United States District Court, D. Delaware
PRINCETON DIGITAL IMAGE CORPORATION, Plaintiff/Counterclaim-Defendant,
KONAMI DIGITAL ENTERTAINMENT INC., HARMONIX MUSIC SYSTEMS, INC. and ELECTRONIC ARTS, INC., Defendants/Counterclaim-Plaintiffs.
REPORT AND RECOMMENDATION
CHRISTOPHER J. BURKE UNITED STATES MAGISTRATE JUDGE.
patent action filed by Plaintiff and Counterclaim-Defendant
Princeton Digital Image Corporation ("PDIC")
against Defendants and Counterclaim-Plaintiffs Konami Digital
Entertainment Inc. ("Konami"), Harmonix Music
Systems, Inc. ("Harmonix") and Electronic Arts,
Inc. ("EA") (collectively, "Defendants"),
PDIC alleges that Defendants directly and indirectly infringe
United States Patent No. 5, 513, 129 (the '"129
patent"). Presently before the Court is PDIC's
motion to dismiss Harmonix and EA's counterclaims for a
declaratory judgment of invalidity and noninfringement
pursuant to Federal Rule of Civil Procedure 12(b)(6) (the
"Motion"). (D.I. 101) For the reasons set out
below, the Court recommends that the District Court
GRANT-IN-PART and DENY-IN-PART the Motion.
the owner, by assignment, of the '129 patent. (D.I. 94 at
¶ 10) The '129 patent, entitled "Method and
System for Controlling Computer-Generated Virtual Environment
in Response to Audio Signals[, ]" relates generally to
virtual reality ("VR") computer systems controlled
by music or control tracks created from music. ('129
patent, col. 1:8-l 8; see also D.I. 94 at ¶
The '129 patent has 23 claims, ('129 patent, cols.
29:1-30:65), though (as will be further explained below) only
dependent claims 14, 19 and 20 remain at issue in this case.
filed this action on November 13, 2012. (D.I. 1) It also
filed a related action (in which it also asserts the '129
patent) against Ubisoft Entertainment SA ("Ubisoft
SA") and Ubisoft Inc. ("Ubisoft Inc., " and
collectively with Ubisoft SA, "Ubisoft"), on
February 27, 2013. (Civil Action No. 13-335-LPS-CJB
("the Ubisoft Action"), D.I.
cases began to move forward, Defendants filed multiple
petitions for inter partes review ("IPR")
with respect to the '129 patent. On November 15, 2013,
for example, Harmonix filed a petition with the United States
Patent and Trademark Office (the "PTO") for IPR of
claims 1, 5-6, 8-13, 15-19, and 21-23 of the'129 patent.
(D.I. 118, ex. 3 at 5-71) In the petition, Harmonix argued that
the claims were invalid in light of three prior art
references ("Fallacaro, " "Pimentel" and
"Pocock-Williams"). On May 9, 2014, the PTO's
Patent Trial and Appeal Board ("PTAB") instituted
review only on claims 10, 11, 22 and 23 (the "Harmonix
'155 IPR"). (Id., ex. 3 at 213-34) Thus,
inter alia, the PTAB determined that it was not
persuaded that there was a reasonable likelihood that the
petitioner would prevail in showing that claim 19 was
unpatentable, and did not institute review on that claim.
(Id., ex. 3 at 233)
April 15, 2014, Ubisofit SA filed a second petition for IPR,
seeking review of all claims of the '129 patent (that is,
claims 1-23); Ubisoft SA requested review of the claims over
combinations of five references that were different than the
ones cited in the Harmonix '155 IPR ("Tsumura,
" "Lytle, " "Adachi, "
"Williams, " and "Thalmann").
(Id., ex. 4 at 8-72) On October 17, 2014, the PTAB
instituted review of claims 1-13, 15-18 and 21-23 (the
"Ubisoft '635 IPR"). (Id., ex. 4 at
152-77) Thus, the PTAB determined that it was not persuaded
that there was a reasonable likelihood that the petitioner
would prevail in showing that claims 14, 19 or 20 were
unpatentable, and did not institute review on those three
claims. (Id., ex. 4 at 162, 171, 175)
November 17, 2014, Harmonix and Konami filed a third petition
for IPR (the "Konami/Harmonix '271 IPR"), which
included a request for review of claims 14, 19 and 20, along
with a corresponding motion seeking joinder of that
proceeding with the Ubisoft IPR. (Id., ex. 5 at
2-103) In addition to petitioning on the same grounds as did
Ubisoft SA, Konami and Harmonix presented new challenges that
had not been presented by Ubisoft SA: a challenge to claims
19 and 20 based on Lytle, and a challenge to claims 14, 19
and 20 based on Adachi and Tsumura. (Id.) On June 2,
2015, the PTAB denied the request for joinder and denied IPR
review on procedural grounds. (Id., ex. 5 at 271-90)
More specifically, the PTAB concluded that Konami and
Harmonix had presented "no persuasive argument or
evidence to explain why the grounds of unpatentability
asserted in the Petition could not have been asserted in the
[Harmonix] '155 IPR[, ]" noted that joinder would
increase the cost, time and effort that would need to be
expended by PDIC in the Ubisoft '635 IPR, and explained
that Konami and Harmonix had not shown that joinder would
"promote efficient resolution of the unpatentability
issues without substantially affecting the schedule for the
[Ubisoft] '635 IPR." (Id., ex. 5 at 289)
For those reasons, the PTAB "decline[d] to exercise
[its] jurisdiction under 35 U.S.C. § 315(c) to authorize
joinder" and denied the motion for joinder.
(Id.) And since the petition for IPR was filed more
than one year after Harmonix was served with the Complaint in
the instant case, absent joinder, the Konami/Harmonix
'271 IPR petition was time-barred. (Id., ex. 5
at 277-78) Therefore, the PTAB stated that "exercising
our discretion under 35 U.S.C. § 314(a) and 37 C.F.R.
§ 42.108(b), we decline to institute an [IPR] in the
instant proceeding." (Id., ex. 5 at 278)
Harmonix '155 IPR proceeding, the PTAB ultimately issued
a Final Written Decision on May 6, 2015, holding that claims
10, 11, 22 and 23 are invalid. (Id., ex. 3 at
386-415) In the Ubisoft '635 IPR, the PTAB issued a Final
Written Decision on October 16, 2015, holding that claims
1-13, 15-18 and 21-23 are invalid. (Id., ex. 4 at
384-428) PDIC did not appeal either of these Final Written
Decisions. Thus, the effect of the PTAB's Final Written
Decisions was to leave only three dependent claims of the
patent (claims 14, 19 and 20) still valid.
the Court lifted a stay of this case and the Ubisoft
Action in January 2016, PDIC filed the now-operative
complaint in this case, the Third Amended Complaint
("TAC"). In the TAC, PDIC alleged that Harmonix,
Konami and EA infringe claims 14, 19 and 20 of the '129
patent by their development, testing, use, publication,
and/or distribution of: (1) the Karaoke Revolution, Dance
Dance Revolution, and Rock Band video game
series; (2) peripheral devices to be used with the games; and
(3) playable song tracks for use with the games. (D.I. 94)
on March 7, 2016, Harmonix and EA filed an Answer to the TAC,
which included two Counterclaims: a First Counterclaim
seeking a declaratory judgment of invalidity of the
patent-in-suit and a Second Counterclaim seeking a
declaratory judgment of noninfringement of the patent. (D.I.
97 at 22-26) The First Counterclaim sought a declaration that
claim 14 was invalid as obvious over at least Adachi and
Tsumura, and that claims 19 and 20 were invalid as
anticipated at least over Lytle; the counterclaim noted that
the "PTAB has not issued any decision" that claim
14 or claims 19 and 20 were invalid on these grounds.
(Id. at 24-25, at ¶¶ 16-17, 23-24) The
Second Counterclaim asserted that "Harmonix and EA have
not infringed and are not infringing, either directly or
indirectly, nor have the[y] contributed to or induced
infringement by others, of any valid claim of the '129
patent, either literally or under the doctrine of
equivalents." (Id. at 26, at ¶ 29)
filed the instant Motion on March 31, 2016. (D.I. 101)
Briefing on the Motion was completed on April 28, 2016. (D.I.
STANDARD OF REVIEW
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).
Courts use the same standard in ruling on a motion to dismiss
a counterclaim under Rule 12(b)(6) as they do in assessing a
claim in a complaint. See Idenix Pharms., Inc. v. Gilead
Scis., Inc., Civil Action No. 13-1987-LPS, 2014 WL
4222902, at *5 (D. Del. Aug. 25, 2014); Tyco Fire Prods.
LP v. Victaulic Co., 777 F.Supp.2d 893, 898-99 (E.D. Pa.
2011) (citing cases).
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 
disregard[ing] any legal conclusions." Id. at
210- II. 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 Ail. 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 (quoting Phillips v. Cnty. of Allegheny, 515
F.3d 224, 233 (3d Cir. 2008)).