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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
PANOPTIS PATENT MANAGEMENT,
LLC, OPTIS CELLULAR TECHNOLOGY,
LLC,
Plaintiffs,
v.
BLACKBERRY CORPORATION,
BLACKBERRY LIMITED,
Defendants.
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Case No. 2:16-CV-00059-JRG-RSP
(Lead Case)
Case No. 2:16-CV-00060-JRG-RSP
(Consolidated Case)
REPORT AND RECOMMENDATION ON
BLACKBERRY’S MOTION TO DISMISS (DKT. NO. 43)
PanOptis Patent Management, LLC, and Optis Cellular Technology, LLC (“PanOptis,”
collectively) allege that BlackBerry Corporation and BlackBerry Limited (“BlackBerry,”
collectively) infringe four patents: United States Patent Nos. 8,019,332, 8,102,833, 8,437,293,
and 8,174,506. BlackBerry moves to dismiss the complaint, contending that PanOptis’s
allegations fail to meet the pleading requirement. Because PanOptis’s complaint contains
sufficient detail, BlackBerry’s motion (Dkt. No. 43) should be DENIED.
DISCUSSION
Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a complaint that
does not state a claim for relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To state a plausible
claim, PanOptis must plead facts to allow a court to draw a reasonable inference that BlackBerry
is liable for the alleged patent infringement. See id. (citing Twombly, 550 U.S. at 556). At this
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stage, a court accepts all well-pleaded facts as true, and views those facts in the light most
favorable to the plaintiff. Bustos v. Martini Club, Inc., 599 F.3d 458, 461 (5th Cir. 2010).
On December 2, 2015, the authority governing the pleading standard for certain types of
patent infringement claims changed. See Lyda v. CBS Corp., 838 F.3d 1331, 1337, 1337 n.2
(Fed. Cir. 2016). While Federal Rule of Civil Procedure 84 and the Appendix of Forms
(specifically, Form 18) controlled pleadings for direct patent infringement claims alleged in
cases filed on or before December 1, 2015, the Iqbal/Twombly standard governs patent
infringement pleadings filed thereafter. See id. at 1337 n.2; Disc Disease Sols., Inc. v. VGH Sols.,
Inc., No. 1:15-CV-188 (LJA), 2016 WL 6561566, at *2 (M.D. Ga. Nov. 2, 2016) (collecting
cases). PanOptis filed its complaint on January 17, 2016, and there is no dispute that the
Iqbal/Twombly standard applies (though PanOptis does not appear to take clear a position on the
issue). See Dkt. No. 63 at 10.
A. PanOptis’s Direct Infringement Allegations
1) Infringement of the LTE Standard Patents
PanOptis alleges that the ’833, ’332, and ’293 patents are essential to practice the Long
Term Evolution (LTE) Standard set by the European Telecommunications Standards Institute
(ETSI). Complaint (Dkt. No. 1) ¶¶ 23-24. By complying with this standard, PanOptis claims that
at least eleven BlackBerry products are necessarily covered by the LTE patents. See, e.g., id.
¶ 37. For each of the three patents, PanOptis identifies a specific claim that is infringed and
alleges that the accused products comply with specific Sections of the LTE Standard document.
See, e.g., id. ¶ 44. BlackBerry argues that PanOptis’s allegations should include more detail. Dkt.
No. 43 at 6. The Court disagrees.
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For a standard essential infringement claim, PanOptis’s allegations are sufficient.
BlackBerry does not cite a case dismissing a complaint for inadequately alleging infringement
based on compliance with an industry standard, and the Court has found none. In fact, a party
asserting a standard essential patent will often rely on compliance with the standard as the sole
basis for infringement at trial. However unwise that practice might be, the point is that alleging
infringement of a standard essential patent is different than alleging ordinary infringement
because standard essential patent infringement rests on compliance with a universal industry
standard. See, e.g., Research In Motion Ltd. v. Motorola, Inc., 644 F. Supp. 2d 788, 793 (N.D.
Tex. 2008) (“A standard, . . . by definition, eliminates alternative technologies.”).
BlackBerry does not have a convincing argument to the contrary. BlackBerry contends
that PanOptis carefully worded its complaint to state that LG and Ericsson, the original assignees
of the LTE patents, merely “declared” the patents essential to practicing the ETSI LTE Standard,
which is not a sufficient allegation. Dkt. No. 43 at 7. It is nonetheless more than a “bare
assertion,” contrary to BlackBerry’s characterization, because it alleges a fact that if true
plausibly gives rise to an inference that the LTE patents are essential to the ETSI Standard, and
that the LTE patents remain essential to that standard today.
BlackBerry insists that the complaint is not detailed enough because “although the
complaint recites entire sections from standards documents, it fails to cite specific portions of
those standards documents or explain how any such portions allegedly infringe the claims of the
asserted patents.” Dkt. No. 43 at 7. No court has appeared to require the level of detail demanded
by BlackBerry, even after the abrogation of Rule 84 and Form 18. See, e.g., SIPCO, LLC v.
Streetline, Inc., No. CV 16-830-RGA, 2017 WL 277398, at *3 (D. Del. Jan. 20, 2017).
PanOptis’s LTE Standard patent allegations are therefore sufficient.
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2) Infringement of the ’506 Patent
The ’506 patent is not a standard essential patent. See Dkt. No. 1 ¶ 83. Thus, rather than
rely on a standard, PanOptis accuses nine BlackBerry products of infringing the ’506 patent. The
devices, according to the complaint,
incorporate object-oriented functionalities and associated software
and hardware interfaces, touchscreen hardware and related software,
and other hardware and software that BlackBerry configures,
installs, and includes in the BlackBerry Mobile Communication
Devices for the function of displaying and allowing movement of
objects on a touchscreen device, infringe one or more claims of the
’506 Patent, including but not limited to claim 8.10
Id. ¶ 89. In other words, PanOptis alleges that BlackBerry has products that include a
touchscreen device, and those products allow objects to move across the touchscreen. In footnote
10, PanOptis attempts to provide more detail by “incorporat[ing] by reference its Disclosure of
Asserted Claims and Infringement Contentions pursuant to Local Patent Rule 3-1.” Id. n.10.
These Contentions, however, were not provided to BlackBerry until three months after PanOptis
filed the complaint, see Dkt. No. 43 at 9, and they are not part of the complaint unless the
complaint is properly amended, see Lodsys Grp., LLC v. Brother Int’l Corp., No. 2:11-CV-
00090-JRG, 2013 WL 5353004, at *2 (E.D. Tex. Sept. 24, 2013) (complaint—not motions,
expert reports, or infringement contentions—governs scope of litigant’s claim).
As one court explained after Form 18 and Rule 84 were eliminated, “[c]learly, Plaintiff
could allege a lot more than it has, as no ethical lawyer would bring this lawsuit if the plaintiff
could not allege more.” SIPCO, 2017 WL 277398, at *3. PanOptis cannot credibly contend that
the ’506 patent covers any touchscreen device that allows objects to be moved across the screen.
Yet that is about all the detail PanOptis’s complaint alleges.
PanOptis’s allegations would nevertheless meet the requirements of Form 18, which
required only five statements, one of which was an allegation, similar to PanOptis’s, “that
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defendant has been infringing the patent ‘by making, selling, and using [the device] embodying
the patent.’” See In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d
1323, 1334 (Fed. Cir. 2012).
But Form 18 no longer applies. The question is what difference there is, if any, between
Form 18 and the Iqbal/Twombly standard. The latest guidance from the Federal Circuit comes
from Lyda v. CBS Corporation. See 838 F.3d at 1339. Although the Court was evaluating a
complaint filed before the abrogation of the Forms and Rule 84, the Court addressed joint
infringement claims that were not governed by Form 18 because those claims required additional
elements not contemplated by the Form. Id. A claim for joint infringement, according to the
Court, “requires pleading facts sufficient to allow a reasonable inference that all steps of the
claimed method are performed and either (1) one party exercises the requisite ‘direction or
control’ over the others’ performance or (2) the actors form a joint enterprise such that
performance of every step is attributable to the controlling party.” Id. (quoting Akamai Techs.,
Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015)).
On one hand, Lyda’s assessment of joint infringement claims seems consistent with Form
18. The reason Form 18 did not apply to joint infringement claims was because Form 18 did not
include a statement of all the elements of the joint claim, not because Form 18 lacked sufficient
detail for the direct infringement part of a joint claim. See id. The allegation exemplified by
Form 18—that a party is “making, selling, and using” a specific device “embodying the patent”
is a factual allegation that, if true, plausibly gives rise to a claim for infringement. See In re Bill
of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012).
Infringement is, after all, a question of fact. Eli Lilly & Co., v. Teva Parenteral Medicines, Inc.,
No. 2015-2067, 2017 WL 117164, at *3 (Fed. Cir. Jan. 12, 2017).
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Form 18 appears consistent with the Iqbal/Twombly standard inasmuch it required
something in between “labels and conclusions” or “a formulaic recitation of the elements of a
cause of action,” see Iqbal, 556 U.S. at 678, and detailed infringement contentions. Identifying
facts such as “making, selling, or using” a specific device is more than an “unadorned, the
defendant-unlawfully-harmed-me accusation.” See Iqbal, 556 U.S. at 678 (2009). By stating a
specific act of infringement and a specific device, Form 18 did more than conclude that “this
defendant infringed my patent.” Finally, Form 18 was consistent with the purpose of the
complaint—to provide notice of what the claim is, the grounds upon which it rests, and to limit
the scope of the action going forward. Twombly, 550 U.S., at 555; Lodsys Grp., LLC v. Brother
Int’l Corp., No. 2:11-CV-00090-JRG, 2013 WL 5353004, at *2 (E.D. Tex. Sept. 24, 2013).
On the other hand, Lyda suggests that slightly more detail than what was specified in
Form 18 is required, at least for a joint infringement claim. And there is no good reason why
more detail should be provided for the direct infringement element of a joint infringement claim
than is required for an ordinary direct infringement claim. For the direct infringement element of
a joint infringement claim, Lyda specified that the facts alleged should be sufficient to “allow a
reasonable inference that all steps of the claimed method are performed.” 838 F.3d at 1339
(emphasis added). Thus, while Form 18 requires factual allegations that a device embodies “the
patent,” Lyda appears to require factual allegations sufficient to give rise to a plausible inference
that a device meets all elements of a specific claim. See id.
It is not necessary, however, to announce a floor for the direct infringement pleading
standard in this case because PanOptis’s allegations satisfy the Lyda and Iqbal/Twombly
standards. PanOptis identifies nine specific devices that allegedly infringe the ’506 patent. Dkt.
No. 1 ¶ 89. Those devices, according to PanOptis, infringe a specific claim—claim 8—because
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the devices include “hardware and related software . . . for the function of displaying and
allowing movement of objects on a touchscreen device.” Id. If that is true, it is plausible that the
elements of claim 8 are embodied by the accused devices. The allegations do not perfectly match
the claim elements, but they are detailed enough to satisfy the pleading standard:
Claim 8 Elements Corresponding Allegation. Dkt. No. 1 ¶ 89
8. A mobile terminal comprising: a touch
screen configured to display at least one
object and to sense first and second touching
actions on the at least one object; and,
“displaying and allowing movement of
objects on a touchscreen device”
a control unit configured to display the at
least one object as being fixed and not
moveable, to release the at least one object
according to the second touching action such
that the at least one object can be moved, to
move the at least one object from a first
position to a second position on the touch
screen corresponding to the first touching
action on the at least one object, and to fix the
moved object to the second position on the
touch screen based on a manipulation of a
position fixing button that is separate from the
first and second touching actions
Plausibly embodied by “hardware and related
software . . . on a touchscreen device”
wherein the first touching action is a dragging
and dropping touching action on the touch
screen, and
“movement of objects on a touchscreen
device”
wherein the second touching action includes
touching the at least one object for a
predetermined time period.
“movement of objects on a touchscreen
device”
As this case illustrates, the pleading standard for patent cases appears uncertain after the
elimination of Form 18 and Rule 84. But the practical consequence of having not satisfied the
pleading requirement in a patent case is limited. There are very few Federal Circuit cases
addressing the pleading standard for an obvious reason—most district courts do not deny leave to
file an amended complaint that conforms to the pleading standard even after the sufficiency of
the pleading has been tested. Lyda involved the rare instance in which leave to amend was not
given. That decision was incidentally found to be within the district court’s discretion, and thus a
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plaintiff assumes a risk when making the choice to oppose a motion to dismiss rather than simply
amend the complaint. See 838 F.3d at 1341.; see also Fed. R. Civ. P. 15(a)(1)(B).
The more typical case, however, is illustrated by SIPCO, LLC v. Streetline, Inc., 2017
WL 277398, at *3 (D. Del. Jan. 20, 2017). The plaintiff’s allegations, according to the court, fell
significantly below the pleading standard, alleging only the following: “One, here are ten patents
we own. Two, you sell some products, which we have identified.” Id. As the Court viewed it,
“Plaintiff makes a legal conclusion, to wit, the sales of your products infringe out patents. This is
insufficient to plausibly allege patent infringement.” Id. The result was at best a minor
inconvenience: “Plaintiff has twenty-one days to file an amended complaint.” Id.
Given the typical result, it is not clear why BlackBerry filed this motion to dismiss to test
the sufficiency of PanOptis’s direct infringement claims. It cannot be because BlackBerry does
not have sufficient notice of PanOptis’s claims because BlackBerry filed the motion to dismiss at
least a month after BlackBerry received PanOptis’s more detailed infringement contentions. See
Dkt. No. 43 at 9. And BlackBerry must be aware that Rule 15(a)(2) gives a court discretion to
freely grant leave to amend anytime “justice so requires.” PanOptis’s complaint contains more
than adequate detail to avoid the risk that PanOptis’s case will surprisingly balloon, and
infringement contentions provide further safeguards against this risk. In reality, BlackBerry’s
motion could accomplish very little. The motion nevertheless consumed almost 90 pages of
briefing from both sides.
In sum, because infringement contentions are provided early in a patent infringement
case, parties should seriously question whether it is worth expending resources challenging the
sufficiency of a complaint as detailed as PanOptis’s. There may be cases in which real prejudice
has resulted from a defendant’s lack of notice (beyond the reality that in every case, the plaintiff
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has a head-start). But in most cases, the result will be a command to the Plaintiff to amend. If
that command comes after the plaintiff has served infringement contentions, a defendant gains
nothing beyond whatever nuisance the motion creates for the plaintiff. With this reality in mind,
the Court turns to the many additional reasons why, according to BlackBerry, PanOptis’s
complaint is inadequate.
B. “Without Limitation”
Because PanOptis labels certain allegations as “without limitation,” BlackBerry contends
the complaint fails to meet the pleading standard. Dkt. No. 43 at 9-10. Most courts ignore such
language when other allegations provide sufficient detail, and the Court will not divert from that
practice here. See Infineon Techs. AG v. Volterra Semiconductor Corp., No. C-11-6239 MMC,
2012 WL 5988461, at *2 (N.D. Cal. Nov. 29, 2012) (denying motion to dismiss complaint that
included “without limitation” language); Core Wireless Licensing S.A.R.L. v. LG Elecs, Inc., No.
2:14-cv-911-RSP-RSP, 2015 WL 5786501, at *3 (E.D. Tex. Sept. 30, 2015 (regardless of
“without limitation” language, identification of a category of direct infringers along with other
allegations was sufficient).
C. PanOptis’s Indirect Infringement Allegations
According to BlackBerry, PanOptis failed to adequately plead indirect infringement first
because PanOptis failed to adequately plead direct infringement. Dkt. No. 43 at 11. That
argument is no different than the one already addressed.
Second, BlackBerry contends that PanOptis failed to adequately plead that BlackBerry
had knowledge of third-party direct infringement. Dkt. No. 43 at 11-12. To the contrary,
PanOptis alleges that the accused “software and hardware components installed and configured
by [BlackBerry] . . . are especially made for the infringing manufacture, sale and use of
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BlackBerry Mobile Communication Devices, and have no substantial non-infringing uses.” Dkt.
No. 1 ¶¶ 46, 63, 80, 98. In addition, PanOptis alleges that BlackBerry knew about the asserted
patents. Dkt. No. 1 ¶¶ 29, 35, 52, 69, 87. These facts, if true, plausibly show that BlackBerry
had the requisite knowledge. See, e.g., Chrimar Sys., Inc. v. Adtran, Inc., No. 6:15-cv-618-JRG-
JDL, 2015 WL 8488485, at *3 (E.D. Tex. Nov. 18, 2015).
Third, BlackBerry contends that PanOptis has not adequately alleged the intent required
for an induced infringement claim. Dkt. No. 43 at 13-14. Yet PanOptis alleges that BlackBerry
“provide[d] manuals and support to resellers and end-use customers regarding the use and
operation of [the accused] products,” including “through its website . . . by telephone, and
through other means of communication.” Dkt. No. 1 ¶¶ 40, 57, 74, 92. Given that BlackBerry
allegedly had knowledge of the patents, PanOptis’s allegations are sufficient. See ZiiLabs Inc.,
Ltd. v. Samsung Elecs. Co., No. 2:14-cv-203-JRG-RSP, 2015 WL 1456448, at *3 (E.D. Tex.
Mar. 30, 2015); Script Sec. Sols. LLC v. Amazon.com, Inc., No. 2:15-cv-1030-WCB, 2016 WL
1055827, at *6 (E.D. Tex. Mar. 17, 2016) (Bryson, J., sitting by designation).
Fourth, BlackBerry argues that PanOptis inadequately alleges that there are no substantial
noninfringing uses, which is a required element of a contributory infringement claim. Dkt. No.
43 at 14-15. If products are allegedly “designed for the sole purpose of performing the claimed
functionality,” a plausible inference can be made that there are no substantial noninfringing uses.
See Core Wireless, 2015 WL 5786501, at *3. According to PanOptis, “[t]he software and
hardware components installed and configured by BlackBerry to practice the patented operations
and structures, do not constitute a staple article or commodity of commerce. Moreover, use of the
same is required for the operation of a BlackBerry Mobile Communication Device.” See, e.g.,
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Dkt. No. 1 ¶ 97-99 (representative allegations for ’506 patent). The lack of noninfringing uses is
therefore plausible from the face of the complaint.
D. Willful Infringement
BlackBerry contends that PanOptis’s willful infringement allegations are insufficient,
albeit under the then-existing Seagate standard, which required knowledge of the patents and
action in the face of an objectively high likelihood that the action would constitute infringement.
See Dkt. No. 43 at 15. PanOptis alleges actual notice of the patents, Dkt. No. 1 ¶ 103, and
infringement thereafter, id. ¶ 104-05. In the absence of any updated authority from BlackBerry
suggesting otherwise (no such authority was filed), the Court considers the allegations sufficient
to plausibly infer that BlackBerry engaged in the type of culpable behavior described in Halo
Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016).
E. Declaratory Judgment Claim
Finally, BlackBerry contends that PanOptis’s declaratory judgment claim should be
dismissed. See Dkt. No. 43 at 17-19. The Complaint alleges that the Plaintiffs “have in good faith
presented BlackBerry with FRAND terms for a worldwide license under Plaintiffs’ entire
portfolio of Essential Patents. BlackBerry, however, has rebuffed and continues to rebuff
Plaintiffs’ good faith efforts to negotiate a license with BlackBerry.” Dkt. No. 1 ¶ 110. The
Plaintiffs therefore seek a declaration that “they have complied with their obligations arising
from their licensing declarations to ETSI . . . and any applicable laws during their negotiations
with BlackBerry concerning a worldwide license under [their] Essential Patents.” Dkt. No. 1
¶ 111. BlackBerry contends that it has not threatened PanOptis with a claim for breach of a
FRAND obligation, and thus there is no case or controversy sufficient to establish subject-matter
jurisdiction. Dkt. No. 43 at 17.
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PanOptis’s declaratory judgment claim, however, is similar to claims permitted by other
courts in standard essential patent cases. See, e.g., Microsoft Corp. v. Motorola, Inc., No. C10-
1823JLR, 2012 WL 395734, at *5 (W.D. Wash. Feb. 6, 2012). PanOptis’s requested declaratory
relief is different than the declaratory claim dismissed by this Court in Core Wireless, in which
the plaintiff sought a declaration that the defendant was an “unwilling” FRAND licensee. See
2015 WL 5786501, at *7. PanOptis, by contrast, requests a declaration that it has complied with
FRAND obligations. Given PanOptis’s alleged offer and BlackBerry’s alleged refusal to take a
FRAND license to the LTE patents, a sufficient controversy exists to confer subject matter
jurisdiction. See Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993) (“When
there is an actual controversy and a declaratory judgment would settle the legal relations in
dispute and afford relief from uncertainty or insecurity, in the usual circumstance the declaratory
action is not subject to dismissal.”).
CONCLUSION
BlackBerry’s motion to dismiss (Dkt. No. 43) should be DENIED. A party’s failure to
file written objections to the findings, conclusions, and recommendations contained in this report
within fourteen days after being served with a copy shall bar that party from de novo review by
the district judge of those findings, conclusions, and recommendations and, except on grounds of
plain error, from appellate review of unobjected-to factual findings, and legal conclusions
accepted and adopted by the district court. Fed. R. Civ. P. 72(b)(2); see Douglass v. United
Servs. Auto. Ass’n., 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc).
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