Dali Wireless, Inc. v. Corning Optical Communications LLC

Background

Dali Wireless, Inc. sued Corning Optical Communications LLC for patent infringement. The case concerns the ’261, ’358, and ’454 patents. Dali alleged that Corning willfully infringed all three patents because Corning had examined Dali’s patent portfolio and proprietary technology during earlier business discussions.

Dali first asserted the three patents in its First Amended Complaint, filed April 30, 2020. The court previously granted Corning judgment on the pleadings as to willfulness because Dali had not alleged that Corning knew of the patents, while allowing Dali to amend. In its Second Amended Complaint, Dali alleged that Corning learned of the ’358 patent in 2016 and the ’261 and ’454 patents in April 2020. Dali also described business dealings and discussions between the companies from 2010 through 2019, including due diligence, possible collaboration, licensing discussions, and a possible acquisition.

Legal standard

Under Federal Rule of Civil Procedure 12(c), a party may seek judgment on the pleadings after the pleadings are closed. The court applied the same standard used for a motion to dismiss: accepting well-pleaded factual allegations as true and asking whether they plausibly state a claim for relief.

For willful patent infringement, the court explained that the allegations must support deliberate or intentional infringement. Knowledge of the asserted patent and evidence of infringement are necessary but not sufficient. The allegations must also support egregious conduct. Willful blindness can satisfy the knowledge requirement when a defendant deliberately avoids confirming a high probability of wrongdoing.

Court’s analysis

The court held that Dali did not adequately allege knowledge of the specific patents or infringement. Dali’s allegations about Corning’s general awareness of Dali’s patent portfolio were not tied to the ’261, ’358, or ’454 patents. The court also stated that the alleged actual notice of the patents would have provided, at most, notice of the patents—not notice of infringement—for only 22 and 15 days. Dali did not adequately allege notice of infringement.

The court also rejected Dali’s theory that Corning acted wrongfully by failing to ensure that products obtained through its 2017 acquisition of SpiderCloud did not infringe Dali’s patents. The law does not impose an affirmative duty to investigate possible infringement or obtain a lawyer’s opinion. However, a defendant may still act willfully if it ignores an infringement risk that is known or so obvious that it should have been known.

The court found that Dali had not alleged such an obvious risk. Although the companies had a history of business discussions, the Second Amended Complaint did not state that Corning’s intellectual-property review included the three patents at issue. The court also noted that Dali’s original complaint did not allege infringement of those patents, which undermined Dali’s argument that infringement should have been obvious.

Disposition

The court concluded that Dali failed to adequately allege willfulness. It granted Corning’s motion for judgment on the pleadings with leave to amend. The court stated that it could not conclude that further amendment would necessarily be futile because Dali’s opposition described information obtained during discovery, including deposition testimony that Dali said supported its willful-blindness theory. The court ordered Dali to file a Third Amended Complaint within 30 days and stated that the order disposed of Docket No. 124.