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Advanced Optical Tracking, LLC v. Koninklijke Philips N.V.

United States District Court, Third Circuit

September 9, 2013

ADVANCED OPTICAL TRACKING, LLC, Plaintiff,
v.
KONINKLIJKE PHILIPS N.V. and PHILIPS ELECTRONICS NORTH AMERICA CORP., Defendants.

REPORT AND RECOMMENDATION

Christopher J. Burke UNITED STATES MAGISTRATE JUDGE

Presently pending before the Court is Defendants Koninklijke Philips N.V.'s ("Philips NV") and Philips Electronics North America Corp.'s ("Philips America") (collectively, "Philips") motion to dismiss Advanced Optical Tracking, LLC's ("AOT") induced infringement claims, pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.I. 13)

For the reasons that follow, I recommend that Philips' Motion to Dismiss be DENIED.

I. BACKGROUND

A. The Parties

AOT is a Delaware limited liability company with a place of business in Wilmington, Delaware. (D.I. 10 at ¶ 2) Philips NV is a corporation organized under the laws of the Netherlands, with a principal place of business in Amsterdam, Netherlands. (Id. at ¶ 3) Philips America, a wholly owned subsidiary of Philips NV, is a Delaware corporation with a principal place of business in Andover, Massachusetts. (Id. at ¶ 4)

B. Procedural Background

On October 5, 2012, AOT commenced this action, asserting that Royal Philips Electronics N.V. and Philips America each directly and indirectly infringe certain claims of its patent, U.S. Patent No. 6, 990, 058 ("the '058 patent"). (D.I. 1 at ¶¶ 11-22) On December 4, 2012, counsel for Philips NV advised AOT that the Dutch parent of Philips America should be named "Koninklijke Philips Electronics N.V." rather than "Royal Philips Electronics N.V." (D.I. 15 at 2) AOT thereafter filed a First Amended Complaint ("FAC") on December 11, 2012; the content of the FAC was identical to the original Complaint, with the exception that the correct name for Philips NV was substituted in the caption.[1] (D.I. 10; D.I. 15 at 2)

In lieu of filing an Answer, on January 28, 2012, Philips filed a motion to dismiss AOT's induced infringement claims, pursuant to Rule 12(b)(6). (D.I. 13) Briefing on this motion was complete on February 25, 2013. (D.I. 17) On July 11, 2013, this matter was referred to me by Judge Leonard P. Stark to hear and resolve all pretrial matters, up to and including the resolution of case-dispositive motions. (D.I. 21)

II. LEGAL STANDARDS

The sufficiency of pleadings for non-fraud cases is governed by Federal Rule of Civil Procedure 8, which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court conducts a two-part analysis. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the court separates the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. Second, the court determines "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). Thus, although a non-fraud claim need not be pled with particularity or specificity, that claim must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and citation omitted).

Determining whether a claim is plausible is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. A plausible claim does more than merely allege entitlement to relief; it must also demonstrate the basis for that "entitlement with its facts." Fowler, 578 F.3d at 211 (citations omitted). Thus, a claimant's "obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted); accord Iqbal, 556 U.S. at 678 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). In other words, "[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 (citing Twombly, 550 U.S. at 556). In assessing the plausibility of a claim, the court must "construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Fowler, 578 F.3d at 210 (citing Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).

III. DISCUSSION

As noted above, it is Plaintiffs allegations of induced infringement that are at issue in the instant motion. Pursuant to 35 U.S.C. § 271(b), "[wjhoever actively induces infringement of a patent shall be liable as an infringer." In order to prove induced infringement, the patentee "must show direct infringement, and that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." Toshiba Corp. v. Imation Corp., 681 F.3d 1358, 1363 (Fed. Cir. 2012) (internal quotation marks and citation omitted). At the pleading stage, in order to survive a motion to dismiss such a claim, a patentee must plead facts "plausibly showing that [the alleged infringer] specifically intended [a third party] to infringe the patents-in-suit ...


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