Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 1 of 11
`Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 1 of 11
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 1 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 2 of 11
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`6:20-CV-00507-ADA
`6:23-CV-00204-ADA
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`NEONODE SMARTPHONE LLC,
` Plaintiff,
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`v.
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`SAMSUNG ELECTRONICS CO. LTD,
`SAMSUNG ELECTRONICS AMERICA,
`INC.,
` Defendants.
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`ORDER ON DEFENDANTS’ MOTION TO DISMISS
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`Before the Court is Samsung Electronics Co., Ltd.’s and Samsung Electronics America,
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`Inc.’s (collectively, “Samsung”) Motion to Dismiss Neonode Smartphone LLC’s (“Neonode”)
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`claims of willful infringement of U.S. patent Nos. 8,812,993 (“’993 Patent”) and 8,095,879 (“’879
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`Patent”) (collectively, “Asserted Patents”) and Neonode’s claims of indirect infringement and
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`direct infringement of the ’993 Patent. ECF No. 12 (in the -00507 action); ECF No. 3 (in the -
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`00204 action).1 After careful consideration of the parties’ briefings, the Court GRANTS-IN-
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`PART Samsung’s Motion to Dismiss.
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`I. BACKGROUND
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`Neonode filed the Complaint commencing this suit against Samsung on May 11, 2022,
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`accusing Samsung of willfully infringing the Asserted Patents and directly and indirectly
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`infringing the ’993 Patent, both pre- and post-suit. ECF No. 1 ¶¶ 37–52, 55–70. Neonode alleges
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`that Neonode entered into a licensing agreement with Samsung on July 13, 2005, where Neonode
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`licensed U.S. Application No. 10/315,250 to Samsung, which eventually issued as the ’879 Patent.
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`1 Unless otherwise noted, all ECF Nos. herein refer to the -00507 action.
`1
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 2 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 3 of 11
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`Id. ¶ 17. The application was allegedly specifically referenced in the agreement. Id. The agreement
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`terminated in 2009. Id. Samsung was sued by Apple Inc. on February 8, 2012, over claims of
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`patent infringement. Id. ¶ 18. Samsung allegedly utilized Neonode’s “N1 Quickstart Guide V0.5”
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`in its invalidity defense in Apple v. Samsung, which describes how to use the Neonode N1. Id. ¶
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`25; ECF No. 25 at 3. Multiple outlets covered Neonode’s ’879 Patent and Samsung’s use of the
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`’879 Patent as a defense in the Apple v. Samsung litigation. ECF No. 1 ¶¶ 20–22. On September
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`24, 2015, Neonode allegedly inquired about Samsung’s interest in Neonode’s patent portfolio,
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`which contained the Asserted Patents, and were told by Samsung’s counsel almost a month later
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`that Samsung was uninterested. ECF No. 25 at 5.
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`II. LEGAL STANDARD
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` Evaluating whether to grant a motion to dismiss under Rule 12(b)(6) is a “purely
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`procedural question not pertaining to patent law.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354,
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`1356 (Fed. Cir. 2007). Thus, Fifth Circuit law governs. Id. In the Fifth Circuit, “all well-pleaded
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`facts” are accepted as true, they are viewed “in the light most favorable to the plaintiff,” and “all
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`reasonable inferences” are drawn in the plaintiff’s favor. Johnson v. BOKF Nat’l Ass’n, 15 F.4th
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`356, 361 (5th Cir. 2021). A complaint must be “plausible on its face” with sufficient factual bases.
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`Ashcroft v. Iqbal, 556 U.S. 544, 570 (2007). “[D]etermining whether a complaint states a plausible
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`claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its
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`judicial experience and common sense.” Id. at 679. Additionally, there must be “factual content
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`that allows the court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged,” based on “more than a sheer possibility that a defendant has acted unlawfully.” Xiros,
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`Ltd. v. Depuy Synthes Sales, Inc., W-21-CV-00681-ADA, 2022 WL 3592449, at *2 (W.D. Tex.
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`Aug. 22, 2022) (citing Iqbal, 556 U.S. at 678). Furthermore, specific facts are not required, as long
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 3 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 4 of 11
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`as the statement gives the defendant “fair notice of what the . . . claim is and the grounds upon
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`which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (alteration in original) (quoting Bell
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`Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007)). Discovery should generally proceed when “the
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`relevant information is beyond the access of the plaintiff . . . unless the complaint recites no more
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`than sheer speculation about the plaintiff’s entitlement to relief.” Motiva Patents LLC v. Sony
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`Corp., 408 F. Supp. 2d 819, 827 (E.D. Tex. 2019) (alteration in original). This is because a plaintiff
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`“need not prove its case at the pleading stage.” Repairify, Inc. v. Keystone Auto. Indus., Inc., 610
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`F. Supp. 3d 897, 900–01 (W.D. Tex. 2022) (quoting Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337,
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`1350 (Fed. Cir. 2018)).
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`“To state a claim for willful infringement, ‘a plaintiff must allege facts plausibly showing
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`that as of the time of the claim’s filing, the accused infringer: (1) knew of the patent-in-suit; (2)
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`after acquiring that knowledge, it infringed the patent; and (3) in doing so, it knew, or should have
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`known, that its conduct amounted to infringement of the patent.’” Parity Networks, LLC v. Cisco
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`Sys., Inc., No. 6:19-CV-00207-ADA, 2019 WL 3940952, at *3 (W.D. Tex. July 26, 2019) (quoting
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`Välinge Innovation AB v. Halstead New England Corp., No. 16-1082-LPS-CJB, 2018 WL
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`2411218, at *13 (D. Del. May 29, 2018)). Without pleading that the defendant had knowledge of
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`the alleged infringement, it is impossible to claim willful infringement. See Halo Elecs., Inc. v.
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`Pulse Elecs., Inc., 579 U.S. 93, 105 (2016). Egregiousness is not a requirement to plead willful
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`infringement, but rather a distinct claim to grant enhanced damages. SRI Int’l, Inc. v. Cisco Sys.,
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`Inc., 14 F.4th 1323, 1329–30 (Fed. Cir. 2021). Egregious conduct can exist without willfulness
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`and willful conduct can exist without egregiousness. Välinge Innovation AB v. Halstead New
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`England Corp., No. 16-1082-LPS-CJB, 2018 WL 2411218, at *9 (D. Del. May 29, 2018).
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`To allege direct infringement, the complaint must contain facts that “plausibly support the
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`assertion that a defendant ‘without authority makes, uses, offers to sell, or sells any patented
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`invention during the term of the patent.” Ruby Sands, LLC v. Am. Nat’l Bank of Tex., No. 2:15-cv-
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`1955, 2016 WL 3542430, at *2 (E.D. Tex. June 28, 2016) (quoting 35 U.S.C § 271(a)).
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`Evidence of direct infringement may be text-based or based on visual exhibits. Repairify, Inc., 610
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`F. Supp. 3d at 901. Although the allegations must show that all claim limitations of at least one
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`claim of the claimed invention are practiced by the accused products to satisfy the Twombly/Iqbal
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`pleading standard, Novitaz, Inc. v. inMarket Media, LLC, No. 16-cv-06795-EJD, 2017 WL
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`2311407, at *3 (N.D. Cal May 26, 2017), the complaint satisfies this requirement if it alleges that
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`the accused products, identified both by name and with visual exhibits, satisfy “each and every
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`element of at least one claim of the [asserted] Patent.” Disc Disease Sols. Inc. v. VGH Sols., Inc.,
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`F.3d 1256, 1260 (Fed. Cir. 2018). And although some courts have found Disc Disease does not set
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`the minimum requirements for pleading patent infringement, Pure Parlay, LLC v. Stadium Tech.
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`Grp., Inc, No. 219CV00834GMNBNW, 2020 WL 569880, at *3 (D. Nev. Feb. 5, 2020), this Court
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`and others have found that it does. Unification Techs. LLC v. Dell Techs., Inc., 6:20-CV-00499-
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`ADA, 2021 WL 1343188, at *3 (W.D. Tex. Jan 28, 2021); accord Berall v. Pentax of Am., Inc,
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`No. 10-CV-577 (LAP), 2021 WL 3934200, at *5 (S.D.N.Y. Sept. 2, 2021). The facts used to
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`support the alleged infringement do not need to “mimic the precise language used in a claim.” In
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`re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1343 (Fed. Cir.
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`2012).
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`To establish indirect infringement, there must be a showing of induced or contributory
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`infringement. 35 U.S.C. §§ 271(b–c). Both types of infringement require that the accused infringer
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`had actual knowledge or was willfully blind to the existence of the patents-in-suit. Glob.-Tech
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 5 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 6 of 11
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`Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 769 (2011). There are three elements that must
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`be pled for induced infringement according to § 271(b): (1) the defendant had actual knowledge
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`of the patent; (2) the defendant knowingly induced a third-party to infringe the patent; and (3) the
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`defendant had the specific intent to induce infringement. Affinity Labs of Tex., LLC v. Toyota
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`Motor N. Am., No. W:13-CV-365, 2014 WL 2892285, at *2 (W.D. Tex. May 12, 2014) (citing
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`DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1305 (Fed. Cir. 2006)).
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`1. Willful Infringement of the Asserted Patents
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`III. DISCUSSION
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`Neonode alleges Samsung knew of the ’879 Patent both pre-suit and post-suit. ECF No. 25
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`at 2–4, 6. Samsung argues these allegations are not factually supported. ECF No. 12 at 2.
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`Samsung’s primary contention is that Neonode fails to support its claim that Samsung had pre-suit
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`knowledge of the Asserted Patents. Id.
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`Neonode alleges five sets of facts to support their claim. First, Samsung took a license to
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`U.S. Application No. 10/315,250 (“’250 Application”) on December 10, 2002, which issued as the
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`’879 Patent on January 10, 2012. ECF No. 25 at 2. The licensing agreement expired sometime
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`during or after 2009. ECF No. 1 ¶ 17. Neonode asserts that because Samsung previously licensed
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`the ’250 Application, Samsung was interested in utilizing the technology which ultimately issued
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`in the ’879 Patent, indicating their infringement. ECF No. 25 at 8. Although this does suggest that
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`Samsung may have been infringing, it fails to show that Samsung had the requisite knowledge of
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`the ’879 Patent’s existence as required to plead willful infringement. State Indus., Inc. v. A.O.
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`Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985). Just having knowledge of an application is
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`typically insufficient because not all applications issue. Vasudevan Software, Inc. v. TIBCO
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`Software Inc., No. C 11-06638 RS, 2012 WL 1831543, at *2–3 (N.D. Cal. May 18, 2012).
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 6 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 7 of 11
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`Furthermore, the claims of a patent application when published may change prior to issuance. Even
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`construing this in the light most favorable to the plaintiff, the license alone does not establish actual
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`knowledge.
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`Second, Neonode argues that Samsung monitored industry press in preparation of Apple
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`Inc. v. Samsung Electronics Co., Ltd, No. 12-CV-00630-LHK (N.D. Cal 2014), providing them
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`with actual knowledge of the ’879 Patent. ECF No. 25 at 3. Several articles discussing the ’879
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`Patent were published between the filing of the initial complaint and trial. ECF No. 25 at 3. The
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`patent number was published in at least one article. ECF No. 1 ¶ 21. This again does not plausibly
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`indicate that Samsung gained actual knowledge of the ’879 Patent. State Indus., 751 F.2d at 1236.
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`This only speculates that Samsung read the articles, and therefore is not sufficiently pleaded to
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`establish actual knowledge.
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`Third, Neonode argues that Samsung’s use of the Neonode N1 as prior art in Apple v.
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`Samsung is sufficient to establish knowledge of the ’879 Patent. ECF No. 25 at 8, 10. It again is
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`not. Neonode pleads that Samsung used the “Neonode Quickstart Guide V0.5” as a reference in
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`the Apple case to support its invalidity contention. ECF No. 1 ¶ 25. Yet Neonode does not allege
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`that the guide contains any statement that the Neonode N1 uses the technology in the ’879 Patent
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`necessary to impart actual knowledge on Samsung. Additionally, Neonode pleads that Samsung
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`used the Neonode N1 at a court hearing in August 2011. ECF No. 25 at 10. But this was before
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`the ’879 Patent issued and therefore could not have imparted actual knowledge of the subsequently
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`issued patent as required. State Indus., 751 F.2d at 1236.
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`Fourth, Neonode argues is it reasonable to infer that Quinn Emanuel, Samsung’s counsel
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`in the Apple lawsuit, informed Samsung of the ’879 Patent following the deposition Quinn
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`Emanuel took as Motorola’s counsel in Motorola Mobility, Inc. v. Apple, Inc., No. 1:10cv023580-
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 7 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 8 of 11
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`Civ-UU. ECF No. 25 at 4. During that deposition, Neonode’s Vice President of Intellectual
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`Property answered questions about the ’879 Patent. ECF No. 25 at 4. Neonode argues that Quinn
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`Emanuel would have provided Samsung with information about the ’879 Patent to support
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`Samsung’s invalidity defense. Samsung argues a law firm representing another client does not
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`impute knowledge on itself. ECF No. 12 at 3–4. Given that Neonode did not specify whether any
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`attorneys were counsel to Motorola and then were counsel to Samsung in the Apple suits, this is a
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`speculative conclusion not sufficiently supported.
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`Fifth, Neonode points to its inquiry with Quinn Emanuel regarding Samsung’s interest in
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`purchasing Neonode’s patent portfolio. ECF No. 25 at 10. Neonode alleges that “reasonable
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`inferences . . . may be drawn therefrom establish[ing] that Samsung had pre-suit knowledge of the
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`specific patents in suit.” ECF No. 25 at 10 n.3. But Neonode does not allege whether it informed
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`Samsung of the issuance of the ’879 patent, the contents of Neonode’s conversation with Samsung,
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`or whether it specifically informed Samsung of the Asserted Patents as part of the general
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`discussion of Neonode’s patent portfolio. Finjan, Inc. v. Juniper Networks, Inc., No. C 17-04659
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`WHA, 2018 WL 905909, at *3 (N.D. Cal Feb. 14, 2018). Instead, it asks the Court to make
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`unwarranted speculation into Samsung’s investigation of the patent portfolio.
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`Thus, Neonode did not sufficiently plead pre-suit knowledge as required for pre-suit willful
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`infringement for the ’879 Patent. Additionally, because Neonode’s assertions of pre-suit
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`knowledge for the ’993 Patent are identical to the fourth and fifth facts described above, Neonode
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`similarly does not sufficiently plead pre-suit knowledge of the ’993 Patent as required for willful
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`infringement.
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`Samsung did, however, have knowledge of the Asserted Patents post-suit because Neonode
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`served its complaint to Samsung, which listed the Asserted Patents that allegedly infringe. See
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 8 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 9 of 11
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`BillJCo, LLC v. Apple, Inc., 583 F. Supp. 3d 769, 778 (W.D. Tex. 2022). Neonode also alleges
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`that Samsung is continuing the infringing conduct. ECF No. 1 ¶¶ 52, 70 (alleging that the
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`infringement “has been and continues to be willful . . . yet proceeded to engage in such conduct
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`despite a high likelihood that a court would find the products to be infringing”). This is sufficient
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`to satisfy post-suit willful infringement. BillJCo, 583 F. Supp. 3d at 778.
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`2. Direct Infringement of the ’993 Patent
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`Neonode asserts that Samsung offered to sell products that infringe the ’993 Patent, naming
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`the Samsung Galaxy S, Galaxy A, Galaxy Note, and Galaxy Tab devices as the infringing products.
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`ECF No. 1 ¶ 56. To support this assertion, Neonode alleges three of claim 1’s limitations in textual
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`form. Id. ¶¶ 58–60. The other two claims, regarding the “edge” of the screen and a “strip” along
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`the edge, are not specifically mentioned. See id. ¶¶ 55–63. Samsung argues Neonode’s failure to
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`specifically mention these limitations indicates the allegation is therefore insufficient. ECF No. 12
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`at 8–10. These limitations, however, are not “conspicuously” left out, as was the case in AMS, LLC
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`v. Muzzy, LLC, No. 18-CV-683-WMC, 2019 WL 1435844, at *1–2 (W.D. Wis. Mar. 29, 2019),
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`but rather visually identified as allowed under Repairify, 610 F. Supp. 3d at 900–01, which still
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`provides fair notice to Samsung. See ECF 1 ¶ 61. Furthermore, Neonode is not required to use the
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`specific terms of “strip” and “edge” in their infringement allegations. Bill of Lading, 681 F.3d at
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`1343. By stating that the padlock is in the “upper center of the display” in conjunction with the
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`screenshot, Neonode has provided sufficient specification to put Samsung on notice of the
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`allegations, satisfying Iqbal. ECF No. 1 ¶ 61. Because all elements and limitations of the claim are
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`alleged, there is sufficient support for the direct infringement claim. Disc Disease, F.3d at 1260.
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`3. Indirect Infringement of the ’993 Patent
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`Having found there was direct infringement of the ’993 Patent, the remaining question is
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`whether there was also indirect infringement. Neonode pleads induced infringement of the ’993
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`Patent. ECF No. 1 ¶ 64. Neonode has not pleaded pre-suit actual knowledge but has pleaded post-
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`suit knowledge of the ’993 Patent as previously discussed.
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`Samsung argues that Neonode has not made any showing that Samsung specifically
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`intended to cause another party to directly infringe post-suit. ECF No. 12 at 7. In their complaint,
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`Neonode points to Samsung’s support page for use of the allegedly infringing technology to
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`encourage infringement. ECF No. 1 ¶ 65. As a result, users of the infringing products allegedly
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`commit direct infringement. Id. ¶ 66. This is more than incident to product distribution, as Samsung
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`alleges. ECF No. 12 at 8 (citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S.
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`913, 937 (2005)). Instead, Neonode specifies Samsung’s instructions on how to infringe the ’993
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`by changing the appropriate setting. ECF No. 1 ¶ 65. By providing instructions of how to infringe,
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`Neonode has met the “low bar required at the pleading stage.” Lexington Luminance LLC V. Lowes
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`Home Centers LLC, 4:18-cv-301-ALM-KPJ, 2019 WL 1317440, at *2 (E.D. Tex. Mar. 13, 2019);
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`see also Motiva Patents, LLC v. Sony Corp., 408 F. Supp. 3d 319, 831–33 (E.D. Tex. 2019). Thus,
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`Samsung has sufficiently pleaded post-suit induced infringement, but failed to sufficiently plead
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`pre-suit induced infringement.
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`IV. CONCLUSION
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`Based on the foregoing analysis of the facts and legal principles, Samsung’s motion to
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`dismiss Neonode’s claims of post-suit willful infringement regarding both Asserted Patents, post-
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`suit indirect infringement of the ’993 Patent, and direct infringement of the ’993 Patent is
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`DENIED. But Samsung’s motion to dismiss Neonode’s claims of pre-suit willful infringement of
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`Case 6:20-cv-00507-ADA Document 88 Filed 06/27/23 Page 10 of 10Case 2:22-cv-01776-WSH Document 29-18 Filed 07/20/23 Page 11 of 11
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`the Asserted Patents and pre-suit indirect infringement of the ’993 Patent is GRANTED. However,
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`Neonode is allowed to amend its Complaint and re-plead its pre-suit indirect and willful
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`infringement claims if it is able to elicit sufficient facts during fact discovery to support such
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`allegations.
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`SIGNED this 27th day of June, 2023.
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