United States District Court, E.D. Texas, Marshall Division
ORDER ADOPTING REPORT AND RECOMMENDATION
W. SCHROEDER III UNITED STATES DISTRICT JUDGE.
before the Court are Defendant AT&T Services, Inc.'s
Objections (Docket No. 202) to Magistrate Judge Payne's
Report and Recommendation (Docket No. 201), which recommends
that the Court deny AT&T's motion to dismiss
Soverain's allegations of willful infringement under
Fed.R.Civ.P. 12(b)(6). For the reasons that follow, the Court
OVERRULES AT&T's objections and
DENIES the motion to dismiss.
patent case concerns U.S. Patents 5, 708, 780, 7, 191, 447,
and 8, 606, 900. According to Soverain, these patents are
part of a larger network management and data extraction
patent portfolio that teaches how to streamline and secure a
“single sign-on” process, extract data from hosts
over a network, and authenticate and encrypt data using
asymmetric keys. Compl. (Docket No. 1, No.
2:17-CV-000293-RWS-RSP) ¶ 25.
to the Complaint, the asserted patents arose from the work of
Open Market, Inc. during the infancy of e-commerce. See
Id. ¶ 2. Open Market's flagship Internet
transaction product, called TRANSACT, included content
management, authorization protocols, and
customer-relationship management technologies. Id.
¶ 5. TRANSACT contained functionality for separating the
management of transactions from the management of content,
allowing companies to securely and centrally manage
transactions using content located on multiple distributed
pleads that Open Market began commercial shipments of
TRANSACT in 1995. Id. ¶ 6. Early customers
included Novell, Sprint, Disney, AT&T, Hewlett-Packard,
Time Warner, Banc One, and First Union. Id. By the
late 1990s, TRANSACT was an established market leader in
e-commerce technology. Id. ¶ 7.
alleges both TRANSACT and the related patent portfolio are
well-known within the industry. From 1996 through 2000,
TRANSACT held the majority of the global market for
transaction management systems and was praised for its
secure, robust design. Id. ¶ 17. Soverain's
patents and published applications have been cited in over
6000 issued United States patents and published applications
as prior art, including by AT&T. Id.
¶¶ 80 (alleging the '447 Patent has been cited
135 times), 101 (alleging the '900 Patent has been cited
139 times), 130 (alleging AT&T knew of and cited to the
'780 Patent in eleven of its own patents), and 132
(alleging the '447 Patent has been cited 1840 times).
AT&T's motion is dispositive, the Court reviews
de novo those portions of the Report and
Recommendation to which AT&T objects. 28 U.S.C. §
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
a court must assume that all well-pled facts are true, and
view those facts in the light most favorable to the
plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215,
218 (5th Cir. 2012). The court must then decide whether those
facts state a claim for relief that is plausible on its face.
Id. at 217. “A claim has facial plausibility
when the pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (quoting Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009)).
subjective willfulness of a patent infringer, intentional or
knowing, may warrant enhanced damages, without regard to
whether his infringement was objectively reckless.”
Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct.
1923, 1933 (2016). “Actual knowledge of infringement or
the infringement risk is not necessary to plead a claim for
willful infringement, but the complaint must adequately
allege factual circumstances in which the patents-in-suit
[are] called to the attention of the defendants.”
Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys.,
LLC, No. 2:15-CV-00037-RWS-RSP, 2016 WL 3878246, at *1
(E.D. Tex. Mar. 30, 2016) (quoting MONEC Holding AG v.
Motorola Mobility, Inc., 897 F.Supp.2d 225, 236 (D. Del.
objects to Judge Payne's recommendation on two grounds.
First, AT&T contends Soverain's allegations of
AT&T's pre-suit knowledge concerning the asserted
patents are insufficient as a matter of law. AT&T's
Objs. (Docket No. 202) at 1-3. Second, AT&T claims
Soverain fails to allege sufficiently egregious misconduct to
support a willfulness finding. Id. at 5.
the first ground-the extent of AT&T's pre-suit
knowledge-not only does Soverain allege each patent is
well-known in the industry by virtue of citations in patents
and published applications, Soverain alleges AT&T cited
the '780 Patent in eleven of its own patent applications,
favorable media coverage of the related technology, early use
by AT&T of related technology, and licensing by
AT&T's competitors. Considered together, these are
sufficient for the Court to reasonably infer AT&T knew of
the asserted patents. See, e.g., SoftView LLC v.
Apple Inc., No. 10-389-LPS, 2012 WL 3061027, at *5-6 (D.
Del. July 26, 2012) (noting that “none of the
allegations standing alone adequately alleges [the defendant]
was aware of the patents-in-suit prior to the initiation of
this litigation, ” but “[t]aken in combination,
the Court concludes that SoftView has alleged a plausible
basis from which one might reasonably infer [the defendant]
had knowledge of the patent-in-suit”); Elm 3DS
Innovations, LLC v. Samsung Elecs. Co., No.
14-1430-LPS-CJB, 2015 WL 5725768, at *3 (D. Del. Sept. 29,
2015) (“[Separately, ] (1) Defendants' knowledge of
patents related to the ...