ZapFraud, Inc. v. Barracuda Networks, Inc.

             IN THE UNITED STATES DISTRICT COURT 
                FOR THE DISTRICT OF DELAWARE 

ZAPFRAUD, INC. 

                    Plaintiff, 
              V.                       Civil Action No.  19-1687-CFC-CJB 
BARRACUDA NETWORKS, INC., 

                    Defendant. 

Brian E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, Delaware; Jonas 
R. McDavit, Wen Xue, DESMARAIS LLP, New York, New York 
        Counsel for Plaintiff 
Michael J.   Flynn, Andrew Mark Moshos, MORRIS, NICHOLS, ARSHT & 
TUNNELL LLP, Wilmington, Delaware; David Xue, Karineh Khachatourian, 
Nikolaus A. Woloszczuk, RIMON, P.C., Palo Alto, California 
        Counsel for Defendant 

                    MEMORANDUM OPINION 

March 24, 2021 
Wilmington, Delaware 

                                    AF      
                                     UNITED STATES DISTRICT  JUDGE 
   Pending before me are Defendant Barracuda Networks, Inc.’s objections to 
the Magistrate Judge’s September 22, 2020 Report and Recommendation.  D.I. 54. 
The Magistrate  Judge recommended in his Report and Recommendation that I 
grant in part and deny in part Barracuda’s motion to dismiss the claims of induced 
infringement, contributory infringement, and enhanced damages for willful 
infringement alleged in Plaintiff ZapFraud Inc.’s Second Amended Complaint. 
Barracuda objects only to the Magistrate  Judge’s recommendation that I deny 
Barracuda’s request to dismiss ZapFraud’s “post-suit” claims for induced and 
contributory infringement of 

U.S. Patent No. 10,277,628

 (the #628 patent) and for 
enhanced damages—that is, claims based on alleged infringement of the #628 
patent that occurred after the filing of the original Complaint in this action. 
  The Magistrate Judge had the authority to make his recommendation under 

28 U.S.C. § 636

(b)(1)(B).  I review his recommendation de novo.  § 636(b)(1); see 
also Fed. R. Civ. P. 72(b)(3); Brown v. Astrue, 

649 F.3d 193, 195

 (3d Cir. 2011). 
  ZapFraud filed the Complaint that initiated this action in September 2019.  It 
filed a First Amended Complaint a month later and then filed its Second Amended 
Complaint in April 2020.  In Count | of the Second Amended Complaint, 
ZapFraud accuses Barracuda of induced, contributory, and willful infringement 

“since at least the filing of this action.”  D.I. 37 49 31, 32, 34.  Although claims for 
induced and contributory infringement exist by virtue of § 271 of the Patent Act, 
there is no such thing as a  claim for willful infringement.  Nonetheless, “in the vast 
majority of patent cases filed today, claims for enhanced damages [under § 284 of 
the Patent Act] are sought based on allegations of willful misconduct—so much so 
that, even though the words ‘willful’ and ‘willfulness’ do not appear in § 284, 
plaintiffs and courts more often than not describe claims for enhanced damages 
brought under § 284 as ‘willful infringement claims.’”  Deere & Co. v. AGCO 
Corp., 

2019 WL 668492

, at *3 (D. Del. Feb.  19, 2019). 
  Claims of indirect infringement—that is, induced or contributory 
infringement—require proof that the defendant’s conduct occurred after the 
defendant (1) knew of the existence of the asserted patent and (2) knew that a third 
party’s acts constituted infringement of the patent.  Commil USA, LLC v.  Cisco 
Sys., Inc., 

135 S. Ct. 1920, 1926

 (2015); see also Global-Tech Appliances, Inc. v. 
SEB S.A., 

563 U.S. 754, 766

 (2011) (“[I]nduced infringement under [35 U.S.C_] § 
271(b) requires knowledge that the induced acts constitute patent infringement.”); 
Aro Mfg. Co. v. Convertible Top Replacement Co., 

377 U.S. 476, 488

 (1964) 
(holding that contributory infringement under 

35 U.S.C. § 271

(c) “require[s] a 
showing that the alleged contributory infringer knew that the combination for 
which his component was especially designed was both patented and infringing”). 

                                  ? 

Claims for enhanced damages based on willful infringement similarly require 
proof that the defendant knew about the asserted patents and knew or should have 
known that its conduct amounted to infringement of those patents.  VLS/ Tech. 
LIC v. Intel Corp., 

2019 WL 1349468

, at *1 (D. Del. Mar. 26, 2019). 
  Barracuda argued in support of its motion that ZapFraud failed to meet the 
pleading requirements for indirect infringement and willfulness-based enhanced 
damages because the Second Amended Complaint lacks factual allegations from 
which it can be inferred that Barracuda knew of the existence of the #628 patent 
(and thus also of the infringement of that patent) before the filing of this suit. 
ZapFraud countered that the original Complaint provided Barracuda notice of the 
#628 patent’s existence and how Barracuda and third parties infringe the patent 
and that ZapFraud therefore had stated cognizable claims for post-suit indirect 
infringement and enhanced damages.  D.I. 26 at 2-3.  The Magistrate Judge agreed 
with ZapFraud. 
  District courts across the country are divided over whether a defendant must 
have the knowledge necessary to sustain claims of indirect and willful 
infringement before the filing of the lawsuit.! 

' Compare Proxyconn Inc. v. Microsoft Corp., 

2012 WL 1835680

, at *7 (C.D. Cal 
May 16, 2012) (requiring pre-suit knowledge for induced infringement claims), 
Brandywine Commce’ns Techs., LLC, v.   T-Mobile USA, Inc., 

904 F. Supp. 2d 1260, 1267

 (M.D. Fla. Oct. 24, 2012) (same), Select Retrieval, LLC v. Bulbs.com Inc., 

2012 WL 6045942

, at *5—6 (D. Mass. Dec. 4, 2012) (same), Bonutti Skeletal

Innovations LLC v Arthrex, Inc., 

2013 WL 12149301

, at *2—*3 (M.D. Fla. Mar. 
29, 2013) (same), Wi-Lan USA, Inc. v. Research In Motion Ltd , 

2013 WL 12092486

, at *4 (S.D. Fla. June 7, 2013) (same), Black Hills Media, LLC v. 
Pioneer Corp., 

2013 U.S. Dist. LEXIS 187917

, at *7—*8 (C.D. Cal Sept. 24, 2013) 
(requiring pre-suit knowledge for willfulness claims), Solannex, Inc. v. MiaSole, 

2011 WL 4021558

, at *3 (N.D. Cal. Sept. 9, 2011) (same), JpVenture, Inc. v. 
Cellco Partnership, 

2011 WL 207978

, at *2 (N.D. Cal. Jan 21, 2011) (same), Cap 
Co. Ltd.  V. McAfee, Inc., 

2015 WL 3945875

, at *2—*3 (N.D. Cal. June 26, 2015) 
(same), and Kaufman v. Microsoft Corp., 

2020 WL 364136

, at *4 (S.D.N.Y. Jan. 
22, 2020) (same) with Groupon Inc. v. MobGob LLC, 

2011 WL 2111986

, at *3 
(N.D. Ill. May 25, 2011) (permitting induced infringement claims based on post- 
suit knowledge), Trading Techs. Int'l, Inc. v. BCG Partners, Inc., 

2011 WL 3946581

, at *4—*5 (N.D. II. Sept. 2, 2011) (same), Intellect Wireless Inc. v. Sharp 
Corp., 

2012 WL 787051

, at *11 (N.D. Ill. March 9, 2012) (same), Symantec Corp. 
v.  Veeam Software Corp., 

2012 WL 1965832

, at *4—*5 (N.D. Cal. May 31, 2012) 
(same), EON Corp. IP Holdings, LLC v. Sensus USA, Inc., 

2012 WL 4514138

, at 
*11-*12 (N.D. Cal. Oct.  1, 2012) (same), Rembrandt Social Media, LP v. 
Facebook Inc., 

950 F. Supp. 2d 876, 882

 (E.D. Va. June 12, 2013) (same), 
Labyrinth Optical Techs., LLC v. Fujitsu Am., Inc., 

2013 U.S. Dist. LEXIS 188873

, at   *13 (C.D. Cal Aug. 21, 2013) (same), Black Hills Media, LLC v. 
Pioneer Corp., 

2013 U.S. Dist. LEXIS 187917

, at *7—*8 (C.D. Cal Sept. 24, 2013) 
(same), MyMedical Records, Inc. v. Jardogs, LLC, 

1 F. Supp. 3d 1020, 1025

 (C.D. 
Cal. 2014) (same), Cap Co. Ltd.  V. McAfee, Inc., 

2015 WL 3945875

, at *3-*5 
(N.D. Cal. June 26, 2015) (same), Nanosys, Inc. v. OD Vision, Inc., 

2016 WL 4943006

, at *5 (N.D. Cal. Sept.  16, 2016) (same), Opticurrent, LLC v. Power 
Integrations, LLC, 

2016 WL 9275395

, at *6—*7 (E.D. Tex. October 19, 2016) 
(same), Intellicheck Mobilisa, Inc. v. Honeywell Int’l Inc., 

2017 WL 5634131

, at 
*12 (W.D. Wash. Nov. 21, 2017), ZitoVault, LLC v. Int'l Bus. Machines Corp., 

2018 WL 2971131

, at *3 (N.D. Tex. Mar. 29, 2018) (permitting willfulness-based 
enhanced damages claims based on post-suit knowledge), Plano Encryption 
Techs., LLC v. Alkami Tech., Inc., 

2017 WL 8727249

, at *6 (E.D. Tex. Sept. 22, 
2017) (same), Bush Seismic Techs. LLC v. Am. Gem Soc'y, 

2016 WL 9115381

, at 
*3 (E.D. Tex. Apr.  13, 2016) (indicating that willfulness-based enhanced damages 
claims based on post-suit knowledge were permissible), and Canon, Inc. v. 
Avigilon USA Corp. Inc., 

411 F. Supp. 3d 162

, 164-66 (D. Mass. Nov. 20, 2019) 
(same).

  Current and recent judges of this District have also taken different views on 
the issue.”  Neither the Federal Circuit nor the Supreme Court has addressed the 
issue. 
  I have held in prior opinions that the complaint itself cannot be the source of 
the knowledge required to sustain claims of induced infringement and willfulness- 
based enhanced damages.  See VLSI Tech. LLC v. Intel Corp., 

2019 WL 1349468

, 
at *2 (D. Del. Mar. 26, 2019) (dismissing willfulness-based enhanced damages 
claim where the plaintiff had alleged that the defendant gained “knowledge of the 
[patent] at least since the filing of this complaint”); Dynamic Data Techs., LLC v. 

2 Compare Mallinckrodt, Inc. v. E-Z-Em Inc., 

670 F. Supp. 2d 349

, 354 n.1  (D. 
Del. 2009) (Farnan, J.) (requiring pre-suit knowledge for induced infringement 
claims), Xpoint Techs., Inc. v. Microsoft Corp., 

730 F. Supp. 2d 349, 357

 (D. Del. 
2010) (Robinson, J.) (same), NETGEAR Inc. v. Ruckus Wireless Inc., 

2013 WL 1124036

, at *1 (D. Del. Mar.  14, 2013) (Robinson, J.) (requiring pre-suit 
knowledge for willfulness claims), SoftView LLC v. Apple Inc., 

2012 WL 3061027

, 
at *8 (D. Del. July. 26, 2012) (Stark, J.) (same), Bonutti Skeletal Innovations LLC v. 
Conformis, Inc., 

2013 WL 6040377

, at *2 n.5 (D. Del. Nov.  14, 2013) (Sleet, J.) 
(same), and Callwave Comm’ns LLC v. AT &  T Mobility LLC, 

2014 WL 5363741

, 
at *1 (D. Del. Jan. 28, 2014) (Andrews, J.) (same) with Walker Digital, LLC v. 
Facebook, Inc., 

852 F. Supp. 2d 559, 565

 (D. Del. 2012) (Robinson, J.) (permitting 
induced infringement claims based on post-suit conduct), SoftView LLC v. Apple 
Inc., 

2012 WL 3061027

, at *8 (D. Del. July 26, 2012) (Stark, J.) (same), Groove 
Digital, Inc. v. King.com, Lid., 

2018 WL 6168615

, at *2 (D. Del. Nov. 26, 2018) 
(Andrews, J.) (same), DoDots Licensing Sols. LLC v. Lenovo Holding Co., Inc., 

2019 WL 3069773

, at *3 (D. Del. July 12, 2019) (Noreika, J.) (same), JpVenture 
Inc. v. Lenovo Grp. Ltd., 

2013 WL 126276

, at *3 (D. Del. Jan. 8, 2013) (Andrews, 
J.) (permitting willfulness-based enhanced damages claims based on post-suit 
knowledge), and Clouding IP, LLC v. Amazon.com, Inc., 

2013 WL 2293452

, at *4 
(Stark, J.) (D. Del. May 24, 2013) (same).

Brightcove Inc., 

2020 WL 4192613

, at *3 (D. Del. July 21, 2020) (dismissing 
induced infringement claims where the plaintiff had alleged that the defendant 
became “aware that its accused products allegedly infringe as of the filing of the 
Complaint”).?  Though not without doubts, I am “not persuaded by Plaintiff[’s] 
contention that the requisite knowledge can be established by the filing of the 
Plaintiff[’s] Complaint.”  Mallinckrodt, Inc. v. E-Z-Em Inc., 

670 F. Supp. 2d 349, n.1

. (D. Del. 2009) (Farnan, J.). 
  “The purpose of a complaint is to obtain relief from an existing claim and 
not to create a claim.”  Helios Streaming, LLC v.  Vudu, Inc., 

2020 WL 3167641

, at 
*2 n.1 (D. Del. June 15, 2020).  ZapFraud has identified, and I know of, no area of 
tort law other than patent infringement where courts have allowed a  plaintiff to 

prove an element of a legal claim with evidence that the plaintiff filed the claim. 
The limited authority vested in our courts by the Constitution and the limited 

3 ZapFraud cites my decision in Deere & Co. v. AGCO Corp., 

2019 WL 668492

, 
(D. Del. Feb.  19, 2019) for the proposition that claims of indirect and willfulness- 
based enhanced damages based solely on post-suit conduct are cognizable.  D.I. 56 
at 6~7.  In Deere, I denied a motion to dismiss such claims alleged in two amended 
complaints in related actions because it was “plausible to infer” from the contents 
of the original complaints and marketing materials published pre-suit that the 
defendants knew that third parties were infringing the asserted patents.  

2019 WL 668492

 at *2.  The defendants in Deere never argued that the claims should be 
dismissed because they were based solely on defendants’ post-suit knowledge of 
the asserted patents.  Accordingly, Deere did not sanction indirect infringement or 
enhanced damages claims that are based on post-suit knowledge of the patents 
asserted in an infringement case.

resources made available to our courts by Congress counsel against encouraging 
plaintiffs to create claims by filing claims.  It seems to me neither wise nor 
consistent with principles of judicial economy to allow court dockets to serve as 
notice boards for future legal claims for indirect infringement and enhanced 
damages.  I agree with Judge Andrews’s statement in Callwave Communications 
LLC v. AT &  T Mobility LLC, 

2014 WL 5363741

, at *1 (D. Del. Jan. 28, 2014), 
that “[t]here is a benefit to society if [a] matter is resolved without a suit.”  As 
Judge Andrews observed in Callwave, a pre-suit notice letter could very well lead 
“the patent holder and the asserted infringer [to] exchange information, and the 
asserted infringer might then take a  license, or the patent holder might learn of 

reasons why suit should not be filed.”  Jd; see also Proxyconn Inc. v. Microsoft 
Corp., 

2012 WL 1835680

, at *5 (C.D. Cal. May 16, 2012) (“[RJequiring a  Plaintiff 

to plead knowledge based on facts other than the filing of the present lawsuit 
furthers judicial economy and preserves parties’ resources by encouraging 
resolution prior to filing a lawsuit.  Pre-litigation attempts at resolution are 
especially desirable in patent cases, which are often expensive and thus resolved by 
settlement.”). 
  The policies that govern our patent system make the requirement of pre-suit 
knowledge of the asserted patents especially warranted for enhanced damages 
claims.  Direct infringement is a  strict liability tort.  Enhanced damages under

§ 284 “are not to be meted out in a typical infringement case, but are instead 
designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement 
behavior.”  Halo Elecs., Inc. v. Pulse Elecs., Inc., 1368S. Ct.  1923,  1932 (2016). 
“The sort of conduct warranting enhanced damages has been variously 
described .. . as willful, wanton, malicious, bad-faith, deliberate, consciously 
wrongful, flagrant, or—indeed—characteristic of a pirate.”  Jd.  The purpose of 
enhanced damages is to punish and deter bad actors from egregious conduct, not to 
provide a financial incentive for opportunistic plaintiffs to spring suits for patent 
infringement on innocent actors who have no knowledge of the existence of the 
asserted patents.  As the Federal Circuit noted in Gustafson, Inc. v. Intersystems 
Industrial Products, Inc., 

897 F.2d 508

 (Fed. Cir.  1990), 
        [i]n our patent system, patent applications are secret, and 
        patentees are authorized to sue “innocent” manufacturers 
        immediately after their patents issue and without warning. 
        To hold such patentees entitled to increased damages or 
        attorney  fees  on  the  ground  of  willful  infringement, 
        however, would be to reward use of the patent system as a 
        form of ambush. 

Id. at 511

. 
  Accordingly, in the absence of binding authority to the contrary from the 
Federal Circuit and Supreme Court, I will adopt the rule that the operative 
complaint in a lawsuit fails to state a claim for indirect patent infringement where 
the defendant’s alleged knowledge of the asserted patents is based solely on the

content of that complaint or a prior version of the complaint filed in the same 
lawsuit.  And I conclude that the operative complaint in a lawsuit fails to state a 
claim for willfulness-based enhanced damages under § 284 where the defendant’s 
alleged knowledge of the asserted patents is based solely on the content of that 
complaint or a prior version of the complaint filed in the same lawsuit.* 
  I therefore will not adopt the Magistrate Judge’s recommendation and will 
dismiss ZapFraud’s claims for post-suit indirect infringement and willfulness- 
based enhanced damages. 

‘Neither of these rules prevents a plaintiff from filing in the future a new lawsuit 
alleging that the knowledge requirement is established based on the defendant’s 
awareness of the previous lawsuit.  Proxyconn, 

2012 WL 1835680

, at *6.  I do not 
believe that requiring a plaintiff to bring a second suit as opposed to obtaining 
leave to supplement its complaint pursuant to Federal Rule of Civil Procedure 
15(d) will necessarily result in inefficiencies.  See Fed. R. Civ. P. 15(d) (providing 
that “[o]n motion and reasonable notice, the court may, on just terms, permit a 
party to serve a supplemental pleading setting out any transaction, occurrence, or 
event that happened after the date of the pleading to be supplemented”).  The 
results of the first suit and estoppel doctrines would likely reduce substantially the 
scope of the second suit.  In addition, having a second suit will avoid thorny 
privilege and attorney work product issues that arise when a defendant relies on the 
opinions of its trial counsel to form its own opinion about whether it infringes the 
asserted patents.  Cf In re Seagate Tech., LLC, 

497 F.3d 1360

, 1374 (Fed. Cir. 
2007), abrogated on other grounds by Halo Elecs., Inc. v. Pulse Elecs., Inc., 

136 S. Ct. 1923

, 

195 L. Ed. 2d 278

 (2016) (en banc) (noting that “[b]ecause willful 
infringement in the main must find its basis in prelitigation conduct, 
communications of trial counsel have little, if any, relevance warranting their 
disclosure, and this further supports generally shielding trial counsel from the 
waiver stemming from an advice of counsel defense to willfulness”).

The Court will issue an Order consistent with this Memorandum Opinion. 

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