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`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 1 of 11
`
`THE HONORABLE JAMES L. ROBART
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`CYWEE GROUP LTD.,
`
`Plaintiffs,
`
`v.
`HTC CORPORATION; and HTC AMERICA,
`INC.,
`
`Defendants.
`
`CASE NO.: 2:17-cv-00932-JLR
`DEFENDANTS’ REPLY BRIEF IN
`SUPPORT OF MOTION TO DISMISS
`PURSUANT TO RULE 12(b)(6)
`
`NOTE ON MOTION CALENDAR:
`November 17, 2017
`
`JURY DEMAND
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 2 of 11
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`I.
`
`INTRODUCTION
`
`CyWee concedes that it failed to expressly allege acts sufficient to support a claim of
`
`indirect infringement. Nevertheless, CyWee argues that the Court should deny HTC’s motion to
`
`dismiss the inducement claims on the ground that the Court may reasonably infer from CyWee’s
`
`Amended Complaint and attached materials that HTC actively induces infringement by its
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`customers and end users. This argument is without merit. It is not enough for CyWee to simply
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`rely on factual allegations that focus on direct infringement. The allegations do not address,
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`even by inference, the requisite elements of induced infringement. None of the allegations that
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`CyWee points to in its Opposition is sufficient to support an inference that HTC specifically
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`intended and took affirmative steps to induce its customers to infringe. Further, CyWee’s
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`Opposition cannot rebut the clear showing in support of the motion to dismiss by introducing, for
`
`the first time, HTC-specific materials that could relate to the patented technology, but which
`
`were not part of the actual allegations of the Amended Complaint. See Seoul Laser Dieboard
`
`Sys. Co., No. 12-cv-02427, 2013 WL 3761535, at *5 (S.D. Cal. July 16, 2013).
`
`For these reasons and others discussed below, the Court should grant HTC’s motion to
`
`dismiss. However, because this case is still in its infancy without a schedule set, HTC does not
`
`oppose CyWee’s request for leave to amend.
`
`II.
`
`CYWEE FAILS TO STATE A CLAIM FOR INDIRECT INFRINGEMENT
`
`The parties do not dispute that “[t]o state a claim for induced infringement, a plaintiff
`
`must allege facts plausibly showing (1) the defendant knew of the patent, (2) the defendant knew
`
`that the induced acts constitute patent infringement, and (3) that the defendant specifically
`
`intended its customers to infringe.” Opp’n at 2 (citing Brooks Mfg. Co. v. Dis-Tran Wood Prod.,
`
`LLC, No. 11-cv-00309, 2011 WL 13127155, at *2 (W.D. Wash. Nov. 3, 2011)). “[I]nducement
`
`must involve the taking of affirmative steps to bring about the desired result.” Global-Tech.
`
`Appliances, Inc. v. SEB S.A., 563 U.S. 754, 760 (2011). However, rather than sufficiently
`
`pleading these elements, CyWee asks the Court to infer induced infringement from its allegations
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 1 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 3 of 11
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`of direct infringement—allegations that rely almost entirely on materials distributed by a third
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`party. Third-party materials do not—and, indeed, cannot—support an inference regarding what
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`HTC specifically intended its customers to do. Because CyWee’s direct infringement allegations
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`are silent regarding HTC’s specific intent and affirmative steps to induce, CyWee fails to plead
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`facts sufficient to plausibly show that HTC induced infringement and fails to satisfy the pleading
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`requirements of Twombly and Iqbal for its indirect infringement claims.
`
`A.
`
`Because CyWee Relies on Third-Party Materials to Plead Direct
`Infringement, Inferring Specific Intent and Affirmative Steps by HTC Is
`Improper and Insufficient to Sustain a Claim of Inducement.
`
`Liability for induced infringement requires not only knowledge of the patents but
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`knowledge that the allegedly induced acts constitute infringement. Id. at 764-766. Even if the
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`Court finds that CyWee adequately pleaded knowledge that the induced acts constitute
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`infringement, a claim for induced infringement “must contain facts plausibly showing that
`
`[Defendant] specifically intended [its] customers to infringe the [patent-in-suit] and knew that the
`
`customer’s acts constituted infringement.” In re Bill of Lading Transmission and Processing Sys.
`
`Patent Litig., 631 F.3d 1323, 1339 (Fed. Cir. 2012); see also Pragmatus AV, LLC v. TangoMe,
`
`Inc., No. 11-cv-01092, 2013 U.S. Dist. LEXIS 19075, at *33 (D. Del. Feb. 13, 2013)
`
`(“inducement requires evidence of culpable conduct, directed to encouraging another’s
`
`infringement, not merely that the inducer had knowledge of the direct infringer’s activities”)
`
`(citation omitted). “Instead of requiring strict specific intent, then, courts typically allow juries to
`
`construct the required intentionality out of evidence that the defendant deliberately exploits the
`
`potential for the product to be used in infringement. Such evidence ordinarily consists of
`
`knowledge that the accused product may be and is used to infringe the patent-in-suit plus some
`other factor indicating the defendant’s desire to ‘attract users of a mind to infringe.’” Tierra
`
`Intelectual Borinquen, Inc. v. ASUS Computer Int'l, Inc., No. 13-cv-00038-JRG, 2014 U.S. Dist.
`
`LEXIS 28249, at *11-12 (E.D. Tex. Mar. 3, 2014) (emphasis added) (citing Metro-Goldwyn-
`
`Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 926 (2005)). “To plead allegations of
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 2 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

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`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 4 of 11
`
`specific intent sufficient to state an indirect infringement claim, the patentee need not cite
`
`statements from the accused infringer specifically instructing the direct infringer ‘to perform all
`
`of the steps of the patented method’; it is enough to cite examples where the accused infringer
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`advertised benefits that can be achieved only through use of the asserted patent.” CAP Co., Ltd.
`
`v. McAfee, Inc., Nos. 14-cv-05068 & 14-cv-05071, 2015 WL 3945875, at *15-16 (N.D. Cal. June
`
`26, 2015) (citing In re Bill of Lading, 680 F.3d at 1341-42). Here, CyWee neither cites to
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`statements from HTC specifically instructing the direct infringer to perform any steps of the
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`patented method nor provides any examples where HTC advertised benefits that can be achieved
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`only through the use of the Asserted Patents.
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`The only HTC “advertising” cited by CyWee are product descriptions listing all the
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`major hardware components contained in HTC’s accused smartphones. See Opp’n at 6
`
`(“[T]hose claim charts specifically identify a product specification published by HTC in which it
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`touts inclusion of an accelerometer, gyroscope, and magnetometer, which are key components of
`
`the patents-in-suit.”). As shown below, these technical specifications do not provide a
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`reasonable inference that HTC specifically intended or intends to induce infringement by its
`
`customers:
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 3 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 5 of 11
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`Am. Compl., Ex. A at 3.
`
`In fact, the bulk of the remaining materials cited by CyWee are from a third-party source.
`
`Beyond generic stock photos of HTC’s accused smartphones and the aforementioned hardware
`
`component lists, CyWee’s claim charts are entirely based on documentation published by Google
`
`for Google’s Android operating system:
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 4 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 6 of 11
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`Am. Compl., Ex. A at 4. In other words, CyWee provides only third-party materials to allege
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`direct infringement of all of the functional elements of the Asserted Patents.
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`Based on these third-party materials, CyWee asks the Court not only to infer direct
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`infringement by HTC, but also to infer direct infringement by HTC’s end users and distributors
`
`in addition to inferring specific intent and affirmative steps taken by HTC to induce
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`infringement. As explained in HTC’s opening brief, CyWee’s allegations, based on these third-
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`party materials, simply demonstrate that, at best, HTC had knowledge of “possible infringement”
`
`by its end users. Mot. at 3 (citing Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1364
`
`(Fed. Cir. 2003) (“[M]ere knowledge of possible infringement by others does not amount to
`
`inducement; specific intent and action to induce infringement must be proven.”)). Imputing
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`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 5 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 7 of 11
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`mens rea by inference, as CyWee requests here, is improper. See Tierra Intelectual Borinquen,
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`2014 U.S. Dist. LEXIS 28249, at *9 (“The question, in essence, is whether a third party’s mens
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`rea of specific intent may be imputed to a defendant with knowledge of that intent, in the absence
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`of further steps by the defendant to induce infringement. For the reasons stated below, the Court
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`finds that such a result would be inconsistent with the induced infringement statute, the case law
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`interpreting it, and the policy rationales of our patent system.”).
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`For similar reasons, CyWee’s reliance on its expert’s declaration is improper and
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`insufficient. CyWee claims that its expert testified that the patented inventions teach how to
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`determine a device’s current orientation based on motion data detected by its motion sensors,
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`such as an accelerometer, gyroscope, and magnetometer. Opp’n at 6-7. However, this testimony
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`is insufficient to support CyWee’s allegations as to HTC’s specific intent and affirmative steps,
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`because it fails to relate to or even mention any HTC products, actions, or materials. See
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`generally Am. Compl., Ex. 3. CyWee’s expert’s declaration simply explains “possible
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`infringement” by generic devices and thus only provides HTC with knowledge of “possible
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`infringement.”
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`CyWee relies on several cases to support the premise that “[it] is well established that, in
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`a case such as this, once a defendant has knowledge that its products infringe, continued related
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`activities including sales of infringing products and/or providing specific instructions on
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`infringing use can lead to a reasonable inference that the defendant had the specific intent to
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`infringe.” Opp’n at 5-6. However, none of these cases supports the leap that CyWee asks the
`
`Court to make here: Draw a reasonable inference of specific intent based solely on third-party
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`conduct and materials. For example, in CreAgri, Inc. v. Pinnaclife Inc., the plaintiff made
`
`several allegations regarding conduct specific to the defendant that demonstrated specific intent:
`Specifically, [plaintiff] contends that [defendant] engages in three activities that
`induce infringement. First, [plaintiff] alleges that “[defendant] collaborates with
`the University of Iowa in an ongoing clinical study directed towards Progressive
`Multiple Sclerosis.” Second, [plaintiff] alleges that [defendant] maintains a
`publicly available YouTube channel containing videos that describe and promote
`Olivamine10 as an effective treatment for inflammatory conditions…. Finally,
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 6 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

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`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 8 of 11
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`[plaintiff] alleges that [defendant] induces infringement by maintaining a website
`that advertises, makes available for sale, and promotes Olivamine10 as a
`treatment for inflammatory conditions.
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`No. 11-cv-06635, 2013 U.S. Dist. LEXIS 105952, at *3-4 (N.D. Cal. July 29, 2013) (citations
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`omitted). Similarly, in Tranxition, Inc. v. Novell, Inc., “[p]laintiff also references a URL of a
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`webpage as evidence that [d]efendant encourages use of its infringing software.” No. 03:12-cv-
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`01404-HZ, 2013 U.S. Dist. LEXIS 74586, at *13 (D. Or. May 27, 2013). Finally, in Sharper
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`Image Corp. v. Target Corp., the court did indeed “declin[e] to grant summary judgment on an
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`inducement claim to certain defendants because they ‘continued to sell’ a particular product
`along with a manual teaching an infringing use after learning of the patent when the plaintiff
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`filed suit.” Opp’n at 6 (emphasis added) (citing 425 F. Supp. 2d 1056, 1066 (N.D. Cal. 2006)).
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`In all of these cases, the plaintiff alleged specific conduct by the defendant that supported the
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`reasonable inference of specific intent.
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`In Pragmatus, much the same as here, the plaintiff alleged that the defendant indirectly
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`infringed the patent “by inducing others to infringe . . . including at least users of [defendant’s]
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`video conference services and products.” 2013 U.S. Dist. LEXIS 19075, at *39-40 (internal
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`quotations and citation omitted). The court dismissed the inducement claim holding:
`These allegations contain no factual assertions that go to [defendant’s]
`specific intent to induce and encourage infringement—no factual allegations,
`for example, about the nature of the relationship between [d]efendant and its
`users, nor about how the use of [defendant] video conference services and
`products relates to the patented methods referenced in the claims of the
`patents-at-issue.
`Id. CyWee similarly fails to include any allegations regarding what aspects of use by HTC’s
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`“end users and distributors” of the accused products constitute infringement and thus suggest
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`inducement by HTC. Accordingly, CyWee’s claim for induced patent infringement should be
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`dismissed.
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 7 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

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`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 9 of 11
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`B.
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`Because of the Early Stage of the Case, HTC Does Not Oppose Amendment
`by CyWee.
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`CyWee asserts for the first time in its Opposition that the allegedly infringing products
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`are accompanied with online marketing from HTC’s website which encourages customers to
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`operate these products in an infringing manner. Opp’n at 10. No such assertion was made in
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`the Amended Complaint, and is therefore not properly considered by the Court in deciding this
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`Motion to Dismiss. Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010); see
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`also Seoul Laser Dieboard Sys., 2013 WL 3761535, at *5. However, given that this case is still
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`in its infancy with no schedule set, HTC does not oppose CyWee’s request for leave to amend
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`its complaint.
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`III.
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`CONCLUSION
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`For the reasons set forth above, CyWee’s claim for induced patent infringement should
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`be dismissed under Rule 12(b)(6) for failure to state claim upon which relief can be granted,
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`unless CyWee is granted and takes leave to amend its complaint to address its deficiencies.
`
`Dated: November 17, 2017
`
`
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`
`
` Respectfully submitted,
`
`s/ Gregory L. Watts
`Gregory L. Watts, WSBA #43995
`WILSON SONSINI GOODRICH & ROSATI PC
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Telephone: (206) 883-2500
`Facsimile: (206) 883-2699
`Email: gwatts@wsgr.com
`
`s/ James C. Yoon
`James C. Yoon, CA Bar #177155 (pro hac vice)
`Ryan R. Smith, CA Bar #229323 (pro hac vice)
`Albert Shih, CA Bar # 251726 (pro hac vice)
`Jamie Y. Otto, CA Bar # 295099 (pro hac vice)
`WILSON SONSINI GOODRICH & ROSATI PC
`650 Page Mill Road
`Palo Alto, CA 94304-1050
`Telephone: (650) 493-9300
`Facsimile: (650) 565-5100
`Email: jyoon@wsgr.com
`rsmith@wsgr.com
`ashih@wsgr.com
`jotto@wsgr.com
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 8 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

`

`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 10 of 11
`
`Attorneys for Defendants
`HTC Corporation and HTC America, Inc.
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`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 9 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`

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`Case 2:17-cv-00932-JLR Document 40 Filed 11/17/17 Page 11 of 11
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`CERTIFICATE OF SERVICE
`I hereby certify that on November 17, 2017, I filed the foregoing with the Clerk of the
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`Court using the CM/ECF system, and served all parties via ECF.
`
`Dated: November 17, 2017
`
`s/ Gregory L. Watts
`Gregory L. Watts
`
`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`MOTION TO DISMISS
`2:17-cv-00932-JLR
`
`- 10 -
`
`WILSON SONSINI GOODRICH & ROSATI
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104-7036
`Tel: (206) 883-2500
`Fax: (206) 883-2699
`
`