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Clouding IP, LLC v. Rackspace Hosting, Inc.

United States District Court, Third Circuit

February 6, 2014

CLOUDING IP, LLC, Plaintiff,
v.
RACKSPACE HOSTING, INC., RACKSPACE US, INC., and JUNGLE DISK, LLC, Defendants.

Richard D. Kirk and Stephen B. Brauerman, Bayard, P.A., Wilmington, Delaware. Marc A. Fenster, Brian D. Ledahl, and Dorian S. Berger, Russ August & Kabat, Los Angeles, California. Attorneys for Plaintiff.

Steven J. Balick and Lauren E. Maguire, Ashby & Geddes, Wilmington, Delaware. Daniel T. Shvodian and James F. Valentine, Perkins Coie LLP, Palo Alto, California. Matthew C. Bernstein, Perkins Coie LLP, San Diego, California. Attorneys for Defendants.

MEMORANDUM OPINION

STARK, U.S. District Judge.

Presently before the Court is Defendants Rackspace Hosting, Inc., Rackspace US, Inc., and Jungle Disk, LLC's ("Defendants" or "Rackspace") Motion to Dismiss Plaintiff Clouding IP, LLC's ("Plaintiff or "Clouding IP") Second Amended Complaint Pursuant to Rule 12(b)(6). (D.I. 76).

I. BACKGROUND

Clouding IP filed this action against Rackspace on May 29, 2012, alleging patent infringement. (D.I. 1) On August 20, 2012, Clouding filed a First Amended Complaint alleging direct, indirect, and willful infringement of the patents-in-suit. (D.I. 13) On October 31, 2012, Rackspace moved to dismiss Plaintiffs First Amended Complaint for failure to state a claim. (D.I. 16) On May 24, 2013, the Court granted Rackspace's motion with respect to indirect infringement, but also granted Clouding leave to amend its complaint. (D.I. 62) While the Court found the knowledge requirement for induced infringement had been adequately plead, the Court dismissed Clouding's claims because the First Amended Complaint "failed to plead facts from which the Court [could] infer intent." (D.I. 61 at 5-6).

On June 22, Clouding filed its Second Amended Complaint, alleging direct, indirect, and willful infringement. (D.I. 71 ("Second Am. Compl.")) The Second Amended Complaint alleged induced infringement of six patents. (See id.) On July 12, Rackspace again moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Clouding's claims of indirect infringement. (D.I. 76) The parties completed briefing on the latest motion to dismiss on August 5, 2013. (D.I. 77, 89, 94)

For the reasons discussed below, the Court will deny Rackspace's motion to dismiss.

II. LEGAL STANDARDS

A. Motion to Dismiss

When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, courts conduct a two-part analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, courts separate 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. This first step requires courts to draw all reasonable inferences in favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, courts are not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997), "unsupported conclusions and unwarranted inferences, " Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false, " Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).

Second, courts determine "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief" Fowler, 578 F.3d at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "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. This is a context-specific determination, requiring the court "to draw on its judicial experience and common sense." Id. at 679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

"[W]hen the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should ... be exposed at the point of minimum expenditure of time and money by the parties and the court." Bell Atl. Corp. v.Twombly, 550 U.S. 544, 558 (2007) (internal quotation marks omitted). Finally, the plaintiffs claim must "give the defendant fair ...


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