September 7, 2017

Knowledge of Ex-Employees Working for Accused Infringer Makes Inducement Claim Plausible

By Bryan K. Wheelock, Principal

In Lifetime Industries, Inc., v. Trim-Lok, Inc., [2017-1096] (September 7, 2017), the Federal Circuit reversed the district court’s dismissal of Lifetime’s complaint for infringement of U.S. Patent 6,966,590, failing to adequately allege that Trim-Lok either directly or indirectly infringed the patent.  Lifetime filed two amended complaints after Trim-Lok twice moved for dismissal for failure to identify the accused product. A Lifetime representative discovered a two-part Trim-Lok seal installed on an RV with a slideout room at a plant run by a third party.  On Trim-Lok’s third motion, the district court determined that Lifetime had adequately identified the accused product, but that Lifetime had not adequately pleaded its case.

The district court concluded that Lifetime had not adequately pleaded direct infringement because the claims require both a two-part seal and an RV, and Trim-Lok only manufactures seals.  The district court rejected Lifetime’s argument that Trim-Lok had “assisted with the installation, directed the installation, or directly installed” the Trim-Lok seal as confusing liability for direct infringement with liability for contributory infringement, which the court characterized as imposing liability “based on an offer to sell a component, material, or apparatus,” and dismissed the complaint for direct infringement.

As to indirect infringement, the district court concluded that Lifetime had not alleged any facts from which intent to infringe could be inferred in this case, and dismissed the complaint for indirect infringement as well.

The Federal Circuit found that Lifetime adequately alleged that Trim-Lok directly infringed, observing that one who “makes” a patented invention without authorization infringes the patent.  The Federal Circuit said that commercial manufacture is not the only way that a combination can infringe; limited internal manufacture and use can also infringe.  The Federal Circuit said that although Lifetime did not allege that Trim-Lok made the RV onto which it installed the seal, Lifetime did allege that Trim-Lok installed the seal onto the RV; that is, Lifetime alleged that Trim-Lok made an infringing seal-RV combination.  The Federal Circuit found that Trim-Lok’s demand for more detail “asks for too much,” noting that there is no requirement for Lifetime to prove its case at the pleading stage.

The Federal Circuit also found that Lifetime has plausibly alleged that Trim-Lok induced infringement.  The Federal Circuit noted that the plausibility requirement is not akin to a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal that the defendant is liable for the misconduct alleged.  The Federal Circuit found that specific allegations that former employees Busch and Torrey had knowledge of the patent and its scope when they joined Trim-Lok, making it plausable that Trim-Lok had knowledge of the patent.  The Federal Circuit also found adequate pleading of intent to infringe, noting that Lifetime alleged that after gaining knowledge of the patent and the products covered by the patent Trim-Lok assisted in the installation of the same time of seal on a RV, never having previously made or sold such seals.

The Federal Circuit also agreed with Lifetime that pleading contributory patent infringement only requires pleading knowledge of the patent, not also an intent to infringe the patent.