Judge Stark Finds Post-Complaint Actions Sufficient for Intent Element of Induced Infringement Claims

Judge Stark recently ruled on defendant Rackspace’s motion to dismiss the second amended complaint filed by plaintiff Clouding IP. Judge Stark had previously granted a motion to dismiss the first amended complaint in this case with respect to indirect infringement because the complaint did not plead facts from which the Court could infer intent, but gave Clouding IP leave to amend. Following Clouding IP’s filing of a second amended complaint, Rackspace again moved to dismiss, and Judge Stark has now denied that motion. Clouding IP, LLC v. Rackspace Hosting, Inc., et al., C.A. No.12-675-LPS, Memo. Op. at 1 (D. Del. Feb. 6, 2014).

As Judge Stark framed the issue, “Rackspace’s motion presents a narrow issue as to whether Clouding failed to sufficiently plead the element of intent for its inducement claims in the Second Amended Complaint.” Id. at 4. Judge Stark, however, disagreed with Rackspace’s argument, noting that “courts in this District have held that to plead indirect infringement based on conduct after a complaint was filed a party need only allege ‘a defendant’s receipt of the complaint and [its] decision to continue its conduct despite the knowledge gleaned from the complaint.’” Id. (citing Apeldyn Corp. v. Sony Corp., 852 F. Supp. 2d 568, 574 (D. Del. 2012); Walker Digital, LLC v. Facebook, Inc., 852 F. Supp. 2d 559, 565 (D. Del. 2012)). Clouding IP met this hurdle by “alleg[ing] Rackspace’s knowledge of the original complaint.” Id. Indeed, “[t]he Court is not presented with a pleading which merely contains ‘a formulaic recitation of a cause of action’s elements.’” Moreover, the Federal Circuit’s decision in Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361, 1367 (Fed. Cir. 2013), which held that “the district court erred in preventing Cisco from presenting evidence during the second trial of its good-faith belief of invalidity to rebut Commil’s allegations of induced infringement,” should not be “expand[ed] . . . into a pleading requirement.” Id. at 6. Accordingly, Judge Stark denied the motion to dismiss the claims of induced infringement.

Clouding IP, LLC v. Rackspace Hosting, Inc., et al., C.A. No.12-675-LPS (D. Del. Feb. 6, 2014).

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