Webasto Thermo & Comfort N. Am., Inc. v. Bestop, Inc.
Webasto Thermo & Comfort N. Am., Inc. v. Bestop, Inc.
Opinion of the Court
This action involves Plaintiffs Webasto Thermo & Comfort North America, Inc. and Webasto-Edscha Cabrio USA, Inc.'s (collectively "Webasto") claim that Defendant Bestop, Inc. ("BesTop") infringes Webasto's
*525I. BACKGROUND
Webasto alleges that on May 24, 2016, the United States Patent and Trademark Office ("USPTO") issued the '342 Patent and that Webasto holds all right, title and interest in the '342 Patent with rights to enforce the '342 Patent and to sue for infringement. (ECF No. 1, Complaint ¶ 8; Ex. A,
Webasto alleges that BesTop manufactures a roof opening mechanism under the name "Sunrider For Hardtop" ("Sunrider") that incorporates Webasto's patented roof opening mechanism and infringes one or more claims of the '342 Patent, either literally or under the doctrine of equivalents. Webasto alleges that representatives of BesTop were present at the 2015 Moab, Utah Jeep event and that, at that time, BesTop did not offer a roof opening mechanism similar to or in-line with its current Sunrider. (Compl. ¶¶ 13-18.)
Webasto alleges that BesTop's Sunrider infringes at least claims 1 and 6 of the '342 Patent. (Compl. ¶ 25.) Claim 6 of the '342 Patent recites:
A roof opening mechanism, being designed as an interchangeable insert, for unlockable fixation at a roof structure of a vehicle roof, and comprising:
a base frame, which can be placed upon an edge region of the roof structure, said edge region for limiting a roof opening, further comprising a fabric covering element, which, by at least one tensioning bow fixedly pivotable with respect to the base frame, is displaceable between a closed position for covering the roof opening and an uncovering position for uncovering the roof opening,
wherein the tensioning bow is coupled to an auxiliary tensioning bow fixedly pivotal to the base frame, and
wherein the tensioning bow, in relation to a vertical longitudinal center plane of the roof, is on each of its two sides connected to the auxiliary tensioning bow via a coupling rod,
the coupling rod being articulated to the auxiliary tensioning bow and to the main tensioning bow via intermediately positioned hinge points.
(Compl. ¶ 26, Ex. A, United States Patent No. 9,346,342, claim 6, PgID 38.) Webasto alleges that BesTop's Sunrider mechanism satisfies all of the limitations of claim 6 of the '342 Patent. (Compl. ¶¶ 27-33.)
Claim 1 of the '342 Patent recites "A vehicle roof having a roof structure with a roof opening, which, by a roof opening mechanism, can be closed or at least partially uncovered as desired, said roof opening mechanism being designed as an interchangeable insert...." (Compl. ¶ 34. Ex. A, '342 Patent, claim 1, PgID 37.) Claim 1 then recites the structural elements of the interchangeable insert which are similar to those set forth connection with claim 6. (Id. ) Webasto alleges that each of the limitations of claim 1 of the '342 Patent are found in BesTop's Sunrider mechanism. (Compl. ¶ 35.)
Webasto alleges that BesTop adopted the Webasto patented design after having seen Webasto's design in at least March 2015 and was or should have been aware that Webasto's design incorporated patentable subject matter. Webasto alleges that BesTop's infringement has caused and continues to cause damage to Webasto and *526that Webasto is entitled to recover damages at trial, including treble damages, pursuant to
This Court previously granted Webasto's motion to dismiss BesTop's original counterclaim in its entirety for failure to meet the pleading requirements of Fed. R. Civ. P. 12(b)(6). Webasto Thermo & Comfort North America, Inc. , No. 16-13456,
II. STANDARD OF REVIEW
When reviewing a motion to dismiss under Rule 12(b)(6), a court must " 'construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.' " Handy-Clay v. City of Memphis ,
In Bell Atlantic Corp. v. Twombly ,
The Supreme Court clarified the concept of "plausibilty" in Ashcroft v. Iqbal ,
*527In ruling on a motion to dismiss, the Court may consider the complaint as well as (1) documents that are referenced in the plaintiff's complaint and that are central to plaintiff's claims, (2) matters of which a court may take judicial notice (3) documents that are a matter of public record, and (4) letters that constitute decisions of a governmental agency. Thomas v. Noder-Love ,
The Twombly / Iqbal pleading standard applies in the case of a Rule 12(b)(6) challenge in a patent case. Webasto ,
III. ANALYSIS
The question presented in Webasto's motion is whether BesTop has pleaded inequitable conduct with the specificity required by Rule 9(b) and whether the allegations of Count III state a plausible claim of inequitable conduct under Rule 12(b)(6). The Federal Circuit has taken aim at what it has labeled a gross misuse and overuse of the inequitable conduct claim in patent actions, stemming in large part from the Federal Circuit's own relaxation of the standards for a showing of the intent and materiality elements of the claim:
This court embraced [ ] reduced standards for intent and materiality to foster full disclosure to the PTO. This new focus on encouraging disclosure has had numerous unforeseen and unintended consequences. Most prominently, inequitable conduct has become a significant litigation strategy. A charge of inequitable conduct conveniently expands discovery into corporate practices before patent filing and disqualifies the prosecuting attorney from the patentee's litigation team. Moreover, inequitable conduct charges cast a dark cloud over the patent's validity and paint the patentee as a bad actor. Because the doctrine focuses on the moral turpitude of the patentee with ruinous consequences for the reputation of his patent attorney, it discourages settlement and deflects attention from the merits of validity and infringement issues.
* * *
With these far-reaching consequences, it is no wonder that charging inequitable conduct has become a common litigation tactic. One study estimated that eighty percent of patent infringement cases included allegations of inequitable conduct. Inequitable conduct has been overplayed, is appearing in nearly every patent suit, and is cluttering up the patent *528system. [T]he habit of charging inequitable conduct in almost every major patent case has become an absolute plague. Reputable lawyers seem to feel compelled to make the charge against other reputable lawyers on the slenderest grounds, to represent their client's interests adequately, perhaps.
Therasense, Inc. v. Becton, Dickinson and Co. ,
To prevail on a claim of inequitable conduct, the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO. A finding that the misrepresentation or omission amounts to gross negligence or negligence under a "should have known" standard does not satisfy this intent requirement. In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference. In other words, the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.
Webasto argues that BesTop has failed to allege a prima facie case of inequitable conduct and seeks dismissal of Count III of BesTop's First Amended Counterclaim alleging Unenforceability of the '342 Patent. The Federal Circuit "applies [its] own law, not the law of the regional circuit, to the question of whether inequitable conduct has been pleaded with particularity under Rule 9(b)." Exergen ,
Rule 9(b) also states that "[m]alice, intent, knowledge, and other conditions of mind of a person may be averred generally." The relevant "conditions of mind" for inequitable conduct include: (1) knowledge of the withheld material information or of the falsity of the material misrepresentation, and (2) specific intent to deceive the PTO. Although "knowledge" and "intent" may be averred generally, our precedent, like that of several regional circuits, requires that the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind.
In sum, to plead the "circumstances" of inequitable conduct with the requisite "particularity" under Rule 9(b), the pleading must identify the specific who, *529what, when, where, and how of the material misrepresentation or omission committed before the PTO. 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 PTO.
"The substantive elements of inequitable conduct are: (1) an individual associated with the filing and prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) the individual did so with a specific intent to deceive the PTO." Exergen ,
A. BesTop Fails to Sufficiently Plead the "Who"
By generically naming the "inventor, his law firm, and/or the prosecution attorney" as the actors in its inequitable conduct claim, BesTop has failed to adequately plead the "who" under established Federal Circuit law. The essence of BesTop's claim of inequitable conduct is that someone associated with Webasto failed to bring to the attention of the PTO examiner the existence of prior art. BesTop identifies the prior art as Webasto's
These allegations fail because they do not adequately identify the "who," the specific "individual associated with the filing and prosecution of a patent application [who] ... failed to disclose material information...." Exergen ,575 F.3d at 1327 n. 3. By alleging that "[the inventor], [his law firm], and/or [the prosecution attorney]" (emphasis added) committed a particular act, [BesTop] has not alleged that any one of those individuals necessarily committed the particular act, nor has [BesTop] clearly pleaded any joint concert of action. Indeed, it appears from the pleading in the alternative that [BesTop] is uncertain who actually committed the act. The following factual scenarios could all fit within the allegations: [the inventor] committed the act, but [his law firm] and [the prosecution attorney] did not; [the inventor's law firm] committed the act, but [the inventor] and [the prosecution attorney] did not; neither [the inventor] nor [his law firm] committed the act, but [the prosecution attorney] did; [the inventor] and [the prosecution attorney] committed the act, but [the inventor's law firm] did not; [the inventor's law firm] and [the prosecution attorney] committed the act, but [the inventor] did not; and [the inventor] and [his law firm] committed the act, but [the prosecution attorney] did not. This is insufficient as it does not identify the "who": the person *530or persons who committed the acts constituting the elements of the defense.
Drew Technologies, Inc. v. Robert Bosch, L.L.C. , No. 12-15622,
BesTop's inequitable conduct counterclaim does not permit a plausible inference 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 PTO." Exergen ,
BesTop's generic pleading is exactly the sort at which the Federal Circuit has taken aim in cases like Therasense and Exergen . BesTop suggests that because it identifies the prior art in its pleading, and specifically identifies which claim limitations that prior art is relevant to, it has "on balance" satisfied Exergen and Rule 9(b). But nothing in Exergen suggests that intent, materiality, and the "who, what, where, when, and how" of the alleged misrepresentations are factors to be balanced against one another. They are necessary elements, each of which must be pleaded with sufficient particularity.
B. BesTop Fails to Allege Facts That Plausibly Suggest a Specific Intent to Deceive or the Materiality of Prior Art Reference
"Although 'knowledge' and 'intent' may be averred generally, [Federal Circuit] precedent, like that of several regional circuits, requires that the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind." Exergen ,
Not only does BesTop fail to identify the "who," and to plausibly suggest the "who's" specific intent, but BesTop also fails to identify what knowledge the "who" possessed about the prior art that satisfies the "but-for" materiality element of a claim of inequitable conduct. "When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." Therasense ,
BesTop's inequitable conduct counterclaim is an example of the very formulaic "knee jerk" filing that has been expressly rejected by the Federal Circuit as a litigation tactic that, when unwound, is insufficient to state a plausible claim for relief and lacks merit to proceed further. BesTop suggests that Webasto has "ignored" more recent Federal Circuit precedent, Amercian Calcar, Inc. v. American Honda Motor Co., Inc. ,
C. BesTop's Seventh Affirmative Defense is Stricken.
Federal Rule of Civil Procedure 12(f) provides that "the court may strike from a pleading an insufficient defense...." Fed. R. Civ. P. 12(f). "Motions to strike affirmative defenses pursuant to Rule 12(f) are generally disfavored, but granting such motions is within the sound discretion of the district court." Fields v. State Farm Mut. Auto. Ins. Co. , No. 11-15296,
Because the Court finds that BesTop's inequitable conduct counterclaim fails to state a claim under Rule 12(b)(6) and fails to satisfy the particularity requirements of Rule 9(b), it follows that BesTop cannot succeed on its Seventh Affirmative Defense, which expressly incorporates by reference the allegations of Count III of its First Amended Counterclaim. Striking BesTop's Seventh Affirmative Defense will also aid in eliminating a "spurious issue" before trial, keeping these parties focused throughout discovery on the infringement and invalidity issues in this patent action, and streamlining this litigation. Accordingly, BesTop's Seventh Affirmative defense is STRICKEN.
IV. CONCLUSION
The Federal Circuit sent a clear message in Therasense , Exergen , and their progeny: in order to assert a claim of inequitable conduct, which levels an accusation of "moral turpitude" and necessarily "casts a dark cloud over the patent's validity and paints the patentee as a bad actor," Therasense,
Accordingly, the Court GRANTS Plaintiffs' Partial Motion to Dismiss BesTop's First Amended Counterclaim, DISMISSES Count III of BesTop's First Amended Counterclaim WITH PREJUDICE and STRIKES BesTop's Seventh Affirmative Defense.
IT IS SO ORDERED.
Nor has BesTop pleaded any facts that would suggest that they are relieved of the obligation to plead but-for materiality based upon "egregious misconduct." See Therasense ,
Reference
- Full Case Name
- WEBASTO THERMO & COMFORT NORTH AMERICA, INC. and Webasto-Edscha Cabrio USA, Inc. v. BESTOP, INC.
- Cited By
- 3 cases
- Status
- Published