Case 5:19-cv-00036-RWS Document 109 Filed 10/23/19 Page 1 of 12 PageID #: 4789
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TEXARKANA DIVISION
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`MAXELL LTD.,
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`Plaintiff,
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`v.
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`APPLE INC,
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`Defendant.
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`§
`§
`§
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`§
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`ORDER
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`CIVIL ACTION NO. 5:19-CV-00036-RWS
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`Before the Court is Apple’s Motion for Partial Dismissal for Failure to State a Claim
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`(Docket No. 27). Briefing in this matter has concluded, and the Court heard this motion on August
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`28, 2019. Docket No. 67. For the reasons stated below, Defendant’s motion is GRANTED-IN-
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`PART and DENIED-IN-PART.
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`I.
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`Background
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`Plaintiff Maxell, Ltd. filed its complaint for patent infringement against Apple on March
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`15, 2019. Docket No. 1. The complaint alleges that Apple infringes 10 patents related to mobile
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`device technology under theories of direct infringement, induced infringement, willful
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`infringement and contributory infringement. Id.
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`The complaint alleges that from June 2013 to “late 2018,” Maxell and Apple had
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`“numerous meetings and interactions” in furtherance of a “potential business transaction” related
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`to the patented technology. Id. ¶ 5. According to the complaint, these meetings and interactions
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`involved discussions of the patents and Apple’s ongoing use of the patented technology. Id. The
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`complaint provides a specific date during this period on which Maxell asserts Apple was placed
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`Case 5:19-cv-00036-RWS Document 109 Filed 10/23/19 Page 2 of 12 PageID #: 4790
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`on notice of each of the asserted patents. For each patent, the complaint further states “Apple will
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`thus have known and intended (since receiving such notice) that its continued actions would
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`actively induce and contribute to actual infringement” of the patent. See, e.g., id. ¶ 30.
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`Maxell’s infringement allegations for each patent are similar. Portions of the complaint
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`regarding the ’317 Patent, entitled “portable terminal with the function of navigation,” are
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`representative of the dispute:
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`23. Apple has directly infringed one or more claims of the ’317
`Patent . . . by or through making, using, importing, offering for sale
`and/or selling its telecommunications technology, including by way
`of example a product known as the iPhone XS
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`24. The iPhone XS includes a screen for displaying information, at
`least
`a
`GPS
`chipset/cellular
`chipset/Wi-Fi
`chipset/iBeacon/compass/gyroscope for providing location and/or
`orientation information, “Maps” and “Find My Friends” software
`that allows users to access location information including the
`present location of the device and orientation of the device and use
`such information to provide walking navigation information and/or
`share location. The iPhone XS further uses location servers to
`provide walking navigation information, route information, and/or
`to provide its position to additional devices in order to allow users
`to walk to a particular shared location. For example, the following
`excerpts from Apple’s websites provide non-limiting examples of
`the iPhone XS at least claims 1-3, 5-7, and 10-11 of the ’317 Patent:
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`Case 5:19-cv-00036-RWS Document 109 Filed 10/23/19 Page 4 of 12 PageID #: 4792
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`25. The foregoing features and capabilities of the iPhone XS, and
`Apple’s description and/or demonstration thereof, including in user
`manuals and advertising, reflect Apple’s direct infringement by
`satisfying every element of at least claims 1-3, 5-7, and 10-11 of the
`’317 Patent, under 35 U.S.C. § 271(a).
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`Id. at ¶ 23–25. The complaint then lists numerous additional devices, termed the “ ’317
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`Accused Products,” which it alleges “also include a ‘Maps’ application, a ‘Find My Friends’
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`application, and/or ‘Location’ services as advertised on Apple’s website.” Id. ¶ 26. The complaint
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`continues:
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`27. Apple has indirectly infringed at least claims 1-3, 5-7, and 10-
`11 of the ’317 Patent . . . by, among other things, actively inducing
`the use, offering for sale, selling, or importation of at least the ’317
`Accused Products. Apple’s customers who purchase devices and
`components thereof and operate such devices and components in
`accordance with Apple’s instructions directly infringe one or more
`claims of the ’317 Patent in violation of 35 U.S.C. § 271. Apple
`instructs its customers through at least user guides or websites, such
`as those located at: https//support.apple.com/en_US/manuals or
`https://www.apple.com/ios/maps/. Apple is thereby liable for
`infringement of the ’317 Patent pursuant to 25 U.S.C. § 271(b).
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`Id. ¶ 27. The complaint then sets out the allegations for contributory and willful
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`infringement. Id. ¶ 28–31.
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`II.
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`Applicable Law
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`When considering a motion to dismiss under Federal Rule of Procedure 12(b)(6), a court
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`must assume that all well-pled facts are true and view those facts in the light most favorable to the
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`plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may consider
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`“the complaint, any documents attached to the complaint, and any documents attached to the
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`motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund
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`V (U.S.) L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court must then
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`decide whether those facts state a claim that is plausible on its face. Bowlby, 681 F.3d at 219. The
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`Case 5:19-cv-00036-RWS Document 109 Filed 10/23/19 Page 5 of 12 PageID #: 4793
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`complaint need not contain detailed factual allegations, but a plaintiff must plead sufficient factual
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`allegations to show that he is plausibly entitled to relief. See Bell Atl. Corp. v. Twombly, 550 U.S.
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`544, 555–56, 570 (2007) (“[W]e do not require heightened fact pleading of specifics, but only
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`enough facts to state a claim to relief that is plausible on its face.”); see also Ashcroft v. Iqbal, 556
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`U.S. 662, 677–79, 684 (2009) (discussing Twombly and applying Twombly generally to civil
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`actions pleaded under Rule 8). “A claim has facial plausibility when the pleaded factual content
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`allows the court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged.” Id. at 678 (quoting Twombly, 550 U.S. at 556).
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`Induced infringement under 35 U.S.C. § 271(b) requires (1) an act of direct infringement
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`by another, and (2) that the defendant knowingly induced the infringement with the specific intent
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`to encourage the other’s infringement. MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon
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`Corp., 420 F.3d 1369, 1378 (Fed. Cir. 2005). Thus, the complaint must (1) adequately plead direct
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`infringement by the defendant’s customers, (2) contain facts plausibly showing that the defendant
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`specifically intended for its customers to infringe and (3) contain facts plausibly showing that
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`defendant knew the customer’s acts constituted infringement. See In re Bill of Lading
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`Transmission & Processing Sys. Patent Lit., 681 F.3d 1323, 1339 (Fed. Cir. 2012).
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`A plaintiff claiming contributory patent infringement under 35 U.S.C. § 271(c) must allege
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`(1) an act of direct infringement, (2) that the defendant “knew that the combination for which its
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`components were especially made was both patented and infringing” and (3) that the components
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`have “no substantial non-infringing uses.” Cross Med. Prods., Inc. v. Medtronic Sofamor Danek,
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`Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005) (internal quotations omitted).
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`Willful infringement requires a showing that (1) “the infringer acted despite an objectively
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`high likelihood that its actions constituted infringement of a valid patent” and (2) the risk of
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`Case 5:19-cv-00036-RWS Document 109 Filed 10/23/19 Page 6 of 12 PageID #: 4794
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`infringement “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). “At the pleading
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`stage, a plaintiff alleging a cause of action for willful infringement must plead facts giving rise to
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`at least a showing of objective recklessness of the infringement risk. . . . Actual knowledge of
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`infringement or the infringement risk is not necessary to plead a claim for willful infringement,
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`but the complaint must adequately allege factual circumstances in which the patents-in-suit [are]
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`called to the attention of the defendants.” Monec Holding AG v. Motorola Mobility, Inc., 897 F.
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`Supp. 2d 225, 236 (D. Del. 2012) (internal quotations omitted); see Elbit Sys. Land and C4I Ltd.
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`v. Hughes Network Sys., LLC, No. 2:15-cv-37, 2016 WL 3878246, at *1 (E.D. Tex. Mar. 30, 2016)
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`(quoting Monec Holding, 897 F. Supp. 2d at 236)).
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`III. Discussion
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`Apple raises three arguments in support of its motion for partial dismissal: (1) the Court
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`should dismiss Maxell’s induced infringement claims for failing to plausibly allege specific intent;
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`(2) the Court should dismiss Maxell’s claims for pre-suit indirect and willful infringement of the
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`’586 Patent for not plausibly alleging Apple’s knowledge of the patent; and (3) the Court should
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`dismiss Maxell’s claims for pre-suit indirect and willful infringement of all asserted patents for
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`failing to plausibly allege knowledge of infringement. Docket No. 27.
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`A. Induced Infringement Claims
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`Apple moves to dismiss Maxell’s induced infringement claims, arguing that the complaint
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`does not plausibly allege Apple had “specific intent” to induce infringement. Docket No. 27 at 6.
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`Apple alleges that the complaint cites broadly to Apple’s website and user manuals, without
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`alleging how the instructions directed Apple’s customers to use the accused products in an
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`infringing manner. Id. at 6–8. Referring to the paragraphs stating the induced infringement claims
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`for each patent, Apple argues the complaint repeats the same “boilerplate” language that “Apple
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`instructs its customers through at least user guides or websites . . . .” Id. at 6 (referring to ¶¶ 27,
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`41, 56, 69, 86, 99, 112, 129, 142 and 157).
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`Apple incorrectly asserts that the complaint includes “nothing more than citations to
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`Apple’s user guides and websites . . . .” Id. at 8. Maxell alleged significantly more. The complaint
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`sets out detailed allegations of direct infringement, identifying the accused functionalities and
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`accused devices for each patent. See, e.g., id. ¶¶ 24–26. The complaint further includes screen-
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`shots and descriptions of Apple’s online user manuals and advertisements, which the complaint
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`alleges contain “descriptions and demonstrations” of the accused functionalities. See, e.g., id. ¶¶
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`24–25. Some of the pictured webpages appear to contain directions for customers to use the
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`accused functionalities. See id. ¶ 24 (a screenshot of Apple’s website describing how users can
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`use the “Find my Friends” app on an iPhone, iPad, iPod touch or Apple Watch). Advertising the
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`benefits of the accused functionalities gives rise to a reasonable inference that Apple intended to
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`induce its customers to infringe the patent. Bill of Lading, 681 F.3d at 1342–45; Uniloc USA, Inc.
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`v. Avaya Inc., No. 6:15-cv-1175, 2016 WL 7042236, at *4 (E.D. Tex. May 14, 2016); BMC
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`Software v. ServiceNow, Inc., No. 2:14-cv-903, 2015 WL 2379333, at *3 (E.D. Tex. May 18, 2015)
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`(holding allegations that a defendant’s activities specifically highlighted the infringing features of
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`the accused products sufficiently to pleaded induced infringement).
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`The complaint further alleges that Apple’s customers directly infringe the patents by using
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`the accused products in accordance with Apple’s instructions and that Apple provides customers
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`instructions on how to infringe the patents with its user manuals and websites. Docket No. 1 ¶ 27.
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`The preceding discussion identifying the accused functionalities and the screenshots of
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`advertisements and instructions on Apple’s website, coupled with this allegation, are more than
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`enough to give rise to a reasonable inference that Apple intended to induce infringement. See
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`Uniloc, 2016 WL 7042236, at *4 (finding allegations that the defendant’s customers directly
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`infringe the patents-in-suit and that the defendant provided step-by-step instructions for customers
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`on how to infringe adequately pleaded specific intent).
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`Apple suggests that courts “routinely dismiss inducement claims premised on general
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`citations to user manuals and websites.” See Docket No. 27 at 7 (citing Stragent, LLC v. BMW of
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`N. Am., LLC, No. 6:16-cv-446-RWS-KNM, 2017 U.S. Dist. LEXIS 156084, at *25 (E.D. Tex.
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`Mar. 3, 2017); Core Wireless Licensing S.A.R.L. v. Apple Inc., No. 6:14-cv-752-JRG-JDL, 2015
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`U.S. Dist. LEXIS 107354, at *12–13 (E.D. Tex. Jul. 15, 2015); Am. Vehicular Scis. LLC v.
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`Mercedes-Benz U.S. Int’l, Inc., No. 6:13-cv-307 MHS-JDL, 2014 U.S. Dist. LEXIS 184564, at
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`*11 (E.D. Tex. Feb. 7, 2014)). However, the cases that Apple cites are readily distinguishable.
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`The court in Core Wireless explicitly recognized that “the provision of instructions by an accused
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`infringer may indicate specific intent to induce infringement.” 2015 U.S. Dist. LEXIS 107334, at
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`*13. However, reference to instructions without allegations of which functionalities are at issue
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`or facts identifying how those instructions direct customers to use the products in an infringing
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`manner is insufficient. Id. The court in Stragent similarly found that “generic statements”
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`regarding the provisions of instructions are insufficient, but when alleged with supplemental facts,
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`including “advertisements, promotions, and publications of demonstrational videos” of the
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`accused products, would sufficiently support an induced infringement claim. 2017 U.S. Dist.
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`LEXIS 156084, at *25.
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`Maxell identified the accused functionalities and included citations and screenshots of
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`Apple’s advertisements and user guides with alleged “descriptions and demonstrations” for those
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`accused functionalities. These factual allegations are sufficient to give rise to a reasonable
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`inference that Apple specifically intended to induce infringement. For these reasons, Apple’s
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`motion to dismiss Maxell’s induced infringement claims should be DENIED.
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`B. Pre-suit Indirect and Willful Infringement of the ’586 Patent
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`Apple next seeks dismissal of Maxell’s claims for pre-suit indirect and willful infringement
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`of the ’586 Patent. Apple argues the complaint does not plausibly allege pre-suit knowledge of
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`the ’586 Patent. Docket No. 27 at 8. The complaint asserts Apple “has been on notice of the ’586
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`Patent since, at least, October 9, 2018.” Docket No. 1 ¶ 145. Apple contends this is facially
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`implausible because the ’586 Patent did not issue until February 19, 2019. Docket No. 27 at 8
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`(citing Diamond Grading Techs. v. Am. Gem. Soc’y, No. 2:14-cv-1162, 2016 WL 3902482, at *5–
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`6 (E.D. Tex. Mar. 30, 2016) (“[M]ere notice of the pendency of a patent application is not sufficient
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`to support a finding of willful infringement of a subsequently issued patent: . . . [f]iling an
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`application is no guarantee any patent will issue.”) (internal quotations omitted)).
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`Maxell argues in its response that, in October 2018, it also provided Apple with notice that
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`the ’586 Patent application had “already been allowed by the PTO.” Docket No. 31 at 8. Because
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`this fact is not included in Maxell’s complaint, the Court may not consider it in evaluating the
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`motion to dismiss. See Lone Star, 594 F.3d at 387; Ford v. United Airlines, Inc., No. 4:18-cv-
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`0924, 2018 WL 3157021, at *1 n.3 (S.D. Tex. June 27, 2018).
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`Knowledge of a patent application alone is insufficient to demonstrate knowledge of the
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`later issued patent. See State Indus. V. A.O. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985);
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`Diamond Grading, 2016 WL 105697, at *5–6 (granting a motion to dismiss under Rule 12(b)(6)
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`where Plaintiff failed to allege knowledge of the ultimately issued patent). Considering only those
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`facts included in the complaint, Maxell has alleged nothing more than knowledge of the patent
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`application. The complaint alleges that the Apple had knowledge of the ’586 patent since October
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`2018, but the patent issued in February 2019. Moreover, the complaint alleges that Maxell’s
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`interactions with Apple regarding its patents continued only until “as recently as late 2018,”
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`months before the ’586 Patent issued. See Docket No. 1 ¶ 5. Maxell has thus pleaded only that
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`Apple had knowledge of the ’586 Patent application and has not alleged facts sufficient to plausibly
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`allege that Apple had knowledge of the ultimately issued ’586 patent.
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`It may be, as was suggested in Blitzsafe Texas, LLC v. Volkswagen Gr. Of Am. Inc., that
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`there are cases where a party’s exposure to a patent application may give rise to knowledge of a
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`later issued patent. No. 2:15-cv-1274, 2016 WL 4778699, at *6 (E.D. Tex. Aug. 19, 2016) (“For
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`example, if an accused infringer receives notice of a patent application for which a notice of
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`allowance has been issued, the accused infringer may well be found to have knowledge of the
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`claims when they issue.”). However, the Court is limited to considering only those facts contained
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`in the complaint. Those facts allege only that Apple had knowledge of the ’586 patent application.
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`Maxell has thus failed to plausibly allege that Apple had pre-suit knowledge of the ’586
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`Patent. Apple’s motion to dismiss Maxell’s claims of pre-suit indirect and willful infringement of
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`the ’586 Patent is GRANTED.
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`C. Pre-suit Indirect and Willful Infringement of All Asserted Patents
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`Apple finally moves to dismiss Plaintiff’s pre-suit indirect and willful infringement claims
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`for failing to plausibly allege knowledge of infringement. Docket No. 27 at 10. Apple argues that,
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`although the complaint alleges Apple had knowledge of the asserted patents, the complaint never
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`alleges how Apple was placed on notice of alleged infringement. Id. at 10–11. That is, Maxell
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`fails to allege what activities or products allegedly infringed the asserted patents. Id.
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`With regard to willful infringement, “[a]ctual knowledge of infringement . . . is not
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`necessary to plead a claim for willful infringement, but the complaint must adequately allege
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`factual circumstances in which the patents-in-suit are called to the attention of defendants.” See
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`Elbit Sys. Land, 2016 WL 3878246, at *3.
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`Apple argues that the complaint does not allege “if or how Maxell ever made Apple aware
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`of what activities or products allegedly infringed.” Docket No. 27 at 11. The Court disagrees.
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`The complaint states that Apple and Maxell met and communicated multiple times between June
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`2013 and “late 2018” to discuss a potential business transaction relating to the asserted patents.
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`Docket No. 1 ¶ 5. The complaint states that, through these meetings and Apple’s further inquiries,
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`Maxell shared “detailed information regarding Maxell’s patents, the developed technology, and
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`Apple’s ongoing use of this patented technology,” including “detailed explanations regarding
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`Maxell’s patents and allegations.” Id. The complaint further includes specific dates, during this
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`time-span, for each patent at issue, on which it alleges Apple was placed on notice of the patents
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`and its infringing activities. See, e.g., id. ¶ 30 (“Apple has been on notice of the ’317 Patent since,
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`at least, June 25, 2013. By the time of trial, Apple will thus have known and intended (since
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`receiving such notice), that its continued actions would actively induce and contribute to actual
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`infringement . . . .”). Maxell’s allegations that the parties discussed the patents, Apple’s products
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`and Apple’s use of the patented technology during a six-year negotiation period, assumed true,
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`give rise to a reasonable inference that Apple was on notice of both the patents and the alleged
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`infringement. See Eidos Display, LLC v. Chi Mei Innolux Corporation, No. 6:11-CV-00201, 2017
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`WL 9288140, at *5 (E.D. Tex, Apr. 6, 2017) (finding pre-suit knowledge that defendant’s activities
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`were allegedly infringing where, years before suit the defendant received a letter requesting the
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`defendant evaluate the relationship between the asserted patent and defendant’s identified
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`products). Apple argues the complaint fails to allege what happened at the meetings, what products
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`were discussed, or how any infringement allegations were communicated. The pleading standards
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`do not require this level of specificity.
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`Apple’s reference to Deere & Co. v. AGCO Corp., No. 18-827-CFC, 2019 U.S. Dist.
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`LEXIS 25885 (D. Del. Feb. 19, 2019) is unavailing. See Docket No. 37 at 5. The complaint in
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`Deere cited a letter sent to defendants allegedly giving notice of the patent and infringement. The
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`court found the complaint insufficient because it did not allege that the letter identified the
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`infringing products or that the letter stated that those products infringed any of the patents. 2019
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`U.S. Dist. LEXIS 25885, at *15–16. By contrast, here, Maxell alleged “numerous meetings” over
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`the course of six years in which the patents, products and allegations in the complaint were
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`discussed.
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`These factual allegations are sufficient to support a reasonable inference that Apple had
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`pre-suit knowledge of both the patents and the infringement. Apple’s motion to dismiss Maxell’s
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`claims for pre-suit indirect and willful infringement of all asserted patents is DENIED.
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`IV.
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`Conclusion
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`It is accordingly
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`ORDERED that Defendant Apple’s motions to dismiss Maxell’s induced infringement
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`claims and the claims for pre-suit indirect and willful infringement are DENIED. It is further
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`ORDERED that Defendant Apple’s motion to dismiss Maxell’s claims for pre-suit indirect
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`and willful infringement of the ’586 patent is DISMISSED WITHOUT PREJUDICE.
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`It is so ORDERED.
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`.
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`____________________________________
`ROBERT W. SCHROEDER III
`UNITED STATES DISTRICT JUDGE
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`SIGNED this 23rd day of October, 2019.
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