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InVue Security Products Inc. v. Mobile Tech Inc.

United States District Court, D. Oregon

October 18, 2019

MOBILE TECH, INC., Defendant,

          Scott E. Davis, John D. Vandenberg, and Kristin L. Cleveland, Klarquist Sparkman LLP, Attorneys for Plaintiff.

          Alan H. Norman, David B. Jinkins, Steven E. Garlock, and Matthew A. Braunel, Thomas Coburn LLP, One U.S. Bank Plaza, St Louis, Attorneys for Defendant.



         Plaintiff InVue Security Products Inc. (“InVue” or “Plaintiff”) brings this action against Mobile Tech, Inc. (“MTI” or “Defendant”). InVue alleges that MTI manufactured and sold products and components of products that infringed upon InVue's valid patents and seeks enhanced damages. Before the Court is Defendant's motion to dismiss all claims. For the following reasons, the Court DENIES Defendant's motion.


         In patent cases, a district court applies the law of the regional circuit (rather than that of the Federal Circuit) to procedural questions such as whether to grant a Rule 12(b)(6) motion to dismiss. See, e.g., C&F Packing Co., Inc. v. IBP, Inc., 224 F.3d 1296, 1306 (Fed. Cir. 2000). In the Ninth Circuit, a motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). When evaluating the sufficiency of a complaint's factual allegations, the Court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In patent infringement cases, this amounts to “facts sufficient to place the alleged infringer on notice as to what he must defend.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). The court must draw all reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted). If a complaint fails to state a claim, the court should grant leave to amend unless it is clear that the complaint's deficiencies are incurable. Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir.1995).


         InVue and MTI compete in the manufacture and sale of retail merchandise security systems. InVue brings this action to recover on claims of alleged direct patent infringement, contributory infringement, and induced infringement. InVue seeks injunctive relief, monetary damages, and enhanced damages for willful infringement.

         The two patents-in-suit are U.S. Patent No. 9, 830, 787 (the '787 patent) and U.S. Patent No. 10, 055, 954 (the '954 patent). The '954 patent is a continuation of the application that issued as the '787 patent. Both patents are entitled “Merchandise Security System Including Retractable Alarming Power Cord.” Three elements comprise the patents-in-suit: (1) a continuous alarming power cord with at least one electrical conductor; (2) a reel and housing for receiving and storing at least a portion of the alarming power cord; and (3) circuity that monitors the electrical signal running through the alarming power cord for interruptions. One end of the alarming power cord attaches to the reel, and the other end attaches to merchandise. Removing the merchandise interrupts the electrical signal running through the power cord. The monitoring circuitry detects the interruption and can trigger an alarm.


         A. Direct Infringement Claims

         Any party who “makes, uses offers to sell, or sells any patented invention within the United States or imports into the United States any patented invention during the term of the patent therefor” without permission commits direct patent infringement. 35 U.S.C § 271. A complaint need only put the “potential infringer . . . on notice of what activity . . . is being accused of infringement.” Nalco v. Chem-Mod LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018) (quotation marks omitted).

         In its First Amended Complaint (“FAC”), InVue alleges that MTI directly infringed on both the '787 patent and the '954 patent. InVue defines the category of MTI's products the sale of which directly infringes on InVue's patents as the “Accused Products.” See FAC ¶ 16. It lists examples of the Accused Products, including the “Round Freedom Micro, ” the “Freedom Micro” (FAC ¶ 18), and the “Freedom Micro DI” (FAC ¶ 19). InVue also includes the “AirTether” in the category of Accused Products. See FAC ¶ 20.[1] The complaint later states that “MTI's manufacture, offer for sale, sale, importation, and/or use of the Accused Products in ...

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