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Continental Circuits LLC v. Intel Corp.

United States District Court, D. Arizona

June 16, 2017

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


          David G. Campbell United States District Judge

         Defendants Ibiden U.S.A. Corp. and Ibiden Co. Ltd. (collectively, "Ibiden") and Intel Corp. jointly move to dismiss Plaintiff Continental Circuits LLC's second amended complaint (Docs. 128 (sealed version), 133 (redacted version)) under Federal Rule of Civil Procedure 12(b)(6). Docs. 142 (redacted version), 147 (sealed version).[1] The motion has been fully briefed. Docs. 142, 155, 175. For the reasons that follow, Defendants' motion to dismiss will be granted in part and denied in part.

         I. Background.

         For the second time, Defendants move to dismiss Plaintiffs complaint on the basis of factual insufficiency. Because the Court recounted the facts and procedural history of this case in detail in its previous order granting Defendants' first motion to dismiss in part (Doc. 112), only a brief review is needed here.

         Defendant Ibiden produces package substrates ____. See Doc. 133, ¶¶ 51, 110, 154; Doc. 147, at 9.[2] These substrates are used in computer electronics, including computer processors manufactured by Defendant Intel. See Doc. 133, ¶¶ 49-51. The two companies worked together to develop the specifications that Intel expects Ibiden's substrates to meet. Id., ¶¶ 52, 55-56.

         Computer circuit boards like those in Intel's products are made of alternating layers of conductive and non-conductive materials. See id., ¶29. When adhesion between the layers is poor, they can separate. See Id. In the 1990s, four employees of Continental Circuits, Inc., a now-defunct circuit-board manufacturer, invented a "novel surface roughening technique" using etching to create a "non-uniformly roughened surface" that allows for stronger adhesion between layers. Id., ¶¶ 28-29, 120. The four co-inventors applied to patent the surface-roughening technology in 1997, and two patents were issued in 2000 and 2004, respectively. Doc. 52, at 6; see also Doc. 133, ¶¶ 12-13. Those patents are not at issue in this case. A continuation application was filed by early 2005, and eventually resulted in issuance of the four patents that are at issue in this action: U.S. Patent Nos. 7, 501, 582 (2009), 8, 278, 560 (2012), 8, 581, 105 (2013), and 9, 374, 912 (2016) (collectively, the "patents-in-suit"). See Doc. 133, ¶¶ 14-17, 35-36.

         Plaintiff Continental Circuits LLC is a non-operating entity that was formed in 2016 and owns the patents-in-suit.[3] Doc. 49, at 11 n.8; Doc. 133, ¶ 19. The day after the last of the patents-in-suit was issued, Plaintiff initiated this action. See Doc. 1. The original and first amended complaints alleged that both Defendants infringed the patents-in-suit directly, indirectly, and willfully. Doc. 95, ¶¶ 120-55.

         Plaintiff claims that a former employee of Continental Circuits "shared the technology described in the patents-in-suit with Ibiden" in 1997, as Ibiden's "supplier relationship with Intel" was growing. Id., ¶¶29-33. According to Plaintiff, Ibiden and Intel "collaborate[d] ... to develop specifications for the design of packaging to ultimately be used in Intel products." Id., ¶45. As a result, certain Intel product lines came to "meet or embody the limitations of at least one claim" of each of the patents-in-suit, as did "any Package Substrates manufactured by Ibiden for Intel or others." Id., ¶¶ 51-100, 103.

         Plaintiff alleges that both Defendants learned of the pending continuation application that eventually became the patents-in-suit through a 2005 letter from a "representative of Continental Circuits" to the heads of their respective legal departments. See id., ¶¶ 34-37. Plaintiff further asserts that a "representative of Continental Circuits . . . confirmed" in a 2014 conversation with an Ibiden manager "that the technology claimed in the patents-in-suit is still in use." Id., ¶ 41.

         On February 21, 2017, this Court granted in part and denied in part motions to dismiss filed by Defendants. Doc. 112, at 20. In the ensuing months, discovery has continued and Plaintiff has amended its complaint a second time. Docs. 128, 133. Defendants now jointly move to dismiss the second amended complaint in part, arguing that Plaintiff "has still failed to come forward with plausible allegations" to support a number of its claims. Doc. 142, at 6.

         II. Legal Standard.

         The Court will not grant a motion to dismiss under Rule 12(b)(6) unless the complaint either lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri v. Paciflca Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). If a complaint sets forth a cognizable legal theory, it 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) (quoting Bell Art. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the complaint's factual allegations "allow[] the court to draw the reasonable inference that I the defendant is liable for the misconduct alleged." Id. "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. (quoting Twombly, 550 U.S. at 556).

         III. Discussion.

         In its previous order, the Court dismissed the first amended complaint's direct infringement claims as to Intel's Itanium series processors, chipsets, and wireless network adapters after concluding that Plaintiff had not provided enough facts to make them plausible. Doc. 112, at 10, 20. Plaintiffs second amended complaint no longer advances claims against Intel's wireless network adapters, and Defendants are not seeking dismissal of the newly-pled direct infringement claims against Intel's Itanium processors and chipsets. Doc. 142, at 5 n.l.

         Defendants move to dismiss Plaintiffs direct infringement claims against Ibiden as to unnamed products sold to customers other than Intel. The Court previously dismissed these claims, and will do so again.

         A. Direct Infringement Claims against Unidentified Ibiden Products.

         1. Section 271(a) Claims.

         A direct infringer under 35 U.S.C. § 271(a) "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." In its previous order, the Court made clear that the Twombly/Iqbal pleading standard, which requires "enough facts to make [Plaintiffs claims] plausible, " applies to direct infringement claims. Doc. 112, at 7, 10. Plaintiffs first amended complaint alleged infringement by Ibiden products manufactured for unspecified companies other than Intel. See, e.g., Doc. 95, ¶¶ 103 (alleging infringement by "any Package Substrates manufactured by Ibiden for Intel or others"), 147 (alleging Ibiden induced infringement by "Intel and other companies supplied by Ibiden"). The Court dismissed these claims because Plaintiff provided "no facts about those unspecified products, and thus set[] forth no plausible basis for infringement by them." Doc. 112, at 11.

         In the second amended complaint, Plaintiff redefines these unnamed products as ___ Doc. 128 ¶¶ 61, 104. Rather than adding facts about the products themselves, Plaintiff has added facts, learned in the course of discovery, about _____ Doc. 128 ¶¶ 58-61. (footnote omitted)

         Plaintiff argues that these additional facts satisfy the "purpose of pleading standards" - to give Defendants "fair notice" of the claims so they can "defend [themselves] effectively." Doc. 175, at 6 (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)). But Plaintiff candidly acknowledges that it has not identified the allegedly infringing products or the specific facts that show they infringe. See Doc. 170, at 6-8; Doc. 175, at 6-8. Plaintiff attempts to excuse this failure by asserting that Ibiden knows which products ___ so Ibiden can identify the infringing products. Plaintiff states: "While Continental Circuits and the Court may not yet be able to identify those products, Ibiden can." Doc. 175, at 8.

         This argument misunderstands modern pleading requirements. As the Supreme Court explained: "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." Iqbal, 556 U.S. at 678 (emphasis added). Plaintiff provides no facts that enable the Court to draw the reasonable inference that Ibiden produces infringing products for other customers. Indeed, it is apparent from the second amended complaint that Plaintiff does not even know if such products exist. Doc. 155, at 5 n.2. Plaintiff alleges the mere possibility of such infringement, and "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[n]' - 'that the pleader is entitled to relief.'" Id. at 679 (alteration in original) (quoting Fed. R. Civ. P. 8(a)(2)).

         Plaintiff alleges that the unnamed products are ___ as the Intel products identified in the second amended complaint, but Plaintiff does not allege facts showing that ___ yields products with the same allegedly-infringing features as the named products. Absent such facts, Plaintiff is left in the same position as before: the second amended complaint, like the first, "contains no facts about those unspecified products." Doc. 112, at 11. As Defendants point out, "[t]here are no images of substrates of non-Intel products, nor any allegations of common materials, specifications, or parameters" between the named and unnamed products. Doc. 155, at 5-6.

         "[M]ost courts have, in the wake of Twombly and Iqbal, required some level of specificity regarding the accused productIndeed, many courts have even required an exact identification." FootBalance Sys. Inc. v. Zero Gravity Inside, Inc., No. 15-1058, 2016 WL 903681, at *4 (S.D. Cal. Feb. 8, 2016) (quoting Wistron Corp. v. Phillip M. Adams & Assocs., LLC, No. 10-4458, 2011 WL 4079231, at *4 (N.D. Cal. Sept. 12, 2011) (rejecting "generic descriptions" such as "computer chips, motherboards, computers")). The general consensus in this Circuit is that "the accused products must be identified with 'at least minimal specificity.'" Anza Tech., Inc. v. Novatel Wireless, Inc., No. 16-585, 2016 WL 7555397, at *3 ...

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