Splunk Inc. v. Cribl, Inc.

District Court, N.D. California·Decided June 23, 2023·No. 3:22-cv-07611·Unknown

Opinion

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

10 SPLUNK INC., 11 Plaintiff, No. C 22-07611 WHA

12 v.

13 CRIBL, INC. and CLINT SHARP, ORDER DENYING MOTION FOR LEAVE TO AMEND 14 Defendants.

15 16 INTRODUCTION 17 Following the order granting in part and denying in part defendants’ motion to dismiss, 18 plaintiff moves for leave to file an amended complaint. For the reasons stated herein, 19 plaintiff’s motion is DENIED. 20 STATEMENT 21 The order on the motion to dismiss described the purported facts at issue (Dkt. No. 55 22 at 1–3). Briefly, they are as follows. 23 Patent and copyright owner Splunk Inc. was founded in 2003 and runs a platform for 24 analyzing large volumes of data. Its flagship product, Splunk Enterprise, ingests flows of data 25 from disparate sources and indexes that data, allowing customers to interact with and monitor 26 their data in real time. Through its Technology Alliance Partner (“TAP”) program, Splunk 27 grants partners a license to use its software development tools and a limited license to run 1 Alleged infringer Cribl, Inc. was founded in 2017 by former Splunk employees, 2 including alleged infringer and Cribl CEO Clint Sharp. In 2018, Cribl launched its first 3 product, now known as Stream, and joined the TAP program by entering into a TAP agreement 4 with Splunk. In 2021, Splunk terminated Cribl’s membership in the TAP program and their 5 TAP agreement. Roughly one year later, it filed a complaint against Cribl and CEO Sharp in 6 the District of Delaware. After Cribl and CEO Sharp indicated that they intended to raise 7 challenges related to personal jurisdiction and venue, the parties agreed that Splunk would 8 voluntarily dismiss its complaint and refile in the Northern District of California (Compl. ¶¶ 2, 9 38–39, 67; Br. 2, Exhs. S–T). 10 According to Splunk’s complaint, Cribl infringed patents awarded to Splunk for its 11 foundational innovations, developed and marketed products by making unlicensed copies of 12 Splunk’s copyrighted software, and used misappropriated information to compete unfairly. 13 Relevant here, Splunk asserted five patents: U.S. Patent Nos. 9,208,206; 9,762,443; 14 10,805,438; 10,255,312; and 9,838,467. The applications were filed between 2014 and 2019, 15 and the patents issued between 2015 and 2020. Once Splunk refiled its complaint in this 16 district, Cribl and CEO Sharp moved to dismiss patent and copyright claims (Dkt. No. 31). 17 The prior order granted the motion to dismiss with respect to Splunk’s patent claims and 18 denied it with respect to Splunk’s copyright claims. Specifically, that order granted the motion 19 as to all claims for direct patent infringement against Cribl based on ineligibility, as well as all 20 claims for willful and indirect patent infringement against Cribl based on separate grounds. 21 Meanwhile, it denied the motion as to all claims for indirect copyright infringement against 22 Cribl and CEO Sharp, as well as the claim for violation of Digital Millennium Copyright Act 23 Section 1202 against CEO Sharp (Dkt. No. 55). 24 The order on the motion to dismiss allowed Splunk to move for leave to amend its 25 complaint, which Splunk has now done. This order follows full briefing and oral argument. 26 ANALYSIS 27 Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend shall be freely 1 undue delay, the movant’s bad faith or dilatory motive, repeated failure to cure deficiencies by 2 amendments previously allowed, undue prejudice to the opposing party, and futility.” Brown 3 v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) (citing Foman v. Davis, 4 371 U.S. 178, 182 (1962)). “Futility of amendment can, by itself, justify the denial of a motion 5 for leave to amend. If no amendment would allow the complaint to withstand dismissal as a 6 matter of law, courts consider amendment futile.” Kroessler v. CVS Health Corp., 977 F.3d 7 803, 815 (9th Cir. 2020) (internal quotation and citations omitted). 8 Splunk’s position is that amendment would not be futile because its proposed amended 9 complaint “supplies additional substantial factual detail and evidence that preclude dismissal at 10 the Rule 12(b)(6) stage of Splunk’s (1) direct patent infringement claims under [Section] 101 11 and (2) willful and indirect patent infringement claims” (Br. 1). Upon review, this order 12 disagrees.1 13 * * * 14 Recall that under the Supreme Court’s Alice test for patent ineligibility, a claim falls 15 outside of Section 101 of the Patent Act if (1) it is directed to a patent-ineligible concept, like 16 an abstract idea, and (2) it lacks elements sufficient to transform it into a patent-eligible 17 application. Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208, 217–18 (2014). And, patent 18 eligibility is a question of law that may contain underlying questions of fact. Berkheimer v. HP 19 Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). “[A]t step two of the Alice test, whether a claim 20 element or combination of elements is well-understood, routine and conventional to a skilled 21 artisan in the relevant field is a question of fact. However, of course, not every [Section] 101 22 determination contains genuine disputes over the underlying facts material to the [Section] 101 23 inquiry.” Sanderling Mgmt. Ltd. v. Snap Inc., 65 F.4th 698, 703 (Fed. Cir. 2023) (internal 24 quotations and citations omitted). When there are no factual allegations that, taken as true, 25 1 In their opposition, Cribl and CEO Sharp argue that amendment would be futile and, separately, 26 that amendment would cause undue prejudice because Cribl has yet to file petitions for inter partes review (“IPR”) of the asserted patents and only has a few months left to do so. But it was 27 Cribl’s choice not to file petitions for IPR. As such, this is not cognizable prejudice. At the 1 prevent resolution of patent-eligibility disputes as a matter of law, they may be resolved on a 2 Rule 12 motion. Uniloc USA, Inc. v. LG Elecs. USA, Inc., 957 F.3d 1303, 1306 (Fed. Cir. 3 2020). 4 Splunk argues that its amended factual allegations prevent resolution of this action’s 5 patent-eligibility disputes as a matter of law at this juncture because they “further explain how 6 the claims capture improvements over conventional technology and differ from conventional 7 practices associated with that technology” (Br. 1) (emphasis omitted). In its motion, Splunk 8 walks through language it seeks to add to its complaint with respect to each asserted patent (see 9 Br. 4–23). According to Splunk, its amended allegations raise factual disputes underlying the 10 Alice analysis, so amendment would not be futile. 11 At the hearing, in support of using factual allegations to prevent resolution of patent- 12 eligibility disputes on a Rule 12 motion, counsel for Splunk quoted a passage from Cellspin 13 Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306 (Fed. Cir. 2019) (see Tr. 20:8–21:10).

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Splunk Inc. v. Cribl, Inc., (N.D. Cal. 2023).

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