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District of Delaware Recites Policy Rationale for Dismissing Willful and Indirect Infringement Claims for Failure to Plead Pre-Suit Knowledge of Infringement

On March 24, 2021, U.S. District Judge Colm F. Connolly of the District of Delaware, granted a defendant’s motion to dismiss claims for contributory and induced infringement and enhanced damages under 35 U.S.C. § 284 because the complaint alleged knowledge of the asserted patents solely based on averments in prior original and amended complaints in the same lawsuit. ZapFraud, Inc. v. Barracuda Networks, Inc., No. 19-cv-01687, ECF 57. In so doing, Judge Connolly reaffirmed the majority position among divided U.S. District Courts, that a complaint asserting patent infringement cannot itself establish knowledge of an asserted patent sufficient to support a claim for indirect or willful patent infringement.

In this case, ZapFraud filed its original complaint in September 2019, accusing Barracuda of induced, contributory, and willful infringement of U.S. Patent No. 10,277,628. ZapFraud then filed first and second amended complaints in October 2019 and April 2020, respectively. Each complaint alleged that the defendant possessed the requisite knowledge of the asserted patent since at least the filing of the original complaint, based solely on the notice of alleged infringement provided by the complaints themselves. Barracuda moved to dismiss the indirect and willful infringement claims in September 2020, which the Magistrate recommended granting and denying in part. Judge Connolly declined to adopt the Magistrate’s recommendation and instead dismissed the indirect and willful infringement claims in their entirety.

Recognizing the division among district courts over whether a defendant must possess the requisite knowledge of an asserted patent and infringement thereof before the filing of an infringement suit, Judge Connolly noted that he was “not without doubts” as to the correct approach. Nonetheless, he held that a plaintiff cannot demonstrate a defendant’s knowledge required to sustain claims of indirect infringement and willfulness-based enhanced damages by filing the claim itself – adding that he was unaware of any other area of tort law where courts have allowed such a practice. Noting that Article III courts are granted limited resources and authority to resolve disputes, he cautioned against allowing complaints and “court dockets to serve as notice boards for future legal claims of indirect infringement or enhanced damages.” By requiring notice of the alleged infringement prior to the complaint, Judge Connolly observed that parties may ultimately avoid litigation altogether, if prior notice communications result in, for example, a license or the patentee’s decision not to pursue a claim.

Judge Connolly reasoned that the potential for willful infringement-based enhanced damages without pre-suit knowledge of the asserted patents is particularly problematic. As the court observed, rather than limiting enhanced damages to willful, malicious, and otherwise egregious infringement behavior, allowing the complaint to satisfy the knowledge requirement threatened to allow enhanced damages to serve as a form of “ambush” or “provide a financial incentive for opportunistic plaintiffs to spring suits for patent infringement on innocent actors who have no knowledge of the existence of the asserted patents.”

In the absence of any binding authority from the Federal Circuit or Supreme Court, district courts are likely to remain divided over whether infringement allegations in a complaint can satisfy the knowledge requirements for indirect or willful infringement allegations in that action. In the meantime, Judge Connolly has added his voice and rationale to the debate among district courts. For more of Mintz’s coverage of this divide and certain other decisions addressing it, see our prior posts covering cases from the District of Delaware and elsewhere: Nike, Inc. v. Skechers U.S.A., Inc., 17-cv-08509 (C.D. Cal. Oct. 26, 2020)APS Technology, Inc. v. Vertex Downhole, Inc. et al, No. 19-cv-01166 (D. Del. July 30, 2020)Mich. Motor Techs., v. Volkswagen Aktiengesellschaft, No. 19-cv-10485 (E.D. Mich. July 13, 2020); and VLSI Tech. LLC. v. Intel Corp., No. 18-cv-0966 (D. Del. June 26, 2020).

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©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume XI, Number 95
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Adam Samansky IP Attorney Mintz Law Firm
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Adam is an experienced IP litigator who primarily serves pharmaceutical, medical, high tech, and defense industry clients. He handles patent, trademark, and trade secret matters for innovators and investors. Adam has a strong record of success in multiparty, highly contested Hatch-Waxman litigation, in addition to other litigations involving advanced biochemistry, polymers, optics, manufacturing processes, and electronics. He has tried cases before multiple US district courts, briefed and argued cases before the US Court of Appeals for the Federal Circuit, and briefed bet-the-company...

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Peter J. Cuomo, Mintz Levin, Patent Litigation Lawyer, Expert Discovery Attorney,Patent Litigation IPRs & Other Post-Grant Proceedings Federal Circuit Appeals Hatch-Waxman ,ANDA Litigation Federal District Court
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Peter’s practice involves intellectual property enforcement and defense, and client counseling on issues related to IP rights. Peter's primary focus is in patent litigation where he has experience in every phase from pre-suit investigations through appeal, including, initial evaluation and case initiation, fact and expert discovery, pre-and post-trial motion practice, and trials and appeals. In addition to suits centered on the assertion and defense of infringement claims, Peter has experience with the successful resolution of multiple inventorship disputes and related misappropriation...

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Joseph Rutowski IP Attorney Mintz
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Joseph’s practice focuses on intellectual property litigation and counseling on issues related to intellectual property rights. Joseph’s primary focus is in patent litigation, including the intricacies of Hatch-Waxman pharmaceutical litigation. He has extensive experience in every stage of litigation, from pre-suit investigations through appeal – including case initiation, fact and expert discovery, motion practice, and successful preparation for and participation in trials involving patent infringement allegations.

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