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Trans Video Electronics, Ltd. v. Netflix, Inc.

United States District Court, D. Delaware

March 4, 2014

TRANS VIDEO ELECTRONICS, LTD., Plaintiff,
v.
NETFLIX, INC., Defendant.

REPORT AND RECOMMENDATION

CHRISTOPHER J. BURKE, Magistrate Judge.

Presently pending before the Court is Defendant Netflix, Inc.'s ("Defendant" or "Netflix") motion (the "Motion") seeking to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), Plaintiff Trans Video Electronics, Ltd.'s ("Plaintiff" or "TVE") induced infringement claim in Plaintiff's Complaint. (D.I. 12)

For the reasons that follow, I recommend that Defendant's Motion be GRANTED without prejudice.

I. BACKGROUND

On December 20, 2012, Plaintiff commenced this action, asserting that Defendant directly infringes the two patents-in-suit, U.S. Patent Nos. 5, 594, 936 ("the '936 patent") and 5, 991, 801 ("the '801 patent") and indirectly infringes the '936 patent. (D.I. 1) In lieu of answering the Complaint, Defendant filed the Motion on July 1, 2013. (D.I. 12) On February 4, 2014, Judge Leonard P. Stark referred the Motion to the Court for resolution. (D.I. 22)[1]

II. LEGAL STANDARD

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)). "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 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)). 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)).[2]

III. DISCUSSION

Here, Defendant challenges the sufficiency of Plaintiff's allegations of induced infringement as to the '936 patent on various grounds. The Complaint's allegations as to direct and induced infringement regarding the '936 patent are as follows:

11. Plaintiff is informed and believes that Defendant infringes the '936 patent either literally or under the doctrine of equivalents. Upon information and belief, Defendant has infringed and continues to infringe one or more claims of the '936 patent by making, using, and providing a method for distributing information to various locations in a digital network; said method comprising receiving and outputting synchronous signals and establishing communications through its on-demand video service, in this district and elsewhere in the United States through its website, www.netflix.com, and other Internet-related services. Upon information and belief, Defendant has infringed and continues to infringe one or more claims of the '936 patent by making, using, and providing an information distribution system for a network, consisting of master communications means, distribution amplifiers, communications unit groups, and a master controller means, through its on-demand video service, in this district and elsewhere in the United States through its website and other Internet-related services.
12. Upon information and belief, Defendant has intentionally induced and continues to induce infringement of one or more claims of the '936 patent in this district and elsewhere in the United States, by its intentional acts which have successfully, among other things, encouraged, instructed, enabled and otherwise caused its customers to use a method for distributing information to various locations in a digital network, said method having been provided by Defendant to its customers for the primary purpose of causing infringing acts by said customers. Defendant has had knowledge of the '936 patent as of July 1, 2011, and, upon information and belief, continues to encourage, instruct, enable and otherwise cause its customers to use its products in a manner which infringes the '936 patent. Upon information and belief, Defendant has specifically intended that its customers use the accused products in such a way that infringes the '936 patent by, at a minimum, providing instructions to its customers on how to use the accused product in such a way that infringes the '936 patent and knew that its actions, including but not limited to providing such instructions, would induce, have induced, and will continue to induce infringement by its customers.

(D.I. 1 at ¶¶ 11-12)

Pursuant to 35 U.S.C. § 271(b), "[w]hoever 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 ...


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