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ViaTech Technologies, Inc. v. Microsoft Corp.

United States District Court, D. Delaware

August 28, 2018



         Presently before the Court is Defendant's "Motion to Dismiss with Prejudice on the Basis of Claim Preclusion" (D.I. 12) and related briefing (D.I. 13, 16, 19). For the reasons that follow, IT IS HEREBY ORDERED THAT Defendant's Motion to Dismiss with Prejudice on the Basis of Claim Preclusion (D.I. 12) is GRANTED, as to accused Windows products, and is otherwise DENIED.

         I. Legal Standards

         A. Motion to Dismiss

         Rule 8 requires a complainant to provide "a short and plain statement of the claim showing that the pleader is entitled to relief" Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows the accused party to bring a motion to dismiss the claim for failing to meet this standard. A Rule 12(b)(6) motion may be granted only if, accepting the well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the complainant, a court concludes that those allegations "could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007).

         "Though 'detailed factual allegations' are not required, a complaint must do more than simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Davis v. Abington Mem'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly, 550 U.S. at 555). I am "not required to credit bald assertions or legal conclusions improperly alleged in the complaint." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). A complaint may not be dismissed, however, "for imperfect statement of the legal theory supporting the claim asserted." See Johnson v. City of Shelby, 135 S.Ct. 346, 346 (2014).

         A complainant must plead facts sufficient to show that a claim has "substantive plausibility." Id. at 347. That plausibility must be found on the face of the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the [complainant] pleads factual content that allows the court to draw the reasonable inference that the [accused] is liable for the misconduct alleged." Id. Deciding whether a claim is plausible will be a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

         B. Claim Preclusion

         Claim preclusion requires: (1) a final judgment on the merits in a prior suit, (2) where both suits involve the same parties or their privities, and (3) both suits are based on the same cause of action. CoreStates Bank, N.A. v. HulsAm., Inc., 176 F.3d 187, 194 (3d Cir. 1999).

         In patent infringement cases, "a cause of action is defined by the transactional facts from which it arises, and the extent of the factual overlap." Senju Pharm. Co. v. Apotex Inc., 746 F.3d 1344, 1348 (Fed. Cir. 2014). The relevant transactional facts are (1) whether both suits involve the same patent, and (2) whether both suits involve accused products that are the same or "essentially the same." Id. at 1349-50.[1] As to the first fact, claim preclusion applies even when the plaintiff chooses different patent claims in the second lawsuit.[2] See Brain Life, LLC v. Elekta, Inc., 746 F.3d 1045, 1053 (Fed. Cir. 2014) (applying, on summary judgment, claim preclusion to method claims dismissed without prejudice in first suit). As to the second fact, two products are "essentially the same" "where the differences between them are merely 'colorable' or 'unrelated to the limitations in the claim of the patent.'" Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1324 (Fed. Cir. 2008). Thus, claim preclusion bars accusing infringing acts "that are accused in [a] first action or could have been made subject to that action." Brain Life, 746 F.3d at 1054 (citing Aspex Eyewear Inc. v. Marchon Eyewear, Inc., 672 F.3d 1335, 1343 (Fed. Cir. 2012)).

         Claim preclusion is an affirmative defense. It is not generally a basis for dismissal on a Rule 12(b)(6) motion unless "apparent on the face of the complaint." Hoffman v. Nordic Naturals, Inc., 837 F.3d 272, 280 (3d Cir. 2016). "If not apparent, the district court must either deny the [motion] or convert it to a motion for summary judgment... ." Id.

         II. First and Second Requirements of Claim Preclusion

         Plaintiff filed suit against Defendant on September 24, 2014, alleging infringement of U.S. Patent No. 6, 920, 567 ("the '567 Patent") ("First Action"). (No. 14-cv-1226, D.I. 1). Plaintiff pled that Defendant had infringed "at least" apparatus claims 1, 2, 3, 4, 5, 6, 7, 13, 14, and 15 and method claims 28-32 of the '567 patent. (Id. at ¶¶ 38, 41). Plaintiffs infringement theory in the First Action was based on a "Software Protection Platform" (SPP) allegedly included in Defendant's Windows product. (First Action, D.I. 329 at 7). On February 10, 2017, Defendant moved for summary judgment of non-infringement. (First Action, D.I. 218). On June 12, 2017, the Court granted Defendant's motion and entered final judgment. (First Action, D.I. 330, 331).

         On May 25, 2017, before the Court entered final judgment in the First Action, Plaintiff filed a new suit against Defendant, again alleging infringement of the '567 Patent ("Second Action").[3] (D.I. 1). On October 1, 2017, Plaintiff filed an Amended Complaint. (D.I. 11). Plaintiff pled that Defendant infringes "at least" apparatus claims 8-11 and method claims 26-27 of the '567 patent. (Id. at ¶¶ 27, 28, 29, 34, 40, 41, 42, 45). Claims 8-11 depend from claim 1. (Id.). Plaintiffs infringement theory in the Second Action is based on Defendant's "Play Ready DRM software," which the Amended Complaint indicates is included in both Windows and other products. (D.I. 11, ¶ 10). Defendant's "PlayReady DRM software protects distributed digital content downloaded to end user devices and systems, for examples, Windows .. . ." (D.I. 11, ¶ 22).

         Defendant argues, and Plaintiff does not dispute, that the first two requirements of claim preclusion are met. (D.I. 13 at 8-9; D.I. 16). The First Action terminated with a final judgment on the merits, and both ...

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