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LLC v. Zmodo Technology Corp. Ltd.

United States District Court, D. Nevada

February 14, 2018

EY K365, LLC, Plaintiff,
v.
ZMODO TECHNOLOGY CORP. LTD., Defendant.

          ORDER

          ROBERT C. JONES UNITED STATES DISTRICT JUDGE

         This case arises out of the alleged infringement of a patent for an audio-video doorbell system. Pending before the Court are two motions to dismiss.

         I. FACTS AND PROCEDURAL HISTORY

         Plaintiff Ey k365, LLC is a North Carolina entity with its principle place of business in that state. (Compl. ¶ 2, ECF No. 1). Plaintiff is the assignee of U.S. Patent No. 9, 432, 638 (“the Patent”) entitled “Communication and Monitoring System, ” which issued on August 30, 2016. (Id. ¶¶ 11-12). Defendant Zmodo Technology Corp. Limited is a Nevada entity with its principle place of business in Illinois. (Id. ¶ 3).

         Plaintiff sued Defendant in the Western District of North Carolina, alleging direct infringement of claims 1 and 6 of the Patent in violation of 35 U.S.C. § 271(a) “by making, using, offering for sale, selling, and/or importing [infringing] devices in the United States, ” (id. ¶ 13), as well as inducing infringement of those claims in violation of 35 U.S.C. § 271(b), (id. ¶ 21). Defendant answered and filed counterclaims for declaratory judgment of non-infringement and invalidity under §§ 101, 102, 103, and 112. (Answer & Countercl., ECF No. 15). Both parties demanded a jury.

         Defendant moved to dismiss for failure to state a claim under 35 U.S.C. § 101. Plaintiff answered the Counterclaim and moved to dismiss Defendant's fourth through ninth affirmative defenses for failure to satisfy Rule 8(c). Chief Judge Whitney of the Western District of North Carolina denied the dispositive motions without prejudice as premature.

         Soon after the Supreme Court decided TC Heartland, Defendant filed a motion to dismiss or transfer because it resided in Nevada and had no regular and established place of business in the Western District of North Carolina. See 28 U.S.C. § 1400(b); TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1520-21 (2017). Chief Judge Whitney granted the motion in part, transferring the case to this District. The case was randomly assigned to Judge Dorsey but immediately randomly reassigned to this Court because Judge Dorsey was not a patent pilot program judge.[1] Claim construction briefing was completed before transfer, but the parties and the Magistrate Judge have not yet determined whether to consolidate claim construction in the related cases. Before construing the claims, the Court will decide the motions to dismiss filed before transfer, as the parties indicated should be done at a recent status conference before the Magistrate Judge. The Court will not consider the previously filed motion for partial summary judgment until after claim construction.

         II. LEGAL STANDARDS

         A. Rule 8(a)

         Federal Rule of Civil Procedure 8(a)(2) requires “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). 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), and 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).

         A court treats factual allegations as true and construes them in the light most favorable to the plaintiff, NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986), but does not accept as true “legal conclusions . . . cast in the form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). A plaintiff must plead facts pertaining to his 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, a plaintiff must not only specify or imply a cognizable legal theory (Conley review), he must also allege the facts of his case so that the court can determine whether he has any basis for relief under the legal theory 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). Also, under Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record” if not “subject to reasonable dispute.” United States v. Corinthian Colls., 655 F.3d 984, 999 (9th Cir. 2011). 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).

         B. Rule 8(c)

         The Court has addressed the standards for stating affirmative defenses in patent cases. See Rockwell Automation, Inc. v. Beckhoff Automation, LLC, 23 F.Supp.3d 1236, 1241-42 (D. Nev. 2014). “The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.” Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir. 1979) (citing Conley, 355 U.S. at 47-48). But there are differences between the pleading standards of claims and defenses under Rules 8(a) and 8(c). Iqbal is based on the Supreme Court's reading of Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief, ” but affirmative defenses under Rule 8(c) must simply be “affirmatively state[d].” See Bank of Beaver City v. Sw. Feeders, L.L.C., No. 4:10CV3209, 2011 WL 4632887, at *5-6 (D. Neb. Oct. 4, 2011). That court noted that the Eighth Circuit had found the bare assertion of a statute of limitations defense to be sufficient. See Id. at *6 (quoting Zotos v. Lindbergh Sch. Dist., 121 F.3d 356, 361 (8th Cir. 1997) (quoting Daingerfield Island Protective Soc'y v. Babbitt, 40 F.3d 442, 445 (D.C. Cir. 1994))). An “affirmative state[ment]” need not contain facts making the defense plausible, as under Iqbal, because Rule 8(c) does not require a “showing, ” as does Rule 8(a), but an affirmative defense must at least fairly identify the legal theory ...


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