The U.S. District Court for the District of Delaware recently rejected a plaintiff's attempt to add to its complaint claims of induced infringement and enhanced damages based on pre-suit conduct. Specifically, the court held that allegations the defendant monitored competitor activity and shielded its employees from reading competitor patents did not support a plausible inference that the defendant knew or was willfully blind to the fact that it had infringed the asserted patents.
Plaintiff VLSI Technology LLC initially filed a complaint against Defendant Intel Corporation, alleging, inter alia, indirect infringement of patents relating to computer chip technology, and that Defendant's infringement was willful. The district court dismissed those claims because the complaint failed to plausibly allege knowledge or willful blindness of the alleged infringement. Plaintiff moved to amend its complaint to plead additional facts and reintroduce the dismissed claims. Defendant opposed the motion as to claims of pre-suit indirect and willful infringement.
Plaintiff's motion to amend sought to add allegations that Defendant regularly monitors its competitors' activities, which alerts it to competitor patents potentially related to its products. Plaintiff also alleged that Defendant engaged the prior owner of the two asserted patents about acquiring other patents in its portfolio. Lastly, Plaintiff sought to add allegations that Defendant has a general policy prohibiting its employees from reading patents held by other companies and individuals so that Defendant can avoid learning that its actions are infringing.
A claim of indirect infringement requires that the accused infringer know of both the patent in suit and its infringement of that patent. To merit an enhanced damage award, infringing conduct must rise to the level of egregious misconduct—above the level of mere intentional or knowing infringement. However, the court held that, at the pleading stage, an enhanced damages claim based on willful infringement must only plausibly allege that the accused infringer (1) had knowledge of, or was willfully blind to, the existence of the asserted patent and (2) had knowledge of, or was willfully blind to the fact, that the accused infringer's conduct constituted, induced or contributed to infringement of the asserted patent.
Nonetheless, the court denied Patent Owner's motion to amend with respect to claims of pre-suit indirect infringement and enhanced damages as futile. The court explained that while Plaintiff plausibly alleged Defendant had knowledge of the two patents, allegations of Defendant's “general polic[ies] with respect to thousands of patents in a field of technology” were insufficient to support the inference that Defendant knew, or was willfully blind to the fact, that it had infringed the specific patents in suit.
Practice Tip: To survive a motion to dismiss, claims of indirect infringement or enhanced damages must plausibly allege that the accused infringer knew that (1) the asserted patents exist and (2) its actions constituted, induced or contributed to infringement of the asserted patents. Allegations of generalized business practices that may have alerted the accused infringer to the existence and infringement of patents must be tied to the asserted patents to support a pleading that the defendant knew, or was willfully blind to, its infringement.
VLSI Tech. LLC v. Intel Corp., No. 18-0966-CFC (D. Del. June 26, 2020) (D.I. 626)
Originally published by Akin Gump, July 2020
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