UTTO Inc. v. Metrotech Corporation, No. 3:2022cv01904 - Document 63 (N.D. Cal. 2022)
Court Description: ORDER GRANTING 42 MOTION TO DISMISS. Signed by Judge William H. Orrick on 12/19/2022. (jmd, COURT STAFF) (Filed on 12/19/2022)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 UTTO INC., Plaintiff, 8 9 10 United States District Court Northern District of California 11 Case No. 22-cv-01904-WHO ORDER GRANTING MOTION TO DISMISS v. Re: Dkt. No. 42 METROTECH CORPORATION, Defendant. 12 13 For the fourth time, defendant Metrotech Corp. (“Metrotech”) moves to dismiss the 14 operative complaint filed by plaintiff UTTO Inc. (“UTTO”), which alleges that Metrotech 15 infringed upon one of UTTO’s patents and interfered with its prospective economic advantage. 16 The motion to dismiss the Third Amended Complaint (“TAC”) is GRANTED and UTTO’s claims 17 DISMISSED with prejudice. UTTO has not shown that the “buffer zone” recited in Claim 1’s 18 “generating limitation” can be generated using only one buried asset data point. Nor has UTTO 19 adequately alleged that the walk back feature’s use of one data point is functionally equivalent to 20 the group of buried asset data points needed to generate that buffer zone. As a result, UTTO has 21 not sufficiently pleaded an infringement claim. 22 UTTO’s interference claim fails as well, primarily because it relies on unreasonable 23 inferences and conclusory statements in alleging an independently wrongful act by Metrotech, and 24 has not adequately pleaded such an act. As this was UTTO’s fourth attempt to state a plausible 25 claim, and it failed to do so, these claims are DISMISSED with prejudice. 26 BACKGROUND 27 UTTO is the assignee of U.S. Patent No. 9,086,441 (“the ’441 Patent”), which claims a 28 method for locating “buried assets”—industry terminology for underground utility lines, pipes, 1 and cables. TAC [Dkt. No. 41] ¶¶ 8, 12, 17. According to UTTO, the ’441 Patent provides a 2 “more efficient, safe, and precise way of locating a particular buried asset,” particularly when 3 there are multiple assets buried in close proximity. See id. ¶ 12. 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 The ’441 Patent has seven claims, only the first of which is independent. See TAC, Ex. 1 (“’441 Patent”). Claim 1 recites the following: A method on a mobile computing device for locating electromagnetic signals radiating from a buried asset, the method comprising: receiving, via a communications network communicatively coupled with the mobile computing device, a group of buried asset data points corresponding to a particular buried asset sought by an operator of the mobile computing device; reading a predefined value pertaining to a width of a buffer zone; generating, based on the group of buried asset data points, a two-dimensional area comprising the buffer zone at an above-surface location, wherein a width of the buffer zone corresponds to the predefined value, and wherein the buffer zone corresponds to the particular buried asset; iteratively executing the following four steps: a) calculating an above-surface location of the mobile computing device using spatial processes; b) determining whether the above-surface location of the mobile computing device is located within the two-dimensional area; c) if the above-surface location is not located within the two-dimensional area, displaying a first graphic in a display of the mobile computing device; and 20 21 22 23 d) if the above-surface location is located within the two-dimensional area, displaying a second graphic in the display. Id. at 17:48-18:16. In late December 2021, UTTO learned that Metrotech had been advertising online 24 firmware for its product, “RTK-Pro Utility Locator with Survey-Grade GNSS” (“RTK-Pro”), 25 which UTTO contends “describes a method involving an electromagnetic locator that appears to 26 infringe the ’441 Patent.” TAC ¶¶ 16, 28. The parties refer to that method as the “walk back 27 feature.” See id. ¶¶ 16, 17. 28 On December 21, 2021, UTTO was scheduled to meet with a third party, Honeywell, as 2 1 part of “continued negotiations with Honeywell regarding the sale of UTTO products which would 2 include licensing of the ’441 Patent.” Id. ¶ 46. Those negotiations began in early October 2021, 3 and involved “several follow-up telephone calls” between Honeywell and UTTO through 4 December of that year. Id. According to UTTO, “Honeywell said that it wanted to include locator 5 services in its offerings and that it was impressed” with UTTO’s “Locate Assurance” platform. Id. 6 For hardware, Honeywell “planned to use Metrotech’s locator devices.” Id. ¶ 47. Honeywell 7 requested the December 21 meeting “to see if Metrotech and UTTO could collaborate and whether 8 data retrieved by Metrotech’s physical devices could be UTTO compliant.” See id. United States District Court Northern District of California 9 At that meeting, a Honeywell representative “asked if the Honeywell data Metrotech was 10 storing could be delivered in a format that would work with the UTTO software.” Id. ¶ 51. 11 According to UTTO, a Metrotech representative “said that it was not a question of whether 12 Metrotech could provide UTTO compliant data and that of course it could” but “whether 13 Metrotech was willing to provide the data to UTTO and that, if it did, he would expect Metrotech 14 would charge Honeywell extra.” Id. UTTO alleges that the Metrotech representative “also 15 promoted the walk back feature during the course of the meeting.” Id. 16 Honeywell and UTTO’s parent company discussed the terms of a “possible software as a 17 service agreement” through early January 2022. Id. ¶ 46. According to UTTO, “[t]he negotiations 18 even reached the point where Honeywell forwarded a final draft agreement to UTTO with specific 19 terms that were expected to govern the parties’ contractual relationship,” including the term of the 20 agreement, the means for providing deliverables, and provisions that any mapping data created in 21 the course of performance belonged to Honeywell. Id. The deal was “nearly finalized.” Id. 22 However, on July 7, 2022, Honeywell announced in a press release that it was “expanding 23 its smart energy offering with underground utility locating and data capturing services” and 24 featured a picture of Metrotech’s RTK-Pro. Id. ¶ 56. 25 On January 31, 2022, UTTO wrote Metrotech about the purported infringement of the ’441 26 Patent. Id. ¶ 29. In mid-March, Metrotech denied that the walk back feature infringed. Id. ¶ 32. 27 A brief back-and-forth between the parties followed, culminating in the filing of this lawsuit on 28 March 25, 2022. See id. ¶¶ 32-34, Dkt. No. 1. 3 I have since denied a motion for preliminary injunction from UTTO and granted two 1 2 motions to dismiss filed by Metrotech. Dkt. Nos. 21, 30, 39. After UTTO filed its TAC, 3 Metrotech again moved to dismiss. Dkt. Nos. 41, 42. LEGAL STANDARD 4 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint United States District Court Northern District of California 5 6 if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion, the 7 plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. 8 Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff 9 pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for 10 the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There 11 must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts 12 do not require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to 13 “raise a right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570. In deciding whether the plaintiff has stated a claim upon which relief can be granted, the 14 15 court accepts her allegations as true and draws all reasonable inferences in her favor. See Usher v. 16 City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to 17 accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or 18 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 19 If the court dismisses the complaint, it “should grant leave to amend even if no request to 20 amend the pleading was made, unless it determines that the pleading could not possibly be cured 21 by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making 22 this determination, the court should consider factors such as “the presence or absence of undue 23 delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, 24 undue prejudice to the opposing party and futility of the proposed amendment.” See Moore v. 25 Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989). DISCUSSION 26 27 28 I. INFRINGEMENT “[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, 4 1 within the United States or imports into the United States any patented invention during the term 2 of the patent therefor, infringes the patent.” 35 U.S.C. § 271(a). 3 A device must practice all elements of a claim to be liable for direct infringement. 4 Fortinet, Inc. v. Forescout Techs., Inc., No. 20-CV-03343-EMC, 2020 WL 6415321, at *11 (N.D. 5 Cal. Nov. 2, 2020). A “direct infringement claim does not satisfy the standards of Twombly and 6 Iqbal where it does not at least contain factual allegations that the accused product practices every 7 element of at least one exemplary claim.” AlterG, Inc. v. Boost Treadmills LLC, 388 F. Supp. 3d 8 1133, 1142-43 (N.D. Cal. 2019) (citation and quotation marks omitted). “To find infringement under the doctrine of equivalents, any differences between the United States District Court Northern District of California 9 10 claimed invention and the accused product must be insubstantial.” Brilliant Instruments, Inc. v. 11 GuideTech, LLC, 707 F.3d 1342, 1346 (Fed. Cir. 2013) (citation omitted). A plaintiff can do this 12 by showing “for each claim limitation, that the accused product performs substantially the same 13 function in substantially the same way with substantially the same result as each claim limitation 14 of the patented product.” Id. at 1347 (citation and quotation marks omitted). 15 The previous motion work has whittled down the number of issues with UTTO’s 16 infringement claim. See, e.g., Order Granting Mot. to Dismiss (“Second MTD Order”) [Dkt. No. 17 39] 4:20-8:18. What remains relates to the “generating” limitation in Claim 1, which recites a 18 method 19 20 21 generating, based on the group of buried asset data points, a two-dimensional area comprising the buffer zone at an above-surface location, wherein a width of the buffer zone corresponds to the predefined value, and wherein the buffer zone corresponds to the particular buried asset. 22 ’441 Patent at 17:58-18:3. I most recently dismissed UTTO’s infringement claim because 23 although it “sufficiently alleged that the walk back feature creates a two-dimensional graphic 24 corresponding to a particular buried assert,” it did not allege “how the walk back feature’s two- 25 dimensional zone is created, whether by using multiple data points or just one.” Second MTD 26 Order at 7:26-8:12. As I wrote: “This is an element of the limitation at issue; it must be addressed 27 for the infringement claim to proceed.” Id. at 8:11-12. 28 Metrotech argues that these allegations are still missing from the TAC, though it slightly 5 1 misstates the issue. See Mot. to Dismiss (“MTD”) [Dkt. No. 42] 4:18-25. It contends that 2 “UTTO’s pleading is still opaque as to how it believes Metrotech’s device purportedly generates a 3 two-dimensional zone using a walk back point” and that “allegations as to how exactly the walk 4 back feature operates do matter.” See id. at 5:16-6:2 (emphasis in original). To be clear: I did not 5 ask UTTO to allege “how exactly the walk back feature operates.” Doing so could require 6 evidence of how Metrotech’s firmware functions, which veers into summary judgment territory 7 rather than that of a motion to dismiss, where a plaintiff must only allege “enough facts to state a 8 claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Doing so “simply calls for 9 enough fact to raise a reasonable expectation that discovery will reveal evidence” of wrongdoing. United States District Court Northern District of California 10 See id. at 556. 11 What was missing from the Second Amended Complaint (“SAC”) was any allegation that 12 the walk back feature’s two-dimensional zone was generated “based on the group of buried asset 13 data points,” as required to plead infringement on the ’441 Patent. See Second MTD Order at 14 7:26-8:12. 15 According to Metrotech, the same issue again sinks UTTO’s infringement claim. 16 Metrotech’s strongest argument is that the buffer zone described in the generating limitation is 17 only generated using multiple buried asset data points, and that UTTO has not plausibly alleged 18 that the walk back feature uses more than one data point to generate an equivalent. See MTD at 19 6:9-8:16. In support, it points to the ’441 Patent’s embodiments (specifically, Figures 4A through 20 4G) and specification, which, in relevant part, speak to the “union” of circular two-dimensional 21 areas surrounding buried asset data points. See id. at 7:22-8:7. 22 UTTO’s response focuses on infringement under the doctrine of equivalents, arguing that 23 the “crux” of its allegations “is that, even if the RTK-Pro were using ‘just one’ walk back point at 24 a time to generate buffer zones, over and over, that is the functional equivalent of using multiple 25 data points to generate buffer zones in the manner described in the ’441 Patent—that is, ‘creating a 26 circle around each buried asset data point.’” See Oppo. [Dkt. No. 51] 5:25-6:3 (citing TAC ¶ 19). 27 It then points to Paragraphs 19 and 20 of the TAC, specifically the allegations that: 28 6 Although the promotional video [on YouTube]1 demonstrates only how the first in a sublist of three “walk back points” is retrieved and verified, a person of ordinary skill in the art would understand that the same procedure could be performed on the other two “walk back points” that were selected. . . . It does not matter whether the RTK-Pro generates circles around the multiple walk back points retrieved one at a time or whether it does so all at once. The use of the RTK-Pro is functionally equivalent to the ’441 Patent in either event. 1 2 3 4 5 ... 6 [A]fter the starting point involving receiving data points from a previous survey, the ’441 Patent can operate on each data point retrieved individually. If the locating functions are turned off for some or all but one of the data points, the process is the functional equivalent of generating a buffer zone around only those data points selected, which could be a single data point if the operator so chooses. 7 8 9 10 United States District Court Northern District of California 11 12 13 Id. at 6:6-15 (citing TAC ¶¶ 19-20). In other words, UTTO argues that even if the walk back feature generates a circle around one data point at a time, it is (1) functionally equivalent to the ’441 Patent’s generation of a buffer zone based on multiple data points; or (2) functionally equivalent to the ’441 Patent’s ability to generate a buffer zone based on one data point. See id. UTTO’s argument is thin at best. First, it has not adequately alleged that the ’441 Patent 14 15 16 17 18 19 20 can generate a buffer zone based on one data point. The TAC alleges that “the buffer zone can be drawn around all the data points collectively or each one individually” and that the patent “explains, in one embodiment, a circular buffer zone can be generated around each separate data point.” Id. ¶ 19. UTTO points to language in the patent that an unidentified embodiment will “create a circle around each buried asset data point using the radius value as the radius measurement of each circle.” Id. But the TAC omits critical language from the patent specification, which describes each of 21 22 23 24 25 26 27 28 the relevant embodiments depicted in Figures 4A through 4G. See Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1128 (Fed. Cir. 2018) (describing the “sources properly considered on a motion to dismiss” as including “the complaint, the patent, and materials subject to judicial notice”). As stated in the description, each of these figures “show how buffer zones are created based on buried asset data points,” plural. See ’441 Patent at 3:28-31. The detailed UTTO’s TAC again references and relies upon a YouTube video published by Metrotech that describes the walk back feature, which was filed manually as Exhibit 2 to the SAC and can be found at https://www.youtube.com/watch?v=NkfVDwFm9Ls. See TAC ¶ 17. 7 1 1 description goes on to explain that in some of these embodiments, a two-dimensional circle is 2 created around each buried asset data point, “wherein the union of all of the circular two- 3 dimensional areas comprises the buffer zone around the buried asset data points. See id. at 12:16- 4 20 (Figure 4C); 12:47-51 (Figure 4D). In others, “buffer points” are defined on either side of 5 “each buried asset data point,” and those buffer points then connected via line segments “so as to 6 generally define a two-dimensional area comprising the buffer zone.” Id. at 13:1-22 (Figure 4E); 7 13:59-14:10 (Figure 4F); 14:51-63 (Figure FG).2 No matter how the embodiments are described, 8 they distinguish between circles or buffer points that relate to each buried asset data point, and the 9 union or connection of those circles or buffer points that create the actual buffer zone. In the TAC, UTTO appears to conflate the circles drawn around buried asset data points United States District Court Northern District of California 10 11 and the buffer zone itself. It again relies on the Metrotech YouTube video, which does show that 12 the walk back feature generates a circle around a data point. See TAC ¶ 20 (“The March 2022 13 YouTube video also shows how the walk back feature works by creating a two-dimensional 14 graphic that pops up on the RTK-Pro screen. . . . The two-dimensional graphic consists of a circle 15 around the walk back point and the user’s location in relation to the circle.”). But the video does 16 not show any union of that circle with others to create the buffer zone that is disclosed in Claim 1. 17 See id. The TAC alleges that the circle is “essentially the same as the ’441 Patent’s buffer zone.” 18 See id. But the patent description belies this point, as it is the “union of all of the circular two- 19 dimensional areas” that “comprises the buffer zone.” See ’441 Patent at 12:16-20, 12:47-51; see 20 also Secured Mail Sols. LLC v. Universal Wilde, Inc., 873 F.3d 905, 913 (Fed. Cir. 2017) (“In 21 ruling on a 12(b)(6) motion, a court need not accept as true allegations that contradict matters 22 properly subject to judicial notice or by exhibit, such as the claims and patent specification.”) 23 (citations and quotation marks omitted). This difference is substantial. As alleged, the walk back feature misses a step critical to the 24 25 26 27 28 2 Although the detailed description uses different language for Figures 4A and 4B, in both the buffer zone is “generated by device using buried asset data points”—again, plural. See ’441 Patent at 11:29-41. The description then states that Figure 4B “shows that a two-dimensional area comprising a buffer zone has been created around the buried asset data points” and the “twodimensional area was generated by defining a two-dimensional circle around each buried asset data point” wherein each circle was connected. Id. at 11:42-49. 8 1 generation of the buffer zone claimed in the ’441 Patent, as it only generates a two-dimensional 2 area around a buried data point and does not join together areas around multiple data points to 3 create the buffer zone. The accused product, therefore, does not perform “substantially the same 4 function in substantially the same way with substantially the same result” as the generating 5 limitation in Claim 1, as needed to allege infringement under the doctrine of equivalents. See 6 Brilliant Instruments, 707 F.3d at 1347 (emphasis added). United States District Court Northern District of California 7 UTTO’s allegations that the ’441 Patent “may be used to work with fewer than all of the 8 data points available” are also belied by the patent itself. See TAC ¶ 19. UTTO points to the 9 patent description and alleges that “functions performed on data points can be turned off” and the 10 operator can then work with a “‘portion’ of the data points retrieved, as opposed to all of them.” 11 See id. It further alleges that “[i]f the locating functions are turned off for some or all but one of 12 the data points, the process is the functional equivalent of generating a buffer zone around only 13 those data points selected, which could be a single data point if the operator so chooses.” See id. 14 But this reads out the above-cited language of the specification. The references to reading 15 “the precision data values of all or a portion of the geographical coordinates of the buried asset 16 data points” are accompanied by a description of: (1) generating either a two-dimensional circle 17 around or buffer points related to “each buried asset data point,” and (2) joining those circles or 18 points so as to define the buffer zone. See ’441 Patent at 12:1-15; 12:47-66; 13:59-14:10; 14:16- 19 43. It is not reasonable to infer, then, as UTTO alleges, that locating functions of all but one data 20 point can be turned off, so that the buffer zone is generated solely based on that one point. The 21 language of the specification makes clear that buffer zones are generated using more than one data 22 point, as they require the union or joinder of more than one circle or buffer point. 23 The remaining question is whether the walk back feature is functionally equivalent to the 24 ’441 Patent if it generates one circle around one walk back point, then another circle around 25 another walk back point, and so on. 26 According to UTTO, the answer is yes. The opposition first points to allegations within 27 the TAC that “generating one circle and then another based on multiple walk back points is 28 functionally indistinguishable from generating multiple buffer zones all at the same time.” See 9 1 Oppo. at 8:13-15 (citing TAC ¶ 20). In support, it cites cases where courts “have held that the 2 order in which steps are performed may show lack of literal infringement, yet infringement may be 3 established under the doctrine of equivalents. Id. at 7:9-17. But, as Metrotech notes, those cases are distinguishable because they expressly considered United States District Court Northern District of California 4 5 the order of steps set forth limitation-by-limitation. See Reply [Dkt. No. 55] 6:6-18; see also 6 Huawei Techs., Co., Ltd. v. Samsung Elecs. Co., Ltd., 340 F. Supp. 3d 934, 958-60 (N.D. Cal. 7 2018) (finding that the “plain language of the claim terms requires an ‘ordering of steps’”); Cave 8 Consulting Grp., Inc. v. Truven Health Analytics, Inc., No. 15-CV-02177-SI, 2016 WL 2902234, 9 at *11 (N.D. Cal. May 13, 2016) (finding that “the claims do not require the steps to be performed 10 in the exact order listed”). UTTO does not allege, for instance, that the “receiving” limitation may 11 occur after the “generating” limitation, which would be akin to the order of steps considered in 12 Huawei Technologies and Cave Consulting. Instead, the issue is language within one limitation. The inherent problem with UTTO’s argument is that, as alleged, the walk back feature uses 13 14 only one data point at a time and, as explained, the ’441 Patent requires the use of multiple data 15 points to generate the buffer zone. Using one data point at a time to generate a two-dimensional 16 area is not sufficiently akin to “generating, based on the group of buried asset data points, a two- 17 dimensional area comprising the buffer zone . . . wherein the buffer zone corresponds to the 18 particular buried asset,” as recited in Claim 1. See ’441 Patent at 17:58-18:3. As a result, UTTO 19 has not pleaded infringement, either directly or under the doctrine of equivalents. This was UTTO’s fourth attempt to plead a plausible infringement claim. In my prior 20 21 Order, I gave UTTO “one final opportunity to amend its complaint and state a plausible claim.” 22 Second MTD Order at 12:19-20. It failed to do so. This claim is DISMISSED with prejudice. 23 24 II. INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE A plaintiff alleging tortious interference with prospective economic relations must show: 25 (1) an economic relationship between the plaintiff and a third party, with the probability of future 26 economic benefit to the plaintiff; (2) the defendant’s knowledge of that relationship; (3) 27 intentional acts by the defendant designed to disrupt the relationship; (4) actual disruption of the 28 relationship; and (5) economic harm to the plaintiff proximately caused by the defendant’s acts. 10 1 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 (2003) (citations omitted). 2 The plaintiff must also plead that the defendant “engaged in an independently wrongful act.” Id. 3 at 1158. Improper motive does not suffice; the act must be “proscribed by some constitutional, 4 statutory, regulatory, common law, or other determinable legal standard.” Id. at 1158-59. 5 6 UTTO, Metrotech, and Honeywell. TAC ¶¶ 44-58. In dismissing the interference claim as 7 alleged in the SAC, I identified two primary flaws: UTTO had not plausibly alleged an existing 8 economic relationship between it and Honeywell or an independently wrongful act by Metrotech. 9 Second MTD Order at 9:17-18, 10:20-22. According to Metrotech, those problems persist in the 10 11 United States District Court Northern District of California UTTO’s interference allegations stem from the December 21, 2021, meeting between TAC. MTD at 9:3-10, 10:23-24. To UTTO’s credit, it added allegations to the TAC that further support the existence of an 12 economic relationship between UTTO and Honeywell with the probability of future economic 13 benefit to UTTO. Namely, the complaint now alleges that the negotiations between the two 14 entities “reached the point where Honeywell forwarded a final draft agreement to UTTO with 15 specific terms that were expected to govern the parties’ contractual relationship,” and included 16 examples of those terms. See TAC ¶ 46. It also alleges that “[t]he deal was nearly finalized.” Id. 17 However, even if this were enough to transform UTTO’s relationship with Honeywell 18 from a potential economic relationship to an existing one, UTTO’s interference claim still falls 19 short. See Prostar Wireless Grp., LLC v. Domino’s Pizza, Inc., No. 16-CV-05399-WHO, 2017 20 WL 67075, at *6 (N.D. Cal. Jan. 6, 2017) (dismissing interference claims because the plaintiff did 21 not establish an existing relationship and “[a]n allegation of interference with a potential customer 22 is too speculative to state a claim”). That is because the TAC does not plausibly allege that 23 Metrotech committed any “independently wrongful act” that is “proscribed by some 24 constitutional, statutory, regulatory, common law, or other determinable legal standard.” Korea 25 Supply, 29 Cal. 4th at 1159. As with the SAC, UTTO’s allegations depend on conclusory 26 allegations and unreasonable inferences, neither of which are sufficient to support a claim so that it 27 survives a motion to dismiss. See In re Gilead Scis. Sec. Litig., 536 F.3d at 1055. 28 The heart of UTTO’s argument is what it contends is Metrotech’s “insistence” that 11 1 if Honeywell sought to license UTTO’s software services, Metrotech could withhold Honeywell’s own data from UTTO or Honeywell, either entirely or, if it allowed it, Honeywell could be required to pay a penalty for working with UTTO in the form of extra charges to be paid to Metrotech, to be determined entirely by Metrotech in exchange for Honeywell’s access to its own data. 2 3 4 5 6 7 8 TAC ¶¶ 54-55. UTTO bases this line of argument on two comments from the December 21 meeting: the Metrotech representative’s comment that “it was not a question of whether Metrotech could provide UTTO compliant data and that of course it could, that Metrotech had that covered” but “whether Metrotech was willing to provide the data to UTTO and that, if it did, he would expect Metrotech would charge Honeywell extra.” Id. ¶ 51. 9 10 United States District Court Northern District of California 11 According to UTTO, the representative “was suggesting that Metrotech would either not allow the data to be used by UTTO at all or, if it did grant access, it would charge a fee that would make it not worth the while to involve UTTO.” Id. It further contends that 12 Metrotech’s position was clear: Either Honeywell would have to abandon plans to contract with UTTO, or Honeywell would have to pay Metrotech an increased price if it wanted to work with UTTO, which Metrotech could determine as it saw fit since it had possession of the data, and so could it price UTTO out of the competition if it wanted to. 13 14 15 16 17 Id. As alleged, the statements of Metrotech’s representative fall within acceptable commercial 18 practice, and the inference UTTO seeks to draw is not reasonable. As I stated in my prior Order, 19 “the reasonable inference is that Metrotech told a potential customer that it would cost more to use 20 Metrotech’s data with another company’s software”—a statement that makes sense, as “[i]t is both 21 common and reasonable for companies to charge extra costs for extra services.” See Second MTD 22 Order at 11:19-22. The purported comments by the Metrotech representative do not, as UTTO 23 suggests, indicate that Metrotech planned to hold Honeywell’s data “hostage” or charge a fee so 24 costly that Honeywell would be dissuaded from working with UTTO. Nothing in the TAC 25 indicates that any fee Metrotech might have charged would be so high that it would effectively 26 “price UTTO out of the competition.” See TAC ¶ 51. Rather, it is reasonable to infer that 27 Honeywell expected certain costs out of an agreement with both UTTO and Metrotech—as 28 alleged, the very purpose of the meeting was to “see if Metrotech and UTTO could collaborate and 12 United States District Court Northern District of California 1 whether data retrieved by Metrotech’s physical devices could be UTTO compliant.” See id. ¶ 47. 2 And if Metrotech indeed suggested that it would not allow Honeywell’s data to be used by UTTO 3 at all, based on the allegations in the TAC, it is unreasonable to infer that Honeywell would simply 4 refuse to work with UTTO as a result, rather than attempt to challenge Metrotech’s actions. See 5 id. ¶ 51 (“the idea that a party that stores electronic communications of another . . . could 6 determine who should have access to the communication flies in the face of the laws governing 7 electronic storage service providers”). 8 The TAC also alleges that Metrotech overstated its own software expertise to Honeywell 9 and could not provide UTTO-compliant data. See id. ¶¶ 51-52. UTTO contends that, soon after 10 the December 21 meeting, the Metrotech representative contacted UTTO “seeking to obtain 11 various details about UTTO’s technical specifications and features,” and that this conversation 12 “indicated that Metrotech did not in fact have the level of software expertise Metrotech wanted to 13 lead Honeywell to believe it had with regard to converting the data.” Id. ¶ 52. I also addressed 14 this point on the prior motion to dismiss. It too relies on an unreasonable inference: that when 15 Honeywell asked Metrotech whether it could provide data to UTTO, Metrotech’s comment that it 16 “had that covered” was somehow a representation of its software capabilities. See Second MTD 17 Order at 12:7-14. What was true in the SAC remains so: Metrotech’s follow-up questions to 18 UTTO were reasonable given the alleged purpose of the meeting, which was to explore pairing 19 UTTO’s software with Metrotech’s hardware. See id. In general, the allegations supporting 20 UTTO’s interference claims are based on a series of inferences that are unreasonable, given the 21 purpose of the meeting, the comments themselves, and the context in which they were made. 22 Compounding the issue are the TAC’s conclusory statements about the laws that were 23 allegedly violated. UTTO alleges that “Metrotech’s insistence on holding Honeywell’s own data 24 hostage to get Honeywell to abandon its plans with UTTO was independently wrongful” because 25 it was “unlawful under the Sherman Act or the Cartwright Act” as well as “unfair and fraudulent 26 within the meaning of California’s Unfair Competition Law.” TAC ¶ 55. It also alleges that “the 27 idea that a party that stores electronic communications of another . . . could determine who should 28 have access to the communication flies in the face of the laws governing electronic storage service 13 United States District Court Northern District of California 1 providers such as the Stored Communications Act.” Id. ¶ 51. But the TAC does not elaborate any 2 further. It does not explain what is prescribed by any of these statutes or how Metrotech’s 3 comments purportedly violated their provisions. See id. And the opposition does not mention 4 these laws, let alone provide any specificity. See Oppo. at 15:8-27. 5 UTTO’s interference claim relies on conclusory statements and unreasonable inferences, 6 which I am not required to accept in deciding a motion to dismiss. It has failed to plausibly state 7 an interference claim, primarily because it has not sufficiently alleged an independently wrongful 8 act by Metrotech. UTTO has had ample opportunity to state this claim and has failed to do so. It 9 is DISMISSED with prejudice. 10 CONCLUSION 11 Metrotech’s motion to dismiss is GRANTED. UTTO’s claims are DISMISSED with 12 13 14 prejudice. IT IS SO ORDERED. Dated: December 19, 2022 15 16 William H. Orrick United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 14
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