potential for claims
`
`for [health] benefits; overweight applicants; and applicants based on age by using
`
`their birth dates and setting maximum age limits for hires.” Id. (internal
`
`quotations omitted). The plaintiff also alleged those who “took FMLA leave were
`
`not permitted to return to their positions following leave,” and that he was
`
`terminated after expressing his concerns to the company. Id. The district court
`
`wrongly held these allegations were “generalized and conclusory” in failing to
`
`specify:
`
`[T]he dates of the meetings . . . ; the names of applicants who were
`denied employment based on a discriminatory reason; [] the names of
`employees who were not permitted to return to work following FMLA
`leave . . . more detailed facts concerning [the defendant’s] refusal to
`hire women,” how the plaintiff learned about the company’s hiring
`decisions, who made the unlawful hiring decision, and how he
`opposed the unlawful practices.
`
`
`Id.
`
`The Sixth Circuit held, “[w]hile these facts may be critical ultimately to
`
`proving [plaintiff’s] claims on a motion for summary judgment or at trial, to
`
`demand such detailed pleading at the motion to dismiss stage disregards the
`
`continuing viability of the short and plain language of Federal Rule of Civil
`
`Procedure 8.” Id. The Court further warned “against reading Twombly and Iqbal
`
`
`
`6
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2703 Filed 10/03/22 Page 14 of 32
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`so narrowly as to be the death of notice pleading.” Id. (internal quotations
`
`omitted).3 The court observed that the Sixth Circuit (and the Supreme Court)
`
`simply requires district courts to look to “whether ‘the plaintiff plead[ed] factual
`
`content that allows the court to draw the reasonable inference that the defendant
`
`is liable for the misconduct alleged.’” Id. at 583–84 (quoting Iqbal, 556 U.S. at
`
`678). Applying the correct standard, the Court rejected the characterization of the
`
`plaintiff’s allegations as “conclusory,” because they depicted how the defendant
`
`was retaliatory. Id. at 584.
`
`Like in Rhodes, Neo’s allegations go well beyond “mere recitals of a cause
`
`of action’s elements” and explain how Mercedes practices each element. Section
`
`II, supra, depicts numerous factual allegations from Neo’s Complaint that make
`
`no mention of the legal elements for willfulness or inducement; instead they
`
`provide support for Neo’s legal conclusions. Mercedes misconstrues the absence
`
`of complete proof of a factual allegation as a “conclusory” legal conclusion—a
`
`concept expressly rejected by the Sixth Circuit in Rhodes. Neo’s factual
`
`assertions should not be cast aside because Mercedes seeks more detailed factual
`
`
`
` 3
`
`
`
` See also Mengelkamp v. Lake Metro. Hous. Auth., 549 F. App’x 323, 330 (6th
`Cir. 2013) (finding a complaint that alleged party investigated charges and that
`action was brought “for retaliation for support of claims of gender-based
`discrimination and sexual harassment” gave the appellee fair notice).
`7
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2704 Filed 10/03/22 Page 15 of 32
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`content. Instead, this Court must look at the facts Neo did allege and assess
`
`whether Neo meets the low-threshold plausibility standard. It does.
`
`B. Mercedes’s Pre-Suit Knowledge and Subsequent Actions Allow
`the Court to Plausibly Infer Mercedes Willfully Infringed.
`Defendant proposes the same impractical heightened pleading standard for
`
`willful infringement as Volkswagen, Honda, and Nissan, misconstruing the
`
`Eastern District of Michigan’s ruling in Michigan Motor.4 To survive a motion to
`
`dismiss a willfulness claim, a plaintiff must allege sufficient facts to support an
`
`inference that the “conduct infringing the patents [] was willful, wanton,
`
`malicious, bad-faith, deliberate, consciously wrongful, or flagrant.” Id. at 385.
`
`Alleging intentional (“deliberate,” “consciously wrongful”) infringement meets
`
`these criteria. See, e.g., Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 103–4
`
`(2016) (“the full range of culpable behavior” includes “willful,” “deliberate,” or
`
`“consciously wrongful”).5
`
`
`
` 4
`
`
`
` Michigan Motor Techs. LLC v. Volkswagen Aktiengesellschaft, 472 F. Supp. 3d
`377, 381 (E.D. Mich. 2020). For the sake of efficiency, Neo directs the Court to
`the Volkswagen Response on pages 6 through 11, detailing why Federal Circuit
`law has rejected this overly stringent pleadings standard.
`5 See also Eko Brands, LLC v. Adrian Rivera Maynez Enter., Inc., 946 F.3d 1367,
`1378 (Fed. Cir. 2020) (determining willfulness only “requires a jury to find no
`more than deliberate or intentional infringement”); WCM Indus., Inc. v. IPS Corp.,
`721 Fed. Appx. 959, 969 (Fed. Cir. 2018) (willfulness facts are sufficient if proven
`defendant “acted despite a risk of infringement that was either known or so obvious
`that it should have been known”); Georgetown Rail Equip. Co. v. Holland L.P.,
`867 F.3d 1229, 1245 (Fed. Cir. 2017) (affirming willfulness verdict based solely
`8
`
`
`
`Case 2:22-md-03034-TGB ECF No. 87, PageID.2705 Filed 10/03/22 Page 16 of 32
`
`1.
`
`Neo Plausibly Alleged Mercedes Received Pre-Suit Notice of
`the Asserted Patents.
`In view of the legal framework laid out in the Volkswagen Response,
`
`Mercedes’s arguments fail for the same reasons Volkswagen’s, Honda’s, and
`
`Nissan’s fail, including regarding Neo’s pleading of pre-suit knowledge of the
`
`Asserted Patents. Mercedes claims Neo’s allegations are “nearly identical” to
`
`those in Michigan Motor when, in fact, Neo’s pleading is far more detailed that
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`the one rejected in Michigan Motor.
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`First, like with Volkswagen, Mercedes’s parent company’s (“Mercedes
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`AG’s”) actual knowledge of the Asserted Patents and infringement may be
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`imputed to its wholly owned subsidiary, Mercedes. The Eastern District of
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`Michigan accepts that a court can make the reasonable inference a parent
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`company with knowledge of asserted patents would communicate with its
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`infringing United States subsidiary. See Nat’l Inst. for Strategic Tech. Acquisition
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`and Commercialization v. Nissan of N. Am., No. 11-11039, 2012 WL 3600289, at
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`*4–*5 (E.D. Mich. 2012). In National Institute, the patentee sent a notice letter to
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`the defendant’s parent company, Honda Motor Company, “indicating that [the
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`on “evidence that [defendant] was aware of the [asserted patent] prior to the current
`litigation . . . and believed that it was infringing the patent”); Bayer Healthcare
`LLC v. Baxalta Inc., 989 F.3d 964, 988 (Fed. Cir. 2021) (same).
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2706 Filed 10/03/22 Page 17 of 32
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`patentee] has built a patent portfolio that includes technologies which may fit
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`with [Honda Motor Company’s] interest” and providing examples of the covered
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`technology. Id. at *2. The Court rejected defendants’ argument the “complaint
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`relies on pure conjecture” to assert defendants’ knowledge of the asserted
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`patents: “[A]ccepting [the plaintiff’s] factual allegations as true” it is reasonable
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`to infer “a Japanese parent company, Honda Motor Company, which received
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`[the plaintiff’s] letter concerning the patents-in-suit, would communicate with its
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`United States subsidiary, American Honda, about these patents and potential
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`infringement thereof.” Id. at *4–5.
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`Like National Institute, Neo alleged that Mercedes AG received a letter,
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`and even went a step further and specifically alleged that “Mercedes, through its
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`parent company, obtained actual knowledge of the Asserted Patents and its
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`infringement thereof as early as November 26, 2021.” Compl. at ¶ 65. As in
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`National Institute, it is reasonable to believe Mercedes’s parent company
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`receiving a notice letter regarding its infringement of Neo’s patent portfolio,
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`including the asserted United States patents, via compliance with 3GPP wireless
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`standards, would communicate with its United States subsidiaries about the same.
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`Accord Acqis LLC v. Lenovo Group, No. 6:20- cv-00967, 2022 WL 2705269
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`(W.D. Tex. July 12, 2022) (finding patentee sufficiently pled actual knowledge
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`“for all Lenovo entities” despite only sending the notice letter to one entity,
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2707 Filed 10/03/22 Page 18 of 32
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`stating that while the plaintiff “may not yet have proven its theory, it has
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`adequately pleaded it”); Mobile Telecomms. Techs., LLC v. BlackBerry Corp.,
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`No. 3:12-cv-1652, 2016 WL 1642927 (N.D. Tex. Apr. 26, 2016) (denying
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`dismissal where the plaintiff alleged that the parent corporation’s knowledge of
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`the asserted patents illustrated its subsidiaries’ same knowledge).
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`Turning to the substance of Neo’s pleadings, the allegations far exceed the
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`allegations in Michigan Motor where the court granted the defendant’s motion to
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`dismiss because the plaintiff asserted only the following:
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`Defendants were made aware of the patents-in-suit at least as early
`as March 4, 2015, when [they were] provided notice of the patents
`via letter.
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`Michigan Motor, 472 F. Supp. 3d at 380. The court declined to credit this
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`allegation because it failed to specify how it supported the plaintiff’s legal
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`knowledge contention. Id. Namely, it did not “specif[y] what the letter stated, did
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`not mention who sent the letter, and did not mention to whom the letter actually
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`was sent.” Id.6
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` 6
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` As stated in the Volkswagen Response and further supported by Neo’s
`assessment of Iqbal above, Neo respectfully observes that, while unnecessary for
`the resolution of this motion, even this allegation—which alleged a specific fact
`(the sending of a letter on a certain date including the patents-in-suit), and not just
`a bare legal conclusion—likely passed the muster under Twombly/Iqbal and should
`have been treated as true.
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2708 Filed 10/03/22 Page 19 of 32
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`
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`Here, unlike the plaintiff in Michigan Motor, Neo’s Complaint specified
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`(1) who sent the letter (“Neo sent a letter”); (2) to whom the letter was sent (“to
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`Mercedes’s parent company”), (3) the date the letter was sent (“on November 23,
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`2021”), (4) the date Mercedes received the letter (“which it received no later than
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`November 26, 2021”), (5) the letter’s reference to the Asserted Patents
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`(“informing Mercedes of Neo Wireless’s relevant patent portfolio, including
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`listing the Asserted Patents”), (6) the letter’s reference to 3GPP wireless
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`standards (“and how the Asserted Patents cover certain 3GPP wireless
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`standards”), (7) the letter’s reference to Mercedes’s infringement (“used in
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`Mercedes’s Accused Products”), and (8) how Mercedes obtained actual
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`knowledge of the Asserted Patents and its infringement (“Mercedes, through its
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`parent company, obtained actual knowledge of the Asserted Patents and its
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`infringement thereof”). Compl. at ¶¶ 64–65.
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`
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`There is more than enough detail in these allegations for the Court to
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`accept them as true, and reasonably infer Neo’s letter was in fact sent, received,
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`and provided Mercedes with actual knowledge of Neo’s Asserted Patents. In fact,
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`courts have accepted allegations of pre-suit notice as true on far less specific
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`pleadings. See, e.g., JDS Technologies, Inc. v. Avigilon USA Corp., No. 15-
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`10385, 2015 WL 3603525, at *2 (E.D. Mich. June 5, 2015) (allowing inference
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`of pre-suit notice of patents even without actual notice letter, based on allegations
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`12
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.2709 Filed 10/03/22 Page 20 of 32
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`of product marking, display of patent numbers at trade shows, and assertion of
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`patents in separate lawsuit against third party); Malibu Boats, LLC v. MasterCraft
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`Boat Co., No. 3:16-cv-82-TAV-HBG, 2016 WL 8286158, at *4 (E.D. Tenn. Oct.
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`28, 2016) (denying motion to dismiss because of defendant’s “alleged
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`correspondence with [plaintiff’s] patent prosecution counsel” about imminent
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`issuance of asserted patent).
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`
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`Though more may be required to prove willful intent, pre- and post-Halo
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`authority supports the conclusion that allegations of pre-suit notice alone allows a
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`plaintiff’s willful infringement claim to survive a motion to dismiss.7 See JDS
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`Technologies, 2015 WL 3603525, at *2 (citing Sony Corp. v. LG Elecs. U.S.A.,
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`Inc., 768 F. Supp. 2d 1058, 1064 (C.D. Cal. 2011); IOENGINE, 2019 WL
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`330515, at *7; see also Addiction & Detox. Inst., LLC v. Aharonov, No. 14-
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`10026, 2015 WL 631959, at *2 (E.D. Mich. Feb. 13, 2015) (dismissing willful
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`infringement claim only because it did “not recite specific facts explaining if and
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`when the defendants had knowledge of the [asserted patent].”); Malibu Boats,
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`2016 WL 8286158, at *4; John Keeler & Co.,Inc. v. Heron Point Seafood, Inc.,
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`2016 WL 6839615, at *4 (N.D. Ohio July 8, 2016) (explaining plaintiff “need not
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` 7
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` For further detail, Neo incorporates by reference the Volkswagen Response note
`3 and page 15.
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`13
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`Case 2:22-md-03034-TGB ECF No. 87, PageID.