MasterObjects, Inc. v. Amazon.com, Inc.

CourtDistrict Court, N.D. California
DecidedOctober 7, 2021
Docket3:20-cv-08103
StatusUnknown

This text of MasterObjects, Inc. v. Amazon.com, Inc. (MasterObjects, Inc. v. Amazon.com, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MasterObjects, Inc. v. Amazon.com, Inc., (N.D. Cal. 2021).

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8

10 MASTEROBJECTS, INC., 11 Plaintiff, No. C 20-08103 WHA

12 v.

ORDER RE MOTION TO DISMISS 13 AMAZON.COM, INC., 14 Defendant. 15

17 INTRODUCTION 18 In this patent infringement action, the accused infringer moves to dismiss the claims of 19 willful infringement in the second amended complaint. A simple notice letter would have 20 likely avoided the necessity of this long order traversing a complicated matter — sometimes in 21 painful detail — as well as the work by two opposing law firms preparing briefing on the issue. 22 To the extent stated below, the motion is GRANTED IN PART and DENIED IN PART. 23 STATEMENT 24 Patent owner MasterObjects, Inc. brings this action against defendant Amazon.com, Inc. 25 for infringement of four patents: U.S. Patent Nos. 8,539,024, 9,760,628, 10,311,073, and 26 10,394,866. All patents concern asynchronous communication technology that allows search 27 engines to suggest search terms based on the characters a user types into the search bar (Sec. 1 MasterObjects filed its complaint in May 2020 but subsequently amended its pleading to 2 add infringement charts, reallege post-suit willful infringement with “greater specificity,” and 3 include a recent PTAB inter partes review involving the ’024 patent. Amazon moved to 4 dismiss the first amended complaint, but withdrew its motion when MasterObjects agreed to 5 file a second amended complaint revising its willfulness allegations (Dkt. Nos. 120 at 4–5; 6 120-1 at ¶ 7; 126; 129; 134). 7 MasterObjects filed its second amended complaint in June 2021. This operative pleading 8 states that Amazon is an “e-commerce juggernaut” and “ad powerhouse” in part because of an 9 instant search feature, which allegedly infringes the patents-in-suit. To support MasterObjects’ 10 claim that Amazon willfully infringed, the operative pleading alleges that Amazon: had pre- 11 suit knowledge of the patents-in-suit, and of the related patent portfolio, since 2011; had post- 12 suit knowledge of infringement upon MasterObjects’ filing of its initial complaint in May of 13 2020; exhibited egregious conduct in the form of “bad faith tactics,” including discovery 14 evasions, boilerplate invalidity contentions, and other dilatory tactics meant to impede 15 MasterObjects. MasterObjects argues that, taken as a whole, Amazon’s egregious, willful 16 infringement justifies enhanced damages (Sec. Amd. Compl. ¶¶ 26, 34, 35, 40, 44, 77, 103, 17 117, 118, 122, 148, 149). 18 Amazon now moves to dismiss the willfulness allegations in MasterObjects second 19 amended complaint. This order follows full briefing and oral argument, held telephonically due 20 to the COVID-19 epidemic.* 21 ANALYSIS 22 To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to 23 relief that is plausible on its face,” where facial plausibility turns on providing enough “factual 24 content that allows the court to draw the reasonable inference that the defendant is liable for 25 the misconduct alleged.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. 26 Iqbal, 556 U.S. 662, 678 (2009). Courts accept well-pled factual allegations in the complaint 27 1 as true and “construe the pleadings in the light most favorable to the nonmoving party.” 2 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 3 Section 284 of the Patent Act states that, in cases of infringement, “the court may 4 increase the damages up to three times the amount found or assessed.” 35 U.S.C. § 284. In 5 Halo, the Supreme Court held that district courts may, in their discretion, award enhanced 6 damages pursuant to Section 284 for egregious cases of misconduct beyond typical 7 infringement — which abrogated the previous, more rigid, standard. Halo Elecs., Inc. v. Pulse 8 Elecs., Inc., 136 S. Ct. 1923, 1932, 1935 (2016). Enhanced damages are “generally reserved 9 for egregious cases of culpable behavior” involving conduct that is “willful, wanton, malicious, 10 bad-faith, deliberate, consciously wrongful, flagrant, or — indeed — characteristic of a pirate.” 11 Ibid. Most patent cases addressing enhanced damages, including this one, key in on willful 12 infringement. 13 Willfulness requires both knowledge of the infringed patent and knowledge of 14 infringement. Subjective willfulness — when the alleged infringer acted despite a risk of 15 infringement that was either known or so obvious it should have been known — can support an 16 enhanced damages award. But, a claim for enhanced damages for willful infringement is not 17 adequately stated when all that is alleged is knowledge of the patent and direct infringement. 18 See Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987–88 (Fed. Cir. 2021); SRI Int’l, 19 Inc. v. Cisco Sys., Inc., 930 F.3d 1295, 1308–10 (Fed. Cir. 2019); Arctic Cat Inc. v. 20 Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1371 (Fed. Cir. 2017). 21 1. MASTEROBJECTS’ PATENT FAMILY. 22 MasterObjects’ allegations of pre-suit knowledge concern the extended patent family of 23 the patents-in-suit, so this order maps out the various relationships, as illustrated below (Br. 2). 24 The patents-in-suit are colored blue: 25 26 27 1 °329 Application '529 Patent Publication 2 □□ Tete Referred to here as . = the 024 Publication 3 sii Seon er 4 '326 Patent '024 Pz tent

App..No. 12/176,984 628 Patent filed: 07/21/08 filed: 07/02/10 od: 09/06/13 7 abandoned: 08/29/17 issued: 11/15/11 issued: 09/12/1 8 ;

10 11 At the base of MasterObjects’ patent family tree, we have U.S. Patent No. 8,112,529, a 12 which is not asserted in this action. As indicated in our chart, two lines of patents relate to the

13 °529 patent. First, a continuation-in-part of the ’529 patent, U.S. Patent No. 7,752,326 heads

v 14 the first branch. MasterObjects previously asserted the °326 patent against Amazon in 2011;

15 our parties stipulated to dismissal of that action. See MasterObjects, Inc. v. Amazon.com, Inc., 16 No. C 11-01055, Dkt. No. 30 (N.D. Cal. Aug. 2, 2011) (Judge Charles R. Breyer). Like its

17 predecessor the patent, the °326 patent is also not asserted here. A continuation-in-part of Z 18 the °326 patent, U.S. Patent Application No. 12/176,984 was abandoned. A continuation of the 19 °984 application, the ’073 patent, is one of our patents-in-suit (Sec. Amd. Compl. 41-43, 20 45). 21 Second, a continuation of the ’529 patent, the ’024 patent is the patent-in-suit that heads 22 the other branch of the MasterObjects’ patent family. The ’628 patent is a continuation of the 23 °024 patent, and the °866 patent is a continuation of the °628 patent. The ’628 and ’866 patents 24 are also patents-in-suit (id. at §[f[ 22, 45). 25 MasterObjects also alleges knowledge on another theory based on U.S. Patent 26 Application Publication No. US-2012/0284329 Al, which corresponds with the ’°024 patent, as 27 indicated in our figure. To discretely identify the US-2012/0284329 A1 application 28 publication, while also logically connecting it to the patent that arose out of it, this order refers

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