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Gpne Corp. v. Fleetmatics Usa, LLC

United States District Court, D. Delaware

February 20, 2015

GPNE CORP., Plaintiff,
v.
FLEETMATICS USA, LLC, Defendant.

REPORT AND RECOMMENDATION

SHERRY R. FALLON, Magistrate Judge.

I. INTRODUCTION

Presently before the court in this patent infringement action is plaintiff and counter-defendant GPNE Corp.'s ("GPNE" or "plaintiff") motion to dismiss counterclaim counts V through VIII of defendant Fleetmatics USA, LLC's ("Fleetmatics" or "defendant") answer, affirmative defenses, and counterclaims for failure to state a claim. (D.I. 30) For the following reasons, I recommend that the court deny the motion to dismiss.

II. BACKGROUND[1]

On August 4, 2009, U.S. Patent No. 7, 570, 954 ("the '954 patent"), entitled "Communication System Wherein a Clocking Signal From a Controller, a Request From a Node, Acknowledgement of the Request, and Data Transferred from the Node are all Provided on Different Frequencies, Enabling Simultaneous Transmission of these Signals, " was issued by the United States Patent and Trademark Office (the "PTO"). (D.I. 28 at ¶ 12) GPNE is the assignee of the '954 patent. ( Id. at ¶ 14)

Fleetmatics and related brand SageQuest provide fleet management solutions in the form of web-based and mobile application solutions. (D.I. 28 at 11, ¶ 4) Fleetmatics' solutions provide its customers with the ability to monitor the vehicle location, fuel usage, speed, and mileage of a mobile workforce. ( Id. ) To monitor these variables, Fleetmatics installs vehicle tracking units ("VTUs") into its customers' vehicles. ( Id. )

In September 2012, third-party requester Research In Motion Corp. and Research In Motion Limited ("RIM") filed reexamination requests with the PTO seeking reexamination of three patents in GPNE's portfolio, including the '954 patent. (D.I. 28 at ¶ 51) The PTO granted RIM's reexamination requests on November 27, 2012. ( Id. at ¶ 52; 11/17/14 Tr. at 24: 16-20) All claims of the '954 patent that were subject to reexamination were confirmed without further amendment. (D.I. 32, Ex. A)

GPNE's U.S. Patent No. 7, 555, 267 ("the '267 patent"), which is not in suit in the present litigation, is also the subject of reexamination proceedings. (D.I. 32, Ex. B) On reexamination, the examiner rejected a number of the '267 patent's claims, including claim 30. ( Id. ) GPNE filed a request for reconsideration of the rejected claims. ( Id. )

In August 2013, GPNE sent six form letters to Fleetmatics' customers in an effort to license its patent portfolio. (D.I. 28 at ¶ 27; 11/17/14 Tr. at 25:1-8, 26:3-14) The letters outlined GPNE's litigation against other companies implementing GPRS technology, urged the customers to consult with their own counsel, and enclosed claim charts, a "Patent License Agreement, " and a list of GPNE patents, including the patents-in-suit. (D.I. 28 at ¶¶ 28-39) By way of example, GPNE relied on claim 30 of the '267 patent to demonstrate its relationship to a GPRS-programmed device. ( Id., Ex. 3) The letters did not mention that the claims of the '267 patent were the subject of reexamination proceedings challenging their validity. ( Id. at ¶ 90; 11/17/14 Tr. at 25:8-10) In response to the letters, at least one Fleetmatics customer, ProBuild Holdings ("ProBuild"), terminated its contract with Fleetmatics, citing Fleetmatics' violation of the intellectual property rights of others. (D.I. 28 at ¶¶ 49-50)

The '954 and '267 patents are also the subject of a lawsuit brought by GPNE against Apple, Inc. ("Apple") in the Northern District of California. (D.I. 31 at 4) On April 9, 2014, the court in that action denied Apple's motion for summary judgment of non-infringement of claim 13 of the '954 patent. GPNE Corp. v. Apple, Inc., 2014 WL 1390039 (N.D. Cal. Apr. 9, 2014). In the decision, the court determined that, while smartphones and tablets are not referred to as "pagers, " devices accessing modem cellular systems for data communication could be viewed as "pagers" and "nodes" as defined by GPNE's patents. Id. at *6. The court further determined that claim 30 of the '267 patent was invalid for lack of written description and enablement. Id. at *12.

On December 19, 2013, GPNE initiated the instant action, alleging that Fleetmatics infringed the patents-in-suit. (D.I. 1) On May 21, 2014, GPNE filed an amended complaint, asserting claims for direct and indirect infringement of the patents-in-suit. (D.I. 17 at ¶¶ 12-21) Fleetmatics filed its answer and counterclaims on June 9, 2014. (D.I. 18) On July 17, 2014, Fleetmatics filed its first amended answer and counterclaims, including counterclaims for tortious interference with business relations, tortious interference with prospective business opportunities, and statutory and common law unfair competition, based on GPNE's conduct in sending form letters to Fleetmatics' customers alleging infringement and threatening legal action. (D.I. 28)

III. LEGAL STANDARD

To state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Although detailed factual allegations are not required, the complaint must set forth sufficient factual matter, accepted as true, to "state a claim for relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A claim is facially plausible when the factual allegations allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Twombly, 550 U.S. at 555-56; Iqbal, 556 U.S. at 663. The court "need not accept as true threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Id.

Following the Supreme Court's decision in Iqbal, district courts have conducted a two-part analysis in determining the sufficiency of the claims. First, the court must separate the factual and legal elements of the claim, accepting the complaint's well-pleaded facts as true and disregarding the legal conclusions. Iqbal, 556 U.S. at 663. "While legal conclusions can provide the complaint's framework, they must be supported by factual allegations." Id. at 664. Second, the court must determine whether the facts alleged in the complaint state a plausible claim by conducting a context-specific inquiry that "draw[s] on [the court's] experience and common sense." Id. at 663-64; Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the Supreme Court instructed in Iqbal, "[w]here 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.'" Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

IV. DISCUSSION

A. Preemption

In support of its motion to dismiss, GPNE alleges that Fleetmatics' state law counterclaims are preempted by federal law because Fleetmatics cannot show that GPNE's letters were "objectively baseless." (D.I. 31 at 7) According to GPNE, a patent owner may permissibly notify infringers of the consequences of infringement, and such action does not constitute bad faith. ( Id. at 7-8) In response, Fleetmatics contends that federal law does not preempt its state law tort claims because it has alleged sufficient facts to show that GPNE sent the infringement letters in bad faith. (D.I. 34 at 6)

The law of the Federal Circuit applies in determining whether the patent laws preempt a state-law tort claim. See, e.g., Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999). The Federal Circuit has held that federal patent law preempts the imposition of state-law liability for a patentholder's communications asserting alleged infringement unless those communications were made in bad faith. Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367, 1374 (Fed. Cir. 2004) (citing Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1355 (Fed. Cir. 1999)); see also Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1336 (Fed. Cir. 1998), rev'd on other grounds, Midwest Indus., 175 F.3d at 1359. "[B]ad faith must be alleged and ultimately proven, even if bad faith is not otherwise an element of the tort claim." Zenith, 182 F.3d at 1355. "In general, a threshold showing of incorrectness or falsity, or disregard for either, is required in order to find bad faith in the communication of information about the existence or pendency of patent rights." Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 897 (Fed. Cir. 1998).

"Bad faith includes separate objective and subjective components." Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008) (citing Mikohn Gaming, 165 F.3d at 897). "The objective component requires a showing that the infringement allegations are objectively baseless."[2] 800 Adept, Inc. v. Murex Sees., Ltd., 539 F.3d 1354, 1370 (Fed. Cir. 2008) (internal quotations omitted). Infringement allegations are objectively baseless if "no reasonable litigant could realistically expect to secure favorable relief." Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 62 (1993). Therefore, the plaintiff seeking to prove bad faith must "prove that the defendant lacked probable cause to institute an unsuccessful civil lawsuit and that the defendant pressed the action for an improper, malicious purpose." Id. The subjective component relates to a showing that the patentee demonstrated subjective bad faith in enforcing the patent. 800 Adept, Inc., 539 F.3d at 1370. For example, the patentee's statements themselves are relevant to determining bad faith. Zenith, 182 F.3d at 1355 (citing Mikohn, 165 F.3d at 897).

1. Infringement allegations

In support of its motion to dismiss, GPNE alleges that it has an objectively reasonable basis to conclude that Fleetmatics' VTUs constitute pagers because the Northern District of California construed "node" as meaning a "pager with two-way communications capability that transmits wireless data communications on a paging system that operates independently from a telephone network, " and Fleetmatics' devices possess two-way communication capability. (D.I. 31 at 8) In response, Fleetmatics contends that its counterclaims identified how the accused products do not meet the limitations of the asserted claims pursuant to the Northern District of California's claim construction, because its VTUs do not transmit wireless data communications on a paging system operating independently from a telephone network. (D.I. 34 at 7) Fleetmatics contends that its counterclaims sufficiently plead that GPNE brought its claims without an objectively reasonable basis to conclude that the VTUs are nodes or pagers, or that the VTUs transmit wireless data ...


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