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CG Technology Development, LLC v. Zynga, Inc.

United States District Court, D. Nevada

February 17, 2017

CG TECHNOLOGY DEVELOPMENT, LLC et al., Plaintiffs,
v.
ZYNGA, INC., Defendant.

          ORDER

          ROBERT C. JONES United States District Judge

         This case arises out of the alleged infringement of eight patents relating to online gambling. Pending before the Court is Defendant Zynga, Inc.'s Motion to Dismiss. (ECF No. 65.) For the reasons given herein, the motion is granted in part and denied in part.

         I.FACTS AND PROCEDURAL HISTORY

         Plaintiff CG Technology Development, LLC (“CG Tech”) is a wholly owned subsidiary of non-party CG Technology, L.P. (“CG”), which provides technology solutions for lottery, gaming, racing, and sports wagering. (Am. Compl. ¶ 2, ECF No. 64.) “[CG] specializes in providing secure, scalable, mobile technology and risk management solutions to integrated resorts, gaming partners, race and sports books, and lottery industries.” (Id.) CG and CG Tech produce mobile phone applications for real-money and social casino gaming, as well as account-based wagering systems. (Id.).

         CG Tech is the assignee of U.S. Patent No. RE39, 818. Plaintiff Interactive Games Limited (“IG Ltd”) is the assignee of U.S. Patent Nos. 6, 899, 628; 6, 979, 267; 8, 342, 924; 7, 029, 394; 9, 111, 417; and 6, 966, 832. Plaintiff Interactive Games LLC (“IG LLC”) is the assignee of U.S. Patent No. 7, 534, 169. Plaintiffs sued Defendant Zynga, Inc. (“Defendant”) in this Court for direct, indirect, and willful infringement via operation of its various online casino games. On October 13, 2016, the Court granted Defendant's motion to dismiss Plaintiffs' original Complaint, (ECF No.1), finding that (1) the ‘628, ‘267, ‘924, ‘394, ‘417, ‘832, and ‘169 Patents are patent-ineligible under 35 U.S.C. § 101 and Alice Corp. Pty. v. CLS Bank lnt'l, 134 S.Ct. 2347 (2014); and (2) the ‘818 Patent is patent-eligible, but Plaintiffs had failed to state a plausible claim of relief.[1] (See Order, ECF No. 54.)

         Plaintiffs have now amended their Complaint, asserting claims for direct, induced, and contributory infringement, as well as willful infringement of the ‘818 Patent. (Am. Compl., ECF No. 64.) Defendant moves again for dismissal. (Mot. Dismiss, ECF No. 65.)

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation “plausible, ” not just “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”). That is, under the modern interpretation of Rule 8(a), a plaintiff must not only specify or imply a cognizable cause of action (Conley review), but also must allege the facts of his case so that the court can determine whether the plaintiff has any basis for relief under the cause of action he has specified or implied, assuming the facts are as he alleges (Twombly-Iqbal review).

         “Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).

         III. ANALYSIS

         a. Direct Infringement of the ‘818 Patent

         The ‘818 Patent claims “[a] video game system . . . which includes a wireless game controller which stores information about the user of the controller.” (‘818 Patent Abstract, ECF No. 64-2 at 3.) The ‘818 Patent has thirteen independent claims and twenty dependent claims. (See Id. at 5:40-8:64, ECF No. 64-2 at 9-10.) Plaintiffs allege infringement of “at least claims 1, 16, 20, 21, 24, 31, and 32.” (Am. Compl. ¶ 20, ECF No. 64.) The Amended Complaint focuses solely on the alleged infringement of Claim 20 “by way of example, ” although the Court finds that all of the asserted claims broadly contain certain essential elements: (1) a game controller or hand-held device, (2) which wirelessly transmits information (3) to a processor executing a game, (4) which authorizes game play based at least in part on the age of the player. (See ‘818 Patent 5:40-59, 6:61-7:10, 7:25-40, 7:46-54, 8:34-49, ECF No. 64-2 at 9-10.)

         Here, after amendment, Plaintiffs' claim of direct infringement of the ‘818 Patent is sufficient to survive the motion to dismiss. The allegations, including screenshots of Defendant's online casino games, descriptions of how Defendant's products allegedly work, and assertions of testing, use, and demonstration of the ‘818 Patent, are enough to make Plaintiffs' legal theory clear and definite: By using smartphones, tablets, or personal computers to test its products and demonstrate them at promotional events, Defendants infringed the ‘818 Patent. Under this theory, these various electronic devices would constitute the “controllers” described in the Patent, and would wirelessly transmit information to a remote processor executing Defendant's casino games. Plaintiffs have specifically and plausibly pled Defendant's use of the ‘818 Patent in testing, promoting, and demonstrating its products, and the screenshots are enough to show that game play is indeed authorized “based at least in part on the age of the player, ” and that “a plurality of input controls . . . allow the player to interact with the processor.” (See Am. Compl. ¶¶ 34-35, ECF No. 64.) Indeed, Plaintiffs specifically allege that prior to gameplay, “each user must confirm they are at least 13 years of age to create and register an account with Zynga by agreeing to Zynga's Terms of Service.” (Id. at ¶ 34.) After confirming their age and registering an account, users must enter a unique username and password to log in and play, which could reasonably constitute the “identification code” required by the ‘818 Patent's claims. Furthermore, Defendant's ...


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