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International Business Machines Corp. v. Expedia, Inc.

United States District Court, D. Delaware

April 11, 2019

INTERNATIONAL BUSINESS MACHINES CORPORATION, Plaintiff,
v.
EXPEDIA, INC., EXPEDIA, INC., HOMEAWAY.COM, INC., H0TELS.COM L.P., HOTWIRE, INC., ORBITZ WORLDWIDE, PNC, ORBITZ, LLC, AND TRAVELSCAPE LLC, Defendants.

          REPORT AND RECOMMENDATION

          CHRISTOPHER J. BURKE, UNITED STATES MAGISTRATE JUDGE.

         In this patent infringement action filed by Plaintiff International Business Machines Corporation ("IBM" and/or "Plaintiff) against Expedia, Inc. ("Expedia Group"), Expedia, Inc. ("Expedia-WA"), Homeaway.com, Inc., Hotels.com L.P., Hotwire, Inc., Orbitz Worldwide, Inc., Orbitz, LLC, and Travelscape LLC (collectively, "Defendants"), presently before the Court is Defendants' motion to dismiss, filed pursuant to Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6) ("Motion"). (D.I. 31) In this Report and Recommendation, the Court will address a portion of the Motion filed pursuant to Rule 12(b)(6), which relates to whether Plaintiff has sufficiently pleaded facts alleging that Expedia Group infringes the patents-in-suit. For the reasons that follow, the Court recommends that this portion of the Motion be DENIED.

         I. BACKGROUND

         A. Factual Background

         Plaintiff IBM is a New York corporation engaged in the business of science and technology. (D.I. 27 at ¶¶ 3, 41) It is the owner of the five patents-in-suit in this case, which bear on certain Internet-related technologies: United States Patent Nos. 5, 796, 967, 7, 072, 849, 5, 961, 601, 7, 631, 346 and 6, 374, 359 (collectively, the "patents-in-suit"). (Id. at ¶¶ 2, 47-55)

         Defendant Expedia Group is a Delaware corporation that is the parent corporation of Defendants Expedia-WA, Homeaway.com, Inc., Hotels.com L.P., Hotwire, Inc., Orbitz Worldwide, Inc., Orbitz, LLC, and Travelscape LLC. (Id. at ¶¶ 4-5) It is alleged that Defendants offer travel and reservation services through their respective websites and mobile applications. (Id. at¶¶8, 10-20)[1]

         B. Procedural Background

         Plaintiff filed the initial Complaint in this case on December 29, 2017. (D.I. 1) After Defendants filed certain motions to dismiss the Complaint, (D.I. 20; D.I. 23), Plaintiff then filed the operative Amended Complaint on July 12, 2018, (D.I. 27). As is discussed in more detail below, the Amended Complaint alleges, inter alia, that Expedia Group infringes the five patents-in-suit through its control of the technological platforms used in the other Defendants' websites and mobile applications, which in turn provide travel and reservation services to users. (Id. at ¶ 68, 90, 113, 135, 158)

         Defendants filed the instant Motion on August 27, 2018, (D.I. 31), which has been referred to the Court for resolution by Chief Judge Leonard P. Stark, (D.I. 5). Briefing on the Motion was completed on October 9, 2018. (D.I. 46) The Court heard argument on the Motion (and on another pending motion to dismiss) on March 29, 2019. (D.I. 101)

         II. LEGAL STANDARD

         A. Rule 12(b)(6) Pleading 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 BellAtl. 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. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).[2]

         B. Pleading Allegations of Direct Patent Infringement

         Direct infringement of a patent claim occurs when a party, without authority, "makes, uses, offers to sell or sells" a patented invention within the United States. 35 U.S.C. § 271(a). In order to plead a cause of action for direct infringement of method claims (at issue here), a complaint must allege that the accused infringer performed all of the steps of the claimed method, either personally or through another acting under his direction or control. Kyowa Kakka Bio, Co., Ltd. v. Ajinomoto Co., Inc., CIVIL ACTIONNO. 17-313, 2018 WL 834583, at *3 (D. Del. Feb. 12, 2018); Courtesy Prods., L.L.C. v. Hamilton Beach Brands, Inc.,73 F.Supp.3d 435, 439 (D. Del. 2014) (citing Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1307 (Fed. Cir. 2012)). "In other words, '[d]irect infringement requires ...


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