Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 1 of 9 PageID #: 5829
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`CONTENT GUARD HOLDINGS, INC.,
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`Plaintiff,
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`MEMORANDUM OPINION AND ORDER
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`Case No. 2:14-CV-61-JRG
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`GOOGLE INC.,
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`v.
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`Defendant.
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`Before the Court is Defendant Google Inc.’s Motion to Dismiss Complaint Pursuant to
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`Federal Rule of Civil Procedure 12(b)(6) (Dkt. No. 35.) The Court held a hearing on the initial
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`motion on November 18, 2014.
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`APPLICABLE LAW
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`The Federal Circuit “review[s] a district court’s dismissal for failure to state a claim
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`under the law of the regional circuit. Content Extraction & Transmission LLC v. Wells Fargo
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`Bank, Nat. Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014) (citing In re Bill of Lading Transmission
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`& Processing Sys. Patent Litig., 681 F.3d 1323, 1331 (Fed. Cir. 2012)).
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`Federal Rule of Civil Procedure (“F.R.C.P.”) 12(b)(6) is a defense that a pleading “fail[s]
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`to state a claim upon which relief can be granted.” When considering a motion to dismiss under
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`F.R.C.P. 12(b)(6), a court must assume that all well-pleaded facts are true, and view those facts
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`in the light most favorable to the plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 218 (5th
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`Cir. 2012). The court may consider “the complaint, any documents attached to the complaint,
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`and any documents attached to the motion to dismiss that are central to the claim and referenced
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`by the complaint.” Lone Star Fund V (U.S.) L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th
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`Cir. 2010). The court must then decide whether those facts state a claim for relief that is
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 2 of 9 PageID #: 5830
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`plausible on its face. Bowlby, 681 F.3d at 217. “A claim is plausible if ‘the plaintiff pleads
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`factual content that allows the court to draw the reasonable inference that the defendant is liable
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`for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’
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`but it asks for more than a sheer possibility that a defendant has acted unlawfully.” United States
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`v. Bollinger Shipyards, Inc., 775 F.3d 255, 260 (5th Cir. 2014) (citing Ashcroft v. Iqbal, 556 U.S.
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`662, 678 (2009)). “The plausibility standard ‘does not give district courts license to look behind
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`[a complaint's] allegations and independently assess the likelihood that the plaintiff will be able
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`to prove them at trial.’” Id. (citing Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787,
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`803 n. 44 (5th Cir. 2011)). The question resolved on a motion to dismiss for a failure to state a
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`claim is not whether the plaintiff will ultimately prevail, “but whether [the] complaint was
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`sufficient to cross the federal court's threshold.” Skinner v. Switzer, 562 U.S. 521, 131 S. Ct.
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`1289, 1296, 179 L. Ed. 2d 233 (2011). “Rule 8(a)(2) of the Federal Rules of Civil Procedure
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`generally requires only a plausible ‘short and plain’ statement of the plaintiff's claim, not an
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`exposition of [the plaintiff’s] legal argument.” Id.
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`“Form 18 sets forth a sample complaint for direct patent infringement and requires:
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`(1) an allegation of jurisdiction; (2) a statement that the plaintiff
`owns the patent; (3) a statement that defendant has been infringing
`the patent ‘by making, selling, and using [the device] embodying
`the patent’; (4) a statement that the plaintiff has given the
`defendant notice of its infringement; and (5) a demand for an
`injunction and damages.”
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`K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283 (Fed.
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`Cir. 2013) cert. denied sub nom. DIRECTV v. K-Tech Telecommunications, Inc., 134 S. Ct. 1026,
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`188 L. Ed. 2d 139 (2014). “Form 18 includes no indication that a patent holder must
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`prospectively anticipate [] noninfringement arguments.” Id. at 1284. “The touchstones of an
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`appropriate analysis under Form 18 are notice and facial plausibility,” and “[w]hile these
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 3 of 9 PageID #: 5831
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`requirements serve as a bar against frivolous pleading, it is not an extraordinarily high one.” Id.
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`at 1286. The Federal Circuit does not read “Form 18 [] to require that a plaintiff identify an
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`accused device by name.” Id. “The adequacy of the facts pled depends on the breadth and
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`complexity of both the asserted patent and the accused product or system and on the nature of the
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`defendant's business activities.” Id.
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`A claim for willful patent infringement requires proof that (1) “the infringer acted despite
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`an objectively high likelihood that its actions constituted infringement of a valid patent,” and (2)
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`“this objectively-defined risk (determined by the record developed in the infringement
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`proceeding) was either known or so obvious that it should have been known to the accused
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`infringer.” In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). “Willfulness does
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`not equate to fraud, and thus, the pleading requirement for willful infringement does not rise to
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`the stringent standard required by Rule 9(b).” Ferguson Beauregard/Logic Controls, Division of
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`Dover Res., Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1343 (Fed. Cir. 2003).
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`A complaint properly pleads a claim of contributory infringement if it contains sufficient
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`facts from which Court may conclude that the claim is plausible. In re Bill of Lading
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`Transmission & Processing System Patent Lit., 681 F.3d 1323, 1337 (Fed. Cir. 2012).
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`“Determining whether a complaint states a plausible claim for relief will ... be a context-specific
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`task that requires the reviewing court to draw on its judicial experience and common sense.” Id.
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`at 1332 (citing Iqbal, 556 U.S. at 679). A plaintiff claiming contributory patent infringement
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`under 35 U.S.C. § 271(c) must prove (1) an act of direct infringement, (2) that the defendant
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`“knew that the combination for which its components were especially made was both patented
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`and infringing,” and (3) that the components have “no substantial non-infringing uses.” Cross
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`Med. Prods., Inc. v. Medtronic Sofamore Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005).
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 4 of 9 PageID #: 5832
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`A claim for induced infringement under 35 U.S.C. § 271(b) requires proof (1) of an act of
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`direct infringement by another, and (2) that the defendant knowingly induced the infringement
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`with the specific intent to encourage the other’s infringement. MEMC Elec. Materials, Inc. v.
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`Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1378 (Fed. Cir. 2005). The intent element
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`requires that the defendant “[know] that the induced acts constitute patent infringement.”
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`Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011); see also DSU Med.
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`Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (“[I]nducement requires that the alleged
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`infringer knowingly induced infringement and possessed specific intent to encourage another’s
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`infringement.’’). Thus, in order to survive a motion to dismiss, the complaint must (1)
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`adequately plead direct infringement by a defendant’s customers, (2) contain facts plausibly
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`showing that the defendant specifically intended for its customers to infringe the asserted patents,
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`and (3) contain facts plausibly showing that the defendant knew that the customer’s acts
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`constituted infringement. See In re Bill of Lading, 681 F.3d at 1339. Global-Tech requires only
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`that the defendant “[know] that the induced acts constitute patent infringement,” and contains no
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`requirement that the knowledge arise before the filing of the suit. Global-Tech Appliances, Inc.
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`v. SEB S.A., 131 S. Ct. 2060 (2011).
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`BACKGROUND
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`This suit is a suit concerning the infringement and validity of certain U.S. patents.
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`Plaintiff ContentGuard was originally formed as a partnership between Xerox Corporation and
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`Microsoft Corporation1 to pursue digital rights management (“DRM”) technology.2 As part of
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`1 ContentGuard is now owned by Pendrell Technologies, LLC. (Dkt. No. 2.)
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`ContentGuard’s website suggests
`that may also be owned by Time Warner.
`http://contentguard.com/company/ (“ContentGuard is owned by Pendrell Corporation and Time
`Warner”) (last visited January 30, 2015).
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 5 of 9 PageID #: 5833
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`its business, ContentGuard filed and obtained various patents, including the nine patents that it
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`asserts in this action. The Defendants in this action—Amazon, Apple, Huawei, Motorola, HTC,
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`and Samsung—are well-known technology companies that, among their varied businesses,
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`provide electronic hardware and software products. Generally in this suit, ContentGuard accuses
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`DRM aspects of certain of Defendants’ software applications (“apps”) (e.g. iTunes, Amazon
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`Kindle, Amazon Instant Video) and hardware and software components of infringing its patent
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`claims.
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`ANALYSIS
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`Google asserts that ContentGuard’s complaint is insufficient to state a claim for any type
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`of patent infringement because it “lacks the factual allegations required to state a claim for direct
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`or indirect patent infringement against Defendant Google Inc.” (MTD at 1.) Google assert that
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`“[i]nstead of pleading facts that could permit an inference of liability, ContentGuard offers only
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`bare legal conclusions.” (Id.)
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`Google asserts that ContentGuard’s complaint should be dismissed for a failure to plead
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`direct infringement because the Complaint does not identify each and every accused Google
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`product. Google does not dispute that ContentGuard’s pleadings identify at least one specific
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`device and application. Google asserts that Paragraph 11 of ContentGuard’s complaint does not
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`identify “types or categories of products that infringe.” (MTD Reply, Dkt. No. 53 at 9.) The
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`Court observes that Google does not comment as to whether the remaining paragraphs of
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`ContentGuard’s complaint serve to identify “types or categories of products that infringe.” The
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`Court also notes, having considered the Complaint, that Google neglects to mention the
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`2 Broadly, DRM technology, which might also be thought of as “copy protection,” seeks
`to control access (e.g. viewing, copying) to digital information, including media, such as music,
`movies, and software.
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 6 of 9 PageID #: 5834
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`considerable additional detail available in the complaint if its paragraphs are read in combination
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`rather than in isolation. The Court finds that, taken together, the allegations of ContentGuard’s
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`complaint do, additionally, identify types or categories of products that infringe. Google also
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`asks the Court to read K-Tech3 as requiring that a plaintiff must specifically identify each and
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`every accused product if such information is non-confidential and regardless of the sufficiency of
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`other well-pled facts, but the Court does not find such an exacting requirement in K-Tech or
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`under the Federal Rules of Procedure. The Court observes that Google does not assert that the
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`details of the DRM technology accused in this case are publicly known. Having considered the
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`pleadings, the briefing, and the relevant attachments, and taking all well-pleaded facts as true and
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`viewing those facts in the light most favorable to the plaintiff, the Court finds that
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`ContentGuard’s pleadings are sufficiently plausible to plead a claim of direct infringement.
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`Google asserts that ContentGuard’s pleadings are insufficient as to ContentGuard’s claim
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`of induced infringement. Google asserts that the “Complaint fails to allege facts to support the
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`allegation that Google had knowledge of the patents-in-suit, as required for a claim of induced
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`infringement.” Google then acknowledges that ContentGuard alleges that pre-suit license
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`negotiations occurred between Google and ContentGuard. (MTD Reply at 2.) The Court
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`observes that Google does not appear to dispute ContentGuard’s allegation that Google had
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`knowledge of ContentGuard’s patents through, at least, negotiations with ContentGuard that
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`occurred before the suit was filed. Google simply asserts that the notice alleged is insufficient.
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`(Id.) Google also acknowledges that even if Google did not have pre-suit notice, that the
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`Complaint would be sufficient to create notice for post-suit conduct. (Id. at 3.) The parties’
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`briefing also vigorously disputes—primarily with conclusory statements—whether or not the
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`3 Supra pp. 2-3.
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 7 of 9 PageID #: 5835
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`pleadings contain facts sufficient to make intent plausible. For example, Google asserts that
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`“[t]he Complaint fails to allege facts to support an inference that Google had the specific intent
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`to induce third parties to infringe the patents-in-suit,” and ContentGuard asserts that “the
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`instructions ContentGuard identifies in the Amended Complaint are not instructions on how to
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`power up the accused devices—they are instructions on how to access, download, and play
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`DRM-protected content.” (MTD Reply at 3; MTD Sur-reply, Dkt. No. 61 at 4.) Google asserts
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`that “the Complaint includes absolutely no facts to support an inference that [the alleged third
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`party infringers] actually engaged in direct infringement.” (MTD Reply at 4.) The Court does
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`not find Google’s conclusory statements on this point to be supported: reading the Complaint as
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`a whole, it appears to plead facts supporting such an inference. Having considered the pleadings,
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`the briefing, and the relevant attachments, and taking all well-pleaded facts as true and viewing
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`those facts in the light most favorable to the plaintiff, the Court finds that ContentGuard’s
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`pleadings are sufficiently plausible to plead a claim of induced infringement.
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`Google asserts that ContentGuard’s contributory infringement allegations fail to provide
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`plausible facts: 1) that explain why such components are a material part of the infringing
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`combination; and 2) that explain why such components lack any substantial non-infringing use.
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`(MTD Reply at 4-7.) ContentGuard asserts that it sufficiently alleges the underlying direct
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`infringement; identifies the infringing combination; alleges facts supporting materiality; and
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`alleges the lack of substantial non-infringing uses. (MTD Sur-reply at 4-6.) Having considered
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`the pleadings, the briefing, and the relevant attachments, and taking all well-pleaded facts as true
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`and viewing those facts in the light most favorable to the plaintiff, the Court finds that
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`ContentGuard’s pleadings are sufficiently plausible to plead a claim of contributory
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`infringement.
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 8 of 9 PageID #: 5836
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`Google asserts that “[t]he Complaint fails to allege any facts in support of its wholly
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`conclusory claim of willful infringement” and that ContentGuard’s pleadings “fail to support an
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`inference that Google acted with objective recklessness as to its risk of infringement of any of
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`the asserted patents.” (MTD Reply at 7.) ContentGuard asserts that it adequately pleads facts
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`that support its willful infringement claims:
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`(1) the inventions disclosed in the patents-in-suit represent the
`“prevailing paradigm for distributing digital content over the
`Internet”;
`(2) market commentators have
`recognized
`that
`ContentGuard’s innovations represent “the technological building
`blocks necessary to make the digital delivery of music, movies and
`other files secure,” without which content creators would not
`permit their content to be distributed to users of Google and third-
`party devices; (3) the strength of ContentGuard’s patents-in-suit is
`underscored by
`the numerous patent
`license agreements
`ContentGuard has executed without any threat of litigation; (4)
`Google had knowledge of ContentGuard’s patents-in-suit; and (5)
`ContentGuard has made numerous attempts to negotiate a license
`agreement with Google.
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`(MTD Sur-reply at 6-7.) Google is correct that ContentGuard only directly refers to willful
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`infringement in one paragraph of its Complaint.4 (See MTD at 21.) Were this paragraph the
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`entirety of ContentGuard’s complaint, the Court would agree with Google. However, there is
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`significantly more to the allegations of ContentGuard’s complaint than this one paragraph. Here,
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`like many other parts of its MTD, Google is, in effect, asking the Court to go significantly
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`beyond the plausibility of the well-plead allegations and into the merits. The Court cannot agree
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`with Google that ContentGuard fails “to allege any facts” supporting its theory. Having
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`considered the pleadings, the briefing, and the relevant attachments, and taking all well-pleaded
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`facts as true and viewing those facts in the light most favorable to the plaintiff, the Court finds
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`that ContentGuard’s pleadings are sufficiently plausible to plead a claim of willful infringement.
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`4 If the allegation of knowledge was not true at the time ContentGuard filed its original
`complaint, the burden is on ContentGuard to amend its complaint to comply with Rule 11.
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`Case 2:14-cv-00061-JRG Document 158 Filed 03/30/15 Page 9 of 9 PageID #: 5837
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`CONCLUSION
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`Rule 12(b)(6) is a defense to pleading where there is a “failure to state a claim upon
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`which relief can be granted.” As described above, a “failure to state a claim upon which relief
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`can be granted” is, generally speaking, an initial threshold test in which a court evaluates the
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`facial plausibility of claims set forth in a pleading, considering the well-pleaded facts in the
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`complaint as true, construing the complaint in a light most favorable to the plaintiff, and drawing
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`reasonable inferences in favor of the plaintiff. Having passed this initial threshold, a case can go
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`forward—under the due process of law—and additional rules of procedure and, in some cases,
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`local rules, such as those employed by this Court, come into play that allow both plaintiffs and
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`defendants to have insight into the details of the other’s case.5
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`For the reasons set forth above, having found that ContentGuard has pled a case upon
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`which relief can be granted, the court DENIES Defendant Google Inc.’s Motion to Dismiss
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`Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Dkt. No. 35.)
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`5 For example, this Court’s local rules require a plaintiff in a patent infringement case to
`serve, on each defendant, a specifically defined “Disclosure of Asserted Claims and Infringement
`Contentions” in advance of the Court’s initial case management conference. See P. R. 3-1.
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