Uniloc 2017 LLC v. ZenPayroll, Inc.

CourtDistrict Court, D. Delaware
DecidedJuly 23, 2020
Docket1:19-cv-01075
StatusUnknown

This text of Uniloc 2017 LLC v. ZenPayroll, Inc. (Uniloc 2017 LLC v. ZenPayroll, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Uniloc 2017 LLC v. ZenPayroll, Inc., (D. Del. 2020).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

UNILOC 2017 LLC, ) ) Plaintiff, ) ) v. ) Civil Action No. 19-1075-CFC-SRF ) ZENPAYROLL, INC., d/b/a GUSTO, ) ) ) Defendant. )

REPORT AND RECOMMENDATION I. INTRODUCTION Presently before the court in this patent infringement action is defendant ZenPayroll, Inc. d/b/a Gusto’s (“Gusto”) partial1 motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.I. 16) For the reasons that follow, I recommend that the court GRANT Gusto’s motion. II. BACKGROUND2 On June 10, 2019, plaintiff Uniloc 2017 LLC (“Uniloc”) originally filed this action alleging that Gusto infringed two patents, United States Patent Numbers 7,069,293 (“the ‘293 patent”) and 6,324,578 (“the ‘578 patent”) (collectively, the “patents-in-suit”). (D.I. 1 at ¶¶ 4– 26) Gusto moved to dismiss Uniloc’s complaint on August 6, 2019. (D.I. 9) In response, Uniloc filed an amended complaint on August 20, 2019. (D.I. 14) Gusto filed the pending

1 Gusto did not move to dismiss Uniloc’s direct and induced infringement claims related to the ‘578 patent. (D.I. 14 at ¶¶ 7–8; D.I. 17 at 1) 2 The facts in this section are based upon allegations in the complaint, which the court accepts as true for the purposes of the present motion to dismiss. See Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008). motion to partially3 dismiss the amended complaint on September 3, 2019, which has been fully briefed. 4 (D.I. 16) Uniloc owns the patents-in-suit by assignment, which “relate[] to network management in general and in particular to application program management on a computer network.” (D.I. 14

at ¶¶ 5, 14; ‘293 patent, col. 1: 24–25; ‘578 patent, col. 1:22–24) “Gusto maintained a network of high-security, access-controlled data centers,” which “hosted a platform” where Gusto “provided products and services such as Payroll, Health Benefits, and Human Resources services.” (Id. at ¶ 6) Gusto’s products and services make up the “Gusto platform.” (Id.) Uniloc alleges that the “Gusto platform” infringes the patents-in-suit. (Id. at ¶¶ 7, 15) III. LEGAL STANDARD Rule 12(b)(6) permits a party to move to dismiss a complaint for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all well pleaded factual allegations in the complaint and view them in the light most favorable to the plaintiff. See Umland v. Planco

Fin. Servs. Inc., 542 F.3d 59, 64 (3d Cir. 2008). To state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are not required, the complaint must set forth sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft

3 Gusto moves to dismiss Uniloc’s claims of direct infringement of the ‘293 patent and contributory infringement of the ‘578 patent. (D.I. 17 at 1) 4 The briefing for the present motion is as follows: defendant’s opening brief (D.I. 17), plaintiff’s answering brief (D.I. 18), and defendant’s reply brief (D.I. 20). v. Iqbal, 556 U.S. 662, 663 (2009). A claim is facially plausible when the factual allegations allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. See Iqbal, 556 U.S. at 663; Twombly, 550 U.S. at 555-56. The court’s determination is not whether the non-moving party “will ultimately prevail,”

but whether that party is “entitled to offer evidence to support the claims.” United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011). This “does not impose a probability requirement at the pleading stage,” but instead “simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of [the necessary element].” Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). The court’s analysis is a context-specific task requiring the court “to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. IV. DISCUSSION a. Direct Infringement of the ‘293 Patent As a preliminary matter, the parties disagree about whether, in accordance with Twombly

and Iqbal, a complaint must contain factual allegations giving rise to an inference that the accused product infringes every element of at least one patent claim to survive a Rule 12(b)(6) challenge. (D.I. 17 at 5–6; D.I. 18 at 4) First, Uniloc argues it is not required to present an element-by-element infringement analysis in a complaint because neither Twombly nor Iqbal was a patent case. (D.I. 18 at 3) However, “[i]t is now well established that both direct and indirect infringement claims are subject to the Twombly/Iqbal standard.” Shire ViroPharma Inc. v. CSL Behring LLC, C.A. No. 17-414-MSG, 2019 WL 3546692, at *3 (D. Del. Aug. 5, 2019) (citing IP Commc’n Sols., LLC v. Viber Media (USA) Inc., C.A. No. 16-134-GMS, 2017 WL 1312942, at *2 (D. Del. Apr. 5, 2017)). Therefore, to survive a 12(b)(6) motion, a complaint alleging direct infringement must contain facts plausibly indicating that a defendant’s accused product practices each limitation of the asserted patent because “if it is not plausible, after reading a complaint, that the accused infringer’s product reads on a limitation in the one asserted claim from a patent- in-suit, then it is not plausible that the accused infringer actually infringes the patent claim (or

the patent).” N. Star Innovations, Inc. v. Micron Tech., Inc., Civil Action No. 17–506–LPS– CJB, 2017 WL 5501489, at *1 (D. Del. Nov. 16, 2017). Second, Uniloc cites Nalco Company v. Chem-Mod, 883 F.3d 1337, 1350 (Fed. Cir. 2018) and In re Bill of Lading Transmission & Processing System Patent Litigation, 681 F.3d 1323, 1335 (Fed. Cir. 2012) (“In re Bill of Lading”) to argue that it is not required to prove infringement of every element in at least one patent claim to survive a Rule 12(b)(6) motion to dismiss. (D.I. 18 at 3–4) Nalco clarified if and how “the abrogation of Form 18 from the Federal Rules of Civil Procedure in 2015 affected the requirements for pleading direct infringement (as set forth in Bill of Lading in 2012).” Boston Fog, LLC v. Ryobi Tech., Inc., C.A. No. 19-2310-LPS-JLH, 2020 WL 1532372, at *2 n.1 (D. Del. Mar. 31, 2020). Nalco

reaffirmed that “the Federal Rules of Civil Procedure

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