What Constitutes Sufficient Factual Allegations for an Induced-Patent-Infringement Claim?

Order Granting Defendants’ Motion to Dismiss with Leave to Amend, CyWee Group Ltd. v. HTC Corp., W.D. Wash. (March 1, 2018) (Judge James L. Robart)

Actively inducing patent infringement incurs liability under 35 U.S.C. § 271(b).  Inducement occurs when the alleged inducer knew of the patent, knew that the induced act would infringe the patent, and intended to bring about the infringement.  Under the plausibility requirement, a complaint incorporating an infringement analysis of a seller’s product can satisfy the requisite knowledge of the patent and of the infringing act.  A recent opinion from the Western District of Washington, however, shows that alleging the requisite intent requires more than alleging that a defendant created and distributed general marketing and technical materials about the accused product.  Rather, to survive a motion to dismiss, a complaint must include facts connecting the defendant’s acts or materials to an infringing use of the patent.

CyWee Group Ltd. sued HTC Corp., alleging infringement of two patents on sensor-fusion technology.  The technology improves computation of a device’s orientation for applications such as gaming, virtual reality, and augmented reality.  In its complaint, CyWee alleged that HTC directly infringed CyWee’s patents and induced HTC’s distributors, resellers, and end users to infringe.  Specifically for HTC’s intent to induce infringement, CyWee alleged that HTC took “active steps — such as creating and disseminating the . . . Accused Products, and product manuals, instructions, promotional and marketing materials, and/or technical materials . . . ”  CyWee also attached claim charts showing how HTC’s products allegedly infringed CyWee’s patents.  CyWee further attached a declaration describing the patented technology and its benefits.  CyWee argued that these allegations and materials sufficed to show HTC’s specific intent to induce infringement.

Judge James L. Robart disagreed.  He concluded that a sufficient pleading of intent to induce must include the defendant’s purposeful expression or conduct to encourage infringement.  Merely alleging that the defendant sold a commercial product knowing the product might be used to infringe a patent is not enough.  By extension, alleging that the defendant continued to sell the accused product after the lawsuit began also is not enough to establish inducement.  Further, the defendant’s ordinary acts incident to selling the accused product, such as offering technical support, product updates, and materials describing the product or its use generally, are not enough to plausibly show the defendant’s intent.

To survive a motion to dismiss, Judge Robart held that the complaint must allege the defendant’s acts or materials specifically connected to an infringing use of the product.  For example, circumstantial evidence that the defendant advertised or promoted an infringing use likely suffices.  Such promotion can be shown through advertising features similar to the patented claims or advertising benefits of the accused product similar to the advantages of the patented invention.  Circumstantial evidence of inducement also includes teaching users to operate the accused product in an infringing manner.

Here, CyWee’s complaint contained no facts connecting HTC’s acts and materials specifically to an infringing use of the accused products.  Further, CyWee’s claim charts merely gave HTC knowledge of its customers’ possible infringement, but did not show HTC’s intent to induce.  Finally, although the plaintiff’s declaration described the benefits of the patented technology, it did not show HTC’s acts or materials touting similar benefits.  Thus, Judge Robart found that CyWee’s allegations were not adequate to survive the motion to dismiss.

With respect to the level of detail required in a complaint, CyWee argued that, at the pleading stage, a plaintiff does not need to identify specific facts such as instructions teaching an infringing use.  Judge Robart agreed.  But he pointed out that the complaint must nonetheless contain enough facts for the court to draw a reasonable inference that the defendant is liable for inducement, which includes specific facts that, if true, would show that HTC intended to bring about infringement.

This order illustrates the level of specificity that plaintiffs may have to plead in their complaints to establish induced infringement.  Plaintiffs should include the defendants’ acts or materials that specifically address a product’s infringing use or associated benefits.  Plaintiffs also should include these alleged facts in the complaint or its attachments, or incorporate the allegations into the complaint by reference.  If a complaint does not meet this standard, defendants should consider seeking to dismiss the allegations of induced infringement.