Google LLC v. Sonos, Inc.

Background

Google, the alleged patent infringer in this declaratory-judgment action, asked for permission under Federal Rule of Civil Procedure 15 to file a second amended complaint. Google sought to add claims seeking declarations that it did not infringe U.S. Patent No. 10,848,885 and that the asserted patents were invalid. It also sought to add claims for breach of the parties’ Content Integration Agreement, breach of the implied covenant of good faith and fair dealing, and conversion.

The proposed state-law claims arose from the parties’ collaboration on “cloud queue technology” between 2013 and 2015. Google alleged that it shared the technology, technical details, source code, and application programming interface designs with Sonos, and that Sonos later incorporated the technology into U.S. Patent Nos. 9,967,615 and 10,779,033 despite the agreement’s ownership provisions.

Sonos did not oppose Google’s revisions to the declaratory-judgment claims. It opposed adding the three state-law claims, arguing undue delay, statute-of-limitations problems, and futility. A proposed amendment is futile when the allegations would not state a legally sufficient claim.

Analysis

Rule 15 generally requires courts to freely allow amendments when justice requires. The relevant considerations include bad faith, undue delay, prejudice, futility, and repeated failure to correct prior pleading problems. Sonos did not argue bad faith, prejudice, or repeated failure to cure deficiencies.

The court concluded that Sonos had not shown that Google unduly delayed bringing the claims. Although the court was skeptical of Google’s timing and described the litigation as involving strategic gamesmanship, it found that delay alone did not justify denying amendment and that Sonos had not established undue delay.

The court rejected Sonos’s argument that Google’s claims were futile because the patent specification predated the parties’ collaboration. Google could plead alternative theories, including allegations that the patent claims were connected to technology shared during the collaboration. The court also declined to resolve at this stage whether earlier patents or other disclosures showed that Sonos had already disclosed the cloud queue concept.

For the ’615 patent, however, the court found that Google had supplied insufficient factual allegations to plausibly claim that Sonos incorporated Google’s cloud queue technology into that patent. The state-law claims were therefore futile as currently alleged to the extent they relied on the ’615 patent.

The court separately held that patents and other intangible property can be the subject of a conversion claim under California law when the property interest is sufficiently defined, capable of exclusive possession or control, and supported by a legitimate claim to exclusivity. The court found Google’s ownership allegations concerning the cloud queue technology and the ’033 and ’615 patents sufficient for purposes of amendment. But it ruled that a conversion theory based on inventorship was futile because federal patent law provides more appropriate procedures for determining inventorship.

Finally, the court found that Google’s implied-covenant claim duplicated its breach-of-contract claim and sought the same relief. The court denied leave to file that separate claim, while allowing the allegations to be treated as part of the contract claim.

Disposition

The court granted in part and denied in part Google’s motion for leave to file a second amended complaint. Google’s new declaratory-judgment claims and breach-of-contract claim may proceed. The separate implied-covenant claim was denied, with its allegations treated as part of the contract claim. The conclusion states that the property-based claim may proceed as to ownership, but not inventorship, and only as to the ’033 patent rather than the ’615 patent. Google was ordered to file a second amended complaint conforming to the order by February 4 at noon.