Limestone filed a patent infringement action against Apple, alleging direct and willful infringement of four patents. For each of the four claims of patent infringement against Apple, Limestone alleged, "[u]pon information and belief, Apple will continue its infringement notwithstanding its actual knowledge of the [four patents] and while lacking an objectively reasonable good faith basis to believe that its activities do not infringe any valid claim of the [four patents]." As such, Apple's future "acts of infringement will constitute continuing willful infringement of the [four patents]."
Apple filed a motion to dismiss Limestone's four willful infringement claims. Apple asserted that Limestone did not allege pre-litigation knowledge of the patents at issue nor did it move for a preliminary injunction. Apple argued that the willful infringement claims were deficient for these reasons.
The district court recognized that there is a split of authority among district courts on the pleading requirements for willful infringement claims: This split derives from varying interpretations of the Federal Circuit's decision in In re Seagate Tech, LLC, 497 F.3d 1360 (Fed. Cir. 2007). One federal court in this circuit wrote the following of Seagate: "The Federal Circuit has held an allegation of willful infringement must either be made based on the accused infringer's pre-litigation knowledge, or be maintained only if the patentee seeks a preliminary injunction." McRo, Inc. v. Namco Bandai Games America, Inc., 23 F. Supp. 3d 1113, 1118 (C.D. Cal. 2013) (citation omitted). . . . However, other federal courts, including those in California, have rejected the notion that Seagate established an absolute rule. For example, the DataQuill court found that an accused's post-filing conduct can serve as the basis of a willful infringement claim. See DataQuill Ltd. v. High Tech. Comput. Corp., 887 F. Supp. 2d 999, 1015 (S.D. Cal. 2011) ("Because Seagate did not create a per se bar, the determination of whether a patentee may pursue a claim for willful infringement based on post-filing conduct without seeking a preliminary injunction 'will depend on the facts of each case.'").
The district court then explained that "[a]fter considering this split of authority and reviewing Seagate, the Court is persuaded that post-filing conduct is an acceptable basis for willful infringement claims. The Court is especially persuaded by the reasoning of the recent decision in Monolithic Power Sys. v. Silergy Corp., Case No. 14-cv-01745, 2015 WL 3799533, at *3 (N.D. Cal. June 18, 2015). In Monolithic, the court wrote, 'it's not clear why there should be any relationship between the decision by a patentee to refrain from seeking a preliminary injunction and the question of whether a defendant is willfully infringing after a lawsuit is filed.' Id. The Monolithiccourt then found that 'a plaintiff can state a claim for post-filing willful infringement so long as the plaintiff alleges, in an amended complaint and with sufficient particularity, that there is an objectively high risk the defendant is continuing to infringe and the defendant knows or should know of that objectively high risk. That, after all, is what a plaintiff must prove to prevail on a willful infringement claim.' Id. (emphasis added) (quoting i4i Ltd. P'ship v. Microsoft Corp., 589 F.3d 831, 860 (Fed. Cir. 2010))."
The district court then adopted this view, finding that post-filing conduct can serve as the basis for willful infringement claims even if a plaintiff has not sought a preliminary injunction. Applying this rule, the district court found that Plaintiff's allegations of willfulness were deficient. As explained by the district court, Plaintiff only alleges: that, "[u]pon information and belief, Apple will continue its infringement notwithstanding its actual knowledge of the [four patents] and while lacking an objectively reasonable good faith basis to believe that its activities do not infringe any valid claim of the [four patents]." Compl. ¶¶ 16, 26, 36, 46. But at the time it filed the Complaint, Plaintiff did not have any basis for asserting Defendant would continue to infringe its patents after receiving notice through the lawsuit. "Other than the mere suggestion that infringement continues, there are no facts in the [Complaint] . . . that would support a claim of recklessness."Vasudevan Software, Inc. v. TIBCO Software Inc., No. C 11-06638 RS, 2012 WL 1831543, at *5 (N.D. Cal. May 18, 2012). Accordingly, as it currently stands, the Complaint fails to state a claim for willful infringement.
The district court further explained that "[a]s outlined by the court in Monolithic, Plaintiff is free to amend its Complaint with respect to post-filing willful infringement based on specific allegations concerning Defendant's conduct subsequent to the commencement of the suit."
Accordingly, the district court granted the motion to dismiss, but permitted leave to amend.
Limestone Memory Systems LLC v. Apple Inc., Case No. SA CV 15-1274-DOC (KESx) (C.D. Cal. Oct. 22, 2015).