Barnes & Noble, Inc. v. LSI Corp.

• Citation: 849 F.Supp.2d 925
• Decision Date: 02 February 2012
• Docket Number: No. C–11–2709 EMC.,C–11–2709 EMC.
• Court: U.S. District Court — Eastern District of California
• Parties: BARNES & NOBLE, INC., et al., Plaintiffs, v. LSI CORPORATION, et al., Defendants.

849 F.Supp.2d 925

BARNES & NOBLE, INC., et al., Plaintiffs,

v.LSI CORPORATION, et al., Defendants.

No. C–11–2709 EMC.

United States District Court, N.D. California.

Feb. 2, 2012.

Carl Gunnar Anderson, Quinn Emanuel Urquhart Oliver and Hedges, LLP, David Eiseman, Melissa J. Baily, Quinn Emanuel Urquhart & Sullivan, LLP, San Francisco, CA, John B. Quinn, Shon Morgan, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, for Plaintiffs.

Charlene Marie Morrow, Hector J. Ribera, Ravi Ragavendra Ranganath, Ryan Aftel Tyz, Virginia K. Demarchi, Yixin Zhang, Fenwick & West LLP, Mountain View, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO STRIKE

EDWARD M. CHEN, District Judge.

Pending before the Court is Defendants' motion to strike Plaintiff Barnes & Noble's (“BN”) affirmative defenses. Docket No. 71. After considering the parties' submissions and oral argument, the Court hereby enters the following order.

I. FACTUAL & PROCEDURAL BACKGROUND

Plaintiffs BN and BN.com are manufacturers and sellers of the Nook e-reader. On June 6, 2011, Plaintiffs filed this declaratory judgment action for non-infringement of patents related to Nook's 3G, WiFi, and audio technology. Docket No. 1. The operative First Amended Complaint (“FAC”) alleges non-infringement and invalidity of eleven patents held by Defendants LSI and Agere. Docket No. 25. Defendants moved to dismiss Plaintiffs' complaints, which this Court denied on October 18, 2011, 823 F.Supp.2d 980, 2011 WL 4948598 (N.D.Cal.2011). Docket No. 61. Defendants then filed an answer asserting counterclaims against Plaintiffs for infringement of one or more (unspecified) claims of each of the eleven patents-in-suit.¹ Docket No. 62 (“D's Answer”). Plaintiffs answered those counterclaims, asserting eight affirmative defenses:

1. Non–Infringement

2. Invalidity

3. Unenforceability due to standards-setting misconduct (on the grounds of estoppel, fraud, laches, waiver, implied waiver, unclean hands, patent exhaustion, implied license, and/or other equitable doctrines)

4. Prosecution History Estoppel/Judicial Estoppel

5. No Injunctive Relief

6. License

7. 35 U.S.C. §§ 287 & 288

8. Failure to State a Claim

Docket No. 66 (“P's Answer”). Defendants now move to strike Plaintiffs' third, fourth, fifth, sixth, and eighth affirmative defenses.

II. DISCUSSION

A. Motion to Strike

1. Legal Standard

Under Federal Rule of Civil Procedure 8(b)(1), a party is required to “state in short and plain terms its defenses to each claim asserted against it.” Fed.R.Civ.P. 8(b)(1). The purpose of such a requirement is to give the plaintiff fair notice of the defense. Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir.1979). Under Rule 12(f), “[a] court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). Most courts have held that the Ashcroft/Twombly pleading standards apply to affirmative defenses, such that they must state a plausible claim for relief. See, e.g., Barnes v. AT & T Pension Ben. Plan–Nonbargained Program, 718 F.Supp.2d 1167, 1171–72 (N.D.Cal.2010) (Patel, J.) (“While neither the Ninth Circuit nor any other Circuit Courts of Appeals has ruled on this issue, the vast majority of courts presented with the issue have extended Twombly's heightened pleading standard to affirmative defenses.”); J & J Sports Productions, Inc. v. Mendoza–Govan, No. C 10–05123 WHA, 2011 WL 1544886, at *1 (N.D.Cal. Apr. 25, 2011) (“ Twombly 's heightened pleading standard applies to affirmative defenses.”); Bottoni v. Sallie Mae, Inc., No. C 10–03602 LB, 2011 WL 3678878, at *1 (N.D.Cal. Aug. 22, 2011) (“[C]ourts in this district consistently have applied the Twombly–Iqbal pleading standard to the pleading of affirmative defenses, requiring a defendant to allege enough facts to state a claim to relief that is plausible on its face.”).

Aside from insufficiency, “[i]mmaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.1993) (internal quotation marks omitted), overruled on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). As indicated by the language of the rule, “ ‘[t]he function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial....’ ” Id. When ruling on a motion to strike, a court views the pleading under attack in the light most favorable to the nonmoving party. See RDF Media Ltd. v. Fox Broad. Co., 372 F.Supp.2d 556, 561 (C.D.Cal.2005).

Plaintiffs argue that the Twombly/Iqbal standard should not apply to affirmative defenses. See Opp. at 2 & n. 1. Plaintiffs contend that there is no reason to subject them to a heightened pleading requirement at such an early stage of the litigation, when Defendants can explore the bases for their affirmative defense through discovery. See Opp. at 4; see also Saeedi v. M.R.S. Associates, Inc., No. C 07–01584(RS), 2007 WL 1875975, at *1 (N.D.Cal. Jun. 28, 2007) (“No rule or policy weighs against requiring Saeedi to use the discovery process to explore what, if any, factual and evidentiary basis M.R.S. may have to support th[e] averment [that it acted according to a bona fide error].”).² However, Twombly's rationale of giving fair notice to the opposing party would seem to apply as well to affirmative defenses given the purpose of Rule 8(b)'s requirements for defenses. Barnes, 718 F.Supp.2d at 1172. “Applying the same standard will also serve to weed out the boilerplate listing of affirmative defenses which is commonplace in most defendants' pleadings where many of the defenses alleged are irrelevant to the claims asserted.” Id. While some courts declined to apply Twombly and Iqbal to defenses, they appear to be in the minority. Id.;see also J & J Sports Prods. v. Coyne, No. C 10–04206 CRB, 2011 WL 227670, at *1–2 & n. 2, 2011 U.S. Dist. LEXIS 6623, at *4–6 & n. 2 (N.D.Cal. Jan. 24, 2011) (striking defenses for failure to provide sufficient notice to the opposing party, even without applying the heightened plausibility standard).

On the other hand, there is much uncertainty as to the applicability of Twombly and Iqbal to patent litigation generally, at least where, as here, the local rules prescribe a detailed process requiring prompt disclosure of specific bases for claims and defenses. See, e.g., ASUSTeK Computer Inc. v. AFTG–TG LLC, No. 5:CV 11–00192–EJD, 2011 WL 6845791, at *13 (N.D.Cal. Dec. 29, 2011) (“[R]equiring a heightened pleading of invalidity would circumvent this Court's Patent Local Rules which require detailed disclosures as to invalidity contentions soon after the suit is filed.”); Xilinx, Inc. v. Invention Inv. Fund I LP, No. C 11–0671 SI, 2011 WL 3206686, at *6 (N.D.Cal. July 27, 2011) (noting examples of conflict between local rules and Twombly/Iqbal in certain circumstances, but finding that a “bare-bones recitation of statutes does not meet the requirements of Twombly and Iqbal and does not put defendants on notice of the basis of Xilinx's claims of invalidity”).

Moreover, Plaintiffs' cite Vistan, in which the court concluded that detailed affirmative defenses were unnecessary where, as here, the opposing party had not yet identified which claims of the patents-in-suit were allegedly infringed. Vistan Corp. v. Fadei USA, Inc., No. C–10–4862 JCS, 2011 WL 1544796, at *7 (N.D.Cal. Apr. 25, 2011) (“These affirmative defenses, while boilerplate, are standard affirmative defenses, appropriate at the outset of the case before discovery has commenced.”). It is unreasonable to expect a party to detail affirmative defenses which depend on the nature of the infringement claims when such claims are not detailed in the complaint or counterclaim. What is good for the goose's complaint should be good for the gander's answer.

Therefore, the Court will address each disputed defense below, keeping in mind the fact that Defendants have yet to reveal which claims of each patent they allege is infringed by Plaintiffs and given the practical needs of the litigation in view of the Patent Local Rules.

2. Third Affirmative Defense–Unenforceability³

Defendants argue that Plaintiffs fail to plead facts sufficient to state a claim for relief under any of their grounds for unenforceability, which include “estoppel, fraud, waiver, implied waiver, unclean hands, patent exhaustion, implied license, and/or other equitable doctrines.” P's Answer ¶ 93. Specifically, Defendants raise the following arguments:

a. Failure to Allege Facts Sufficient to Impute Acts of Predecessor Entity to the Defendants

Defendants argue that Plaintiffs fail to plead facts sufficient to impute the acts of Lucent, a predecessor entity, to Defendants. Plaintiffs allege that based “[o]n information and belief supported by publicly available documents,” Lucent is a predecessor-in-interest to LSI/Agere. See, e.g., P's Answer at 15 ¶ 11, 20 ¶ 60. Plaintiffs' third affirmative defense of unenforceability includes numerous factual allegations of misconduct by Lucent, including misrepresentations to, and failure to follow the disclosure rules of, various standard-setting organizations (“SSOs”) of which Lucent (and, in certain cases, Defendants) were members. Specifically, Plaintiffs allege that Lucent “intentionally and knowingly made material misrepresentations and/or omissions in connection with standards-setting organizations,” e.g., by failing to report that certain of its patents—now implicated in this suit—were applicable or essential to the proposed standards those SSOs later adopted. See, e.g., FAC ¶ ¶ 35–40.

Defendants claim these allegations are insufficient to connect them to any conduct by Lucent. While not entirely clear, Defendants appear to be making a two-part argument: (1) that Plaintiffs...