Court: District Court, D. Puerto Rico; May 15, 2012; Federal District Court
Ingeniador, LLC filed a patent infringement complaint against multiple defendants, including Alfresco Software, Interwoven, Blackboard, Bridgeline Digital, EMC Corp., Hewlett-Packard, Microsoft, Oracle, SAP, and others, under 35 U.S.C. § 271. The plaintiff seeks an injunction against infringement, damages, attorney fees, and costs, based on federal question jurisdiction (28 U.S.C. § 1331) and patent law jurisdiction (28 U.S.C. § 1338(a)). Prior court actions included dismissals of several defendants and a default judgment against Bridgeline. Currently, the court is considering various motions to dismiss for lack of personal jurisdiction, failure to state a claim, and improper joinder, as well as motions to transfer the case.
The plaintiff alleges infringement of U.S. Patent No. 6,990,629, assigned to Ingeniador from Schlumberger Technology Corporation, claiming that the defendants sell products that infringe or contribute to infringement of this patent. Specific motions filed include claims of lack of personal jurisdiction by Blackboard, Interwoven, SpringCM, Compulink, and Tridion, which the court has granted, dismissing these defendants. Additionally, a motion to dismiss for failure to state a claim was filed by Microsoft, HP, EMC, Nuxeo, Informática, Oracle, SAP, and Lexmark, along with related motions from Interwoven, Compulink, Tridion, and Alfresco. The court found the motions related to Interwoven, Compulink, and Tridion moot due to prior jurisdiction rulings and granted the motions from Microsoft, HP, EMC, Nuxeo, Informática, Oracle, SAP, Lexmark, and Alfresco.
EMC filed a motion to dismiss for improper joinder under Rule 20, joined by SpringCM and partially by Lexmark. Other defendants, including Microsoft, HP, Informática, and SAP, also filed similar motions. Ingeniador opposed all motions, leading to replies from EMC, SpringCM, and Compulink, with Ingeniador submitting a sur-reply. Due to the dismissal of the defendants for lack of personal jurisdiction or failure to state a claim, the court deemed all motions for improper joinder moot.
Motions to transfer venue were filed by EMC, SpringCM, and Compulink to various districts, opposed by the Plaintiff, with replies from each defendant and a sur-reply from the Plaintiff. The court found these motions moot as well.
The legal standard for personal jurisdiction highlights that the Due Process Clause protects individuals from being subject to judgments in forums lacking meaningful contacts with them. Personal jurisdiction can be general or specific, with the Federal Circuit law governing patent infringement cases. The plaintiff bears the burden of proving jurisdiction, needing only a prima facie case when no jurisdictional discovery has occurred. Jurisdiction over out-of-state defendants is permissible under the state's long-arm statute, provided it complies with federal due process, which requires that asserting jurisdiction does not violate traditional notions of fair play and substantial justice.
The court must determine if it can assert jurisdiction over each defendant based on due process, given that Puerto Rico’s long-arm statute aligns with constitutional limits. The analysis centers on the constitutionality of personal jurisdiction, distinguishing between general and specific in personam jurisdiction. General jurisdiction requires "continuous and systematic" activities within the forum state, supported by evidence such as property or business presence. The Supreme Court's decision in Helicópteros established that general jurisdiction was not found over a foreign company despite extensive activities in Texas, as the company lacked authorization to operate there and had no agent for service of process. A mere website not aimed at a specific jurisdiction and a small number of employees do not suffice for general jurisdiction. Limited sales can also negate general jurisdiction, as shown in Campbell Pet Co., where minimal sales over several years were insufficient. Specific jurisdiction, on the other hand, applies when the cause of action relates to the defendant's activities in the forum state, necessitating that the defendant has purposefully established minimum contacts there. This involves showing that the defendant has availed itself of conducting activities within the forum state.
The Federal Circuit established a three-part test for determining specific jurisdiction over a defendant, which includes: (1) whether the defendant purposefully directed activities at forum residents, (2) whether the claim arises from those activities, and (3) whether exercising jurisdiction is reasonable and fair. This allows for specific jurisdiction even with isolated contacts, provided the cause of action relates to those contacts. The court also identified five factors to assess whether asserting jurisdiction would violate fair play and substantial justice, including the burden on the defendant and the interests of both the forum state and the plaintiff.
In the case involving Blackboard, the court examined whether it has general jurisdiction. Although Blackboard has minimal contact with Puerto Rico—one employee and 16 customers—it lacks sufficient ties, such as being registered in Puerto Rico or maintaining bank accounts there. Citing precedents, the court concluded Blackboard’s limited presence does not meet the threshold for general jurisdiction, leading to the granting of Blackboard’s motion to dismiss. Consequently, the court deemed the motion regarding misjoinder of parties moot.
Compulink, a California corporation, is contested regarding the court's personal jurisdiction over it. The plaintiff claims specific jurisdiction based on Compulink's use of value-added resellers (VARs) in Puerto Rico, which generated approximately $2,957 in sales in 2010 and accounted for 0.01% of Compulink’s gross revenues since January 1, 2010. However, Compulink ceased using VARs prior to the lawsuit. The court finds that, while Compulink's activities could suggest some directed engagement with Puerto Rico, the plaintiff fails to establish any patent infringement related to these contacts. The court applies the Federal Circuit's five-factor test for jurisdiction, ultimately favoring Compulink. Key considerations include the significant burden on Compulink to litigate in Puerto Rico, the lack of a special interest from Puerto Rico in the case, and the minimal advertising presence Compulink had in the territory. Consequently, the court concludes it lacks jurisdiction over Compulink and grants its motion to dismiss, rendering its other motions moot.
In contrast, Tridion is found to have no contacts with Puerto Rico, lacking any physical presence, employees, or agents in the jurisdiction. The plaintiff's arguments based on Tridion's interactive website and clientele do not convince the court that Tridion has purposefully availed itself of Puerto Rican law. Thus, the court cannot assert jurisdiction over Tridion either.
Plaintiff invokes the stream of commerce doctrine established in Asahi Metal Indus. Co. v. Superior Court and further clarified in J. McIntyre Machinery, Ltd. v. Nicastro, which indicates that jurisdiction based on this doctrine requires a defendant to have targeted the forum for business, not merely to have produced products that reach the forum. The court finds no specific jurisdiction over Tridion, noting that merely maintaining an interactive website does not constitute purposeful availment. The court cites Trintec Indus. Inc. v. Pedre Promotional Prods. Inc., emphasizing that a website accessible from a jurisdiction does not imply persistent conduct within that jurisdiction. Plaintiff failed to demonstrate that residents of Puerto Rico purchased infringing products through the website, relying instead on the website merely listing Puerto Rico, which is insufficient for establishing minimum contacts. Furthermore, the argument that jurisdiction is justified due to Tridion's sales to companies in Puerto Rico is rejected, as there is no legal precedent supporting such a theory. Consequently, the court grants Tridion's motion to dismiss for lack of personal jurisdiction and finds the motions to dismiss for failure to state a claim and misjoinder moot.
Regarding the failure to state a claim, the dispute centers on whether the more stringent pleading standards established in Twombly and Iqbal apply to this case. Plaintiff contends that only the notice pleading standards in Form 18 should apply, while Defendants argue that the plausibility standard from Iqbal is applicable to all federal civil cases. The analysis is governed by First Circuit law, which has yet to clarify the application of Twombly and Iqbal to patent cases, necessitating a review of prior pleading standards.
The Supreme Court established uniform procedures for federal courts under the Rules Enabling Act, leading to the development of the Federal Rules of Civil Procedure, which initially adopted a notice pleading standard. This standard was exemplified in Conley v. Gibson, where the Court ruled that a complaint should not be dismissed unless it was evident that the plaintiff could prove no set of facts justifying relief. This principle dominated for approximately fifty years until the landmark decisions in Twombly and Iqbal, which shifted the pleading standard from mere notice pleading to requiring complaints to include sufficient factual allegations that raise the right to relief above a speculative level. Specifically, Twombly mandated that claims must be "plausible on its face," diverging from the Conley standard that allowed for any conceivable set of facts. Iqbal further clarified that the Twombly standard applies broadly across all civil cases, not just antitrust matters.
There exists a tension between the heightened pleading standards established by Twombly and Iqbal and the existing provisions of Rule 84 and its accompanying forms, such as Form 18, which adhere to the older notice pleading standard. This discrepancy has led to conflicting interpretations, particularly in patent infringement cases, where some courts have held that these claims are exempt from the heightened standards. The First Circuit has not yet addressed this issue, leading to uncertainty in its application.
The district court determined that the plaintiff must allege sufficient facts to notify the defendant of the claims against it, referencing McZeal v. Sprint Nextel Corp. However, the court clarified that the standards set by Twombly and Iqbal necessitate more than mere notice pleading for direct infringement claims. These standards apply to all civil cases and thus to the plaintiff's direct infringement claims. The case is further complicated by the inclusion of indirect and contributory infringement claims, which impose additional complexities on the complaint. Courts have generally required heightened pleading standards for indirect and contributory infringement claims, as these types of claims involve elements not addressed by the standard Form 18 of the Federal Rules of Civil Procedure. Consequently, the court decided that all of the plaintiff's claims must meet the heightened pleading requirements established by Twombly and Iqbal.
The court also noted that the forms accompanying the Federal Rules should be updated to reflect the specificity now required by these standards, as they currently do not provide adequate guidance for civil complaints. All remaining defendants have filed motions to dismiss, arguing that the plaintiff's complaint fails to allege sufficient facts to meet the necessary threshold for relief. The plaintiff's complaint asserts direct, indirect, and contributory infringement; however, it did not contest the sufficiency of the allegations supporting its contributory infringement claim in its opposition. The court deemed the motion to dismiss this claim unopposed, implying that the plaintiff waived any potential arguments regarding it.
The court has dismissed the Plaintiff's contributory infringement claim and will analyze the direct and indirect infringement claims separately. It will accept all well-pleaded facts as true and draw reasonable inferences in favor of the Plaintiff. Direct infringement is governed by 35 U.S.C. § 271(a), which states that unauthorized making, using, selling, or importing of a patented invention constitutes infringement. The Defendants argue that the Plaintiff’s claims—either a method claim or a hybrid claim—must fail. The Plaintiff does not specify the type of claim beyond direct and indirect infringement. The patent abstracts a method and system for publishing information on a network-based computer system and includes both method claims (claims 1-19) and system claims (claims 20-25).
The court notes that a method claim is directly infringed only when the method is performed. In this instance, the Defendants are alleged to have sold products containing the patented method, but it is the end users who commit direct infringement by using the product to carry out the patented method. Therefore, the Defendants cannot be liable for infringement simply by selling the product. The Plaintiff's system claim requires allegations that the Defendants make, use, sell, or import items with all elements of the patent claims arranged as specified. The complaint lacks sufficient factual allegations to support this claim, as it only concludes that each Defendant makes, uses, sells, or imports a product embodying the '629 Patent without detailed support.
The complaint alleges that various defendants infringe on the Plaintiff's '629 patent through their respective products. Specifically, Alfresco's Document Management and Web Content Management products are claimed to infringe by allowing users to create, access, and modify files. EMC's content management platform is accused of enabling publishing content, while Informática's platform purportedly allows data access and modification through a web interface. Lexmark's platform is said to create, edit, and maintain documents over a network, and Nuxeo's services are claimed to support web-based editing and publishing. However, the court finds these allegations to be legal conclusions rather than factual assertions, as the Plaintiff fails to specify which claims of the '629 patent are allegedly infringed and relies on general product descriptions. Consequently, the court grants the defendants' motions to dismiss the direct infringement claims due to insufficient factual pleading.
Regarding indirect infringement, which is governed by 35 U.S.C. § 271(b), the Plaintiff must first establish direct infringement. The court notes that indirect infringement claims require proof of both direct infringement and the defendant's knowledge or intent to induce such infringement. Since the direct infringement claims are dismissed for lack of sufficient allegations, the court also dismisses the indirect infringement claims for the same reason.
Plaintiff is not required to allege that Defendants directly committed the infringement; rather, the end-users of Defendants' products can be the direct infringers. However, Plaintiff has inadequately supported its indirect infringement claim, failing to specify how these end-users infringed the 629 Patent by using Defendants' products. Mere allegations of infringement are insufficient; a plaintiff must provide sufficient factual material to substantiate the claim, which Plaintiff has not done. Consequently, the court grants Defendants’ motion to dismiss the indirect infringement claim.
The court also determines it lacks personal jurisdiction over Blackboard, Compulink, and Tridion, and finds that Plaintiff has failed to state a claim against EMC, Nuxeo, Informática, Lexmark, and Alfresco. As all claims against the appearing Defendants are dismissed due to either lack of personal jurisdiction or failure to state a claim, the court deems all other motions by Defendants moot, except for Bridgeline’s motion to set aside default judgment.
In its analysis, the court references First Circuit precedent, given the absence of Federal Circuit guidance on the number of employees required for establishing general jurisdiction over an out-of-state corporation. The First Circuit's decisions, particularly Glater, depend on Supreme Court cases such as Keeton v. Hustler Magazine and Helicópteros, suggesting that a defendant must specifically target a forum for personal jurisdiction to be established. The court notes that when a Supreme Court decision lacks a majority rationale, the narrowest grounds of concurring opinions define the holding; here, Justice Breyer’s concurrence, joined by Justice Alito, guides the analysis.
Additionally, Plaintiff must comply with the statutory requirement of notifying Defendants of the alleged infringement as per 35 U.S.C. § 287, which Plaintiff claims to have done in paragraph 45 of the complaint. However, the court does not address whether this allegation meets the heightened pleading standard.
