Signify N. Am. Corp. v. Reggiani Lighting USA, Inc.
| Decision Date | 23 March 2020 |
| Docket Number | 18 Civ. 11098 (ER) |
| Parties | SIGNIFY NORTH AMERICA CORPORATION and SIGNIFY HOLDING B.V., Plaintiffs, v. REGGIANI LIGHTING USA, INC. and REGGIANI S.P.A. ILLUMINAZIONE, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Signify North America Corporation and Signify Holding B.V. (collectively, "Signify") bring this case against Reggiani Lighting USA, Inc. and Reggiani S.p.A. Illuminazione (collectively, "Reggiani"), alleging infringement of five LED-related patents, including U.S. Patent Nos. 7,348,604 (the "'604 patent"), 7,352,138 (the "'138 patent"), 7,766,518 (the "'518 patent"), 8,070,328 (the "'328 patent"), and 7,262,559 (the "'559 patent") (collectively, the "patents-in-suit"). Doc. 21. In response, Reggiani brings four counterclaims and asserts ten affirmative defenses. Doc. 38. Before the Court is Signify's motion to dismiss Reggiani's third and fourth counterclaims for patent misuse and inequitable conduct, respectively, and to strike its fifth and tenth affirmative defenses on the same grounds. Doc. 40. For the reasons stated below, the motion is GRANTED.
Signify, formerly Philips Lighting, owns numerous lightbulb-related patents, including for LED inventions and technologies, such as the patents-in-suit. Doc. 21 ¶ 12. Signify produces both lighting components and fixtures. Doc. 38 ¶ 33.1 Although it competes directly with companies like Reggiani—a "small family owned company . . .focused on providing innovative luminaires"—it also supplies components to Reggiani and other lighting fixture manufacturers. Id. ¶ 8, 33.
In its complaint, Signify alleges that Reggiani infringed the patents-in-suit. Doc. 21 ¶¶ 18-115. In pertinent part, Reggiani counters that at least some of these patents are unenforceable because Signify has engaged in inequitable conduct and patent misuse—allegations that Signify calls unacceptably broad and lacking sufficient factual bases to survive a motion to dismiss.
According to Reggiani, one or more individuals at Signify impermissibly withheld references from the '138 and '559 patent applications with the specific intent to deceive the United States Patent Office (the "PTO"), thereby rendering these patents unenforceable. Doc. 38 ¶¶ 45, 51. These patents appear to describe a type of light dimmer and a type of light switch, respectively. The '138 patent is titled "Methods and apparatus for providing power to lighting devices," and describes, in part, a method and device for controlling LED-based light sources (e.g., via a dimmer). Doc. 21 ¶¶ 14, 36. The '559 patent is titled "LEDs Driver," and describes, in part, a control switch-operable power supply for LED light sources (e.g., a light switch). Id. ¶¶ 17, 99.
With respect to the '138 patent, Reggiani alleges that at least one individual at Signify—either Ihor A. Lys, Frederick M. Morgan, and/or Joseph Teja—knowingly withheld a material publication from the PTO during the prosecution of that patent. Doc. 38 ¶ 45. Lys and Morgan were inventors of the '138 patent, and Teja was prosecution counsel for the patent. Id. The allegedly material publication was PCT International Publication No. WO 99/31560 (the "'138 publication"). The publication, titled "Digitally Controlled Illumination Methods and Systems," is an international patent application filed in December 1998 and published in June 1999. It describes "methods and systems for illumination," including "LED systems associated with a processor." Doc. 41, Ex. B at 1. According to Reggiani, the '138 publication is prior art to the patent because itdiscloses or renders either anticipated or obvious certain limitations to its first claim. Doc. 38 ¶¶ 45-47. Reggiani states that the PTO specifically noted that at least one of these limitations was absent from the prior art, and, therefore, that if the PTO had been aware of the '138 publication, it would not have issued at least the first claim of the patent. Id. ¶ 47. Reggiani further alleges that the '138 publication is non-cumulative of other references because any similar reference was "buried in over 400 other [cited] references, were published after the filing date of the '138 patent, were not . . . prior art'" and would have thus been "easily overlooked." Id. ¶ 48. Lys and Morgan allegedly knew about the publication and its materiality because they were listed as inventors on the publication. Id. ¶ 49. Similarly, Teja was allegedly aware of it because he disclosed the publication in unrelated patent applications he prosecuted. Id. At least one of these individuals allegedly withheld the publication from the PTO in furtherance of a strategy "to broadly cover the LED retrofit2 market and to broaden and lengthen the patent coverage of . . . technology relating to LED lighting." Id. ¶ 50.
Reggiani makes similar allegations concerning the '559 patent. Specifically, it alleges that Signify's strategy to "cover the LED retrofit market" led at least two of the named inventors on the '559 patent, Ajay Tripathi and Bernd Clauberg, and/or its prosecution counsel, including Robert J. Krause, to knowingly withhold U.S. Patent Application Publication No. US 2002/0176262 (the "'559 publication") during the prosecution of that patent. Id. ¶¶ 51, 54. The '559 publication is a patent application titled "Power Supply for LEDs," published in November 2002. Doc. 41, Ex. C. It describes, at least in part, a method for "adjust[ing] the current flow through the transformer supplying current to . . . LEDs." Id. at 1. Reggiani claims that the '559 publication was material to the patent application because it disclosed each limitation of the patent's eleventh claim and thereby rendered it either anticipated or obvious. Doc. 38¶¶ 51-53. During the examination, "Applicants argued, and the Examiner agreed" that these limitations were missing from the prior art, id. ¶ 53, a claim that disclosure of the '559 publication would have rebutted. Therefore, had the PTO known of the '559 publication, it would not have issued at least the patent's eleventh claim. Id. Tripathi and Clauberg allegedly knew of the publication and its materiality because they were listed as the publication's inventors and because the publication shared portions of its disclosure statement with the '559 patent.3 Id. ¶ 54. Allegedly, this was not the only material reference withheld by in-house counsel during the prosecution of the '559 patent; according to Reggiani, withholding the '559 publication was part of a larger "pattern of lack of candor." Id.
Signify argues that these allegations fail to "point to any deliberate decision by any specific individual to withhold the allegedly material information during the prosecution of the '138 and '559 patents." Doc. 41 at 1. In particular, it maintains that Reggiani's continued use of the "and/or" conjunction dooms the allegations, as it forecloses the specificity required for pleading fraud-based claims under Rule 9(b).
Reggiani also alleges that "Signify filed this lawsuit knowing that the asserted patents are likely invalid and/or that Reggiani's products could not possibly infringe them, and thus filed it in bad faith and with the improper purpose of stifling competition in the market." Doc. 38 ¶ 40. This is part of Signify's alleged larger pattern of targeting lighting fixture manufacturers, which are mostly small companies, and threatening litigation that they most likely cannot afford. Id. ¶ 36. For example, Reggiani notes that "numerous" suits against other lighting fixture manufactures "have settled at the early stages of litigation." Id. ¶ 35. And, according to Reggiani, Signify's over 900 licensees"were acquired mainly through cease and desist letters threatening litigation." Id. ¶ 38. The purpose of this scheme is to use Signify's extensive lighting patent portfolio to coerce the licensing of patents for exorbitant fees, regardless of whether the patents are valid or actually infringed. Id. ¶¶ 34, 37. Among the patents Signify lists on its website, Reggiani estimates that about one-fifth are expired and notes that the foreign counterparts for others, including the '138, '559, and '604 patents, have been revoked, withdrawn, or limited. Id. ¶ 39.
Not only does Signify contest that its alleged "bad faith" enforcement can form a legal basis for patent misuse, but also that, even if this theory were to survive, Reggiani's pleadings fail to establish how the current action impermissibly broadens the scope of any of the patents-in-suit with anticompetitive effects, as required for pleading patent misuse. See Doc. 41.
Signify brought this action on November 28, 2018, Doc. 1, and amended its complaint on February 5, 2019, Doc. 21, claiming five counts of patent infringement against Reggiani. Reggiani filed an answer and counterclaims on March 22, 219, Doc. 25, which Signify answered on April 12, 2019, Doc. 28. Reggiani then amended its answer twice, once on April 17, 2019, Doc. 30, and again on May 23, 2019, Doc. 38. It asserts ten affirmative defenses and brings counterclaims for invalidity, noninfringement, patent misuse, and inequitable conduct. Doc. 38.
On June 24, 2019, Signify filed the instant motion seeking to dismiss Reggiani's counterclaims for patent misuse and inequitable conduct pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike affirmative defenses for the same pursuant to Rule 12(f). Doc. 40.
"A motion to dismiss a counterclaim is evaluated under the same standard as a motion to dismiss a complaint." Inter-Am. Dev. Bank v. IIG Trade Opportunities Fund N.V., No. 16 Civ. 9782 (PAE), 2017 WL 6025350, at *4 (S.D.N.Y. Dec. 4, 2017) (internal quotation marks and citations omitted). Under Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed for "failure to state a claim upon...
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