Case 1:17-cv-00184-JFB-SRF Document 416 Filed 03/25/21 Page 1 of 7 PageID #: 15380
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`FRAUNHOFER-GESELLSCHAFT ZUR
`FORDERUNG DER ANGEWANDTEN
`FORSCHUNG E.V.,
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`Plaintiff,
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`v.
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`SIRIUS XM RADIO INC.,
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`Defendant.
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`1:17CV184
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`MEMORANDUM AND ORDER
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`This matter is before the Court on Siriuis XM Radio’s motion to dismiss for failure
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`to state a claim, D.I. 236; and motion to file a sur-reply in opposition to defendant Sirius
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`XM’s motion to dismiss the amended complaint, D.I. 267, filed by plaintiff.1 The parties
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`also filed a stipulation to extend time. D.I. 246. In view of the Court’s determination as
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`to the motion to dismiss, and in light of the briefing on this issue, the Court will deny the
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`stipulation as moot.
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`Background
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`“MCM is the method used to transmit data which splits components and sends
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`them over separate carrier signals. Plaintiff developed patented technology related to
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`multicarrier modulation for use in satellite radio broadcasting. On March 4, 1998,
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`Fraunhofer entered into an exclusive license agreement with WorldSpace International
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`Network Inc. (“WorldSpace”) to license all patents for MCM technologies (the “MCM
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`License”). Fraunhofer subsequently obtained U.S. Patent Nos. 6,314,289 (“the ’289
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`1 The Court will deny the motion to file a sur-reply brief as it is unnecessary to the issues addressed herein.
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`1
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`patent”), 6,931,084 (“the ’1084 patent”), 6,993,084 (“the ’3084 patent”), and 7,061,997
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`(“the ’997 patent”) (collectively, the “patents-in-suit”), which relate to MCM technologies
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`and are covered by the MCM License. Later, WorldSpace gave a sublicense to XM Case
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`Satellite, and XM used the license technology to assist in the development of the XM
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`DARS system. XM then merged in 2008 with Sirius. In 2008 WorldSpace filed a Chapter
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`11 bankruptcy. A settlement agreement was approved between WorldSpace,
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`Fraunhofer, and Yamzi and it rejected the MCM license.” D.I. 175 at 4-5.
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`Fraunhofer alleges infringement of United States Patent Nos. 6,314,289 ("the '289
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`patent"), 6,931,084 ("the '1084 patent"), 6,993,084 ("the '3084 patent"), 7,061,997 ("the
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`'997 patent") (collectively, the "Asserted Patents"), which are directed to apparatuses and
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`methods used to receive and decode encoded satellite signals, identify "channel fading"
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`effects, and correct for those offsets using a channel decoder.
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`Sirius filed an initial motion to dismiss. D.I. 10. The Court granted that motion to
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`dismiss, D.I. 175, and the plaintiff appealed to the Federal Circuit. D.I. 182. The Federal
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`Circuit reversed and remanded. D.I. 193.
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`Standards of Review
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`a. Magistrate Judge
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`The standard of review is governed by 28 U.S.C. § 636(b)(1)(C) and Federal Rule
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`of Civil Procedure 72(b). The district court “shall make a de novo determination of those
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`portions of the report or specified proposed findings or recommendations to which
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`objection is made” and “may also receive further evidence or recommit the matter to the
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`magistrate judge with instructions.” 28 U.S.C. § 636(b)(1)(C). Similarly, Rule 72(b)(3)
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`2
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`requires de novo review of any recommendation that is dispositive of a claim or defense
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`of a party.
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`The Supreme Court has construed the statutory grant of authority conferred on
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`magistrate judges under 28 U.S.C. § 636 to mean that nondispositive pretrial matters are
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`governed by § 636(b)(1)(A) and dispositive matters are covered by § 636(b)(1)(B).
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`Gomez v. United States, 490 U.S. 858, 873-74 (1989); see also Fed. R. Civ. P. 72(a).
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`Under subparagraph (B), a district court may refer a dispositive motion to a magistrate
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`judge “to conduct hearings, including evidentiary hearings, and to submit to a judge of the
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`court proposed findings of fact and recommendations for the disposition.” 28 U.S.C. §
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`636(b)(1)(B); see EEOC v. City of Long Branch, 866 F.3d 93, 99–100 (3d Cir. 2017). The
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`product of a magistrate judge, following a referral of a dispositive matter, is often called a
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`“report and recommendation.” Id. “Parties ‘may serve and file specific written objections
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`to the proposed findings and recommendations’ within 14 days of being served with a
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`copy of the magistrate judge’s report and recommendation.” Id. (quoting Fed. R. Civ. P.
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`72(b)(2)).
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`“If a party objects timely to a magistrate judge’s report and recommendation, the
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`district court must ‘make a de novo determination of those portions of the report or
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`specified proposed findings or recommendations to which objection is made.’” EEOC,
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`866 F.3d at 99 (quoting 28 U.S.C. § 636(b)(1)).
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`a. 12(b)(6)
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`Under the Federal Rules, a complaint must contain “a short and plain statement of
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`the claim showing that the pleader is entitled to relief .” Fed. R. Civ. P. 8(a)(2). The rules
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`require a “‘showing,’ rather than a blanket assertion, of entitlement to relief.” Bell Atlantic
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`Corp. v. Twombly, 550 U.S. 544, 556 n.3. (2007) (quoting Fed. R. Civ. P. 8(a)(2)).
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`“Specific facts are not necessary; the statement need only ‘give the defendant fair notice
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`of what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus, 551
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`U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555). In order to survive a motion to
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`dismiss under Fed. R. Civ. P. 12(b)(6), the plaintiff's obligation to provide the grounds for
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`his entitlement to relief necessitates that the complaint contain “more than labels and
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`conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
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`Twombly, 550 U.S. at 555.
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`The factual allegations of a complaint are assumed true and construed in favor of
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`the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable
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`and ‘that a recovery is very remote and unlikely.’” Id. (quoting Scheuer v. Rhodes, 416
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`U.S. 232, 236 (1974)). “On the assumption that all the allegations in the complaint are
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`true (even if doubtful in fact),” the allegations in the complaint must “raise a right to relief
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`above the speculative level.” Twombly, 550 U.S. at 555-56. In other words, the complaint
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`must plead “enough facts to state a claim for relief that is plausible on its face.” Id. at 547.
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`“A claim has facial plausibility when the plaintiff pleads factual content that allows the
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`court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (stating that the plausibility standard
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`does not require a probability but asks for more than a sheer possibility that a defendant
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`has acted unlawfully.).
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`Twombly is based on the principles that (1) the tenet that a court must accept as
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`true all of the allegations contained in a complaint is inapplicable to legal conclusions and
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`(2) only a complaint that states a plausible claim for relief survives a motion to dismiss.
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`Id. at 678-79. Determining whether a complaint states a plausible claim for relief is “a
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`context-specific task” that requires the court “to draw on its judicial experience and
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`common sense.” Id. at 679. Accordingly, under Twombly, a court considering a motion
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`to dismiss may begin by identifying pleadings that, because they are no more than
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`conclusions, are not entitled to the assumption of truth. Id. Although legal conclusions
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`“can provide the framework of a complaint, they must be supported by factual allegation s.”
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`Id. When there are well-pleaded factual allegations, a court should assume their veracity
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`and then determine whether they plausibly give rise to an entitlement to relief. Id.
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`Thus, the court must find “enough factual matter (taken as true) to suggest” that
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`“discovery will reveal evidence” of the elements of the claim. Twombly, 550 U.S. at 556;
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`Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 347 (2005) (explaining that something
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`beyond a faint hope that the discovery process might lead eventually to some plausible
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`cause of action must be alleged). When the allegations in a complaint, however true,
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`could not raise a claim of entitlement to relief, the complaint should be dismissed for
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`failure to state a claim under Fed. R. Civ. P. 12(b)(6). Twombly, 550 U.S. at 558; Iqbal,
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`556 U.S. at 679.
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`DISCUSSION
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`Motion to Dismiss, D.I. 236
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`Defendant moves to dismiss plaintiff’s amended complaint pursuant to Fed. R. Civ.
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`P. 12(b)(6). Defendant bases this motion on its reading of the recent Opinion by the
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`Federal Circuit. D.I. 193-I. This Opinion, argues defendant, means that “Fraunhofer must
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`demonstrate, as a threshold matter, that it properly terminated the License Agreement
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`5
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`between Fraunhofer and WorldSpace International Network Inc. (“WorldSpace”) (AC at
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`Ex. F (“MLA” or “Master Agreement”)) in order to contend that SXM’s sublicense
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`terminated. See Opinion at 10-12. This means that if Fraunhofer did not properly
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`terminate the MLA, there can be no termination of the sublicense. Fraunhofer fails to clear
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`this threshold hurdle.” Defendant’s brief, D.I. 237 at 7. The Court disagrees and will deny
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`the motion to dismiss this case.
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`The Federal Circuit clearly instructed that SXM’s “license defense cannot be
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`resolved on a motion to dismiss.” D.I. 193 at 2. Further, the Federal Circuit rejected the
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`argument that the amended complaint was futile, particularly given that certain documents
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`could support plaintiff’s version of the case. Id. at 18. The Court will not revisit these
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`issues on this new motion, as none of the issues raised by the defendant can be
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`determined in this second motion to dismiss. The Court will abide by and follow the
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`directives of the Federal Circuit and the motion will be denied. See Bankers Tr. Co. v.
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`Bethlehem Steel Corp., 761 F.2d 943, 950 (3d Cir. 1985) (“trial court must adhere to the
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`decision and mandate of an appellate court” and must honor “the principles of law
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`enunciated in the appellate opinion … as law of the case”); ArcelorMittal France v. AK
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`Steel Corp., 786 F.3d 885, 888–89 (Fed. Cir. 2015) (same). We are not trying this case
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`on the amended complaint, so the parties shall move forward with the factual and legal
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`issues, such as termination and relevant evidence related to the contractual issues, which
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`will most likely be resolved at the summary judgment stage or at trial.
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`THEREFORE, IT IS ORDERED THAT:
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`1. The stipulation of the parties, D.I. 246, is denied as moot.
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`2. The motion to file a sur-reply brief, D.I. 267, is denied.
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`3. The motion to dismiss the amended complaint, D.I. 236, is denied.
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`Dated this 25th day of March, 2021.
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`BY THE COURT:
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`s/ Joseph F. Bataillon
`Senior United States District Judge
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`7
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