170 F. Supp. 3d 928
E.D. Tex.2016Background
- Plaintiff Script Security Solutions, LLC (Texas) owns U.S. Patents 6,542,078 and 6,828,909 and sued Amazon, Best Buy, and Time Warner for direct, indirect (induced and contributory), and willful infringement.
- Defendants moved to dismiss: Amazon moved for improper venue and all three moved to dismiss indirect- and willfulness-related claims.
- Script amended complaints multiple times; defendants refiled motions to dismiss the amended complaints.
- Central legal dispute on venue: whether 28 U.S.C. §1391(c)’s definition of corporate “residence” governs §1400(b) (patent venue) after the 2011 amendments.
- Pleading disputes: whether Script’s complaints plausibly allege induced infringement (knowledge and intent), contributory infringement (no substantial non-infringing use), and willfulness (objective and subjective prongs).
- Court denied all motions to dismiss but noted it may revisit venue if the Federal Circuit’s decision in In re TC Heartland alters the governing law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Venue: whether §1391(c)’s residency definition applies to §1400(b) patent venue | §1391(c) defines "resides" for all venue purposes, so corporate defendants reside where subject to personal jurisdiction (supports venue in district) | §1391(a)’s "except as otherwise provided by law" and Fourco mean §1400(b) controls; corporate residence should be state of incorporation only | Court held §1391(c) (post-2011) defines residency for all venue purposes including §1400(b); VE Holding remains controlling; venue not improper here (subject to future Federal Circuit guidance) |
| Induced infringement: adequacy of pleading knowledge and intent | Script pleaded accused products, infringing functionality, pre-suit knowledge (and knowledge by complaint for post-filing acts), and willful blindness policy | Defendants argued allegations are conclusory and fail to show pre-suit knowledge or specific intent | Court held allegations sufficiently plausible to survive Rule 12(b)(6): post-filing knowledge may be alleged via complaint; pre-filing knowledge plausibly pleaded via willful blindness/policy of ignoring patents |
| Contributory infringement: adequacy of pleading no substantial non-infringing use and "especially made" knowledge | Script identified specific accused products and alleged features with no substantial non-infringing use; end users are direct infringers | Defendants argued Script’s allegations are formulaic recitations lacking factual enhancement | Court held complaints sufficiently allege contributory infringement (accused security features plausibly lack substantial non-infringing uses) |
| Willfulness: adequacy of pleading objective and subjective risk | Script pleaded defendants knew of the patents, encouraged infringing use, and thus plausibly faced and knew of an objectively high risk | Defendants argued Script failed to allege facts showing actual or constructive knowledge of an objectively high risk of infringement | Court held Script met pleading standards for willfulness at this stage (plausible pre-suit knowledge and conduct); dismissal denied |
Key Cases Cited
- Fourco Glass Co. v. Transmirra Prods. Co., 353 U.S. 222 (Sup. Ct. 1957) (held corporate "residence" for §1400(b) meant state of incorporation under pre-amendment statute)
- VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) (held §1391(c) definition of "resides" applies to §1400(b) after Congress amended §1391)
- Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (Sup. Ct. 2011) (willful blindness recognized as basis for knowledge in induced infringement)
- In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (announced objective/subjective two-prong test for willful infringement)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (pleading standards and plausibility requirement)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (plausibility standard for pleading)