Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 1 of 10
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`BROADSIGN INTERNATIONAL, LLC,
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`Plaintiff,
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Civil Action No.: 1:16-cv-04586 (LTS)
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`JURY TRIAL REQUESTED
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`v.
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`T-REX PROPERTY AB,
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`Defendant.
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`MEMORANDUM IN SUPPORT OF PLAINTIFF’S MOTION FOR LEAVE TO AMEND
`THE COMPLAINT PURSUANT TO FED. R. CIV. P. RULE 15
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`Alfred R. Fabricant (AF8255)
`Lawrence C. Drucker (LD9423)
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: (212) 209-4800
`Facsimile: (212) 209-4801
`afabricant@brownrudnick.com
`ldrucker@brownrudnick.com
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`ATTORNEYS FOR PLAINTIFF
`BROADSIGN INTERNATIONAL, LLC
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 2 of 10
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`I.
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`INTRODUCTION
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`On January 10, 2018, the Court ordered that Plaintiff BroadSign International, LLC
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`(“BroadSign” or “Plaintiff”) may file this motion for leave to file a Second Amended Complaint
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`against Defendant T-Rex Property AB (“T-Rex” or “Defendant”), attached hereto as Exhibit A.
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`As discussed herein, Plaintiff’s proposed Second Amended Complaint addresses deficiencies
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`identified by this Court with respect to subject matter jurisdiction, particularly the case or
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`controversy requirement.
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`Plaintiff seeks to further amend the Amended Complaint to allege facts that support a
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`finding of subject matter jurisdiction. Specifically, Plaintiff’s proposed Second Amended
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`Complaint alleges facts that support findings that T-Rex has engaged in an aggressive
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`enforcement strategy against similarly-situated suppliers like BroadSign and that the Parties are
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`in a real dispute over contributory infringement. Accordingly, Plaintiff respectfully requests
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`grant of leave to file the proposed Second Amended Complaint.
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`II.
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`LEGAL STANDARD
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`The Federal Rules of Civil Procedure provide that courts “should freely give leave [to
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`amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “In the absence of any apparent or
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`declared reason…the leave sought should, as the rules require, be ‘freely given.’” Kroshnyi v.
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`U.S. Pack Courier Servs., Inc., 771 F.3d 93, 109 (2d Cir. 2014) (citing Foman v. Davis, 371 U.S.
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`178, 182 (1962)). As a matter of law, justice requires leave to amend when the moving party has
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`“at least colorable grounds” for the proposed amendment. Litton Indus., Inc. v. Lehman Bros.
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`Kuhn Loeb Inc., 734 F. Supp. 1071, 1078 (S.D.N.Y. 1990) (citing S.S. Silberblatt, Inc. v. East
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`Harlem Pilot Block—Building 1 Housing Dev. Fund Co., 608 F.2d 28, 42 (2d Cir. 1979)). A
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`motion to amend may be denied if there is “undue delay, bad faith or dilatory motive” on the part
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`of the moving party. Foman, 371 U.S. at 182.
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 3 of 10
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`III. T-REX’S HAS ENGAGED IN AN AGGRESSIVE ENFORCEMENT STRATEGY
`AGAINST SIMILARLY-SITUATED SUPPLIERS
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`In addition to the nature and extent of communication between parties, Court’s consider a
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`patentee’s aggressive enforcement strategy in determining subject matter jurisdiction. See Arris
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`Group v. British Telecomm., 639 F.3d 1368, 1378 (Fed. Cir. 2011); Arrowhead Indus. Water,
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`Inc. v. Ecolochem, Inc., 846 F.2d 731, 737–38 (Fed. Cir. 1988). Courts, however, may be
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`skeptical that a patentee’s litigation enforcement strategy is in fact “aggressive” if it “appears to
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`involve suing . . . users, not . . . suppliers.” See Microsoft Corp. v. DataTern, Inc., 755 F.3d 899,
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`906-07 (Fed. Cir. 2014).
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`The Court explained that “Defendant’s actions [do not] constitute an ‘aggressive
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`enforcement strategy’ warranting a finding of subject matter jurisdiction here, as Defendant’s
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`strategy ‘appears to involve suing . . . users,’ including BroadSign’s customers, ‘not . . .
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`suppliers,’ such as BroadSign.” Dkt. 40 at 8. In response to the Court’s findings, Plaintiff
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`proposes further amending the complaint to allege that, as a supplier of digital out-of-home
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`media products to the digital advertising industry, Plaintiff is under threat of litigation because T-
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`Rex’s aggressive litigation strategy involves asserting the Patents-in-Suit against both customers
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`and suppliers. T-Rex has filed complaints alleging patent infringement of the Patents-in-Suit
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`against suppliers similarly-situated to BroadSign, including suppliers of digital out-of-home
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`media software and/or hardware. T-Rex has filed complaints against BroadSign’s direct-
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`competitor suppliers, including at least: Barco, Inc.1; Prismview, LLC (a Samsung Electronics
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`Company)2; Table Top Media, LLC3; Clear Channel Outdoor Holdings, Inc. et al; 4 GPS
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`1 T-Rex Property AB v. Barco, Inc., Case No. 1:16-cv-6938 (N.D. Ill. July 1, 2016); T-Rex
`Property AB v. Barco, Inc., Case No. 1:16-cv-6940 (N.D. Ill. July 1, 2016)
`2 T-Rex Property AB v. Prismview, LLC, Case No. 4:16-cv-00404 (E.D. Tex. June 16, 2016)
`3 T-Rex Property AB v. Table Top Media, LLC, Case No. 1:16-cv-6932 (N.D. Ill. July 1, 2016)
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`3
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 4 of 10
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`Industries, LLC5; Quality Systems Technology, Inc.6; Four Winds Interactive, LLC7;
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`AutoNetTV Media, Inc.;8 Cardinal Health, Inc.9; Zoom Media Corp.10; ANC Sports Enterprises,
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`LLC11; iPort Media Networks, LLC12; Reach Sports Marketing Group, Inc.13; RMG Networks
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`Holding Corporation14; and Time-O-Matic d/b/a Watchfire.15. Each of these suppliers has
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`supplied software and/or hardware to advertising customers in the digital out-of-home media
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`space. Because these facts allege that T-Rex has engaged in an aggressive enforcement strategy
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`against similarly-situated suppliers like BroadSign, the proposed Second Amended Complaint
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`sufficiently supports a finding of jurisdiction, as indicated in the Court’s Memorandum Opinion
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`and Order (Dkt. 40 at 8-9), and Plaintiff respectfully requests leave to further amend the
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`complaint to allege such facts. Ex. A at ¶¶ 11-28.
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`IV. A CONTROVERSY EXISTS BETWEEN THE PARTIES AS TO INDIRECT
`INFRINGEMENT
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`4 T-Rex Property AB v. Clear Channel Outdoor Holdings, Inc., et al., Case No. 6:16-cv-00974
`(E.D. Tex. June 30, 2016); T-Rex Property AB v. Clear Channel Outdoor Holdings, Inc.,
`Case No. 5:12-cv-01162 (N.D. Tex. Dec. 11, 2012)
`5 T-Rex Property AB v. GPS Industries, LLC, Case No. 4:16-cv-00458 (E.D. Tex. June 30,
`2016)
`6 T-Rex Property AB v. Quality Systems Technology, Inc., Case No. 1:16-cv-6942 (N.D. Ill. July
`1, 2016)
`7 T-Rex Property AB v. Four Winds Interactive, LLC, Case No. 1:16-cv-6934 (N.D. Ill. July 1,
`2016)
`8 T-Rex Property AB v. AutoNetTV Media, Inc., Case No. 1:16-cv-6649 (N.D. Ill. July 1, 2016)
`9 T-Rex Property AB v. Cardinal Health, Inc., Case No. 1:16-cv-5484 (N.D. Ill. May 23, 2016)
`10 T-Rex Property AB v. Zoom Media Corp., Case No. 1:16-cv-3475 (N.D. Ill. March 21, 2016)
`11 T-Rex Property AB v. ANC Sports Enterprises, LLC, Case No. 0:16-cv-581 (D. Minn. March
`7, 2016)
`12 T-Rex Property AB v. iPort Media Networks, LLC, Case No. 1:16-cv-1583 (N.D. Ill. Jan. 29,
`2016)
`13 T-Rex Property AB v. Reach Sports Marketing Group, Inc., Case No. 0:16-cv-070 (D. Minn.
`Jan. 13, 2016)
`14 T-Rex Property AB v. RMG Networks Holding Corporation, Case No. 3:15-cv-738 (N.D. Tex.
`March 5, 2015)
`15 T-Rex Property AB v. Time-O-Matic, LLC, Case No. 1:14-cv-1488 (C.D. Ill. Dec. 23, 2014)
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 5 of 10
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`The Arris Court states that “[w]e have recognized that, where a patent holder accuses
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`customers of direct infringement based on the sale or use of a supplier’s equipment, the supplier
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`has standing to commence a declaratory judgment action . . . there is a controversy between the
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`patentee and the supplier as to the supplier’s liability for induced or contributory infringement
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`based on the alleged acts of direct infringement by its customers.” Arris Group, 639 F.3d at
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`1375. The Arris Court concluded that “applying the standard articulated by the Supreme Court
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`in MedImmune, there is an actual controversy between Arris and BT concerning Arris’ liability
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`for, at least, contributory infringement,” because the following four factors were shown: (a) the
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`supplier’s product was used to commit acts of direct infringement; (b) the product’s use
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`constituted ‘‘a material part of the invention,’’ (c) the supplier knew its product was ‘‘especially
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`made or especially adapted for use in an infringement’’ of the patent; and (d) the product is ‘‘not
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`a staple article or commodity of commerce suitable for substantial noninfringing use.’’ Id.;
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`Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1316–17 (Fed. Cir.
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`2010). This Court has found that the Arris factors (a) and (b) have been sufficiently pled by
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`BroadSign. Dkt. 40 at 9-10. Regarding the remaining factors, the Arris Court concluded that
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`“we find that [patent owner’s] infringement accusations against [customer] carried the implied
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`assertion that [supplier] was committing contributory infringement.” Arris Group, 639 F.3d at
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`1375.
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`BroadSign alleges additional facts in its Second Amended Complaint that satisfy Arris
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`factors (c) and (d). BroadSign’s Second Amended Complaint sets forth facts regarding T-Rex’s
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`allegations in complaints against BroadSign-customer ContextMedia. For example, in T-Rex’s
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`first amended complaint against ContextMedia, T-Rex included infringement contentions placing
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`ContextMedia (and BroadSign) on specific notice of the infringement on a limitation-by-
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 6 of 10
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`limitation basis with specific citations to ContextMedia documents. Ex. A at ¶ 33; Ex. C at 15-
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`25. T-Rex’s limitation-by-limitation analysis includes references to ContexMedia’s “Digital
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`Waiting Room Screen” product which consists of a BroadSign product and BroadSign software.
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`Ex. A at ¶ 33; Ex. C at 15. T-Rex iterates through each limitation of claim 25 of the ’470 Patent,
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`claim 22 of the ’334 Patent, and claims 42 and 43 of the ’603 Patent and contends that
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`BroadSign’s software within the Digital Waiting Room Screen meets each of the limitations of
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`these claims. Ex. A at ¶ ¶ 33-40; Ex. C at 15-25. Moreover, these allegations do not identify
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`functionalities implemented independently by BroadSign’s customers, but instead identify
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`functionalities implemented by BroadSign’s own software solutions. Ex. A at ¶ 34.
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`For example, regarding the first limitation of claim 25 of the ’470 Patent, T-Rex alleges
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`that the Digital Waiting Room Screen product “receives control instructions from at least one
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`external information mediator” because the Digital Waiting Room Screen “receives control
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`instructions from medical content providers including, without limitation, ‘patient education
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`producers and health organizers’ and advertisers.” Ex. A at ¶ 36; Ex. C at 15-16. While
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`BroadSign disputes whether any of the limitations of the claims are met by the Digital Waiting
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`Room Screen, the BroadSign software is responsible for the functionality for receiving
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`information from medical content providers identified by T-Rex. Ex. A at 36. Additionally, T-
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`Rex alleges that the Digital Waiting Room meets the limitations of the claims because it uses
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`“smart playlist technology [to curate] programming that is customized to each office according
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`to its specific patient population.” Ex. A at ¶ 36; Ex. C at 16. Again, while BroadSign disputes
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`whether this functionality meets the limitations of any claim, the functionality identified by T-
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`Rex is provided by BroadSign to ContextMedia as part of BroadSign’s solution. Ex. A at 36.
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 7 of 10
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`This is not the case where BroadSign provides components that are modified by its
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`customers to behave in the manner alleged by T-Rex. Instead, T-Rex’s prose-format claim
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`charts identify components of BroadSign’s systems and software that are provided by BroadSign
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`to its customers. Accordingly, declaratory judgment jurisdiction exists at least with regard to
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`BroadSign’s induced or contributory infringement of the T-Rex patents. See, Arris, 639 F.3d at
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`1375 (“where a patent holder accuses customers of direct infringement based on the sale or use
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`of a supplier's equipment, the supplier has standing to commence a declaratory judgment action
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`if ... there is a controversy between the patentee and the supplier as to the supplier's liability for
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`induced or contributory infringement based on the alleged acts of direct infringement by its
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`customers.”); c.f. Microsoft v. DataTerm 755 F.3d 899, 903 (Fed. Cir. 2014).
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`In view of the additional allegations in BroadSign’s Second Amended Complaint,
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`BroadSign has sufficiently alleged that it has knowledge that its products are especially made or
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`especially adapted for use in providing the functionality that T-Rex accuses of infringement.
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`Accordingly, factor (c) of the Arris test for contributory infringement is met by BroadSign’s
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`Second Amended Complaint.
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`Finally, regarding factor (d) of the Arris test, BroadSign’s Second Amended Complaint is
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`sufficient because it alleges that the BroadSign products, such as the systems and software
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`included in the Digital Waiting Room Sign product, are built to order for BroadSign’s customers.
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`Ex. A at 46. See, e.g., Sticker Industrial Supply Corp. v. Blaw-Knox Co. (vendor “had good
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`reason to fear that it might be liable for contributory infringement” for its sale of ladle feeders to
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`steel producers, only after noting that that equipment was “built to order for its customers” and,
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`thus, “not a staple” article of commerce). 367 F.2d 744, 747 (7th Cir. 1966).
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 8 of 10
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`Accordingly, because BroadSign’s First Amended Complaint set forth sufficient facts to
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`meet factors (a) and (b) of the Arris test, and because BroadSign’s Second Amended Complaint
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`sets forth those same facts plus additional facts sufficient to satisfy factors (c) and (d) of the
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`Arris test, BroadSign’s Second Amended Complaint supports a finding of jurisdiction, as
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`indicated in the Court’s Memorandum Opinion and Order (Dkt. 40 at 9-10). Plaintiff
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`respectfully requests leave to further amend the complaint to allege such facts.
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`V.
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`INVALIDITY
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`The proposed Second Amended Complaint alleges new Counts regarding invalidity with
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`respect to the Patents-in-Suit. Ex. A at ¶ ¶ 76-87. Specifically, the Second Amended Complaint
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`alleges that the Patents-in-Suit are invalid for failing to meet one or more of the requirements
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`under 35 U.S.C. §§ 101, 102, 103, and/or 112. Ex. A at ¶ ¶ 78, 82 and 86. The new invalidity
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`counts do not cause undue delay as the case remains in initial stages and the pre-trial conference
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`has been adjourned sine die. Dkt. 40. Deciding validity along with infringement for the same
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`patents would also serve the interests of judicial economy. Given the relatively early stage of the
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`case and the interests of efficiency and judicial economy, the Court should grant leave to add
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`Counts 5-7 regarding invalidity.
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`VI. CONCLUSION
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`Justice requires leave here. There exists no apparent or declared reason for denying this
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`motion. This motion is timely filed in accordance with the Court’s Order (Dkt. 40 at 10). T-Rex
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`will not be prejudiced by the filing of the proposed Second Amended Complaint at this time in
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`the litigation. Accordingly, given the clear absence of any substantial reason to deny this motion
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`and in the interest of justice, this Court should grant Plaintiff’s motion for leave to file the
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`proposed Second Amended Complaint.
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 9 of 10
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`Dated: January 31, 2018
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`Respectfully submitted,
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`BROWN RUDNICK LLP
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` /s/ Alfred R. Fabricant
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`Alfred R. Fabricant (AF8255)
`Email: afabricant@brownrudnick.com
`Lawrence C. Drucker (LD9423)
`Email: ldrucker@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: (212) 209-4800
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`By:
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`ATTORNEYS FOR PLAINTIFF
`BROADSIGN INTERNATIONAL, LLC
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`9
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`Case 1:16-cv-04586-LTS Document 43 Filed 02/01/18 Page 10 of 10
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`CERTIFICATE OF SERVICE
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`I hereby certify that on January 31, 2018, I electronically filed the foregoing filing with
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`the Clerk of Court using the CM/ECF system which will send notification of such filing via
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`electronic mail to all counsel of record.
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` /s/ Alfred R. Fabricant
` Alfred R. Fabricant
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