Uniloc 2017 LLC v. ZenPayroll, Inc.

CourtDistrict Court, D. Delaware
DecidedJanuary 27, 2021
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. 2021).

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. 33) For the reasons that follow, I recommend that the court GRANT Gusto’s motion. II. BACKGROUND a. Procedural History 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 a motion to

1 Gusto seeks dismissal with prejudice of Uniloc’s direct infringement claims related to the ’293 patent and claims 20, 22, 24, 35, 37, and 39 of the ’578 patent, which have been invalidated by a sister court. See section IV.b, infra. (D.I. 34) partially2 dismiss the amended complaint on September 3, 2019, which the court recommended granting. Uniloc 2017 LLC v. ZenPayroll Inc., C.A. No. 19-1075-CFC-SRF, 2020 WL 4260616 (D. Del. July 23, 2020) On August 24, 2020, Uniloc notified the court that it would seek leave to file a second

amended complaint, in which it would address all of the concerns raised by Gusto’s motion to dismiss (D.I. 16) and the court’s Report and Recommendation. (D.I. 30) On August 27, 2020, in light of Uniloc’s letter, the court adopted the disposition recommended in the Report and Recommendation, granted Gusto’s motion, and granted Uniloc leave to file another amended complaint. Uniloc 2017 LLC v. Zen Payroll, Inc., C.A. 19-1075-CFC-SRF, 2020 WL 5077416 (D. Del. Aug. 27, 2020). On September 11, 2020, Uniloc filed its second amended complaint (“the SAC”). (D.I. 32) On September 25, 2020, Gusto filed the present motion to dismiss the SAC for failure to state a claim, which has been fully briefed.3 (D.I. 33) b. Facts4 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. 32

2 Gusto moved to dismiss Uniloc’s claims of direct infringement of the ’293 patent and contributory infringement of the ’578 patent. (D.I. 17 at 1) 3 The briefing for the present motion is as follows: Gusto’s opening brief (D.I. 34), Uniloc’s answering brief (D.I. 35), and Gusto’s reply brief (D.I. 37). Uniloc also filed a notice of subsequent authority, Uniloc 2017 LLC v. Google LLC, 2020 WL 7626430 (N.D. Cal. Dec. 22, 2020), in support of its opposition to Gusto’s motion. (D.I. 41, Ex. A) The court held that Uniloc lacked standing to bring the patent infringement suit and, therefore, dismissed the case for lack of subject matter jurisdiction. Uniloc, 2020 WL 7626430, at *12–13. 4 The facts in this section are based upon allegations in the SAC, 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). The SAC incorporates by reference the patents-in-suit, which were attached as exhibits to the complaint (D.I. 1, Ex. A–B), and a claim chart for the ’578 patent, which was attached as an exhibit to the amended complaint (D.I. 14, Ex. C). (D.I. 32 at ¶¶ 5, 7– 8, 15) at ¶¶ 5, 15; ’293 patent, col. 1:24–25; ’578 patent, col. 1:22–24) “Gusto maintain[s] a network of high-security, access-controlled data centers,” which “host[] a platform” where Gusto “provide[s] products and services such as Payroll, Health Benefits, and Human Resources services.” (D.I. 32 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, 16) Gusto has known about the patents-in-suit since, at the latest, May 17, 2017, when it was served with a complaint in a prior patent infringement action in the United States District Court for the Eastern District of Texas. (Id. at ¶¶ 11, 25) 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 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 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). However, “the Federal Rules of Civil Procedure

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