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

Background

Cooperative Entertainment, Inc. (CEI) sued Kollective Technology, Inc. for infringement of 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 software, when used with Microsoft Teams, infringed patent claims 1, 2, 3, and 5.

The court was considering Kollective’s third motion to dismiss. In an earlier order, the court had dismissed CEI’s prior complaint for failing to allege facts showing that the accused product segmented content based on a trace route. CEI then filed a Second Amended Complaint.

Legal standard

Kollective moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. At this stage, the court generally accepts well-pleaded factual allegations as true and views them favorably to the plaintiff, but it does not have to accept unsupported legal conclusions.

Court’s analysis

The court held that the Second Amended Complaint still did not provide facts showing that SD ECDN segmented content based on a trace route. CEI relied mainly on language from Kollective’s website stating that the product used pings and traceroutes to gather information about the network and monitor other agents and network performance. The court had previously interpreted that language as describing the gathering of network information, not the use of trace routes to segment content. The court found that CEI added no facts addressing that deficiency.

The court also held that CEI had alleged facts inconsistent with its infringement theory. CEI alleged that the accused product relied on conventional protocols to segment video files. The court explained that the patent claims instead required the unconventional technique of segmenting content based on a trace route. Because CEI’s allegations contradicted the method it claimed was infringing, the court concluded that CEI had effectively pleaded itself out of court.

The court did not reach Kollective’s remaining arguments because the failure to allege trace-route-based segmentation was sufficient to resolve the motion.

Disposition

The court GRANTED Kollective’s motion to dismiss without leave to amend. It found that CEI had been unable to cure the deficiencies identified in the prior order and that further amendment would be futile. The order did not grant CEI permission to file another amended complaint.