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Judge Burke recommends dismissing claims for indirect and willful infringement, recommends granting leave to amend complaint

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In a recent Report and Recommendation, Magistrate Judge Christopher J. Burke recommended granting defendants’ motions to dismiss certain of plaintiff’s claims pursuant to Rule 12(b)(6). Varian Medical System, Inc. v. Elekta AB, et al., C.A. No. 15-871-LPS (D. Del. Jul. 12, 2016). One group of defendants (the “U.S. Defendants”) sought dismissal of plaintiff’s claims for induced, contributory, and willful infringement. The other group of Defendants (the “Foreign Defendants”) sought dismissal of plaintiff’s claims for induced and contributory infringement. Id. at 1. The complaint named only one exemplary accused product–the Gamma Knife Icon–a radiation treatment device that defendants manufactured, marketed, and sold in the U.S. since 1987. Id. at 1-2.

Recommending dismissal of plaintiff’s claims for indirect infringement, Judge Burke first found that plaintiff failed to allege facts that would “plausibly suggest that a third party has directly infringed” the asserted patent-in-suit. Judge Burke explained that while “the Complaint does . . . make it clear who the general group of possible direct infringers are said to be,” it does not “adequately allege that any third party actually used the accused device.” Id. at 8-9. Next, Judge Burke noted that the “allegations are also defective because . . . even if the third party ‘customers and potential customers’ used the product[,] . . . the Complaint does not sufficiently articulate how this use of the product can be said to constitute infringement of at least claim 1 of the patent-in-suit.” Id. at 9-10.

The U.S. Defendants further contended that the complaint “lacks plausible allegations that they had pre-suit knowledge” of the patent-in-suit (the “’919 patent”), and Judge Burke agreed. One of the Foreign Defendants–Elekta AB–had discussed the ’919 patent before the USPTO, which demonstrated its knowledge of the ’919 patent. Id. at 11-12. In addition, Elekta AB is related to the U.S. Defendants: “U.S. Defendant Elekta Holdings U.S. is a wholly-owned subsidiary of Elekta AB, and U.S. Defendant Elekta, Inc. is, in turn, a wholly-owned subsidiary of Elekta Holdings U.S.” Id. at 12. Nevertheless, as Judge Burke explained, “knowledge of a patent by a parent corporation is not necessarily imputed to [its] subsidiar[ies].” Id. at 12. While plaintiff also tried to argue that knowledge of the patent should be imputed to the U.S. Defendants based on their “close-knit relationship” with Elekta AB, Judge Burke was unpersuaded given that the facts supporting this argument were not alleged in the complaint. Id. at 13-15.

Turning to the U.S. Defendants’ motion to dismiss the claims for willful infringement, Judge Burke found that “Plaintiff’s Complaint clearly falls short of the pleading requirements,” and that “Plaintiff does little more than provide a formulaic recitation of the pre-Halo elements of a willful infringement claim.” Id. at 15-17.

Finally, Judge Burke recommended that “Plaintiff be given leave to file one further amended complaint addressing the deficiencies outlined” in the Report and Recommendation. Id. at 18.

Varian Medical System, Inc. v. Elekta AB, et al., C.A. No. 15-871-LPS (D. Del. Jul. 12, 2016).

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