Phenix Longhorn, LLC v. AU Optronics Corporation et al, No. 2:23-cv-00477 (E.D. Tex. Aug. 12, 2024)

Before the Court is the Motion to Dismiss Under FRCP 12(b)(6) filed by Defendant AU Optronics Corporation. Dkt. No. 12; Dkt. No. 18 (reply in support). Plaintiff Phenix Longhorn, LLC opposed the Motion and filed a response brief. Dkt. No. 14. For the reasons below, the motion should be DENIED.

I. LEGAL STANDARD

A party may move to dismiss an action when the complaint fails “to state a claim upon which relief can be granted . . . .” FED. R. CIV. P. 12(b)(6). A complaint states a sufficient claim if it gives the defendant “fair notice of what the … claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis in original) (citations omitted).

When considering a Rule 12 motion to dismiss, a court accepts “all well-pleaded facts as true and view[s] those facts in the light most favorable to the plaintiff.” Bowlby v. City of Aberdeen, Miss., 681 F.3d 215, 219 (5th Cir. 2012) (citation omitted). The court may consider “the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v.2 Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citation omitted). The court must then decide whether those facts “state a claim that is plausible on its face.” Bowlby, 681 F.3d at 219. “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 (2009)).

This evaluation will “be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft, 556 U.S. at 679. “This standard ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of’ the necessary claims or elements.” In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir. 2008) (quoting Bell Atl., 550 U.S. at 556).

II. ANALYSIS

Defendant asserts that the complaint does not allege actions that give rise to U.S. liability for Counts I and III of the complaint alleging induced infringement. Dkt. No. 12 at 6. The heart of Defendant’s motion is the contention that the Supreme Court holding in RJR Nabisco, Inc. v. European Community superseded the Federal Circuit’s holding in Merial Ltd. v. Cipla Ltd. that “Section 271(b) . . . does not, on its face, foreclose liability for extraterritorial acts that actively induce an act of direct infringement that occurs within the United States.” Dkt. No. 12 at 7 (citing Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1302–03 (Fed. Cir. 2012)). Defendant asserts that the two-step approach applied in RJR Nabisco should be applied here to find that 35 U.S.C. § 271(b) does not apply extraterritorially and, as a result of step two, determine that Counts I and III should be dismissed. Dkt. No. 12 at 7; Dkt. No. 12 at 7–11 (applying the two-step approach).

The Court finds that Defendant’s approach is not supported by Federal Circuit precedent. While the Merial decision was prior to RJR Nabisco, the Federal Circuit has since applied Merial3 to § 271(b). Compare RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325 (2016) (decided June 20, 2016), with Enplas Display Device Corp. v. Seoul Semiconductor Co., Ltd., 909 F.3d 398, 408 (Fed. Cir. 2018) (“liability for induced infringement under § 271(b) can be imposed based on extraterritorial acts, provided that the patentee proves the defendant possessed the requisite knowledge and specific intent to induce direct infringement in the United States.”) (citing Merial, 681 F.3d 1283, 1302–03 (Fed. Cir. 2012)); cf. Brumfield v. IBG LLC, 97 F.4th 854, 871–75 (Fed. Cir. Mar. 27, 2024) (discussing applicability of RJR Nabisco to §§ 271(a), (f), 281, 284); cf. Syngenta Crop Protection, LLC v. Willowood, LLC, 944 F.3d 1344, 1359–64 (discussing applicability of RJR Nabisco to § 271(g)). Since the Federal Circuit has not applied RJR Nabisco’s two-step approach to § 271(b), while concurrently applying it to other patent statutes, the Court does not do so here.

Upon review of the operative pleadings, the Court finds that the complaint sufficiently states a facially plausible cause of action for induced infringement based on extraterritorial acts that induce direct infringement in the United States. Enplas, 909 F.3d at 408.

III. CONCLUSION

Accordingly, IT IS RECOMMENDED that Defendant AU Optronics Corporation’s Motion to Dismiss Under FRCP 12(b)(6) (Dkt. No. 12) be DENIED.

A party’s failure to file written objections to the findings, conclusions, and recommendations contained in this report within 14 days bars that party from de novo review by the District Judge of those findings, conclusions, and recommendations and, except on grounds of plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted and adopted by the district court. Fed. R. Civ. P. 72(b)(2); see Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc). Any objection to this Report and4 Recommendation must be filed in ECF under the event “Objection to Report and Recommendations [cv, respoth]” or it may not be considered by the District Judge.