Cooperative Entertainment, Inc. v. Kollective Technology, Inc.

Background

Cooperative Entertainment, Inc. (CEI) sued Kollective Technology, Inc. for allegedly infringing U.S. Patent No. 9,432,452. The patent concerns systems and methods for distributing large files through dynamic peer-to-peer networks. CEI alleged that Kollective’s SD ECDN product, when used with Microsoft Teams, infringed claims 1, 2, 3, and 5 of the patent.

The case came back to the district court after an earlier ruling that found the patent invalid under Section 101 was vacated by the Federal Circuit. On remand, Kollective’s renewed motion addressed only whether CEI had adequately pleaded patent infringement under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

Pleading standard

The court applied the requirement that a complaint contain enough factual matter to make the claimed entitlement to relief plausible. It rejected Kollective’s argument that CEI was required to plead infringement separately for every patent element. Under the applicable standard, a patent-infringement complaint need not provide an element-by-element analysis at this stage, but it must give enough factual information to plausibly show infringement and identify the accused activity.

Analysis

The court focused on content segmentation. It explained that the patent repeatedly requires content to be segmented, which the court understood as dividing content—such as a video—into smaller clips for distribution. CEI itself described segmentation as a requirement of every asserted claim and identified trace-route-based segmentation as an inventive concept of the patent.

The court found that CEI’s complaint did not provide facts showing that SD ECDN segmented content. CEI alleged, in a conclusory sentence, that SD ECDN’s distribution was based on content segmentation. CEI also quoted Kollective’s website about using pings and traceroutes to gather network information and about controlling bandwidth and download speeds. The court concluded that these quotations did not explain how SD ECDN divided content into segments or otherwise suggested that it performed this central patent function.

The court emphasized that CEI was not required to plead detailed facts addressing every patent element. However, without facts suggesting that SD ECDN performed content segmentation, the complaint did not state a plausible infringement claim.

Disposition

The court granted Kollective’s motion to dismiss with leave to amend. The opinion did not state that the dismissal was with or without prejudice. The court also noted that CEI had alleged more than merely the name of Kollective’s product: it alleged that SD ECDN used peer-to-peer content sharing outside a content-distribution network. The deficiency was the lack of sufficient factual allegations that SD ECDN segmented content.