Case 6:21-cv-00165-ADA Document 56 Filed 01/12/22 Page 1 of 8
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`CPC PATENT TECHNOLOGIES PTY LTD.,
` Plaintiff,
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`v.
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`APPLE INC.,
` Defendant.
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`CASE NO. 6:21-CV-00165-ADA
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`JURY TRIAL DEMANDED
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`MEMORANDUM OPINION AND ORDER
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`The Court considers Defendant Apple Inc.’s Motion to Dismiss Plaintiff CPC Patent
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`Technologies PTY LTD.’s complaint. ECF No. 23. Plaintiff filed its opposition, and Defendant filed
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`its reply. ECF Nos. 25, 26.
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`Plaintiff complained that Defendant directly and indirectly infringes U.S. Patent Nos.
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`9,269,208 (“’208 Patent”), 9,665,705 (“’705 Patent”), and 8,620,039 (“’039 Patent”). ECF No. 1 at
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`¶¶ 27-28, 33-34, 39-40. Plaintiff accuses Defendant’s iPhones and iPads with Apple Card loaded into
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`the iPhone Wallet of infringing the ’039 Patent and accuses iPhones and iPads with TouchID or
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`FaceID of infringing the ’208 Patent and ’705 Patent. Id. ¶ 2. Plaintiff seeks past damages. Id. at 7.
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`The complaint attaches supporting documents and infringement claim charts. ECF No. 1, Exs. A-J.
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`After careful consideration of the briefs and applicable law, the Court GRANTS-IN-PART
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`and DENIES-IN-PART Plaintiff’s Motion.
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`I.
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`LEGAL STANDARDS
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`Rule 12(b)(6) requires that a complaint contain sufficient factual matter, if accepted as true,
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`to “‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
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`(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To meet this factual plausibility
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`standard, the plaintiff must plead “factual content that allows the court to draw the reasonable
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`Case 6:21-cv-00165-ADA Document 56 Filed 01/12/22 Page 2 of 8
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`inference that the defendant is liable for the misconduct alleged,” based on “more than a sheer
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`possibility that a defendant has acted unlawfully.” Id. “Threadbare recitals of the elements of a cause
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`of action, supported by mere conclusory statements, do not suffice.” Id. For a complaint to survive a
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`Rule 12(b)(6) motion to dismiss, “every element of each cause of action must be supported by specific
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`factual allegations.” Carlton v. Freer Inv. Grp., Ltd., No. 5:15-cv-00946-DAE, 2017 WL 11046201,
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`at *8 (W.D. Tex. Aug. 8, 2017) (citation omitted). All allegations must include “enough factual
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`matter” that, when taken as true, “state a claim to relief that is plausible on its face.” Twombly, 550
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`U.S. at 570. However, in resolving a motion to dismiss for failure to state a claim, the question is “not
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`whether [the plaintiff] will ultimately prevail, . . . but whether [the] complaint was sufficient to cross
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`the federal court’s threshold.” Skinner v. Switzer, 562 U.S. 521, 530 (2011). “The court’s task is to
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`determine whether the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate
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`the plaintiff's likelihood of success.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d
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`383, 387 (5th Cir. 2010) (citing Iqbal, 556 U.S. at 678).
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`To allege direct infringement, the complaint must allege facts sufficient to create a plausible
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`inference that each element of the claim is infringed by the accused products. Kirsch Research and
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`Dev., LLC v. Atlas Roofing Corp., No. 5:20-cv-00055-RWS, 2020 WL 8363154, at *2 (E.D. Tex.
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`Sept. 29, 2020). “If it is apparent from the face of the complaint that an insurmountable bar to relief
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`exists, and the plaintiff is not entitled to relief, the court must dismiss the claim.” Chapterhouse, LLC
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`v. Spotify, Inc., No. 2:18-cv-00300-JRG, 2018 WL 6981828, at *1 (E.D. Tex. Dec. 11, 2018).
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`To allege indirect infringement, the plaintiff must plead specific facts sufficient to show that
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`the accused infringer had actual knowledge of the patents-in-suit or was willfully blind to the
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`existence of the patents-in-suit. Glob.-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 769
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`(2011) (“[I]nduced infringement under § 271(b) requires knowledge that the induced acts constitute
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`patent infringement” or at least “willful blindness” to the likelihood of infringement.); Commil USA,
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`LLC v. Cisco Sys., Inc., 575 U.S. 632, 639 (2015) (“Like induced infringement, contributory
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`infringement requires knowledge of the patent in suit and knowledge of patent infringement.”). “For
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`an allegation of induced infringement to survive a motion to dismiss, a complaint must plead facts
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`plausibly showing that the accused infringer ‘specifically intended [another party] to infringe [the
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`patent] and knew that the [other party]’s acts constituted infringement.’” Lifetime Indus., Inc. v. Trim-
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`Lok, Inc., 869 F.3d 1372, 1376-77 (Fed. Cir. 2017). “[T]here can be no inducement or contributory
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`infringement without an underlying act of direct infringement.” Joao Control & Monitoring Sys., LLC
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`v. Protect Am., Inc., No. 1:14-cv-00134-LY, 2015 WL 3513151, at *3 (W.D. Tex. Mar. 24, 2015).
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`“To state a claim for indirect infringement . . . a plaintiff need not identify a specific direct infringer
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`if it pleads facts sufficient to allow an inference that at least one direct infringer exists.” In re Bill of
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`Lading Transmission & Processing Sys. Pat. Litig., 681 F.3d 1323, 1336 (Fed. Cir. 2012).
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`“The patentee bears the burden of pleading and proving he complied with § 287(a).” Arctic
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`Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1367 (Fed. Cir. 2017). At the motion
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`to dismiss stage, “[a] claim for past damages requires pleading compliance with the marking statute—
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`even when compliance is achieved, factually, by doing nothing at all.” Express Mobile, Inc. v.
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`DreamHost LLC, No. 1:18-CV-01173-RGA, 2019 WL 2514418, at *2 (D. Del. June 18, 2019). “In
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`the event of failure so to mark, no damages shall be recovered by the patentee in any action for
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`infringement, except on proof that the infringer was notified of the infringement and continued to
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`infringe thereafter, in which event damages may be recovered only for infringement occurring after
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`such notice.” 35 U.S.C. § 287(a).
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`II.
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`ANALYSIS
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`A. Direct Infringement of the ’039 Patent – “dependent upon the received card
`information”
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`Defendant contends that Plaintiff pleaded no facts supporting direct infringement of “means
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`for defining, dependent upon the received card information, a memory location in a local memory
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`external to the card.” ECF No. 23 at 6. Plaintiff pleads that Apple’s security enclave constitutes
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`memory locations, as depicted in figure 7 of Apple’s published patent application 2014/0089682
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`(“’682 Application”). ECF no. 1, Ex. J at 2-3. Plaintiff’s Reply appears1 to rely on the ’682
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`Application to show that the security enclave can only be selected (or defined) as a memory location
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`for storing fingerprint data after (e.g., depending on or contingent on) receiving card information from
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`an enrolled Apple Card. ECF No. 25 at 6-7. Receiving data from other peripherals causes the selection
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`of a different memory space outside of the secure enclave. Id. at 7. Thus, the selection of memory in
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`the secure enclave for storing fingerprint data is contingent on (or depends on) receiving card
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`information from an enrolled Apple Card instead of a different peripheral. See id. at 6-7.
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`Plaintiff’s Reply provides a plausible infringement theory at the pleading stage. However, the
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`complaint and its attached infringement contentions fail to fully articulate this theory. ECF No. 1, Ex.
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`J at 2-3. For example, the infringement contention makes no mention of defining an address in the
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`security enclave or a different area depending on whether data is received from an enrolled Apple
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`Card or from a different peripheral. Because adding this clarification will plausibly state an
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`infringement theory for this element, Defendant’s motion to dismiss direct infringement of the ’039
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`Patent is GRANTED-IN-PART. The claim for direct infringement of the ’039 Patent is dismissed
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`with leave to file an amended complaint within one week of this order that clearly articulates its
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`infringement theory.
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`1 Although the Court agrees with Defendant that Plaintiff’s explanation is “cryptic,” the decrypted
`explanation remains plausible. ECF No. 26 at 4-5.
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`B. Direct Infringement of the ’208 and ’705 Patents—“at least one of the number of
`said entries and a duration of each said entries”
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`Defendant contends Plaintiff pleaded no facts showing that the accused device will
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`“determin[e] at least one of the number of said entries and a duration of said entry” from claim 10 of
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`the ’208 Patent and a similar limitation in the ’705 Patent. ECF No. 23 at 13-14. Defendant contends
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`the infringement charts “never allege that the number or duration of fingerprint or face images
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`captured is measured, stored, or used in any way.” ECF No. 9 at 9.
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`The infringement contentions attached to the complaint plausibly show that the accused
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`product will determine and store only the number of said entries. ECF No. 23 at 7 (reproducing
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`contention showing three face images), 8 (reproducing contention showing three fingerprints). The
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`accused products will “receive a series of face images” and “populate the database of biometric
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`signatures.” Id. at 7 (reproducing contentions). The accused product also “receives a series of
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`fingerprint signal[s] … to set up a Touch ID.” Id. at 8 (reproducing contentions). Plaintiff provides
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`similar contentions for both the ’705 Patent and ’208 Patent. Id. at 9. Plaintiff argues that the accused
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`products determine (establish) a number of biometric data entries in a series sufficient for enrolling a
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`user’s biometric data. ECF No. 25 at 11.
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`ECF No. 1, Ex. H at 11.
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`ECF No. 1, Ex. I at 16.
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`The parties dispute claim construction. Defendant argues “at least one of” modifies only “the
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`number of said entries.” ECF No. 23 at 13-14. In other words, the claim requires least one entry in
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`addition to requiring a duration of duration of each said entries. Plaintiff argues “at least one of”
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`creates a choice between either “the number of said entries” or “a duration of each said entries.” ECF
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`No. 25 at 9-10. In other words, satisfying only “the number of said entries” without the “duration of
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`said entries” meets the claim.
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`The Court scheduled a Markman hearing for February 10, 2022. For now, the Court finds that
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`Plaintiff’s claim construction is plausible, so Plaintiff need not plead infringement of the claimed
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`duration. The inherent and plausibly pleaded construction entitles Plaintiff to a Markman hearing.
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`Accordingly, the motion to dismiss direct infringement claims of the ’208 and ’705 Patents is denied.
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`If Defendant prevails on this term at the Markman hearing and Plaintiff fails to amend its infringement
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`contentions consistent with the prevailing construction, then Defendant has leave to renew its
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`motion.
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`C. Indirect Infringement
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`Defendant first argues that the indirect infringement claims warrant dismissal because the
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`direct infringement claims warrant dismissal. ECF No. 23 at 15. Consistent with the Court’s decisions
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`above, Defendant’s motion is granted in part. The claim for indirect infringement of the ’039 Patent
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`is dismissed with leave to amend the underlying claim for direct infringement.
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`Next, Defendant argues that the indirect infringement claims warrant dismissal because “the
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`entirety of CPC’s indirect infringement allegation consist of a single sentence: ‘[w]ith knowledge of
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`the ’208 Patent, Apple has induced its customers to infringe at least claim 10 of that patent by
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`instructing such customers regarding registration for, and use of, the Touch ID and Face ID function
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`of the Accused Products.’” ECF No. 23 at 16. Defendant contends Plaintiff made only similar
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`statements for the other two patents. Id.
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`The Court finds Defendant relied on an incomplete statement of facts. The Complaint further
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`alleges that Plaintiff provided Defendant specific notice of the patents in this lawsuit months before
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`filing this lawsuit. ECF No. 1 ¶¶ 22-23. This notice plausibly establishes Defendant’s knowledge of
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`the asserted patents and allows for a plausible inference of Defendant’s intent thereafter. The alleged
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`notice to Defendant also distinguishes Logic Devices, where no specific notice preceded the lawsuit.
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`2014 WL 60056.
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`Finally, Defendant argues that Plaintiff failed to specifically identify the induced customers.
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`However, “[t]o state a claim for indirect infringement . . . a plaintiff need not identify a specific direct
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`infringer if it pleads facts sufficient to allow an inference that at least one direct infringer exists.” Bill
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`of Lading, 681 F.3d at 1336. Plaintiff provides no opposing authority.
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`Defendant’s motion to dismiss the claims for indirect infringement is otherwise DENIED.
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`D. Past Damages
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`Defendant argues for dismissal of the claim to past damages because Plaintiff’s “complete
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`marking compliance allegation is ‘CPC has complied with 35 U.S.C. § 287 with respect to” the
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`asserted patents. ECF No. 23 at 17.
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`The Court finds Defendant relied on an incomplete statement of facts. The Complaint alleges
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`that Plaintiff provided Defendant specific notice of the patents in this lawsuit months before filing
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`this lawsuit, which entitles Plaintiff to past damages. ECF No. 1 ¶¶ 22-23; 35 U.S.C. § 287 (“damages
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`may be recovered only for infringement occurring after such notice”).
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`Defendant’s motion to dismiss claims to past damages is DENIED.
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`III. CONCLUSION
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`Defendant’s motion to dismiss direct and indirect infringement of the ’039 Patent is
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`GRANTED-IN-PART. Plaintiff has leave to file an amended complaint within one week of this
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`Order that clearly articulates its infringement theory.
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`Defendant’s motion to dismiss direct and indirect infringement claims of the ’208 and ’705
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`Patents is DENIED. Defendant has leave to renew its motion if Defendant prevails on the disputed
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`construction at the Markman hearing and Plaintiff fails to amend its infringement contentions
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`consistent with the prevailing construction.
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`Defendant’s motion to dismiss claims to past damages is DENIED.
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`SIGNED this 12th day of January 2022.
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`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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