Court: District Court, N.D. California; March 5, 2018; Federal District Court
To prove copyright infringement, the Plaintiff must demonstrate ownership of a copyright and that the Defendants copied protectable expression. The Court agrees with Defendants' argument that the Plaintiff has not adequately alleged ownership of the copyright pertaining to the software's output files.
Regarding patent infringement, the MOVA assets are covered by several patents. The Plaintiff alleges that Crystal Dynamics directly infringed or induced direct infringement of these patents. However, Crystal contends that the Plaintiff fails to adequately plead any theory of patent infringement.
1. For direct infringement, Crystal argues that the Plaintiff has not specified actions that constitute making, using, offering to sell, or selling the patented invention. The Plaintiff claims that acts of infringement by DD3 are attributable to Crystal, which used the MOVA Contour system. The Court concludes that the Plaintiff has not sufficiently alleged a direct infringement claim.
2. Active inducement requires knowledge that the induced acts constitute patent infringement, necessitating either actual knowledge or willful blindness. The patent holder must demonstrate that once the defendants were aware of the patent, they actively aided another's direct infringement. Knowledge of potential infringement is insufficient; specific intent and action to induce infringement must be established. The Iqbal/Twombly standard applies to allegations of induced infringement. The Plaintiff asserts that between 2008 and 2012, Crystal and Square Enix attended industry conferences where Rearden promoted MOVA Contour, and they were business partners utilizing Rearden's technology in their games, which included contractual agreements for revenue sharing.
Rearden alleges that between February 2013 and October 11, 2016, Crystal Dynamics contracted with DD3 for facial performance capture services using the copyrighted Contour Program, particularly regarding Camilla Luddington's portrayal of Lara Croft in *Rise of the Tomb Raider*. Rearden claims that Crystal Dynamics conducted intellectual property due diligence with DD3 before using the MOVA Contour facial motion capture system, suggesting possible awareness of Rearden's patents at that time. Although the allegations are considered thin, they are sufficient to withstand a motion to dismiss, indicating that Crystal Dynamics may have intended to induce infringement by contracting with DD3. Rearden asserts that Crystal Dynamics later assisted in the infringement after learning of the patents, which is adequate to plead intent.
Regarding willful infringement, Crystal Dynamics' motion to dismiss these allegations is contested. The Supreme Court has clarified that enhanced damages under the Patent Act are reserved for egregious infringement behaviors. While plaintiffs do not need to prove willfulness at the pleading stage, they must provide more than a cursory claim for relief. Courts have allowed willful infringement allegations to proceed even if the facts presented are less compelling than those outlined in other cases. The court expresses skepticism about the adequacy of Crystal Dynamics' due diligence claims but ultimately finds that Rearden's allegations meet the necessary pleading standard.
Crystal Dynamics also argues that Rearden lacked standing to sue due to an unresolved ownership dispute over the patents. However, the court affirms that Rearden was the rightful owner of the patents at the time of filing, referencing a previous case that supports Rearden's position. Consequently, while the copyright and direct infringement claims are dismissed without prejudice, the motion is denied in all other respects.
