Syngenta Crop Prot. v. Atticus, LLC

• Decision Date: 21 March 2022
• Docket Number: 5:19-CV-509-D
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: SYNGENTA CROP PROTECTION, LLC, Plaintiff, v. ATTICUS, LLC, Defendant.

SYNGENTA CROP PROTECTION, LLC, Plaintiff, v. ATTICUS, LLC, Defendant.

No. 5:19-CV-509-D

United States District Court, E.D. North Carolina, Western Division

March 21, 2022

ORDER

JAMES C. DEVER III United States District Judge

On November 12, 2019, Syngenta Crop Protection, LLC (“Syngenta” or “plaintiff”) filed suit against Atticus, LLC (“Atticus” or “defendant”) alleging patent infringement [D.E 1]. On June 29, 2021, Atticus filed an amended answer and counterclaims [D.E. 272]. Atticus raised counterclaims alleging noninfringement and the invalidity of Syngenta's patents, violations of the Sherman Act, 15 U.S.C §§ 1, et seq., violations of the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”), N.C. Gen. Stat. §§ 75-1.1 et seq., defamation, and a claim for attorney's fees. See [D.E. 272] ¶¶ 256-96. On July 13, 2021 Syngenta moved to dismiss Atticus's antitrust, defamation, and UDTPA claims under Federal Rule of Civil Procedure 12(b)(6) [D.E. 294] and filed a memorandum in support [D.E. 295]. On July 20, 2021, Syngenta moved to stay discovery concerning Atticus's counterclaims while Syngenta's motion to dismiss was pending [D.E. 301]. On August 3, 2021, Atticus responded in opposition to Syngenta' motion to dismiss [D.E. 319] and in opposition to Syngenta's motion to stay [D.E. 323]. On August 17, 2021, Syngenta replied to Atticus's response in opposition to Syngenta's motion to dismiss [D.E. 334]. As explained below, the court grants Syngenta's motion to dismiss and denies as moot Syngenta's motion to stay.

I.

A motion to dismiss under Rule 12(b)(6) tests the complaint's legal and factual sufficiency.

See Ashcroft v. Iqbal, 556 U.S. 662, 677-80 (2009); Bell Atl. Corp, v, Twombly, 550 U.S. 544, 554-63 (2007); Coleman v, Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010), affd, 566 U.S. 30 (2012); Giarratano v. Johnson. 521 F.3d 298, 302 (4th Cir. 2008). To withstand a Rule 12(b)(6) motion, a pleading “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quotation omitted); see Twombly, 550 U.S. at 570; Giarratano, 521 F.3d at 302. In considering the motion, the court must construe the facts and reasonable inferences “in the light most favorable to [the nonmoving party].” Massey v. Ojaniit, 759 F.3d 343, 352 (4th Cir. 2014) (quotation omitted); see Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013), abrogated on other grounds by Reed v. Town of Gilbert, 576 U.S. 155 (2015). A court need not accept as true a complaint's legal conclusions, “unwarranted inferences, unreasonable conclusions, or arguments.” Giarratano, 521 F.3d at 302 (quotation omitted); see Iqbal, 556 U.S. at 678-79. Rather, a party's factual allegations must “nudge[ ] [its] claims, ” Twombly, 550 U.S. at 570, beyond the realm of “mere possibility” into “plausibility.” Iqbal, 556 U.S. at 678-79.

When evaluating a motion to dismiss, a court considers the pleadings and any materials “attached or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v, Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011); see Fed.R.Civ.P. 10(c); Goines v. Valley Cmty, Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016); Thompson v. Greene, 427 F.3d 263, 268 (4th Cir. 2005). A court may also consider a document submitted by a moving party if it is “integral to the complaint and there is no dispute about the document's authenticity” without converting the motion into one for summary judgment. Goines, 822 F.3d at 166. Additionally, a court may take judicial notice of public records. See, e.g.. Fed.R.Evid. 201; Tellabs, Inc, v. Makor Issues & Rts., Ltd., 551 U.S. 308, 322 (2007); Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

Syngenta's motion to dismiss requires the court to consider North Carolina state law defamation and UDTPA claims. Accordingly, this court must predict how the Supreme Court of North Carolina would rule on any disputed state law issues. See Twin City Fire Ins. Co. v. Ben Amold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005). In doing so, the court must look first to opinions of the Supreme Court of North Carolina. See id.; Parkway 1046, LLC v. U.S, , Home Corp., 961 F.3d 301, 306 (4th Cir. 2020); Stable v. CTS Corp,, 817 F.3d 96, 100 (4th Cir. 2016). If there are no governing opinions from that court, this court may consider the opinions of the North Carolina Court of Appeals, treatises, and “the practices of other states.” Twin City Fire Ins. Co.. 433 F.3d at 369 (quotation omitted).^[1] In predicting how the highest court of a state would address an issue, this court must “follow the decision of an intermediate state appellate court unless there [are] persuasive data that the highest court would decide differently.” Toloczko, 728 F.3d at 398 (quotation omitted); see Hicks v. Feiock, 485 U.S. 624, 630 & n.3 (1988). Moreover, in predicting how the highest court of a state would address an issue, this court “should not create or expand a [s]tate's public policy.” Time Warner Ent.-Advance/Newhouse P'ship v. Carteret-Craven Elec. Membership Corp., 506 F.3d 304, 314 (4th Cir. 2007) (alteration and quotation omitted); see Day & Zimmerman. Inc, v. Challoner, 423 U.S. 3, 4 (1975) (per curiam); Wade v. Panek Med., Inc., 182 F.3d 281, 286 (4th Cir. 1999).

A.

Syngenta argues that Atticus fails to state a plausible antitrust claim under section 2 of the Sherman Act See [D.E. 295] 15-30. Atticus disagrees. See [D.E. 319] 13-30. Atticus alleges Syngenta's lawsuit against it is a sham and an abuse of process that amounts to monopolization or attempted monopolization under section 2 of the Sherman Act. As explained below, the Noerr-Pennington^[2] doctrine bars Atticus's antitrust claim.

A patentee can be subject to antitrust liability for the anticompetitive effects of a lawsuit. See Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir. 1998); LendingTree, LLC v. Zillow, Inc., No. 3:10-CV-439-FDW-DCK, 2011 WL 13222698, at *2 (W.D. N.C. Nov. 4, 2011) (unpublished).^[3] However, under the Noerr-Pennington doctrine, patentees, like everyone else, have a “First Amendment right to petition the government for redress without fear of antitrust liability.” Balt. Scrap Corp, v. David J. Joseph Co., 237 F.3d 394, 398 (4th Cir. 2001); see Indus, Models, Inc, v. SNF, Inc., 716 Fed.Appx. 949, 955-56 (Fed. Cir. 2017) (unpublished); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1349-50 (Fed. Cir. 2014); ERBE Elektromedizin GmbH v. Canady Tech. LLC. 629 F.3d 1278, 1291-93 (Fed. Cir. 2010); FilmTec Corp, v. Hydranautics, 67 F.3d 931, 937 (Fed. Cir. 1995); see also Waugh Chapel S., LLC v. United Food & Com. Workers Union Local 27, 728 F.3d 354, 362-64 (4th Cir. 2013); IGEN Int'l, Inc, v, Roche Diagnostics GmbH, 335 F.3d 303, 310 (4th Cir. 2003).

To strip a patentee of its immunity from antitrust liability, a party must show either that the patentee obtained the patent through knowing and willful fraud, see Walker Process Equip., Inc, v. Food Mach. & Chem. Corp., 382 U.S. 172, 177-78 (1965), or that the lawsuit is a sham. See NobelpharmaAB, 141 F.3dat 1068; C.R. Bard, Inc, v. M3 Sys., Inc., 157 F.3d 1340, 1368-69 (Fed. Cir. 1998); Lending Tree, LLC, 2011 WL 13222698, at *2. As is the case here, “an antitrust claim premised on stripping a patentee of its immunity from the antitrust laws is typically raised as a counterclaim by a defendant in a patent infringement suit.” Nobelpharma AB, 141 F.3d at 1067. To state a claim for treble damages under section 4 of the Clayton Act, a counterclaiming defendant also must plausibly allege all the other elements of a substantive antitrust claim. See Dippin' Dots, Inc, v. Mosey, 476 F.3d 1337, 1346 (Fed. Cir. 2007); Lending Tree, LLC, 2011 WL 13222698, at *2. Atticus alleges only that Syngenta's lawsuit against it is a sham, not that Syngenta obtained its patents through knowing and willful fraud.

Patentees lose their Noerr-Pennington immunity when they engage in sham litigation. See, e.g., Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 555-56 (2014); BE&K Constr. Co. v. N.L.R.B., 536 U.S. 516, 525-26 (2002); Prof'l Real Estate Invs., Inc, v. Columbia Pictures Indus., Inc,, 508 U.S. 49, 60-61 (1993) [hereinafter PREI1; Indus. Models, Inc., 716 Fed.Appx. at 956; Content Extraction, 776 F.3d at 1349-50; ERBE Elektromedizin. 629 F.3d at 1291-93; Film Tec Corp., 67 F.3d at 937. Litigation is a sham if it satisfies a two-part definition comprising an objective component and a subjective component. See BE&K Contr. Co., 536 U.S. at 526 (“For a suit to violate the antitrust laws, then, it must be a sham both objectively and subjectively.”). First, the “lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.” PREL 508 U.S. at 60; see Octane Fitness, 572 U.S. at 556; BE & K Constr. Co., 536 U.S. at 526; Content Extraction, 776 F.3d at 1350. A lawsuit is not objectively baseless if its proponent had probable cause to bring suit. See PREL 508 U.S. at 62. Second, the “litigant's subjective motivation” for the lawsuit must be to directly interfere with a competitor's business relationships. PREI, 508 U.S. at 60; see Octane Fitness, 572 U.S. at 556; BE & K Constr. Co., 536 U.S. at 526; Content Extraction, 776 F.3d at 1350. If a court determines that a lawsuit is not objectively baseless, the court need not consider the litigant's subjective motivations. See PREL 508 U.S. at 60-61.

The Noerr-Pennington doctrine is an affirmative defense and a court generally may not “reach the merits of an affirmative defense unless all facts necessary to the affirmative...