The Software IP Report

Willful Infringement Allegations Require More Than Conclusory Statements

In a recent decision from the United States District Court for the District of Nevada, the court granted a motion to dismiss willful infringement allegations for lacking plausible factual allegations. IP Power v. Westfield , No. 2:19-cv-01878-MMD-NJK (D. Nev. June 4, 2020). This case centers around U.S. Patent No. 6,817,671, which is directed to a collapsible, reclining camp chair with a footrest and cupholders. 

The plaintiff sued the defendant after multiple correspondences were exchanged between the parties.  In its complaint alleging patent infringement, the plaintiff also asserted that the defendant engaged in conduct rising to the level of willful infringement. 

The defendant filed a motion to dismiss the willful infringement allegations, and the defendant’s argument centered on a single paragraph in the complaint.  That paragraph recited that:

In addition, it is believed that [defendant] knew of the 671 Patent and/or licensed products before [defendant] developed its Accused Instrumentalities and copied the patented features from the 671 Patent and/or licensed patented products into the Accused Instrumentalities. Furthermore, [defendant] had actual or constructive knowledge of the 671 Patent and its infringement prior to the filing of this Complaint. At least as of March 22, 2019, [plaintiff] informed [defendant] that [defendant]’s Reclining Camp Chair was covered by the 671 Patent. A copy of said communication is attached to this Complaint as Exhibit B. Lastly, it is believed that [defendant] is a large enough company that it could have paid a license to Plaintiff but decided to continue infringing instead. Accordingly, [defendant] has committed willful patent infringements of the 671 Patent and should be held liable for up to treble damages.

In other words, the plaintiff asserted three reasons why the defendant should have been held liable for willful infringement per the court.  The court identified these reasons as:

Defendant copied features covered by the ’671 Patent and used them in its accused product (the “Copying Allegation); (2) Defendant knew about the ’671 Patent because Plaintiff sent Defendant a letter accusing Defendant of infringing it (the “Letter Allegation”); and (3) Defendant could have paid for a license to the ’671 Patent but decided to continue infringing instead (the “Ability to Pay Allegation”).

The court addressed initially addressed the “Letter Allegation” and found that the plaintiff selectively highlighted only one letter it sent to the defendant regarding the infringement allegations.  However, the defendant countered by showing that it continually responded to the plaintiff’s letters alleging infringement explaining why the defendant believed it did not infringe the ‘671 patent.

The court noted that the plaintiff, through its complaint, made it appear that it notified the defendant of the alleged infringement and that the defendant ignored the letter and continued with the alleged infringing.  However, the court looked to the chain of correspondence to find that the picture changed dramatically since the chain of correspondence changed the context of the allegations set forth in the complaint.  Based on this reasoning, the court granted the motion to dismiss based on the “Letter Allegation.”

The court went on to address the “Copying and Ability to Pay Allegations.”  The court noted at the onset that this was a simpler reasoning because the above-referenced paragraph only includes conclusory statements with no supporting factual allegations.  The court referenced the Twombly/Iqbal standard in supporting its decision to dismiss.  Most remember the standards set forth in Twombly and Iqbal from our time in evidence.  More specifically, Twombly stands for the principle that  “[f]actual allegations must be enough to rise above the speculative level,” and Iqbal stands for the principle that a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face” to survive a motion to dismiss. 

In other words, the paragraph recited above failed to cross the line from “conceivable to plausible” and did not include sufficient factual allegations to deny the motion to dismiss. 

In dismissing the willful infringement allegations, the court did grant leave to the plaintiff to amend its willful infringement allegations.