Nomadix, Inc. v. Hospitality Core Services LLC

Filing 69

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS/STRIKE COUNTERCLAIMS AND DEFENSES 54 by Judge Dean D. Pregerson. (SEE DOCUMENT FOR SPECIFICS). (lc). Modified on 6/29/2015 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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NOMADIX, INC.,

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Plaintiff,

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v.
HOSPITALITY CORE SERVICES
LLC, d/b/a BLUEPRINT RF,

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Defendant.
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Case No. CV 14-08256 DDP (VBKx)
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS/STRIKE COUNTERCLAIMS AND
DEFENSES
[Dkt. No. 54]

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Presently before the Court is Plaintiff’s motion to dismiss

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certain counterclaims and strike corresponding affirmative

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defenses.

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I.

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BACKGROUND
Plaintiff alleges that Defendant has infringed multiple

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patents1 of a system that redirects users’ web browsers to a portal

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page so they may access a computer network in various locations.

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(Lezama Decl., Ex. 9, column 3, line 40.

See also Dkt. No. 47 at

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The patents at issue are
’894 patent”), 6,868,399 (“the
patent”), 8,266,266 (“the ’266
patent”), 8,364,806 (“the ’806
patent”). (FACC at 15.)

U.S. Patent Nos. 6,636,894 (“the
’399 patent”), 8,156,246 (“the ’246
patent”), 8,266,269 (“the ’269
patent”), 8,788,690 (“the ’690

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1-3 (background section of Court’s prior order, discussing the

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patents at issue in more detail).)

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Plaintiff’s system is essentially the same as a procedure that

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became available for public use in 1998.

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Amended Counterclaim (“FACC”), ¶ 42.)

Defendant alleges that

(Defendant’s First

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Defendant alleges that for some of the patents, Plaintiff

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failed to make the required disclosures of prior art in the field.2

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(Id. at ¶ 13.)

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whereby a gateway device facilitates a “handshake” with the

For example, the ‘894 patent includes a process

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computer, allowing the user to be redirected to a portal page.

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(Lezama Decl., Ex. 9, lines 25-40.)

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same procedure is disclosed in Plaintiff’s other prior art

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references, including Short et al. (Assigned to Nomadix, Inc.)

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WO98/404990, but Plaintiff neglected to submit these disclosures to

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the patent examiner.

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Defendant alleges that this

(FACC, ¶ 18.)

Defendant provides other similar examples of omitted prior

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art.

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Patent No. 6,182,139 (“the ‘139 patent”) describes a materially

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similar gateway procedure which Plaintiff failed to disclose.

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at ¶ 26.)

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purposely omitted this information in order to intentionally

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deceive the patent examiner.

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Plaintiff’s patent applications, Defendant alleges, it did make

(Id. at ¶¶ 19-24, 26-30.)

E.g., Defendant alleges that

(Id.

Allegedly, for the series of patents at issue, Plaintiff

(Id. at ¶ 14.)

In some of

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“Prior art” may consist of references to any documentary or
non-documentary sources, such as academic publications, other
patents, or known unpatented inventions, that help “to determine
the novelty and nonobviousness of claimed subject matter in a
patent application or patent.” 1 Donald S. Chisum, Chisum on
Patents at Gl-18 (Matthew Bender ed., 2015).
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prior art disclosures, but this information was buried in lengthy

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disclosure sections.

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(Id. at ¶ 12.)

Defendant further alleges that Plaintiff’s patents are not

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enforceable due to either “inequitable conduct” on Plaintiff’s part

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during prosecution, “prosecution laches,” estoppel, or unclean

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hands.

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(Id. at ¶¶ 82-85.)

Defendant also alleges that the ‘894, ‘246, ‘266, ‘269 and

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‘806 patent (the “captive portal” patents) are duplicative since

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they discuss nearly identical processes.

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(Id. at ¶ 8.)

Defendant also alleges that it “designed around” Plaintiff’s

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patents by “practicing prior art” – that is, its allegedly

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infringing systems are simply combinations of known, pre-existing

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inventions or technology.

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(Id. at ¶ 62.)

Specific allegations as to each patent are as follows:
- the ‘894 and ‘399 patents:

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Defendant alleges that “Nomadix failed to submit its own

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material prior art publications to the Patent Office,” including an

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international patent application (“WO 98/40990”) and a series of

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papers written by Leonard Kleinrock, a “named inventor” of the

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Nomadix patents.

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patents contain claims as to redirection technology that are

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materially similar to the prior publications, (id. at ¶¶ 17-19),

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and further alleges in general terms an intent to deceive the

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patent examiner.

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- the ‘399 and ‘690 patents:

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(Id. at ¶¶ 13-15.)

Defendant alleges that the

(Id. at ¶¶ 15, 18, 20.)

Defendant also alleges that Plaintiff’s attorney made

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misleading statements distinguishing another reference to prior art

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with regard to the ‘399 patent.

(Id. at ¶ 21.)
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Defendant alleges

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that Plaintiff “extended its misleading arguments” as to the ‘399

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patent when it “silently allowed the claims of the ‘690 patent to

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be granted” without comment on the prior art relevant to both.

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(Id. at ¶ 21, 23.)

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application “include[d] unreasonably voluminous prior-art

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disclosures having the effect of obscuring the most important

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prior-art references (commonly referred to as “burying” the most

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important references).

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Plaintiff failed to disclose prior art (“Brendel” and “RFC 1919”)

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having to do with “TCP/IP handshakes” and “transparent proxying.”

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(Id. at ¶¶ 26-30.)

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knew of the references and intentionally or recklessly omitted

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them.

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- the ‘246, ‘266, ‘269, and ‘806 patents:

Defendant also alleges that the ‘690 patent

(Id. at ¶ 12.)

Defendant also alleges that

Defendant alleges that Plaintiff’s attorney

(Id. at ¶ 31.)

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Defendant alleges that Plaintiff also “buried” the most

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important prior art references in the applications for these

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patents.

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attorney omitted the Brendel and RFC 1919 prior art from some of

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the applications and “buried” them in a mass of other references in

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other applications.

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that these patents depend on the ‘894 patent, and therefore they

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are “infected” with the inequitable conduct alleged as to that

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patent.

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(Id. at ¶¶ 12, 24.)

Defendant alleges that Plaintiff’s

(Id. at ¶¶ 26-31, 39.)

Defendant also alleges

(Id. at 38.)

Defendant therefore alleges counterclaims seeking declaratory

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judgments that their systems do not infringe Plaintiff’s patents,

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that the patents are invalid, and/or that the patents are

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unenforceable on equitable grounds.

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Plaintiffs have filed this motion to dismiss those

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counterclaims and strike associated affirmative defenses.

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II.

LEGAL STANDARD

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In order to survive a motion to dismiss for failure to

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state a claim, a complaint need only include “a short and plain

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statement

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relief.”

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(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

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must include “sufficient factual matter, accepted as true, to state

of the claim showing that the pleader is entitled to
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 55 (2007)
A complaint

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a claim to relief that is plausible on its face.”

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Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at

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570).

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“accept as true all allegations of material fact and must construe

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those facts in the light most favorable to the plaintiff.”

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v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000).

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Ashcroft v.

When considering a Rule 12(b)(6) motion, a court must

Resnick

A court may strike any “redundant, immaterial, impertinent, or

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scandalous matter” from a pleading.

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‘redundant’ matter consists of allegations that constitute a

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needless repetition of other averments . . . .”

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Butler, 229 F.R.D. 166, 170 (E.D. Cal. 2005).

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is that which has no essential or important relationship to the

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claim for relief or the defenses being pleaded.

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matter consists of statements that do not pertain, and are not

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necessary, to the issues in question.”

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984 F.2d 1524, 1527 (9th Cir. 1993) rev'd as to other matters, 510

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U.S. 517 (1994).

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Fed. R. Civ. P. 12(f).

“A

Wilkerson v.
“‘Immaterial’ matter

‘Impertinent’

Fantasy, Inc. v. Fogerty,

“[T]he function of a 12(f) motion to strike is to avoid the
expenditure of time and money that must arise from litigating
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spurious issues by dispensing with those issues prior to trial . .

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. .”

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Cir. 1983).

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III. DISCUSSION

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Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th

As an initial matter, the Court notes that the parties’ briefs

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in this motion and especially the counterclaim are densely written

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and filled with both technical jargon and unexplained patent terms

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of art.

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does increase the likelihood of misunderstanding and outright

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While none of this is fatal to the parties’ arguments, it

error.

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A federal judge in Illinois recently adopted the following

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requirement of the lawyers in a patent case: “All submissions must

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be brief and nontechnical and eschew patent-law jargon. Since I am

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neither an electrical engineer nor a patent lawyer, and since this

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case will be tried to a jury, the parties' lawyers must translate

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technical and legal jargon into ordinary language.”

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v. Barco N.V., No. 05 C 5620, 2009 WL 1098864, at *1 (N.D. Ill.

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Apr. 15, 2009).

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this case.

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A.

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New Medium LLC

The Court expects the same in future filings in

Non-Infringement
Defendant’s first counterclaim seeks declaratory judgment that

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their systems do not infringe Plaintiff’s patents because they

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merely “practice[] prior art” – that is, they rely on technology

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that predates Plaintiff’s patents.

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(FACC, ¶¶ 58-62.)

However, the Federal Circuit has explained that “practicing
prior art” is not a defense to an infringement claim.

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Spectramed's argument is that Baxter, in order to establish

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literal infringement, must prove . . . [that] Spectramed's
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accused devices must not be an adoption of the combined

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teachings of the prior art. This is not a correct statement of

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the law governing patent infringement. There is no requirement

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that the accused device be nonobvious in light of the prior

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art, or otherwise be itself patentable . . . .

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obviousness in light of the prior art go to validity of the

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[plaintiff’s] claims, not to whether an accused device

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infringes.

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Questions of

Baxter Healthcare Corp. v. Spectramed, Inc., 49 F.3d 1575, 1583

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(Fed. Cir. 1995).

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opposition.

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Defendant does not dispute this point in its

This is not to say Defendant cannot plead noninfringement.

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For example, the counterclaim alleges that Defendant “designed

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around” Plaintiff’s patent, (FACC, ¶ 62), which is a perfectly

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legitimate defense.

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(Fed. Cir. 2011) (“[L]egitimate design-around efforts should always

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be encouraged as a path to spur further innovation.”).

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Court emphasizes that reliance on prior art alone is insufficient

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to overcome an infringement claim.

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B.

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TiVo Inc. v. EchoStar Corp., 646 F.3d 869, 883

But the

Enforceability of Plaintiff’s Patents
Defendant’s third counterclaim seeks declaratory judgment that

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Plaintiff’s patents are not enforceable under a variety of

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equitable doctrines.

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1.

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Inequitable Conduct
Defendant alleges that Plaintiff engaged in “inequitable

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conduct” during the prosecution of its patents by failing to

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disclose prior art and by “burying” the art in a way that made it

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hard for the patent examiners to find.
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“Inequitable conduct is an equitable defense to patent

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infringement that, if proved, bars enforcement of a patent.”

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Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285

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(Fed. Cir. 2011).

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the accused infringer must prove that the patentee acted with the

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specific intent to deceive the PTO” by withholding or

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misrepresenting a “known material reference.”

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(emphasis in original).

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the ‘atomic bomb’ of patent law.

“To prevail on a claim of inequitable conduct,

Id. at 1290

“[T]he remedy for inequitable conduct is
Unlike validity defenses, which

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are claim specific, inequitable conduct regarding any single claim

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renders the entire patent unenforceable.”

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omitted).

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invoking the doctrine “prove by clear and convincing evidence that

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the applicant knew of the reference, knew that it was material, and

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made a deliberate decision to withhold it.”

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Id. at 1288 (citations

The Federal Circuit therefore requires that the party

Id. at 1290.

At the pleading stage, of course, Defendant is not required to

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provide evidence of knowledge, materiality, and intent.

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elements must still be pled, and because the doctrine sounds in

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fraud, they must be pled with the particularity required by Rule

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9(b) – that is, the party must identify “the specific who, what,

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when, where, and how of the material misrepresentation or omission

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committed before the PTO.”

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575 F.3d 1312, 1326-28 (Fed. Cir. 2009).

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other conditions of a person's mind,” however, “may be alleged

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generally.”

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But those

Exergen Corp. v. Wal-Mart Stores, Inc.,
“[I]ntent, knowledge, and

Fed. R. Civ. P. 9(b).

With the above legal standards in mind, the Court begins with

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some observations as to Plaintiff’s arguments in favor of

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dismissal.
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a.

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Identity of Specific Individuals
Plaintiff argues that Defendant’s pleading is insufficient

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because it identifies, for example, “Nomadix including Mr. Edwards”

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as having knowledge of, and withholding or misrepresenting,

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material references.

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cases.

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sufficiently particular to plead that “Exergen, its agents and/or

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attorneys . . . both knew of the material information and

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deliberately withheld or misrepresented it.”

(FACC, ¶ 18.)

Plaintiff analogizes to two

First, in Exergen, the court held that it was not

Exergen, 575 F.3d at

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1329.

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“attorneys”; it names specific individuals.

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Electronics Co. v. Nichia Corp., the court held that although a

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plaintiff company had named individuals associated with the

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company, it had not “identified the ‘who’ of the material

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misrepresentations because they have not identified ‘the specific

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individual associated with the filing or prosecution of [Nichia's

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patents-in-suit] who both knew of the material information and

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deliberately withheld or misrepresented it.’”

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872 (E.D. Mich. 2012) (quoting Exergen, 575 F.3d at 1329).

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this case, Mr. Edwards and two other identified individuals, Mr.

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Duan and Mr. Kesler, were the attorneys who filed the patent

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applications.

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these specific individuals who were “associated with the filing or

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prosecution of” Nomadix’s patents, they are adequately pled as to

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the “who” prong.

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But here Defendant does not merely refer to “agents” or
Second, in Everlight

907 F. Supp. 2d 866,
But in

Thus, to the extent that the pleadings identify

Plaintiff nonetheless argues that the pleading is inadequately

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particular because in some places it refers to the company rather

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than the attorney.

(E.g., FACC, ¶ 24 (“Nomadix failed to bring [a]
9

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reference to the examiner’s attention . . . .”).)

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not find such occasional references to the corporate identity to be

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fatal, however, where the attorneys who filed the patent

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applications are clearly identified and are alleged to have the

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requisite knowledge.

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b.

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The Court does

Knowledge
Plaintiffs argue that Defendants do not specifically allege

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the requisite knowledge on the part of Nomadix’s attorneys, for two

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reasons.

First, Plaintiffs point to language stating that the

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attorneys “knew or reasonably should have known” of material

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references.

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knowledge, and “should have known” does not suffice to meet that

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standard.

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or reasonably should have known” misstates the standard.

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does include an allegation of actual knowledge, and could therefore

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easily be amended or simply construed3 to state the correct

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standard, as long as facts reasonably supporting an inference of

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knowledge are also alleged.

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(allegations requiring an inference of scienter satisfy Rule 9(b)

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as long as the facts provide a basis for making such an inference

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and the inference is a reasonable one).

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Plaintiffs point out that the standard is actual

(Mot. at 9.)

Plaintiff is correct that the phrase “knew
But it

Exergen, 575 F.3d at 1327 n.4&5

Plaintiff also argues that some of the allegations are

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conclusory and inadequate, because it is not enough to allege that

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a company should have known the contents of its own prior

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See, e.g., Segal v. Fifth Third Bank, N.A., 581 F.3d 305, 310
(6th Cir. 2009) “Courts may look to–they must look to–the substance
of a complaint's allegations . . . . Otherwise . . . enforcement
would reduce to a formalistic search through the pages of the
complaint for magic words . . . and nothing more.”).
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applications.

(Mot. at 8 (citing Exergen, 575 F.3d at 1330).)

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That is true, but Defendant is alleging something more specific:

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that the lawyers charged with engaging in patent prosecution for

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Nomadix were aware of the contents of the company’s previous patent

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applications as to very similar systems or mechanisms.

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plausible inference from their role in patent prosecution and their

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duty of due diligence, which presumably includes investigating the

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company’s own prior patents.

That is a

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Indeed, in most cases, the allegation here is that Plaintiff’s

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attorney’s knew of specific parts of the prior patent applications,

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which was not the case in Exergen.

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that the pleading fails to allege knowledge of “the specific

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portions of [the] prior art that were allegedly material.”

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at 9.)

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extensive references to specific portions of prior art.

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FACC, ¶ 18 (stating that Edwards knew or should have known of page

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3 and page 13 of Short et al. (Assigned to Nomadix, Inc.)

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WO98/404990); id. at ¶ 21 (“Nomadix (including Mr. Edwards) knew or

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reasonably should have known of the materiality of 5,987,430 at

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Fig. 21 and column 18 beginning at line 21.”); id. at ¶ 22 (“See

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Van Horne 5,987,430 at Fig. 9 (blocks 641, 643 645 describe the

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DHCP process); and column 15 beginning at line 61 . . . .”); id. at

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¶ 24 (“Nomadix including Mr. Kesler knew or reasonably should have

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known of the materiality [of] Van Horne 5,987,430 at Fig. 21 and

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column 18 beginning at line 21 . . . .”).

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c.

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Plaintiff states in the motion

(Mot.

This argument is somewhat baffling, however, in light of
(E.g.,

Intent
As with knowledge, intent may be pled generally, and the

pleading may rely on inferences.

Additionally, it is well11

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established that “[t]he requirements of Rule 9(b) may be ‘relaxed

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as to matters peculiarly within the opposing party's knowledge,’ if

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the plaintiffs cannot be expected to have personal knowledge of the

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facts prior to discovery.”

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Supp. 1217, 1228 (N.D. Cal. 1994) (quoting Wool v. Tandem Computers

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Inc., 818 F.2d 1433, 1439 (9th Cir. 1987)).

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almost always peculiarly within the opposing party’s knowledge, and

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it is appropriate to allow some leeway to a pleading party.4

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In re Gupta Corp. Sec. Litig., 900 F.

Obviously, intent is

Plaintiff appears to argue (Reply at 19) that, to show

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deceptive intent, a party should point to some sort of “smoking

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gun” statement, as was alleged in iLife Technologies Inc v.

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AliphCom, No. 14-CV-03345-WHO, 2015 WL 890347, at *1 (N.D. Cal.

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Feb. 19, 2015) (counterclaimant alleged that inventor stated in

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email, “I know how to take down our fall detection patents . . .

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and a really determined effort to invalidate the patents, if

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performed skillfully could succeed”).

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certainly sufficient to establish intent, it will rarely be the

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case that a party can provide, at the pleading stage, such a

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specific piece of evidence, and Rule 9(b) does not require that

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they do so.

While such a statement is

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4

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Wright and Miller also argue that courts applying Rule 9(b)
must “take account of the general simplicity and flexibility
contemplated by the federal rules,” noting that the forms
accompanying the Federal Rules give, as an example of a pleading
satisfying Rule 9(b), the following: “Defendant C.D. on or about .
. . conveyed all his property, real and personal to defendant E.F.
for the purpose of defrauding plaintiff and hindering and delaying
the collection of the indebtedness evidenced by the note above
referred to.” 5A Fed. Prac. & Proc. Civ. § 1298 (3d ed.). “The
forms in the Appendix suffice under these rules and illustrate the
simplicity and brevity that these rules contemplate.” Fed. R. Civ.
P. 84.
12

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The Court does note, however, that Defendant in several places

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pleads that Plaintiff’s attorneys acted with intent or

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recklessness.

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“knew or should have known” pleading discussed above, intent can be

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alleged by inference as long as the facts pled reasonably support

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the inference.

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d.

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9

That is not the correct standard, but as with the

Exergen, 575 F.3d at 1327 n.4&5.

Materiality
Plaintiff argues that Defendant has not successfully alleged

materiality, because Defendant does not specifically tie particular

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claims in the patent applications to specific allegedly material

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portions of the allegedly omitted references.

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the Court notes above, however, there are in fact adequate

13

references to specific material.

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(Mot. at 10.)

As

(See, e.g., FACC, ¶ 18.)

Plaintiff also argues that Defendant’s more specific pleadings

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as to materiality are implausible.

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is a line between determining plausibility and attempting to divine

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what the facts will show or come to ultimate conclusions.

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court must take the allegations as true, no matter how skeptical

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the court may be.”

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Particularly in a patent case like this, where the arguments depend

21

on close comparison of descriptions of complex technologies, there

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is a danger of taking a side on the underlying fact of similarity

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or difference between the two inventions.

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an allegation that a specific portion of a prior art reference

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contains a description of a technique or component that is also

26

used in the patent application will suffice to show materiality.

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e.

(Id. at 10-11.)

However, there

“[A]

Ashcroft v. Iqbal, 556 U.S. 662, 696 (2009).

Conclusions

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13

At the pleading stage,

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2
3

With the above as guiding principles, the Court concludes as
follows.
As to all patents, Defendant sufficiently alleges the “who” of

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the inequitable conduct counterclaim by identifying specific

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attorneys who are alleged to have engaged in the inequitable

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conduct.

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As to the ‘399 and ‘690 patents, Defendant sufficiently

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alleges materiality, knowledge, and intent.

Defendant alleges

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specific portions of prior art that are material to the patent

10

applications and alleges sufficient facts to support an inference

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that Plaintiff’s lawyer had sufficient state of mind, because

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Defendant alleges that he knew of the prior art and affirmatively

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misrepresented it to the patent examiner.

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certainly supports an inference of intent to deceive.

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should have known” and “intent or recklessness” language discussed

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above does not correctly state the standard as to knowledge and

17

intent, but because the facts alleged strongly support an inference

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of both knowledge and intent, the Court finds that the claim is

19

adequately pled.

(FACC, ¶ 21.)

This

The “knew or

20

As to the ‘894 patent, Plaintiff argues that Defendant’s

21

allegation of materiality of WO 98/40990 is undermined by fact that

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the patent survived a reexamination in which different prior art

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was submitted that “disclose[d] a TCP/IP handshake in connection

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with a gateway redirection procedure in which the gateway proxies

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(spoofs) the requested address.”

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98/40990 that Defendant pleads as material describe “the nomadic

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router pretending to be the host which the router expects to

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communicate with,” (FACC, ¶ 18), which appears to describe

(FACC, ¶ 26.)

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The sections of WO

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essentially the same process.

2

Defendant has not pled facts suggesting that but for the omission

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of WO 98/40990, the patent examiner would not have granted the ‘894

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patent.

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Plaintiff therefore argues that

However, the ultimate grant of a patent is not dispositive on

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the question of materiality, although it can be highly probative.

7

Molins PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed. Cir. 1995).

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The pleading adequately alleges that WO 98/40990 was material prior

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art.

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Plaintiff argues that Defendant fails to adequately plead the

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requisite mental state as to the ‘894 patent.

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states only that “Mr. Edwards[] was, or should have been, aware of

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the relevance of these references [i.e., the international patent

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application and the academic papers], which were published by a

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named inventor or Nomadix itself.”

16

erroneous “or should have been” framing, however, Defendant alleges

17

sufficient facts to raise an inference of knowledge.

18

above, it is a plausible inference that Edwards knew of Nomadix’s

19

own prior art, because he was an attorney charged with prosecuting

20

a patent as to very similar technology on the company’s behalf, and

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a reasonable attorney would familiarize himself with the company’s

22

relevant prior art.

23

and accompanying text), the Court finds that Defendant’s general

24

pleading as to intent satisfies Rule 9(b), given the totality of

25

the circumstances alleged.

26

The counterclaim

(FACC, ¶ 20.)

Apart from the

As discussed

And for reasons discussed above (see note 4

As to the remaining patents, the claims get somewhat more

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complicated.

According to the patent documents submitted by

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Plaintiff, it would appear that the ‘266, ‘246, ‘269, ‘806, and
15

1

‘690 patents all directly descend from the ‘849 patent, and the

2

‘246, ‘269, ‘806, and ‘690 patents descend from the ‘266 patent.

3

(Decl. Mark Lezama ISO Mot. Dismiss, Exs. 9-14.)

4

Defendant alleges that Plaintiff failed to submit WO 98/40990

5

and the so-called “Brendel” prior art when applying for these later

6

patents.

7

matter, because the parent patent applications included these

8

references.

9

Plaintiff argues, however, that these omissions do not

For example:

The ’246 patent descends directly from the ’266 patent, and

10

the same PTO examiner handling both cases considered WO

11

98/40990 in examining the ’266 patent.

12

patent ultimately descends from the ’894 patent, and the PTO

13

considered Brendel when reexamining the ’894 patent.

14
15

Similarly, the ’246

(Reply at 20 (citations omitted).)
Prior art disclosed as to a parent application need not be

16

disclosed again in continuation applications.

17

Inc., 159 F.3d 534, 547 (Fed. Cir. 1998) (affirming summary

18

judgment of no inequitable conduct because information in a parent

19

application need not be resubmitted); Brunswick Corp. v. United

20

States, 34 Fed. Cl. 532, 593 (1995) (no inequitable conduct where

21

the prior art is “included in the file for plaintiff's parent

22

application, which the CIP examiner is required to review as part

23

of the same prosecution”); MPEP § 609.02(A)(2) The examiner will

24

consider information which has been considered by the Office in a

25

parent application when examining . . . a continuation-in-part

26

application filed under 37 CFR 1.53(b).

27

information need not be resubmitted in the continuing application .

28

. . .”).
16

ATD Corp. v. Lydall,

A listing of the

1

Thus, as Plaintiff argues, it is not, by itself, inequitable

2

conduct not to include the reference to WO 98/40990 in the ‘246

3

application, because that application explicitly refers back to the

4

‘266 application.

5

back to ‘266.

6

The same thing is true of the others that refer

Plaintiff points out that even on Defendant’s pleadings, the

7

reexamination of ‘894 took place before the applications for these

8

patents, Brendel was considered in the reexamination, and the above

9

patents are continuations of the ‘894 patent.

10
11

(FACC, ¶¶ 26-27;

Opp’n at 13.)
However, as to continuations of the ‘894 patent, it is not as

12

clear that the Brendel reference would have been included in the

13

later patent application.

14

Court is aware of none, stating that an applicant for a

15

continuation patent need not submit information that was not

16

submitted with the parent application and was only submitted for a

17

reexamination of the parent.

18

the reexamination yielded no amendments to the patent, (Lezama

19

Decl., Ex. 9 at 1308), it is not clear that a patent examiner

20

considering a later continuation application would necessarily have

21

scoured the reexamination record for new references not listed in

22

the parent application.

23

as to the parent application in some technical sense, but not

24

actually considered, it should be resubmitted with the continuation

25

patent application.

26

that the ADT rule applies here.

27
28

Plaintiff points to no case, and the

Particularly where, as in this case,

And where information has been submitted

MPEP § 609.02(B)(2).

Thus, it is not clear

Defendant also alleges that the applications for these patents
“bury” references to other material prior art, including WO
17

1

98/40990 and something called “RFC 1919,”5 in a mass of other, less

2

relevant references.

3

Co. for the proposition that “[a]n applicant can not be guilty of

4

inequitable conduct if the reference was cited to the examiner.”

5

221 F.3d 1318, 1327 (Fed. Cir. 2000).

6

that “‘burying’ a particularly material reference in a prior art

7

statement containing a multiplicity of other references can be

8

probative of bad faith.”

9

1172, 1184 (Fed. Cir. 1995).

Plaintiff cites to Fiskars, Inc. v. Hunt Mfg.

But other cases have held

Molins PLC v. Textron, Inc., 48 F.3d
Fiskars did not deal directly with

10

the burying question and likely does not foreclose an inequitable

11

conduct claim based on intentional burying.

12

Burying, 19 Mich. Telecomm. & Tech. L. Rev. 99, 107-08 (2012).

13

Robert Brendan Taylor,

Exactly under what circumstances “burying” supports an

14

inference of bad faith is unclear from the cases.

15

“[i]ntent [to deceive] need not be proven by direct evidence; it is

16

most often proven by a showing of acts, the natural consequences of

17

which are presumably intended by the actor.”

18

1180.

19

the applicant cited an enormous number of prior art references

20

(nearly 600), and it was alleged that the patent examiner had

21

actually asked for clarification because of the volume of

22

references.

23

Inc. v. Brokertec USA, L.L.C., the applicant’s supporting

24

declarations and exhibits “amounted to over two thousand pages” and

Nonetheless,

Molins, 48 F.3d at

Thus, for example, in CIVIX-DDI, LLC v. Hotels.com, L.P.,

711 F. Supp. 2d 839, 849 (N.D. Ill. 2010).

In eSpeed,

25
5

26
27
28

The counterclaim does not clearly identify RFC 1919, but it
does state that it “describes a standard procedure known as
‘transparent proxying’ in which a gateway conducts a connection
handshake while proxying (spoofing) a requested website as a part
of sending a response message while proxying (spoofing) the
requested website.” (FACC, ¶ 29.)
18

1

were worded so as to obscure the relationship with prior art.

417

2

F. Supp. 2d 580, 598 (D. Del. 2006) aff'd, 480 F.3d 1129 (Fed. Cir.

3

2007).

4

the Rule 9(b) intent standard, which requires specific facts

5

supporting an inference of an intent to deceive.

6

cases, the volume of paper in combination with other facts provided

7

that factual basis.

Thus, “burying” is really nothing more than a species of

In the burying

8

Here Defendant’s position is that “over 1,000 references

9

consuming on the order of 10,000 pages” in the various patent

10

applications is excessive and “buries” the key prior art.

11

at 22-23.)

12

– i.e., an intent to deceive.

13

(Opp’n

This, in turn, gives rise to an inference of bad faith

To prove intent under a burying theory, Defendant will have a

14

high bar to clear at trial.

See Star Scientific, Inc. v. R.J.

15

Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008) (to

16

prove intent to deceive by circumstantial evidence, “the inference

17

must not only be based on sufficient evidence and be reasonable in

18

light of that evidence, but it must also be the single most

19

reasonable inference able to be drawn from the evidence to meet the

20

clear and convincing standard.”).

21

the totality of the facts pled – multiple overlapping and cross-

22

referenced applications, some of which may have omitted a key

23

reference that was only available in the ‘894 reexamination, and

24

which (Defendant alleges) are overstuffed with irrelevant

25

references – the Court finds that Defendant adequately states a

26

counterclaim for inequitable conduct.

27

C.

But at the pleading stage, given

Prosecution Laches, Estoppel, and/or Unclean Hands

28
19

1

Prosecution laches is an equitable defense to a charge of

2

patent infringement that renders a patent unenforceable due to “an

3

unreasonable and unexplained delay in prosecution that constitutes

4

an egregious misuse of the statutory patent system under the

5

totality of the circumstances.”

6

Labs., Inc., 625 F.3d 724, 728 (Fed. Cir. 2010).

7

for prosecution laches, the defendant must allege actual prejudice

8

to either the defendant or the public.

9

Cancer Research Tech. Ltd. v. Barr
To state a claim

Id. at 729.

Defendant’s theory of prosecution laches is essentially that

10

Plaintiff has submitted multiple, prolix, and unreasonably complex

11

patent applications, allegedly as continuations of earlier patents

12

in the basic technology, but in reality simply intended to multiply

13

the time it takes the Patent Office to issue the patents, thereby

14

creating an “unreasonable and unexplained delay.”

15

Opp’n at 22-23.)

16

(See FACC, ¶ 84;

The Federal Circuit has instructed that “[t]here are

17

legitimate grounds for refiling a patent application which should

18

not normally be grounds for a holding of laches, and the doctrine

19

should be used sparingly lest statutory provisions be unjustifiably

20

vitiated.”

21

Research Found., 422 F.3d 1378, 1385 (Fed. Cir. 2005).

22

the court there also held that:

Symbol Technologies, Inc. v. Lemelson Med., Educ. &
However,

23

[R]efiling an application solely containing previously-allowed

24

claims for the business purpose of delaying their issuance can

25

be considered an abuse of the patent system.

26

multiple examples of repetitive refilings that demonstrate a

27

pattern of unjustifiably delayed prosecution may be held to

28

constitute laches. Taken singly, the delay in the prosecution
20

In particular,

1

on any one particular application will surely not appear to

2

merit relief by the courts in equity. On the other hand, an

3

examination of the totality of the circumstances, including

4

the prosecution history of all of a series of related patents

5

and overall delay in issuing claims, may trigger laches.

6
7

Id. at 1385-86 (citation omitted).
In Symbol, an inventor submitted numerous continuation-in-part

8

applications, both while the parent application was still pending

9

and afterward.

Id. at 1380.

The parent patent issued seven years

10

after the original application was filed.

11

issuance of the patents in that case may have been delayed by as

12

much as 39 years.

13

that the inventor “systematically extended the pendency of his

14

applications by sitting on his rights, and sequentially filing one

15

application at a time so that he could maintain copendency while

16

waiting for viable commercial systems to be designed and marketed.”

17

Symbol Technologies, Inc. v. Lemelson Med., Educ. & Research

18

Found., Ltd. P'ship, 301 F. Supp. 2d 1147, 1156 (D. Nev. 2004).

19

The district court found, and the Federal Circuit affirmed, the

20

prosecution laches rendered the patents unenforceable.

21

F.3d at 1384.

22

redundant continuations-in-part over a number of years, in order to

23

delay patent issuance and effectively extend one’s patent monopoly

24

as the field develops, is a potentially viable one.

25

Id.

Id.

Ultimately, the

The trial court made an explicit finding

Symbol, 422

Thus, Defendant’s theory that filing multiple,

However, the facts of this case do not lend themselves to a

26

theory of prosecution laches.

27

doctrine had greater application in prior decades when patent terms

28

were measured from the date the application was approved.

First, as Plaintiff points out, the

21

The

1

possibility of extending the lifetime of one’s monopoly created a

2

perverse incentive to unreasonably prolong the prosecution process.

3

That incentive has now been removed by a change to the patent

4

statutes setting the term from the date of filing.

5

154(a)(2) (“Such grant shall be for a term beginning on the date on

6

which the patent issues and ending 20 years from the date on which

7

the application for the patent was filed . . . .”); Cancer

8

Research, 625 F.3d 724 at 732 (“[T]he facts of this case are not

9

likely to be frequently repeated, as patent terms are now measured

35 U.S.C. §

10

from effective filing date.”).

11

extend its monopoly past the 20-year mark, no matter how many

12

continuation applications it files, because all those offspring

13

patents would have a priority date that is the same as the parent.

14

35 U.S.C. § 154(a)(2); Mohsenzadeh v. Lee, 5 F. Supp. 3d 791, 794

15

(E.D. Va. 2014).

16

In this case, Plaintiff cannot

Second, Plaintiff’s ‘894 patent (parent to nearly all the

17

other patents at issue) was issued in a reasonable four-year

18

timeframe, and none of the continuation applications were filed

19

until the parent application was approved.

20

have been no delay of the issuance of the parent patent.

21

patent set out many, if not most, of the claims at issue – indeed,

22

one of Defendant’s arguments for invalidity is that Plaintiff’s

23

patents are largely redundant with previous patents, including

24

‘894.

25

have been aware of the general outline of Plaintiff’s claims, and

26

its presumptive legal right to those claims, at least since the

27

issuance of the ‘894 patent.

(FACC, ¶¶ 64-67.)

Thus, there appears to
That

Thus, the industry may be presumed to

This makes it less likely that others

28
22

1

in the industry could be substantially prejudiced by uncertainty as

2

to Plaintiff’s claims.

3

Finally, even if the patent issuance had been delayed,

4

Defendant must allege more than the general harm that comes from an

5

extended patent monopoly.

6

plead that “either the accused infringer or others invested in,

7

worked on, or used the claimed technology during the period of

8

delay.”

9

724, 729 (Fed. Cir. 2010).

10
11
12

Rather, in claiming prejudice, it must

Cancer Research Tech. Ltd. v. Barr Labs., Inc., 625 F.3d
Defendant does not plead such facts.

The Court therefore finds that Defendant’s pleading does not
adequately allege prosecution laches.
Defendant also argues that Plaintiff’s multiple, prolix, and

13

complex patent applications are not in good faith, but are intended

14

to create a “legal thicket” for would-be challengers to the

15

patents, significantly raising the cost of administrative

16

challenges as to both the per-patent fees charged by the Patent

17

Office and the lawyer-hours required to review long, dense patent

18

documents.

19

equitable reason must exist to declare the patents unenforceable,

20

whether prosecution laches, estoppel, unclean hands, or some other

21

theory.

22

“extend the law to recognize this defense” if it is not supported

23

by existing cases.

24

(Opp’n at 24-25.)

(FACC, ¶¶ 84-85.)

Defendant therefore argues that some

Defendant also asks the Court to

(Id.)

The defense of unclean hands is essentially a cousin to

25

inequitable conduct that lowers the materiality threshold on a

26

showing of “egregious misconduct” like perjury or the suppression

27

of evidence.

28

No. 2:11-CV-6519-MRP, 2011 WL 7461786, at *8 (C.D. Cal. Dec. 9,

See Human Genome Sciences, Inc. v. Genentech, Inc.,

23

1

2011); Network Signatures, Inc. v. State Farm Mut. Auto. Ins. Co.,

2

No. SACV 11-00982 JVS, 2012 WL 2357307, at *7 (C.D. Cal. June 13,

3

2012) rev'd on other grounds, 731 F.3d 1239 (Fed. Cir. 2013).

4

Defendant does not explain how this doctrine could be extended to

5

encompass its equitable complaints about the multiplicity,

6

prolixity, and complexity of Plaintiff’s patents.

7

Court is not aware of any theory of estoppel that would provide

8

Defendant the relief it seeks.

9

Similarly, the

Moreover, by allowing for continuation patents, 35 U.S.C. §

10

120, Congress has determined that some multiplicity of patents on

11

the same subject matter is appropriate, even if that means that

12

there is some increase in costs to parties seeking review of

13

patents.

14

administrative review process, suggesting that it is aware of, and

15

has taken into account, the interaction between that process and

16

the availability of continuation patents.

17

Invents Act, Pub.L. No. 112–29, 125 Stat. 284 (2011).

18

Congress has set a balance of rights between competing interests,

19

courts should not lightly undertake to adjust that balance.

20

Moreover, Congress has recently reexamined the

Leahy–Smith America
Where

Of course, if the continuation patents are frivolously filed,

21

they may be declared invalid.

22

counterclaim requesting Plaintiff’s patents be declared invalid,

23

and likely that is its best remedy here.

24

IV.

25

Defendant has asserted a

CONCLUSION
The motion to dismiss (and strike related affirmative

26

defenses) is GRANTED IN PART.

27

infringement is adequately pled, with the caveats discussed above.

28

Defendant’s counterclaim for inequitable conduct is adequately pled

Defendant’s counterclaim for non-

24

1

as to all patents.

Defendant’s counterclaim as to prosecution

2

laches is DISMISSED.

3

unclean hands are DISMISSED.

4

corresponding to the DISMISSED counterclaims are likewise stricken.

Defendant’s counterclaims as to estoppel and
All affirmative defenses

5
6

IT IS SO ORDERED.

7
8

Dated: June 29, 2015
DEAN D. PREGERSON
United States District Judge

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