Rembrandt Social Media, LP v. Facebook, Inc.

The lawsuit filed against an alleged indirect infringer can be used to demonstrate knowledge of the subject patent's existence, however, when the lawsuit is the basis of the accused infringer's knowledge the patentee is limited to recovering post-filing damages.

Opinion (ELLIS): Rembrandt Social Media, LP ("Rembrandt") sued Facebook, Inc. ("Facebook") and AddThis, Inc. ("AddThis") claiming their products infringed two of its patents related to providing or creating web content. This opinion resolved Facebook and AddThis's motion to dismiss Rembrandt's claim that they willfully, directly and indirectly infringed claim 7 of one of the patents. To survive a motion to dismiss the complaint must allege facts that, if true, plausibly state a claim entitling the complainant to relief. Indirect infringement requires a showing that the alleged infringer either: 1) directly induced infringement of the patent, or 2) contributed to direct infringement. To succeed in either option Rembrandt needed to show that Facebook and AddThis knew of the existence of the patent. The courts are divided over whether knowledge of the patent must have occurred before the filing of the lawsuit, or whether post-suit knowledge is sufficient. The majority position, which was adopted by the district court, holds that post-suit knowledge is sufficient. However, when post-suit knowledge is the basis for showing knowledge, the plaintiff can only recover damages for indirect infringement occurring after it filed suit. Rembrandt attempted to show Facebook's pre-suit knowledge through Facebook's status as a client of the law firm that represented the original inventor of the patent, through its purchase of a patent that cited the subject patent as prior art, and through a previous, unrelated patent infringement suit. The district court held that none of these potential sources of knowledge were sufficient to raise a plausible inference that Facebook had knowledge of the patent prior to the suit. Accordingly, the court GRANTED Facebook's motion to dismiss the claim of indirect infringement in so far as it covered pre-suit damages. Because willful infringement also requires showing pre-suit knowledge, the court GRANTED Facebook's motion to dismiss the willful infringement claim.