Dali Wireless, Inc. v. Corning Optical Communications LLC

Background

Dali sued Corning for willful infringement of U.S. Patent Nos. 10,433,261, 9,197,358, and 10,506,454. The patents concern distributed antenna systems and technologies involving carrier-power adjustment, soft or fractional frequency reuse, and traffic-load optimization. Dali alleged that Corning’s SpiderCloud Enterprise Radio Access Network system infringed the patents.

Dali and Corning had business discussions beginning in 2010, including discussions about a possible strategic partnership, product development, licensing, and acquisition. Dali alleged that Corning conducted due diligence on Dali’s technology and patent portfolio and later acquired SpiderCloud and its accused products. After earlier versions of Dali’s complaint were dismissed with permission to amend, Dali filed a Third Amended Complaint. Corning then moved to dismiss Dali’s willful-infringement allegations and to strike several groups of allegations.

Willful-Infringement Allegations

The court granted Corning’s motion to dismiss the willful-infringement allegations. Under the Patent Act and the authorities discussed by the court, willful infringement requires plausible allegations that the accused infringer knew of the specific patents, knew of the infringement, and engaged in sufficiently egregious conduct to support enhanced damages.

The court held that Dali’s allegations mainly showed, at most, general knowledge of Dali’s technology or patent portfolio. Dali did not identify facts showing that Corning’s earlier due diligence specifically included the three patents at issue. Dali’s list of 75 Corning patents, which included citations to Dali patents, also did not plausibly establish that Corning had specific knowledge of the patents or their substance. The court reasoned that patent prosecution can involve broadly searching for and reporting relevant citations, so the citations alone were insufficient.

The court also found that Dali did not plausibly allege Corning knew its products infringed the patents. For the ’261 and ’454 patents, Dali alleged that Corning learned of them shortly before Dali first asserted them in the lawsuit, but alleged knowledge of the patents without separately alleging knowledge of infringement. For the ’358 patent, Dali alleged that Corning knew about the patent and that its products used fractional frequency reuse. The court found those allegations insufficient because Dali did not plausibly connect the product feature to obvious infringement of the patent, particularly given the court’s statement that thousands of patents concern fractional frequency reuse techniques.

The court also rejected Dali’s argument that Corning’s post-filing knowledge supported willful infringement. It found that Dali’s complaint was not sufficiently detailed or clear about infringement to provide the necessary basis for post-filing knowledge. Finally, the court held that Dali’s theories that Corning had an affirmative duty to investigate possible infringement or was willfully blind repeated theories the court had already rejected and did not provide additional supporting facts.

Motion to Strike

The court granted in part and denied in part Corning’s motion to strike under Federal Rule of Civil Procedure 12(f), which allows a court to remove redundant, immaterial, impertinent, or scandalous material from a pleading.

The court denied the motion as to paragraphs 32–49, 52–70, 109–116, and 117–198. Although the allegations were insufficient to establish willful infringement, the court found they could still provide context for the remaining infringement claims. The court stated that Corning could deny those allegations in its answer.

The court granted the motion as to paragraph 269. That paragraph alleged that Corning’s ONE system also infringed Dali’s patents, based on a separate Texas district court case. The court found the paragraph immaterial and impertinent because the Texas case involved a different Dali patent and a different category of Corning products.

Disposition

The court granted Corning’s motion to dismiss the allegations of willful infringement. It granted in part and denied in part Corning’s motion to strike, granting it as to paragraph 269 and denying it as to the remainder of the challenged material. The order states that the remaining substantive patent-infringement claims were still at issue and disposes of Docket No. 157.