Sonos, Inc. v. Google LLC

District Court, N.D. California·Decided March 16, 2022·No. 3:21-cv-07559·Unknown

Opinion

NORTHERN DISTRICT OF CALIFORNIA

Plaintiff, No. C 21-07559 WHA

v.

GOOGLE LLC, ORDER RE MOTION TO DISMISS AND CERTIFICATION UNDER 28 Defendant. U.S.C. § 1292(b)

In this patent infringement action, alleged infringer moves to dismiss patent owner’s enhanced damages and indirect infringement claims. To the following extent, the motion is This action is yet another pitched battle in the world-wide war between alleged infringer Google LLC and patent owner Sonos, Inc. regarding speaker technology. With our parties already embroiled in litigation in this district, the ITC, Canada, France, Germany, and Holland, Sonos’s counsel sent Google an email alerting that Sonos would be filing an eighty-seven-page patent infringement complaint the next day against the search giant, this time in the District Court for the Western District of Texas, Waco Division. Within twelve hours, Google filed its filed its Texas action as promised. Sonos, Inc. v. Google LLC, No. C 20-00881 ADA (W.D. Tex. filed Sept. 29, 2020) (Judge Alan D. Albright). An order stayed Google’s declaratory judgment action to allow Judge Albright to rule on Google’s motion to transfer the action in Texas to our district (No. C 20-06754 WHA, “DJ Dkt.” No. 36). He denied it. The Court of Appeals for the Federal Circuit, however, directed that the case come here. Both cases are now before me. This motion arises in Sonos’s action, the one formerly in Texas. Sonos’s second amended complaint alleges that Google infringes five of its patents, U.S. Patent Nos. 9,344,206; 9,967,615; 10,469,966; 10,779,033; and 10,848,885. The parties recently stipulated to dismissal of the ’206 patent from our action (Dkt. No. 151; DJ Dkt. No. 132). As part of its patent infringement claims, Sonos alleges direct and indirect infringement and seeks enhanced damages for alleged willful infringement. Google now moves to dismiss Sonos’s second amended complaint for failing to adequately plead willful infringement and indirect infringement as to the ’966, ’033, and ’885 patents. It does not contest the adequacy of the allegations regarding the ’615 patent. This order follows full briefing and oral argument. To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to relief that is plausible on its face,” where facial plausibility turns on providing enough “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Courts accept well-pled factual allegations in the complaint as true and “construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 1. ENHANCED DAMAGES. The parties disagree over the proper pleading standard for enhanced damages based on willful infringement. Google asserts a patent owner must allege knowledge of the specific egregiousness are not required. This is a recurring issue in patent litigation, so this order will set forth a comprehensive treatment of the problem and then turn to its application in the instant case. Section 284 of the Patent Act states that, in cases of infringement, “the court may increase the damages up to three times the amount found or assessed.” In its most recent decision on Section 284, the Supreme Court held that while “there is no precise rule or formula” for meting out enhanced damages, it is “generally reserved for egregious cases of culpable behavior” that has “been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or — indeed — characteristic of a pirate.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 103–04 (2016) (cleaned up). In other words, enhanced damages constitute a “punishment [that] should generally be reserved for egregious cases typified by willful misconduct.” Id. at 106. The Supreme Court thus recognized the close interrelation between enhanced damages and willfulness. Indeed, patent plaintiffs will usually couch their requests for enhanced damages as claims for willful infringement, and defendants will then often seek to dismiss those claims at the outset. Some district courts in response have treated willful infringement as a distinct claim that can be subject to a motion to dismiss. See Boston Sci. Corp. v. Nevro Corp., 415 F. Supp. 3d 482, 493 (D. Del. 2019) (Judge Colm F. Connolly); Novitaz, Inc. v. inMarket Media, LLC, 2017 WL 2311407, at *5 (N.D. Cal. May 26, 2017) (Judge Edward J. Davila). Since Halo, the Court of Appeals for the Federal Circuit has explained that egregiousness is for the district judge to decide after the verdict: As the plain language of 35 U.S.C. § 284 makes clear, the issue of punishment by enhancement is for the court and not the jury. Under Halo, the concept of “willfulness” requires a jury to find no more than deliberate or intentional infringement. The question of enhanced damages is addressed by the court once an affirmative finding of willfulness has been made. It is at this second stage at which the considerations of egregious behavior and punishment are relevant. Questions of whether an accused patent infringer’s conduct was “egregious behavior” or “worthy of punishment” are Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citations and parentheticals omitted). So, the jury decides whether infringement was willful, and, if it was, then the district judge determines whether it was egregious enough to warrant enhanced damages, and, if so, how much (up to three times the actuals). Willfulness is thus a necessary but not necessarily sufficient predicate, for a finding of egregious misconduct and enhanced damages. See also SRI Int’l, Inc. v. Cisco Sys., Inc., 930 F.3d 1295, 1310 (Fed. Cir. 2019). To establish willful patent infringement, the patent owner must prove knowledge of the patent and knowledge of infringement. First, “[k]nowledge of the patent alleged to be willfully infringed continues to be a prerequisite to enhanced damages.” WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016). Mere knowledge of a “patent family” or the plaintiff’s “patent portfolio” is not enough. Second, the Court of Appeals for the Federal Circuit has stated: “To establish willfulness, the patentee must show the accused infringer had a specific intent to infringe at the time of the challenged conduct.” Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987–88 (Fed. Cir. 2021); see also Eko Brands, 946 F.3d at 1378 (“deliberate or intentional infringement”). But what must be pled at the outset? No post-Halo appellate authority addresses any pleading requirements for enhanced damages, or for that matter, willful infringement. With respect to willfulness, this order agrees that specific intent to infringe be pled with plausibility. This means that knowledge of the patent and knowledge of infringement must be pled with plausibility. An important practical aspect of our patent system is encouraging the practice of pre-sui

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