Worldwide Home Prods., Inc. v. Bed Bath & Beyond, Inc., 11 Civ. 03633 (LTS)(MHD)
| Decision Date | 22 January 2013 |
| Docket Number | No. 11 Civ. 03633 (LTS)(MHD),11 Civ. 03633 (LTS)(MHD) |
| Parties | WORLDWIDE HOME PRODUCTS, INC., Plaintiff, v. BED BATH AND BEYOND, INC., and COHESION PRODUCTS, INC., Defendants. |
| Court | United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York |
Plaintiff Worldwide Home Products, Inc. ("Plaintiff or "Worldwide") brings this action against defendants Bed Bath and Beyond, Inc. ("BB&B") and Cohesion Products, Inc. ("Cohesion") (collectively "Defendants") alleging patent infringement and inducement of patent infringement. Defendants' answer asserted several affirmative defenses and counterclaims. Plaintiff now moves pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Defendants' First, Second, Third, and Fourth Counterclaims for failing to state a claim on which relief can be granted. Plaintiff also moves pursuant to Federal Rule of Civil Procedure 12(f) to strike Defendants' Fifth Affirmative Defense and their First, Second, and Third counterclaims.1 The Court has jurisdiction of this matter under 28 U.S.C. § 1331. The Court has considered carefully all of the parties' arguments and submissions. For the following reasons, Plaintiff's motion isgranted in part and denied in part.
A full summary of the allegations in the Amended Complaint is contained in the Order of December 21, 2012 (docket entry no. 147), disposing of Defendants' motion to dismiss. Familiarity with that decision is presumed.
Under Federal Rule of Civil Procedure 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). Motions to strike are viewed with disfavor and are infrequently granted. See, e.g., Wireless Ink Corp. v. Facebook, Inc., 787 F. Supp. 2d 298, 313 (S.D.N.Y. 2011). "The standard for striking an affirmative defense is three-pronged: (1) there must be no question of fact that might allow the defense to succeed; (2) there must be no substantial question of law that might allow the defense to succeed; and (3) the plaintiff must be prejudiced by the inclusion of the defense." Specialty Minerals, Inc. v. Pluess-Staufer AG, 395 F. Supp, 2d 109, 111 (S.D.N.Y. 2005).
In deciding a Rule 12(b)(6) motion, the Court accepts as true the non-conclusory factual allegations in the complaint and draws all reasonable inferences in the movant's favor. Roth v. Jennings, 489 F.3d 499, 501 (2d Cir. 2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009). "To survive a motion to dismiss, a complaint [or counterclaim] must contain sufficientfactual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678.
Defendants' Fifth Affirmative Defense states that "Plaintiff's claims are barred, in whole or in part, by the doctrine of unclean hands" based on Plaintiff's "misrepresentations ... during the prosecution of the patent application resulting in the '300 patent and, further, Plaintiff's intentional withholding of information from the USPTO that is material to the patentability of the '300 patent." Plaintiff argues that "unclean hands" is an equitable defense to equitable claims and is inapplicable to this suit, which seeks damages.
Plaintiff's contention is meritless. Unclean hands is not merely a defense to equitable claims. Rather, "[i]f inequitable conduct occurred with respect to one or more claims of an application, the entire patent is unenforceable." Impax Laboratories. Inc. v. Aventis Pharmaceuticals Inc., 468 F.3d 1366, 1375 (Fed. Cir. 2006). Accordingly, Plaintiff's motion to strike the Fifth Affirmative Defense is denied.
Defendants' First and Second Counterclaims seek declaratory judgments of noninfringement and invalidity/unenforceability of the 300 patent claims. Defendants' request is granted. The motion to dismiss the First and Second Counterclaim is granted, without prejudice to the filing of amended counterclaims consistent with Defendants' application.
Defendants' Third Counterclaim seeks a declaratory judgment that the '300 patent is invalid and unenforceable due to Plaintiff's alleged inequitable conduct during the prosecution of the patent application. Specifically, Defendants allege that Plaintiff knowingly provided misleading information to the patent examiner and that, but for its fraudulent conduct, Plaintiff patent would not have been approved. Plaintiff moves to dismiss the counterclaim, arguing that a finding of inequitable conduct does not invalidate the patent but, rather, renders it unenforceable. Courts regularly use the terms invalidity and unenforceability interchangeably when adjudicating challenges predicated on allegations of inequitable conduct during the patent prosecution. See, e.g., In re OxyContin Antitrust Litig., 530 F. Supp. 2d 554, 558 (S.D.N.Y. 2008); REFAC Int'l. Ltd. v. Lotus Dev. Corp., 887 F. Supp. 539, 540 (S.D.N.Y. 1995) aff'd, Refac Int'l. Ltd. v. Lotus Dev. Corp., 81 F.3d 1576 (Fed. Cir. 1996). Plaintiff, which devotes a mere half-page of its motion to argumentation about the Third Counterclaim, does not cite any authority holding that a declaration of invalidity is an unavailable remedy for fraudulent conduct, nor does it explain what rides on the distinction between invalidity and enforceability.
Accordingly, Plaintiff's motion to dismiss the Third Counterclaim is denied.
D. Motion to Strike Defendants' First. Second, and Third Counterclaims
Plaintiff moves to strike Defendants' First, Second, and Third Counterclaims on the grounds that they are merely "mirror images" of Plaintiff's causes of action. Ruke 12(f)provides that "the court may strike from a pleading ... any redundant . . . matter." Fed. R. Civ P. 12(f). When a counterclaim is merely the "mirror image" of an opposing party's claim and the counterclaim serves no independent purpose, the counterclaim may be dismissed. Arista Records LLC v. Usenet.com. Inc., No. 07 Civ. 8822, 2008 WL 4974823, *3 (S.D.N.Y. Nov. 24, 2008). In determining whether a counterclaim is merely a mirror image of a claim, the court must consider whether a case or controversy would still exist in connection with the counterclaim if the court entered a judgment dismissing the opponent's claim. Id. (citing Larson v. General Motors Corp., 134 F,2d 450, 452 (2d Cir. 1943)).
Defendants' First Counterclaim, which seeks a declaration of non-infringement, is nothing more than its First Affirmative Defense repackaged and is a mirror image of Plaintiff's claim. A dismissal of Plaintiff's infringement action would necessarily resolve it. Therefore, the First Counterclaim is struck as redundant.
Defendants' Second and Third Counterclaims are a different matter. These Counterclaims allege invalidity, which is legally and factually distinct from infringement. See Arista Records LLC, at *3; Maverick Recording Co. v. Chowdhury, Nos. 07 Civ. 200 & 07 Civ 640(DGT), 2008 WL 3884350, at *2 (E.D.N. Y. Aug. 19, 2008). The Supreme Court has stated that a counterclaim for a declaration of invalidity may be entertained even after a court finds in plaintiff's favor on the infringement question and dismisses the complaint. Cardinal Chem. Cov. Morton Int'l. Inc., 508 U.S. 83, 95-98 (1993).2 Accordingly, the motion to strike the Second and Third Counterclaims is denied.
E. Motion to Dismiss Defendants' Fourth Counterclaim
Defendants allege that Plaintiff, "by virtue of its continued attempts to misuse the '300 patent, knowing that it procured the '300 patent by a willful fraud on the USPTO, has purposefully and intentionally attempted to obtain a monopoly in violation of Section 2 of the Sherman Acts, 15 U.S.C, § 2." The tactic by which Plaintiff has allegedly attempted to obtain a monopoly is filing lawsuits to enforce its patent.
To state a section 2 claim for attempted monopolization, a plaintiff must allege "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Bayer Schering Pharma AG v. Sandoz, Inc., 813 F. Supp. 2d 569, 578 (S.D.N.Y. 2011) ). "A threshold showing for a successful attempted monopolization claim is sufficient market share by the defendant because defendant's market share is the primary indicator of the existence of a dangerous probability of success." AD/SAT. Div. of Skylight, Inc. v. Associated Press, 181 F.3d 216, 227 (2d Cir. 1999) (internal quotation marks omitted).
Defendants have not alleged any facts in support of their contention that Plaintiff's behavior creates a "dangerous probability of achieving monopoly power." Defendants...
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