Potter Voice v. Apple: Claims for Willfulness Survive Motion to Dismiss Where Siri Inventors Allegedly Knew of Patent Prior to Employment with Apple

by Jeffer Mangels Butler & Mitchell LLP

Potter Voice filed a patent infringement action against Apple, alleging infringement of U.S. Patent No. 5,729,659 (the '659 patent) through Apple products containing Siri. In 2010, Apple acquired a corporation called Siri, Inc., which in 2007 "spun off" from SRI International, the company that invented the Siri product now used on Apple's iPhone 4S and other Apple products.

As part of its patent infringement action, Potter Voice alleged that Apple willfully infringed the '659 patent. In a motion to dismiss, Apple disputed whether the allegations in the complaint adequately pled Apple's knowledge of the '659 patent.

In analyzing the motion to dismiss, the district court noted that "[w]hile courts have emphasized the importance of pleading the defendant's knowledge of the patent-in-suit, when, as here, the defendant is a corporation, this pleading requirement should be evaluated through the scope of corporate law and agency principles. It is well established that corporations act through their employees and an agent's knowledge will generally be imputed to the corporate principal so long as employees are acting within the scope of their employment."

As a result, the district court found that to require that the corporation is aware of the asserted patent is to say that certain of the corporation's employees have knowledge of willful infringement, it is safe to say that the employees required to have knowledge of the asserted patent must have some connection to the decision willfully to infringe.

Potter Voice's complaint alleged that "Apple learned of the '659 patent when it acquired Siri, Inc. employees who were the inventors of the SRI patents. The former Siri, Inc. employees were aware of the '659 patent because it was cited to them in the prosecution history of the SRI patents. These employees took their knowledge of the '659 patent to Apple when they became Apple employees in about 2007. Apple, having learned of the likelihood of infringement of the '659 patent, nevertheless acted in a way that infringed."

The district court concluded that this was "not a bare recitation of the legal elements of willful infringement, but constitutes facts describing how the alleged infringer came to learn of the patent in suit."

The district court also rejected Apple's assertion that the allegations fell short of the "plausibility" standard set by Iqbal and Twombly. "While willful infringement is not equal to fraud and therefore is not subject to the stringent Rule 9(b) particularity requirement, the Iqbal and Twombly standards still apply. See Mitutoyo Corp. v. Cent. Purchasing LLC, 499 F.3d 1284, 1290 (Fed. Cir. 2007). According to Apple, PVT's theory of Apple's knowledge is unlikely because the '659 patent was never cited by the examiners of the SRI patents, nor was it the subject of any office action or rejection. Apple admits that the inventors of the later patents submitted an Information Disclosure Statement (IDS) naming the '659 patent as knowledge of that patent. See id.

The district court found that these arguments went to the weight of the evidence and were not proper for a resolution on a motion to dismiss. "Apple's arguments, especially those that the Siri inventors would have forgotten the '659 patent, go to the weight of the evidence rather than the sufficiency of PVT's allegations. At the motion to dismiss stage, the Court does not undertake a full evaluation of "probability," but simply asks for "more than a sheer possibility that a defendant has acted unlawfully." See Iqbal, 556 U.S. at 678. With all of its allegations accepted as true, PVT demonstrates more than a sheer possibility that Apple was aware of the asserted patent. One can reasonably infer that the former SRI employees, who themselves knew of the '659 patent, later had a connection to Apple's willful infringement."

Accordingly, the district court denied the motion to dismiss the willfulness claim.

Potter Voice Technologies v. Apple Inc., et al., Case No. C 13-1710 CW (N.D. Cal.)


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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