In a recent report and recommendation, Magistrate Judge Christopher J. Burke recommended that a motion to dismiss the plaintiffs’ allegations of induced infringement be granted. Versata Software, Inc., et al. v. Could9 Analytics, Inc., C.A. No. 12-925-LPS (D. Del. Feb. 18, 2014). Judge Stark had previously dismissed, without prejudice, the plaintiffs’ allegations of indirect infringement in an amended complaint, finding that “[a]ll that is alleged with respect to specific intent to induce the end user is really just legal conclusion and conclusory factual assertions, essentially tracking the statute.” Id. at 2. The plaintiffs then amended their claims in the Second Amended Complaint, and the defendant again moved to dismiss, at which point Judge Stark referred the motion to Magistrate Judge Burke.
The defendant argued that the Second Amended Complaint’s induced infringement allegations still failed to “allege facts plausibly showing that the defendant had knowledge that the alleged direct infringer’s acts constituted infringement.” Id. at 4. More specifically, the defendant argued that the plaintiff failed to allege how end users using the accused products were infringing. Id. Judge Burke explained that “while a plaintiff need not provide a detailed, step-by-step description of the alleged infringement in the complaint, this Court has required some identification of how it is that use of the accused product infringes the patent, in order to plausibly assert that the indirect infringer knew that the downstream use of its products constitutes patent infringement.” Id. at 6 (emphasis in original).
The induced infringement allegations at issue were that the defendant “actively induces . . . the infringement of the [patents-in-suit] by customers that use [the defendant’s] Infringing Products,” and that the defendant “sells the infringing products with the intent that its customers use those products in an infringing manner.” Id. at 8. Judge Burke found the allegations deficient, explaining that “[t]hese allegations do not do the job of plausibly asserting Defendant’s knowledge that the end users’ acts constituted infringement of the patents-in-suit, as Plaintiffs have simply identified the accused products and generically alleged that their use somehow infringes the asserted patents.” Id. However, Judge Burke recommended that the allegations be dismissed, without prejudice, to permit the plaintiff to file a third amended complaint. Id. at 8-9.