MasterObjects, Inc. v. Amazon.com, Inc.

Background

MasterObjects brought a patent-infringement action against Amazon involving U.S. Patent Nos. 8,539,024, 9,760,628, 10,311,073, and 10,394,866. The patents concern asynchronous communication technology that allows search engines to suggest search terms as a user types characters into a search bar. MasterObjects’ second amended complaint alleged that Amazon’s instant-search feature infringed the patents.

MasterObjects sought enhanced damages under Section 284 of the Patent Act based on alleged willful infringement. It alleged that Amazon knew of the patents before the lawsuit and learned of the alleged infringement when MasterObjects filed its initial complaint. It also alleged that Amazon engaged in egregious litigation conduct after the lawsuit began, including discovery evasions, boilerplate invalidity contentions, and other allegedly dilatory tactics.

Amazon moved under the pleading rules to dismiss the willful-infringement allegations. The court explained that a complaint must contain enough factual allegations to make the claim plausible, while factual allegations that are properly pleaded are accepted as true at this stage.

Pre-Suit Willful Infringement

The court limited its review of pre-suit knowledge to the ’024 patent because MasterObjects stated that it was no longer asserting pre-suit enhanced damages based on the ’628, ’073, and ’866 patents.

The court rejected MasterObjects’ reliance on the parties’ 2011 lawsuit involving the ’326 patent. General knowledge of a patent family or portfolio was not enough to show knowledge of the particular ’024 patent. The earlier litigation ended before the ’024 patent was filed, and the ’024 patent issued later. The court therefore concluded that the 2011 litigation could not plausibly establish Amazon’s knowledge of the ’024 patent.

MasterObjects also relied on Amazon’s prosecution of its own patents, during which the U.S. Patent and Trademark Office or Amazon cited the publication corresponding to the ’024 patent. The court held that these allegations plausibly established Amazon’s pre-suit knowledge of the ’024 patent because the citations occurred after that patent issued. At the pleading stage, Amazon’s explanation that its lawyers might not have connected the publication to the issued patent did not defeat the claim.

But the court found that MasterObjects did not adequately plead Amazon’s pre-suit knowledge that its products infringed the ’024 patent. The complaint did not plausibly connect the cited publication, Amazon’s patent prosecutions, or the related patent allegations to Amazon’s accused products. Allegations concerning Amazon’s chief intellectual-property counsel and a potential witness were also insufficient because they suggested, at most, that those individuals might have known of the patent, not that they knew how or why Amazon’s products infringed it.

The court likewise found that MasterObjects had not adequately pleaded willful blindness. The complaint contained only a general allegation and did not identify deliberate actions Amazon took to avoid learning of infringement.

Post-Suit Willful Infringement

The court separately considered allegations concerning all four patents after MasterObjects filed the lawsuit. MasterObjects alleged that Amazon continued providing the accused instant-search feature after learning of the infringement allegations. It also alleged several forms of litigation misconduct, including untenable claim-construction positions, large numbers of asserted prior-art references, allegedly copied arguments, bad-faith inequitable-conduct and ownership defenses, boilerplate invalidity contentions, and improper discovery evasion.

Applying the flexible standard for enhanced damages described by the Supreme Court, the court held that the second amended complaint adequately alleged Amazon’s post-suit knowledge of the patents and infringement. Considering the alleged post-suit misconduct as a whole, the allegations made it reasonable to infer intentional infringement. The court said Amazon’s explanations for its litigation conduct were matters for a later stage, including summary judgment, rather than a basis to dismiss the claim from the pleadings.

Disposition

The court stated that Amazon’s motion to dismiss was GRANTED IN PART and DENIED IN PART. MasterObjects’ claim based on pre-suit willful infringement was DISMISSED WITH PREJUDICE because MasterObjects had already amended its complaint and another amendment would be futile. MasterObjects’ enhanced-damages claims based on post-suit willful infringement survived for now.