Vg Innovations Inc v. Minsurg Corp., Case No. 8:10-cv-1726-T-33MAP

• Decision Date: 18 April 2011
• Docket Number: Case No. 8:10-cv-1726-T-33MAP
• Parties: VG INNOVATIONS, INC., Plaintiff, v. MINSURG CORPORATION, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

VG INNOVATIONS, INC., Plaintiff, v. MINSURG CORPORATION, et al., Defendants.

Case No. 8:10-cv-1726-T-33MAP

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

Dated: April 18, 2011

ORDER

This matter comes before the Court upon consideration of Defendants Minsurg Corporation and Minsurg International, Inc.'s Motion to Dismiss (Doc. # 14), filed on September 27, 2010. Plaintiff VG Innovations, Inc. filed a Response in Opposition (Doc. # 22) on October 19, 2010. In this patent infringement dispute, the Minsurg Defendants request that the Court dismiss all claims against them pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Court denies the Motion.

I. Legal Standard

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all factual allegations in a complaint as true andconstrue them in the light most favorable to the plaintiff. See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1269 (11th Cir. 2009).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations,... a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(internal citations and quotations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Id.

A plaintiff must plead enough facts to state a plausible basis for the claim. James River Ins. Co. v. Ground Down Eng'g, Inc., 540 F.3d 1270, 1274 (11th Cir. 2008) ("To survive dismissal, the complaint's allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level; if they do not, the plaintiff's complaint should be dismissed"). Additionally, "[t]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a causeof action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

II. Analysis

In its amended complaint, VG asserts three counts against the Minsurg Defendants. (Doc. # 12 at 19-22). In count one, VG requests a declaration: (i) that the '761 Patent is invalid under 35 U.S.C. §§ 101, 102, 103, and 112; (ii) that VG does not infringe the '761 Patent; (iii) that the '761 Patent is unenforceable due to the Minsurg Defendants' inequitable conduct; and (iv) that the '761 Patent is unenforceable due to the Minsurg Defendants' misuse. (Doc. # 12 at 19-20). In count two, VG asserts that the Minsurg Defendants have violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). (Doc. # 12 at 20-21). Finally, in count three, VG alleges that the Minsurg Defendants have intentionally interfered with VG's business relations. (Doc. # 12 at 22).

A. Declaratory Judgment

1. Invalidity and Noninfringement

The Minsurg Defendants contend that the Court should dismiss VG's invalidity and noninfringement declaratory judgment claims pursuant to Rule 12(b)(6) because VG has not met the pleading requirements of the Federal Rules of Civil Procedure. (Doc. # 14 at 1). Rule 8(a)(2) requires thatpleadings contain "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the opposing party is given "fair notice of what the... claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555. VG's invalidity and noninfringement claims satisfy this standard.

VG seeks a declaration that the '761 Patent is invalid "because the claimed invention is obvious in light of the Stein Paper and other prior art, including scholarly articles and patents disclosing the use of minimally invasive surgical portals and approaches...." (Doc. # 12 at 19). In addition, VG submits that the '761 Patent "fail[s] to meet the requirements of the Patent Act, 35 U.S.C. § 1, et seq., including, but not limited to, 35 U.S.C. §§ 101, 102, 103, and 112." (Doc. # 12 at 20). VG's noninfringement claim requests a declaration that VG "does not infringe any valid claims of the '761 Patent, whether directly, contributorily, vicariously, or by inducement." (Doc. # 12 at 20).

The Minsurg Defendants have the burden of proof as to infringement of the patents. See Under Sea Indust., Inc. v. Dacor Corp., 833 F.2d 1551, 1557 (Fed. Cir. 1987)("The burden always is on the patentee to show infringement"); Schinzing v. Mid-States Stainless, Inc., 415 F.3d 807, 814 (8th Cir. 2005)(where defendant counterclaimed for a declaratory judgment of noninfringement, patent holder "was obligated to counterclaim for infringement and had the burden to show infringement").

Allegations similar to those at issue have withstood challenges under Rule 12(b)(6). In Boldstar Technical, LLC v. Home Depot, Inc., 517 F. Supp. 2d 1283, 1286 (S.D. Fla. 2007), a patent infringement dispute, the court examined allegations contained in Home Depot's counterclaims in the context of a Rule 12(b)(6) motion. Id. at 1290. Home Depot counterclaimed for a declaration of noninfringement and stated: "Home Depot has not infringed and is not infringing the '039 patent or any claim thereof either directly, contributorily, by inducement, or otherwise." Id. In its second counterclaim, Home Depot alleged that the patent at issue was "invalid for one or more of the following reasons: [several statutory grounds for invalidity]" and prayed for a declaratory judgment that the patent was invalid. Id.

In denying the plaintiff's motion to dismiss, the Boldstar court concluded that Home Depot's counterclaims "effectively apprise[d]" the plaintiffs of the grounds of Home Depot's allegations. Id. at 1291. The court reasoned that the counterclaims were "brief but clear" and the plaintiffs could "reasonably be required to frame a response." Id.; seePfizer Inc. v. Apotex Inc., 726 F. Supp. 2d 921, 937-38 (N.D. Ill. 2010)(finding that the singular allegation that the patent at issue was "invalid for failure to comply with one or more of the conditions of patentability set forth in Title 35 of the United States Code" satisfied Rule 8 and was sufficient to put the plaintiff on notice of the invalidity claim); Elan Pharma Int'l Ltd. v. Lupin Ltd., No. 09-1008, 2010 WL 1372316, at *4 (D.N.J. Mar. 31, 2010) (concluding that noninfringement counterclaims that simply averred that the defendant's product did not infringe the listed patents satisfied Rule 8(a) and put the plaintiff on full notice of the defendant's claims of noninfringement).

The claims at issue are very similar to those alleged in the Boldstar, Pfizer and Elan cases. In its claims, VG provides notice to the Minsurg Defendants that it contends that its products do not violate the Minsurg Defendants' patent and that the patent is invalid. This Court concludes that these allegations put the Minsurg Defendants on notice of VG's claims of noninfringement and invalidity, and therefore are not subject to dismissal for failure to state a claim.

2. Inequitable Conduct

VG requests a declaration that the claims of the '761 Patent are "unenforceable due to [the Minsurg Defendants']pattern of inequitable conduct before the [Patent and Trademark Office], including failing to disclose the significance of the Stein Paper to the [Patent and Trademark Office], and then failing to disclose other references describing the widespread use of minimally invasive surgical portals and techniques." (Doc. # 12 at 19). The Minsurg Defendants contend that VG failed to plead this claim with sufficient particularity. (Doc. # 14 at 9-11). For the reasons stated below, the Court disagrees and finds that VG's allegations satisfy the applicable pleading standard.

Claims alleging inequitable conduct are subject to Federal Rule of Civil Procedure 9(b). Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1328 (Fed. Cir. 2009). The Exergen court explained that in order to plead

inequitable conduct with the requisite particularity under Rule 9(b), the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the [Patent and Trademark Office]. Moreover, although knowledge and intent may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the [Patent and Trademark Office].

Id. at 1328-29 (internal quotations omitted).

While VG often refers to the Minsurg Defendants generally, VG affirmatively identifies Dr. David Petersen, the Minsurg Defendants' Chief Medical Officer and the patent applicant, as the person who failed to disclose the significance of the Stein Paper and other references to the Patent and Trademark Office. (Doc. # 12 at 9). This identification satisfies the "who" portion of the analysis.

VG also provides ample detail regarding the alleged prior art references in satisfaction of the "what" prong of the analysis. VG alleges that the Minsurg Defendants "failed to disclose numerous published references revealing that the use of a minimally invasive and/or 'arthroscopic type portals' to perform surgery, including surgery on the facet joints, was well-known to spinal surgeons by the mid to late 1990s." (Doc. # 12 at 9). Additionally, VG explained that "[a]mong other materials, [the Minsurg Defendants] failed to disclose...