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Judge Burke recommends denial of motion to dismiss pre-suit induced infringement claims

Yesterday, in Elm 3DS Innovations, LLC v. Samsung Electronics Co., Ltd., et al., C.A. No. 14-1430-LPS-CJB (D. Del. Sept. 29, 2015), Magistrate Judge Christopher J. Burke recommended denial of Defendants’ motion to dismiss induced infringement claims to the extent Plaintiff was seeking pre-suit infringement damages. Plaintiff had only alleged pre-suit induced infringement of one of the patents-in-suit (the ‘239 patent). Plaintiff’s operative complaint cited no direct evidence that Defendants had reviewed or cited to the ‘239 patent before the suit, but did contain circumstantial evidence. See id. at 4-5. In finding that the complaint had sufficiently alleged pre-suit knowledge of this patent, the Court concluded that its allegations “suggest[ed] that . . . Defendants had some fairly detailed, specific discussions about the ‘239 patent’s parent – and went on to cite other patens from the same patent family thereafter. . . . [T]hese facts at least help make it seem more plausible that Defendants did in fact have actual knowledge of the ‘239 patent.” Id. at 5 (emphasis in original). “Plaintiff’s allegations that the’239 patent is well known and frequently referenced in the semiconductor industry, and that it has been frequently cited by Defendants’ competitors . . . over the last many years” supported the same conclusion: [t]hese pleaded facts are relevant . . . because if true . . . they render it more likely that Defendants . . . may have been similarly aware of the ‘239 patent’s existence and its contents.” Id. at 5-6.

Even though these two categories of allegations “may not have been sufficient” by themselves, and did not “make pre-suit knowledge probable” when taken together, “considered as a whole, they render it a least plausible that Defendants were aware of the ‘239 patent and its claims prior to suit,” which was sufficient to withstand a motion to dismiss. Id. at 6-7 (emphasis in original).

Defendants also argued that Plaintiff had failed to adequately plead their knowledge of their customers’ infringement. The Court also rejected this argument. The complaint had set out “how or why these products infringement at least [one claim],” Plaintiff had plausibly alleged knowledge of the ‘239 patent (as discussed above) and that Defendants would have been able to understand the content and scope of its specifications and claims. Id. at 7-8 (emphasis in original). Further, Plaintiff has plausibly alleged that Defendants knew its semiconductor chips were incorporated into its customers’ finished products imported and sold in the U.S. Id. at 8. Taken together, these facts plausibly alleged Defendants’ knowledge of its customers’ infringement. Id. at 9.

Finally, Defendants argued that Plaintiff had insufficiently pled specific intent to infringe. The Court also rejected this position, explaining that the complaint alleged Defendants’ “encourage[ment]” for their customers to incorporate Defendants’ products into finished products, “all after having sufficiently described what it is about Defendants’ semiconductor chips that is said to render them infringing apparatuses in the first place, and why Defendants had knowledge that those chips infringed. This is sufficient to plead specific intent.” Id. at 9.

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