United States District Court, E.D. Texas, Tyler Division
AMG PRODUCTS, INC. D/B/A AMG DEVELOPMENT and PAUL SMITH, Plaintiffs,
FRY'S ELECTRONICS and WALGREEN CO., Defendants.
ORDER ADOPTING REPORT AND RECOMMENDATION OF UNITED
STATES MAGISTRATE JUDGE
D. KERNODLE UNITED STATES DISTRICT JUDGE.
case was referred to United States Magistrate Judge John D.
Love pursuant to 28 U.S.C. § 636. On March 12, 2019, the
Magistrate Judge issued a Report and Recommendation
(“Report”), recommending that Defendants'
Motion to Dismiss (Docket No. 52) be granted as to
Plaintiffs' claims of induced infringement and denied as
to Plaintiffs' claims for willful infringement. Docket
No. 55. Plaintiffs AMG Products Inc. d/b/a AMG Development
and Paul Smith (collectively “Plaintiffs”)
objected to the Magistrate Judge's Report. Docket No. 56.
Defendants Fry's Electronics and Walgreen Co.
(collectively “Defendants”) responded. Docket No.
64. Having reviewed Plaintiffs' written objections de
novo, the Court concludes that the findings and conclusions
of the Magistrate Judge are correct and that the objections
are without merit. 28 U.S.C. § 636(b)(1).
first object that the pled facts allow for a reasonable
inference that Defendants encourage customers to use the
infringing product. Docket No. 56 at 3. Plaintiffs cite
specifically to paragraphs 19, 20, 21, and 23 of the Amended
Complaint in support. Id. at 2-3. However,
Plaintiffs do not explain how these paragraphs-which are
essentially legal conclusions with very few facts-state a
claim for induced infringement. See Id. Further, the
Magistrate Judge specifically considered each of these
paragraphs in analyzing Plaintiffs' allegations.
See Docket No. 55 at 2-3. Plaintiffs also suggest
that the Magistrate Judge erred in holding that Plaintiffs
were required to allege an affirmative action to state a
claim for induced infringement. The Magistrate Judge made no
such holding. Although the Magistrate Judge noted that
“Plaintiffs do not allege that Defendants took any
affirmative steps to include those instructions or place them
for sale in their retail stores, ” he went on to state
that “Plaintiffs have not alleged that Defendants took
any deliberate actions to avoid learning about the
instructions in such a way that might implicate
liability.” Docket No. 55 at 6-7. Thus, Plaintiffs'
arguments that the Magistrate Judge required heightened
allegations of affirmative action are misplaced, as the
Magistrate Judge also stated that allegations of deliberate
indifference may suffice, but that Plaintiff alleged no such
facts here. Id.
next argue that Tierra Intelectual Borinquen, Inc. v.
ASUS Computer Int'l, Inc., 2014 WL 894805 (E.D. Tex.
Mar. 4, 2014), is distinguishable. Plaintiffs contend that
Tierra was a policy-driven decision where the
accused product had substantial non-infringing uses; whereas,
the accused product in this case does not have any
substantial non-infringing uses. Docket No. 56 at 4. To the
extent Plaintiffs are distinguishing Tierra based on
the absence of substantial non-infringing uses, Plaintiffs
failed to raise this argument before the Magistrate Judge.
Indeed, the Magistrate Judge specifically noted that
“Plaintiffs do not address the argument that Defendants
are only retailers who sell the accused products with the
contained instructions or point to any allegations that would
impute scienter to Defendants”-an argument for which
Defendants relied on Tierra in their briefing.
Docket No. 55 at 6. As a result, this argument is waived.
See Freeman v. Cty. of Bexar, 142 F.3d 848, 851 (5th
Cir. 1998). Regardless, Plaintiffs' amended complaint
failed to plead any lack of substantial non-infringing uses.
See Docket No. 31. And Plaintiffs failed to cite any
facts that would suggest Defendants had the requisite
mens rea for inducement. Accordingly, the Court
overrules this objection and agrees with the conclusion of
the Magistrate Judge.
Magistrate Judge also recommended that the Court dismiss the
indirect-infringement claims with prejudice because there are
no facts giving rise to such a claim and Plaintiffs have not
asked to amend. Docket No. 55 at 6-7. Also, Plaintiffs
already amended their complaint, and that amendment alleged
only that Defendants are retailers who sell a prepackaged
product with enclosed instructions provided by the accused
product manufacturer. See, e.g., Docket No. 31 at
¶¶ 23, 24. The Court therefore assumes that
Plaintiffs are unable to state a claim for induced
infringement and that a second amendment would be futile.
Further, Plaintiffs did not object to this portion of the
Magistrate Judge's recommendation. The Court thus
dismisses the indirect-infringement claims with prejudice.
See Vogt v. United States, 480 Fed.Appx. 305, 306
(5th Cir. 2012).
the Magistrate Judge recommended that Defendants' Motion
to Dismiss (Docket No. 52) be denied as to Plaintiffs'
claims for willful infringement. Docket No. 55 at 8- 9.
Neither side objected to this recommendation. As such, and
having reviewed the Report of the Magistrate Judge, the Court
agrees with this conclusion.
reasons discussed herein, the Court ADOPTS
the Report of the United States Magistrate Judge as the
findings and conclusions of this Court. All objections are
OVERRULED and Defendants' Motion to
Dismiss (Docket No. 52) is GRANTED as to
Plaintiffs' claims of induced infringement and
DENIED as to Plaintiffs' claims for
willful infringement. Plaintiffs' claims for indirect
infringement are DISMISSED with prejudice.