Cyber Acoustics, LLC v. Belkin Int'l, Inc.

• Decision Date: 27 December 2013
• Docket Number: Case No. 3:13–cv–01144–SI.
• Citation: 988 F.Supp.2d 1236
• Parties: CYBER ACOUSTICS, LLC, Plaintiff, v. BELKIN INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — District of Oregon

988 F.Supp.2d 1236

CYBER ACOUSTICS, LLC, Plaintiff,

v.BELKIN INTERNATIONAL, INC., Defendant.

Case No. 3:13–cv–01144–SI.

United States District Court, D. Oregon.

Dec. 27, 2013.

Greg Meyer, Kara R. Fussner, and Rudolph A. Telscher, Jr., Dickey & Pierce, P.L.C., St. Louis, MO; Susan D. Pitchford, Chernoff Vilhauer McClung & Stenzel, LLP, Portland, OR, Attorneys for Plaintiff.

David D. Dalke, David P. Enzminger, and Jenna W. Logoluso, Winston & Strawn LLP, Los Angeles, CA; Jon P. Stride, Tonkon Torp LLP, Portland, OR, Attorneys for Defendant.

OPINION AND ORDER

MICHAEL H. SIMON, District Judge.

This is an action by Plaintiff Cyber Acoustics, LLC (“Cyber”) against Defendant Bel kin International, Inc. (“Belkin”) alleging infringement of U.S. Patent No. 8,281,924 (“the '924 Patent”). Dkt. 1. On September 13, 2013, Belkin filed its first amended answer and amended counterclaims, which included an affirmative defense and counterclaim alleging inequitable conduct in the prosecution of the '924 Patent. Dkt. 23. Cyber filed a motion to dismiss Belkin's counterclaim alleging inequitable conduct and related affirmative defense. Dkt. 25. For the following reasons, Cyber's motion is DENIED.

STANDARDS

A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir.2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett–Packard Co., 668 F.3d 1136, 1140 (9th Cir.2012); Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n. 2 (9th Cir.2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In addition, a complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Baca, 652 F.3d at 1216. “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). All of these principles apply with equal force both to a claim stated in a complaint and a counterclaim stated in a responsive pleading. See Baca, 652 F.3d at 1216.

An answer must “affirmatively state any avoidance or affirmative defense.” Fed.R.Civ.P. 8(c). Such defenses must be stated “in short and plain terms.” Fed.R.Civ.P. 8(b). A court may strike an affirmative defense under Federal Rule of Procedure 12(f) if it presents an “insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). The purpose of a Rule 12(f) motion is to avoid spending time and money litigating spurious issues. See Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.1993), rev'd on other grounds,510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). “The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.” Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir.1979) (per curium) (citation omitted); see also Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1023 (9th Cir.2010). A Rule 12(f) motion will not “be granted if there is a substantial question of fact or a mixed question of law and fact that cannot be resolved, even if it is possible to determine the issue by drawing inferences from acts and statements that are not disputed.” C. Wright, A. Miller, et al.,5C Fed. Prac. & Proc. Civ. § 1381 (3d ed.). An affirmative defense is legally insufficient only if it clearly lacks merit “under any set of facts the defendant might allege.” Polk v. Legal Recovery Law Offices, 291 F.R.D. 485, 489 (S.D.Cal.2013) (citation and internal quotation marks omitted).

BACKGROUND

On October 9, 2012, the United States Patent and Trademark Office (the “PTO”) issued the '924 Patent to Cyber with the sole inventor listed as Joseph Westrup (“Westrup”). Dkt. 1–1 at 1. The patent at issue is for a cover for a portable electronic device. Id. Westrup assigned his interest in the ' 924 Patent to Cyber. Dkt. 1–2 at 1. On February 11, 2013, Cyber sued Defendant Belkin in this court, alleging infringement of the '924 Patent (the “Original Action”). On July 9, 2013, Cyber filed a Petition to Correct Inventorship with the PTO. Cyber requested that the PTO, pursuant to 35 U.S.C. § 256 and 37 C.F.R. § 1.324, issue a Certificate of Correction to correct inventorship from Westrup to Steven Murphy, Kwong Chi Kei, and Lui Suen Yen. Dkt. 1–3 at 1. In support of its Petition, Cyber provided: (1) statements from Murphy, Kwong, and Lui that “the inventorship error occurred without any deceptive intention on their part;” (2) a statement from Westrup “that he has no disagreement as to the requested correction;” and (3) an assignment from Murphy and Kwong to Cyber. Dkts. 1–3 at 1–8, 1–4 at 1–2. Cyber filed the instant lawsuit on July 9, 2013, after filing the Petition to Correct Inventorship. Dkt. 1. On July 31, 2013, Cyber and Belkin stipulated to the dismissal of the Original Action. Since then, they have proceeded with discovery in this later-filed lawsuit. After Cyber filed the pending motion to dismiss, the PTO granted Cyber's Petition to Correct Inventorship of the ' 924 Patent. Dkt. 32–1 at 2. On September 19, 2013, Belkin filed its First Amended Answer and Amended Counterclaims. Dkt. 23. In its answer, Belkin raised defenses to Cyber's claims and asserted several counterclaims against Cyber.

Relevant to the issues raised in the pending motion, Belkin asserts in its Third Affirmative Defense that the '924 Patent is unenforceable because “Westrup obtained the patent-in-suit only by deceiving the patent office regarding the identity of the inventors.” Dkt. 23 at 7–9, ¶¶ 8–14. In addition, Belkin requests in its Third Counterclaim, which alleges facts that are substantially similar to Belkin's Third Affirmative Defense, declaratory judgment of unenforceability of the '924 Patent. Id. at 13–15, ¶¶ 25–34. Among other things, Belkin alleges that the '924 Patent is unenforceable “for failing [to] [ sic ] name the true inventor as set forth in 35 U.S.C. § 102(f)” and that Westrup's declaration that he was the “original, first, and sole inventor” to the PTO was “completely false.” Id. at 13, ¶ 28. The thrust of Belkin's Third Affirmative Defense and Third Counterclaim is that the ' 924 Patent is unenforceable because of Westrup's inequitable conduct during the initial prosecution of the '924 Patent.

On September 19, 2013, Cyber brought this motion pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(6), and 12(f) to dismiss Belkin's counterclaim alleging inequitable conduct and to strike Belkin's related affirmative defense. Dkt. 25.

DISCUSSION

Cyber argues that Belkin fails in its Third Counterclaim to state a claim upon which relief can be granted because the allegations in support of Belkin's inequitable conduct counterclaim do not comply with Rule 9(b) as interpreted by the U.S. Court of Appeals for the Federal Circuit. See Exergen Corp. v. Wal–Mart Stores, Inc., 575 F.3d 1312, 1325–31 (Fed.Cir.2009). Cyber also argues that Belkin's Third Affirmative Defense should be stricken under Rule 12(f) for failing to provide the requisite fair notice of what the defense is and the factual grounds upon which it rests. These arguments are without merit, and each is addressed in turn.

A. Motion to Dismiss

Exergen Corp. v. Wal–Mart Stores, Inc. establishes that a party must plead a claim alleging inequitable conduct with particularity and allege both an intent to deceive the PTO and that the false statement was material. 575 F.3d at 1328–29. Cyber argues that Belkin failed to plead: (1) its inequitable conduct counterclaim with particularity; and (2) facts sufficient to demonstrate that Westrup “specifically intended to deceive the patent office.” Dkt. 31 at 5.

1. Legal Standards in Pleading an Inequitable Conduct Claim

A claim for inequitable conduct is reviewed under Federal Rule of Civil Procedure 9(b). Exergen, 575 F.3d at 1327. Whether inequitable conduct has been pleaded adequately is a question of Federal Circuit law because it “pertains to or is unique to patent law.” Cent. Admixture Pharmacy Servs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347, 1356 (Fed.Cir.2007). Inequitable conduct is an equitable defense to patent infringement that, if proven, bars enforcement of a patent. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed.Cir.2011). The remedy of inequitable conduct is considered “the ‘atomic bomb’ of patent law.” Id. at 1288. Inequitable conduct focuses on the misdeeds of the individuals responsible for securing a patent. Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 607 F.3d 817, 828–32 (Fed.Cir.2010). Deceit and misdeeds by even a non-inventor during the prosecution of a patent is sufficient to “spoil...