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Continental Circuits LLC v. Intel Corp.

United States District Court, D. Arizona

February 21, 2017

Continental Circuits LLC, Plaintiff,
Intel Corporation, et al., Defendants.


          David G. Campbell United States District Judge

         Defendants Ibiden U.S.A. Corporation and Ibiden Co. Ltd. (collectively, “Ibiden”) and Intel Corporation have filed separate motions to dismiss Plaintiff Continental Circuits LLC's complaint under Federal Rule of Civil Procedure 12(b)(6). Docs. 49, 52. After the motion was fully briefed (Docs. 49, 52, 54, 58, 60) and scheduled for oral argument, Plaintiff filed an amended complaint (Doc. 95).[1] The Court heard oral argument on February 3, 2017. For the following reasons, Defendants' motions to dismiss will be granted in part and denied in part.

         I. Background.

         Plaintiff alleges that Ibiden and Intel infringed four of its patents directly, indirectly by inducing and contributing to infringement, and willfully. See Doc. 95, ¶¶ 120-55. The Court will recount Plaintiff's factual allegations, which must be taken as true for purposes of this motion. See Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009) (citation omitted).

         A. The Parties.

         Continental Circuits Inc. was a manufacturer of printed circuit boards used in the computer industry.[2] Doc. 95, ¶ 22. Four employees of Continental Circuits Inc. observed that electrical devices made of alternating layers of conductive and non-conductive materials suffered from poor adhesion that caused the layers to separate. Id., ¶ 28. The employees invented a “novel surface roughening technique” that used etching to produce a “non-uniformly roughened surface” and allowed for stronger adhesion between layers. Id., ¶¶ 28, 110. In 1997, the co-inventors filed an application to patent the surface-roughening technology. Doc. 52, at 6.[3]

         Another Continental Circuits Inc. employee, sales representative Jeff Long, learned of this technology in the mid-1990s. Doc. 95, ¶ 29. Plaintiff alleges that Long, before his discharge from Continental Circuits Inc. in 1997, “entered into a business arrangement” with Defendant Ibiden, a manufacturer of package substrates used in computer electronics. Id., ¶¶ 30, 44. In the course of this “arrangement, ” Long allegedly shared the technology described in the 1997 patent application with Ibiden. Doc. 52, at 6; Doc. 95, ¶¶ 30-32;. “In the late 1990s, ” Ibiden was supplying an increasing quantity of package substrates to Intel, a global computer-processor manufacturer, and other companies. Doc. 52, at 6; Doc. 95, ¶¶ 33, 43, 147. Like all of Intel's suppliers, Ibiden collaborated with Intel to develop specifications that Ibiden's products were expected to meet. Doc. 95, ¶¶ 45-47.

         B. The Patents-in-Suit.

         The application to patent the surface-roughening technology became U.S. Patent No. 6, 141, 870 (the “'870 patent”), issued November 7, 2000, and U.S. Patent No. 6, 700, 069 (the “'069 patent”), issued March 2, 2004. See id., ¶¶ 12-13. In early 2005, “a representative of Continental Circuits” sent a letter to Intel's Chief Legal Counsel, informing him of the existence of the '870 and '069 patents and a related continuation application. Id., ¶ 34. The representative expressed an interest in licensing the portfolio to Intel. Id. In a letter dated March 2, 2005, an Intel employee acknowledged receipt of the letter and stated that “[a]n Intel attorney is reviewing the matter.” Id., ¶ 36. On April 21, 2005, Intel sent another letter advising the representative that “Intel has determined not to pursue this matter.” Id., ¶ 37.

         Ibiden received the same offer in early 2005. See id., ¶ 35. “[A] representative of Continental Circuits” sent a letter to the General Counsel of Ibiden Circuits of America, purporting to inform him of the existence of the '870 and '069 patents and the continuation application, and expressing an interest in licensing the portfolio to Ibiden. Id. The amended complaint does not mention a response from Ibiden.

         The continuation application referenced in the letters to Ibiden and Intel resulted in issuance of the four patents at issue in this action: U.S. Patent No. 7, 501, 582 (the “'582 patent”), issued March 10, 2009; U.S. Patent No. 8, 278, 560 (the “'560 patent”), issued October 2, 2012; U.S. Patent No. 8, 581, 105 (the “'105 patent”), issued November 12, 2013; and U.S. Patent No. 9, 374, 912 (the “'912 patent”), issued June 21, 2016. See id., ¶¶ 14-17, 34-35. In 2014, “it was confirmed” during a “conversation . . . between a representative of Continental Circuits and a business development manager at Ibiden” that “the technology claimed in the patents-in-suit is still in use at Ibiden today.” Id. ¶ 41. When pressed for specifics, “the Ibiden manager became evasive and ended the discussion.” Id.

         C. The Infringement Complaint.

         Plaintiff initiated this action on June 22, 2016, one day after the '912 patent was issued. See Doc. 1, ¶ 17. The complaint sets forth one patent infringement count each against Ibiden and Intel, alleging direct infringement, induced infringement, and contributory infringement of the four patents-in-suit. Doc. 95, ¶¶ 120-55. The complaint also alleges that the infringement was willful. Id., ¶¶ 136, 154.

         Plaintiff's amended complaint implicates hundreds of products and hundreds of patent claims. The complaint defines “Accused Instrumentalities” to include “any version” of products from nine Intel product lines: Atom, Core, Pentium, Celeron, Xeon, Itanium, and Quark series processors, and “any processors manufactured in a manner similar to those, ” and also Intel's Chipsets and Wireless Network Adapters. Doc. 95, ¶ 103. The amended complaint lists model numbers of individual products comprising each of these product lines. See id., ¶¶ 51, 56, 61, 66, 71, 76, 81, 86, 91. Plaintiff claims that “any” of the products in these product lines - more than 1, 000 total - “meet or embody the limitations of at least one claim” of the patents-in-suit. Doc. 52, at 5; Doc. 95, ¶ 103; see, e.g., Doc. 95, ¶¶ 52-55 (allegations as to Atom series). The four patents contain 337 total claims. Doc. 49, at 2; Doc. 52, at 5. The amended complaint identifies, “by way of example and not limitation, ” claim 14 of the '560 patent as representative. Doc. 95, ¶¶ 122, 141. The term “Accused Instrumentalities” also encompasses “any Package Substrates manufactured by Ibiden for Intel or others.” Id. ¶ 103 (emphasis added).

         The amended complaint includes magnified cross-section images of the roughened surface between conductive and non-conductive layers from five of Intel's product lines: Core, Atom, Pentium, Celeron, and Xeon. Id. ¶ 107. It does not include cross-section images from the Itanium or Quark series processors, the chipsets, or the wireless network adapters. In an effort to tie the images to these products, the amended complaint alleges that “[t]he images . . . are representative of the cross-sections of a substrate layer within each of the Accused Instrumentalities, ” and that “[t]here is no material difference in the substrate layers between any versions of the Accused Instrumentalities.” Id., ¶¶ 108-09. Plaintiff “rel[ies] on the cross-section images of the majority of the accused product lines for a factual basis supporting its contentions of infringement.” Doc. 54, at 11.

         II. Legal Standard.

         A successful motion to dismiss under Rule 12(b)(6) must show either that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss as long as it contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556).

         III. Discussion.

         Ibiden and Intel argue that Plaintiff's direct infringement claims should be dismissed because Plaintiff has not pled sufficient facts to make the claims plausible. Doc. 49, at 2-3; Doc. 52, at 5. They also argue that the inducement, contributory infringement, and willfulness claims fail if the direct infringement claims fail, and, in any event, that Plaintiff has not alleged facts to support the state of mind required for these claims. Doc. 49, at 3; Doc. 52, at 5.

         A. Direct Infringement.

         “[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent” is liable for direct infringement. 35 U.S.C. § 271(a). Section 271(g) extends direct infringement to patented processes: “[w]hoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States” is also liable.

         1. Direct Infringement Pleading after Form 18.

         Until its abrogation on December 1, 2015, Rule 84 of the Federal Rules of Civil Procedure directed that “[t]he forms in the Appendix suffice[d]” at the pleading stage. Form 18 provided a sample complaint for patent infringement, and courts considering the sufficiency of patent infringement complaints compared them to Form 18. e.Dig. Corp. v. iBaby Labs, Inc., No. 15-5790, 2016 U.S. Dist. LEXIS 111689, at *4 (N.D. Cal. Aug. 22, 2016).[4] “[T]o the extent any conflict exist[ed] between Twombly (and its progeny) and the Forms regarding pleading requirements, the Forms control[led].” K-Tech Telecomms. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283 (Fed. Cir. 2013).

         Because Form 18 was abrogated along with Rule 84 and the rest of the forms, it no longer maintains any force. e.Digital, 2016 U.S. Dist. LEXIS 111689, at *5-8; accord Avago Techs. Gen. IP (Sing.) PTE Ltd. v. Asustek Comput., Inc., No. 15-4525, 2016 U.S. Dist. LEXIS 55655, at *12-13 (N.D. Cal. Apr. 25, 2016); Atlas IP LLC v. Pac. Gas & Elec. Co., No. 15-5469, 2016 U.S. Dist. LEXIS 60211, at *4 (N.D. Cal. Mar. 9, 2016); InCom Corp. v. Walt Disney Co., No. 15-3011, 2016 U.S. Dist. LEXIS 71319, at *5-6 (C.D. Cal. Feb. 4, 2016). In Form 18's absence, Twombly and Iqbal govern direct infringement claims. FootBalance Sys. v. Zero Gravity Inside, Inc., No. 15-1058, 2016 U.S. Dist. LEXIS 137978, at *6 (S.D. Cal. Oct. 4, 2016); accord e.Digital, 2016 U.S. Dist. LEXIS 111689, at *7-8; TeleSign Corp. v. Twilio, Inc., No. 16-2106, 2016 U.S. Dist. LEXIS 123516, at *4 (C.D. Cal. Aug. 3, 2016); Tannerite Sports, LLC v. Jerent Enters., LLC, No. 15-180, 2016 U.S. Dist. LEXIS 57942, at *9 (D. Or. May 2, 2016).

         Plaintiff notes that one court in this Circuit has held otherwise. Doc. 54, at 9 n.5 (citing Hologram USA, Inc. v. Pulse Evolution Corp., No. 14-772, 2016 U.S. Dist.

         LEXIS 5426 (D. Nev. Jan. 15, 2016)). Hologram relied on an Advisory Committee Note statement that “[t]he abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8.” Id. at *7-8 n.1 (quoting Fed.R.Civ.P. 84 advisory committee's note to 2015 amendments). Hologram assumed the phrase “existing pleading standards” included Form 18, and therefore applied Form 18 even after its abrogation. See Hologram, 2016 U.S. Dist. LEXIS 5426, at *8 & n.1.

         The Court finds Hologram's rationale unpersuasive for the same reason as Judge Tigar in e.Digital:

First, it is just as likely, if not more so, that the Advisory Committee used the phrase “existing pleading standards” simply to refer to Twombly and its progeny, but not including the exception recognized by K-Tech. Indeed, nothing in the Advisory Committee note suggests that it was aware of the K-Tech exception to Twombly. Second, K-Tech's holding was premised on the fact that “to the extent any conflict exists between Twombly (and its progeny) and the Forms regarding pleading requirements, the Forms control.” Absent Form 18 itself, there is simply no support in the Federal Rules of Civil Procedure for a different pleading standard for direct patent infringement claims. As a result, the Court concludes that former Form 18 no longer controls and that ...

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