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Samsung Display Co., Ltd. v. Acacia Research Corp.

United States District Court, S.D. New York

December 3, 2014



J. PAUL OETKEN, District Judge.

Plaintiff Samsung Display Company, Ltd. ("SDC") brought this action against Defendant Acacia Research Corporation ("Acacia"), alleging that Acacia acted unlawfully in initiating, through its affiliate entities, patent infringement lawsuits against SDC customers. SDC asserts six causes of action against Acacia: breach of contract, tortious interference with contractual relations, tortious interference with prospective contractual relations, unfair competition, abuse of process, and prima facie tort. Acacia moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).

For the reasons that follow, Acacia's motion is granted in part and denied in part.[1]

I. Background

A. Factual Background[2]

SDC is a Korea-based corporation, created as a spin-off from Samsung Electronics Company, Ltd. ("SEC") in April 2012. (Compl. ¶ 2.) Acacia is a Delaware corporation with its principal place of business in Newport Beach, California. It owns and/or controls Acacia Research Group LLC ("ARG"), Innovative Display Technologies LLC ("IDT"), and Delaware Display Group LLC ("DDG").

On March 2, 2011, SEC and Acacia entered into an agreement (the "Option Agreement"), under which Acacia granted SEC licenses and covenants not to sue with respect to certain patents owned by Acacia. ( See Declaration of Edward Treska in Support of Motion to Dismiss, Ex. A ("Option Agreement") (filed under seal).)[3] In particular, the Option Agreement provides the following:

[Acacia] and the Acacia Entities hereby represent, warrant, and covenant to Samsung that Samsung's Authorized Third Parties shall be perpetually immune from any claim or suit under the Acacia Patents for the use... of any Samsung Products... [and] Combination Products....

( Id. § A2.5.)

In addition, the Option Agreement requires that Acacia "ensure that the Acacia Entities abide by the terms and conditions of this Option Agreement... and [the] Covenant-Not-To-Sue Addendum set forth at Addendum A." ( Id. § 3.1.)

The Option Agreement defines "Acacia" as "[Acacia Research Corporation] and its past, present, and current Affiliates, " ( id. § 1.1), and "Samsung" as "Samsung Electronics Co., Ltd. and its Affiliates" ( id. § 1.8). According to the Complaint, SDC is an affiliate of SEC, and ARG, IDT, and DDG are affiliates of Acacia, as the term is defined in the Option Agreement.[4] (Compl. ¶ 9.)

The Complaint alleges that, contrary to express provisions of the Option Agreement, Acacia's affiliates initiated patent infringement lawsuits against SDC customers for their use of SDC products.[5] The Complaint identifies nine lawsuits in particular: four filed by IDT in Texas in June 2013; one filed by IDT, also in Texas, in October 2013; and four filed by DDG and IDT in Delaware in December 2013. These suits, the Complaint charges, amount to a material breach of the Option Agreement.

The Complaint claims that, as a result of the lawsuits, SDC has suffered injury in the form of "irreparable harm" to its "goodwill and reputation" among its customers, who relied on SDC's representations and assurances that they would not be subject to suit by Acacia for their use of SDC products. ( Id. ¶¶ 24, 28.) These customers have reportedly "complained to SDC" about the lawsuits and "expressed concern to SDC regarding its intellectual property practices." ( Id. ¶ 24.) The Complaint further alleges that Acacia has maintained its lawsuits notwithstanding written notice from SEC advising Acacia of its material breach and its effect on SDC's relationship with its customers. ( Id. ¶ 25.) Acacia's initiation of the suits and failure to cure its breach are, the Complaint says, "willful" and "in bad faith." ( Id. ¶¶ 26, 27.)

B. Procedural History

SDC filed its Complaint against Acacia on February 28, 2014. (Dkt. No. 3.) Pursuant to an order by Judge Crotty, the Complaint was filed under seal. ( Id. )

Acacia filed its motion to dismiss the Complaint on May 6, 2014. (Dkt. No. 17.) On May 22, 2014, SDC filed both an opposition to Acacia's motion and its own conditional motion for leave to amend the Complaint. (Dkt. Nos. 24, 25.) Acacia filed a combined reply to SDC's opposition and an opposition to SDC's motion for leave to amend on June 2, 2014. (Dkt. No. 28.) SDC filed a reply in support of its motion for leave to amend on June 12, 2014. (Dkt. No. 30.) All filings were made wholly or partially under seal.

II. Legal Standard

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." To survive a motion to dismiss under Federal Rule 12(b)(6), a complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The standard of "facial plausibility" is met when "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility is distinct from probability, and "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and that a recovery is very remote and unlikely." Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014) (quoting Twombly, 550 U.S. at 556) (internal quotation marks omitted). At the same time, a court is "not bound to ...

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