Zond, Inc. v. Fujitsu Semiconductor Ltd., C.A. No. 12-11634, 2014 WL 69035 (D. Mass. Jan. 9, 2014) (Young, D.J.) [Pleading Standard].
Zond, Inc. v. SK Hynix Inc., C.A. No. 13-11591, Memorandum and Order on Defendants’ Motion to Dismiss the Amended Complaints (D. Mass. Jan. 31, 2014) (Stearns, D.J.) [Pleading Standard].
The District of Massachusetts recently addressed patent infringement pleading standards in granting in part and denying in part Rule 12(b)(6) motions to dismiss in two related cases. In both cases, Zond, Inc. (“Zond”) alleged claims of direct infringement, induced infringement, contributory infringement, and willful infringement of seven patents concerning plasma discharge technology intended for use in manufacturing processes for semiconductor chips.
In Fujitsu, Judge Young made clear that Form 18 of the Federal Rules of Civil Procedure is the operative pleading standard for claims of direct infringement, not the pleading standard articulated by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). This conclusion, however, is unexceptional given holdings by the Federal Circuit in recent years.
On the other hand, the Court’s discussion of knowledge with respect induced infringement in the two cases is notable. A claim for induced infringement requires allegations of fact plausibly suggesting that the defendant knew of the patent combined with an intent to cause the infringing acts. In Fujitsu, the District of Massachusetts addressed for the first time whether the alleged inducer must have knowledge of the patent prior to the filing of the lawsuit. Noting that districts are evenly divided on this issue, the Court held that pre-filing knowledge is required before a claim of induced infringement may be made. The Court reached this holding by relying on Rule 11 to the Federal Rules of Civil Procedure, which requires factual allegations in a complaint to have evidentiary support. The Court reasoned that a plaintiff cannot properly allege that a defendant has knowledge of patents-in-suit based on merely filing a complaint because the defendant has not yet received the complaint at the time the plaintiff so files. But a patentee can file an initial complaint, and if the conduct continues post-filing, amend that complaint to include allegations of induced infringement. At bottom, Zond satisfied the knowledge requirement by filing an amended complaint.
In Hynix, the Court found that Zond failed to properly plead the pre-suit knowledge element of an infringement by inducement claim on Iqbal and Twombly grounds. Based upon its information and belief that the defendants attended industry conferences at which Zond showcased its patented technology, Zond neglected to make a factual allegation that any of the defendants’ employees actually attended one of the unspecified Zond presentations or received any of the unspecified Zond promotional material, rather than just a trade show in general. Additionally, because pre-suit knowledge of the patents-in-suit is required to state a claim for willful infringement, the Court also dismissed Zond’s willful infringement claim with respect to the original complaint.