Yahoo! Inc. v. Facebook, Inc.

Filing 29

MOTION to Strike and/or Dismiss Yahoo Inc.'s Claims and Defenses of Inequitable Conduct filed by Facebook, Inc.. Motion Hearing set for 6/22/2012 09:00 AM in Courtroom 11, 19th Floor, San Francisco before Hon. Jeffrey S. White. Responses due by 5/30/2012. Replies due by 6/6/2012. (Keefe, Heidi) (Filed on 5/16/2012)

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COOLEY LLP
STEPHEN C. NEAL (170085)
([e-mail])
MICHAEL G. RHODES (116127)
([e-mail])
HEIDI L. KEEFE (178960)
([e-mail])
MARK R. WEINSTEIN (193043)
([e-mail])
5 Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Telephone:
[phone]
Facsimile:
[phone]

WILMER CUTLER PICKERING
HALE AND DORR LLP
WILLIAM F. LEE (Pro Hac Vice)
([e-mail])
CYNTHIA D. VREELAND (Pro Hac Vice)
([e-mail])
60 State Street
Boston, MA 02109
Telephone: [phone]
Facsimile:
[phone]
MARK D. SELWYN (244180)
([e-mail])
JOSEPH F. HAAG (248749)
([e-mail])
950 Page Mill Road
Palo Alto, CA 94304
Telephone: [phone]
Facsimile:
[phone]

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Attorneys for Defendant
FACEBOOK, INC.

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN FRANCISCO DIVISION
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YAHOO INC.,

Case No. CV-12-01212-JSW

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Plaintiff,

FACEBOOK, INC.’S MOTION TO
STRIKE AND/OR DISMISS YAHOO
INC.’S CLAIMS AND DEFENSES OF
INEQUITABLE CONDUCT

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v.
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FACEBOOK, INC.,
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Defendant.
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FACEBOOK, INC.,

Date:
June 22, 2012
Time:
9:00 a.m.
Ctrm:
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The Honorable Jeffrey S. White

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Counterclaim-plaintiff,
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v.
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YAHOO INC.,
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Counterclaim-defendant.
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COOLEY LLP
ATTORNEYS AT LAW
SAN FRANCISCO

1.

NOTICE OF MOTION AND
MOTION TO STRIKE AND/OR DISMISS

CV-12-01212-JSW

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NOTICE OF MOTION

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PLEASE TAKE NOTICE THAT on June 22, 2012, at 9:00 a.m., in Courtroom 11, 450

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Golden Gate Avenue, San Francisco, California, defendant and counterclaimant Facebook, Inc.

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(“Facebook”) will and hereby moves for an Order striking and/or dismissing the portions of the

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“Reply and Counter Counterclaims” filed by plaintiff Yahoo Inc. (“Yahoo”) alleging that U.S.

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Patent Nos. 8,005,896 and 8,150,913 are unenforceable due to inequitable conduct. Because

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Yahoo’s inequitable conduct allegations do not comply with applicable pleading standards under

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Federal Rule of Civil Procedure 9(b) and Federal Circuit authority, Facebook seeks an order

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striking and/or dismissing them. This motion is based on the following Memorandum of Points

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and Authorities, the Court’s record in this action, the Declaration of Heidi L. Keefe filed

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concurrently with this motion, all matters of which the Court may take judicial notice, and any

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other evidence and arguments presented at the hearing of the motion and allowed by the Court.

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MEMORANDUM OF POINTS AND AUTHORITIES
I.

INTRODUCTION

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Yahoo claims that two of the ten patents Facebook asserts are unenforceable due to

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inequitable conduct. But all of these allegations are unsupportable and/or deficient. First, Yahoo

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claims these patents do not list Joseph Liauw as an inventor and that there is no sworn statement

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by Mr. Liauw in the Patent Office records explaining his omission.1

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demonstrably false.

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available Patent Office records,2 because these records include the exact sworn statement from

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Mr. Liauw Yahoo claims is missing.

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Yahoo’s claim is

Yahoo made this allegation without actually reviewing the publically

Yahoo next contends that both patents are unenforceable due to the addition of text into
the ’913 application, but has provided no coherent theory or facts suggesting deceptive intent.

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See Para 57 of Yahoo Reply and Counter Counterclaims (Dkt. No. 28 at 12:4-11).
The prosecution record also confirms that Yahoo did not perform a proper investigation
prior to asserting its inequitable conduct defenses. In preparing to file this motion, Facebook obtained
the official ’311 provisional file history from the Patent Office to confirm that Mr. Liauw’s statement
was still in the file – which it is. (Keefe Decl., at ¶ 2, Ex. A.) The prosecution record revealed
only one request to inspect the ’311 provisional prosecution history – the one filed by Facebook.
(Id.)
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Accordingly, Yahoo’s inequitable conduct allegations should be dismissed for failing to

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meet the standards for pleading and proving them. See Exergen Corp. v. Wal-Mart Stores, Inc.,

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575 F.3d 1312, 1327-28 (Fed. Cir. 2009); Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d

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1276, 1289-90 (Fed. Cir. 2011) (en banc).

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II.

STATEMENT OF FACTS

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On March 12, 2012, Yahoo filed its Complaint accusing Facebook of infringing ten

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patents allegedly owned by Yahoo. (Dkt. No. 1.) On April 3, Facebook filed its Answer and

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Counterclaim wherein Facebook denied Yahoo’s allegations of infringement and asserted various

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affirmative defenses of invalidity and unenforceability. (Dkt. No. 16 at 1-11.) Facebook also

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asserted counterclaims against Yahoo for Yahoo’s infringement of ten patents owned by

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Facebook. (Dkt. No. 16 at 11-19.)

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On April 27, Yahoo filed its Reply to Facebook’s patent infringement counterclaims and

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asserted various affirmative defenses. Yahoo’s Seventh Affirmative Defense alleges that U.S.

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Patent No. 8,005,896 (the “’896 patent”) and U.S. Patent No. 8,150,913 (“’913 patent”) asserted

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by Facebook are unenforceable due to inequitable conduct.

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theories: (1) the allegedly intentional failure to name Joseph Liauw as an inventor on the ’896 and

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’913 patents; and (2) the allegedly improper addition of new material into the application that

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matured into the ’913 patent. (Dkt. No. 28 at 11-13, 13-18.) Yahoo’s Nineteenth and Twentieth

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“Counter-Counterclaims” seek declarations that the ’896 and ’913 patents are unenforceable for

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the same reasons as Yahoo’s affirmative defenses, including its inequitable conduct defense.

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(Dkt. No. 28 at 11-18, 29-30.) Neither of Yahoo’s inequitable conduct theories has any merit.

This defense is based on two

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a.

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Yahoo’s first inequitable conduct theory, entitled “Intentional Failure to Name a Known

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Inventor,” accuses inventor Chris Cheah and attorney C. Douglass Thomas of deliberately failing

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to list a third party, Joseph Liauw, as an inventor on the ’896 and ’913 patents. (Dkt. No. 28 at

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11-13.) Yahoo relies on nothing more than the fact that Mr. Liauw was listed as an inventor on

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the provisional patent application but was not listed as an inventor on the subsequent utility

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application.

Yahoo’s “Known Inventor” Theory

(Dkt. No. 28 at 11-12.)

Yahoo claims that since all of the disclosures are

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substantively the same, Mr. Liauw should have been listed as an inventor on the ’896 and ’913

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patents, and that by not listing him, Messrs Cheah and Thomas violated their duty of candor. (Id.)

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Yahoo’s inequitable conduct theory is based on a series of demonstrably false statements,

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principally the assertion that Mr. Liauw never submitted a written statement acknowledging that

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he was mistakenly named as an inventor on the provisional application – when in fact he did (as

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shown below). In particular, Yahoo alleges that:

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PTO regulations require that “[i]f multiple inventors are named in a provisional
application, each named inventor must have made a contribution, individually
or jointly, to the subject matter disclosed in the provisional application. ” 37
C.F.R. § 1.45(c). These regulations further require that “deleting the name or
names of the inventor or inventors” in a provisional application requires,
among other things “[a] statement by the person or persons whose name or
names are being deleted that the inventorship error occurred without deceptive
intention on the part of such person or persons.” 37 C.F.R. § 1.48(e). No such
statement was provided by Mr. Liauw in prosecution of the ’311
provisional or the ’456 application.
(Dkt. No. 28 at 12:4-11 (emphasis added).)

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Yahoo’s allegations are directly contradicted by the publicly-available and judicially-

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noticeable prosecution history records at the Patent Office. Those records confirm that on July 5,

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2001, the applicant submitted a Petition and Fee to Correct Originally Named Inventors Under 37

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C.F.R. § 1.48(e) seeking to delete Mr. Liauw as an inventor. (Keefe Decl., at ¶ 2, Ex. A.) The

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petition was accompanied by the following signed statement from Mr. Liauw:

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(Keefe Decl., at ¶ 2, Ex. A.) The Patent Office subsequently issued a revised Filing Receipt for

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the provisional application listing Mr. Cheah as the sole inventor. (Id.)

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Yahoo’s allegation that no statement of an inventorship error “was provided by Mr. Liauw

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in prosecution of the ’311 provisional” (Dkt. No. 12:10-11) forms the foundation of its

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inequitable conduct defense and its allegations of deceptive intent. Mr. Liauw’s signed statement

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above, which remains in the prosecution file of the ’311 provisional, definitively demonstrates the

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falsity of Yahoo’s assertion.

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b.

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Yahoo’s second theory of inequitable conduct is based on the assertion that Mr. Cheah

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and Mr. Douglass failed to inform the Patent Office that additional text was added to the

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application for the ’913 patent when it was filed on August 22, 2011. (Dkt. No. 28 at 13-18.)

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More particularly, Yahoo complains about revisions to the “Abstract” and ”Summary of the

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Invention” portions of the application reflecting the language of the proposed ’913 claims. Yahoo

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asserts that the ’913 patent is unenforceable because it was called a “continuation” of earlier

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applications when, according to Yahoo, the claims of the ’913 patent relied on the newly-added

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text that was not supported by disclosures in the earlier applications. (Id. at 16-18.) “But for this

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intentional deception,” Yahoo alleges, “none of the claims of the ’913 patent would have been

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granted.” (Dkt. No. 28 at 15:19.) It further alleges that the ’896 patent is unenforceable based on

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the doctrine of “infectious unenforceability.”

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contradicted by statements Yahoo previously made contending the disclosures to all be

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substantively identical. Moreover, Yahoo provides no analysis of the actual claimed subject

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matter of the ’913 patent or a comparison with the disclosures of the original application. In fact,

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although Yahoo asserts that “[r]edline comparisons of the disclosure of the ’913 patent and each

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of the six applications to which it claims priority are attached to this Answer as Exhibits A-1

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through A-6,” Yahoo failed to attach the referenced exhibits. (Dkt. No. 28 at 15.)

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III.

YAHOO’S “NEW MATTER” THEORY

(Id. at 18:4.)

These allegations are directly

LEGAL STANDARD

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The Federal Circuit has significantly increased the standards for pleading and proving

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inequitable conduct in two recent cases. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d

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1312 (Fed. Cir. 2009); Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir.

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2011) (en banc). In Exergen, the Federal Circuit held that inequitable conduct is subject to the

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heightened pleading standard of Rule 9(b).

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elements of inequitable conduct, without setting forth the particularized factual bases for the

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allegation, does not satisfy Rule 9(b).” Exergen Corp., 575 F.3d at 1326-27. An accused

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infringer raising such a charge must instead identify “the specific who, what, when, where, and

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how of the material representation or omission committed before the PTO.”

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Moreover, because inequitable conduct requires intent to deceive the Patent Office, the accused

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infringer also must set forth “sufficient allegations of underlying facts from which a court may

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reasonably infer that a specific individual (1) knew of the withheld material information or of the

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falsity of the material misrepresentation, and (2) withheld or misrepresented this information with

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a specific intent to deceive the PTO.” Id. at 1328-29.

“A pleading that simply avers the substantive

Id. at 1327.

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In the second case, Therasense, the Federal Circuit heightened the standards for finding

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both intent and materiality. To prevail on a claim of inequitable conduct, an accused infringer

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must now show: (1) that persons involved in prosecution of the patent “made a deliberate decision

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to withhold” material information; (2) that the PTO “would not have allowed a claim had it been

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aware of the undisclosed [information]; and (3) that “the patentee acted with the specific intent to

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deceive the PTO.” Therasense, Inc., 649 F.3d at 1290-91 (internal quotations and citation

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omitted). A court “may not infer intent solely from materiality,” and specific intent to deceive

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must be “‘the single most reasonable inference able to be drawn from the evidence.’” Id. at 1290

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(quoting Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir.

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2008)).

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This Court has recognized that a motion to strike under Federal Rule of Civil Procedure

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12(f) is an appropriate vehicle to challenge the sufficiency of an inequitable conduct defense. See

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Zep Solar Inc. v. Westinghouse Solar Inc., No. C 11–06493 JSW, 2012 WL 1293873, at *2 (N.D.

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Cal. Apr. 16, 2012) (White, J.) (granting motion to strike inequitable conduct defense under Rule

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12(f)). The Court may also dismiss, under Rule 12(b)(6), a deficient inequitable conduct defense

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that has been pleaded as a declaratory judgment counterclaim seeking a finding of

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unenforceability. See Qarbon.com Inc. v. eHelp Corp., 315 F. Supp. 2d 1046, 1050-51 (N.D. Cal.

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2004).

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IV.

ARGUMENT

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A.

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Had Yahoo reviewed the prosecution file for the ’311 provisional application, it would

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have immediately discovered – contrary to the false allegations in its Reply – that there was no

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deception whatsoever. As explained in Part II.A above, Mr. Liauw submitted a signed statement

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to the Patent Office clarifying he was mistakenly named on the provisional application as a co-

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inventor. The Patent Office responded by issuing a corrected filing receipt for the provisional

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application that listed Mr. Cheah as the sole inventor. (Keefe Decl. at ¶ 2, Ex. A.)

Yahoo’s Groundless “Known Inventor” Theory Should Be Dismissed

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The provisional prosecution file documents that contradict Yahoo’s pleading are subject to

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judicial notice and may properly be considered in connection with the present motion. “The

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district court will not accept as true pleading allegations that are contradicted by facts that can be

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judicially noticed or by other allegations or exhibits attached to or incorporated in the pleading.”

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DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1119, 1133 (N.D. Cal. 2010) (internal

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quotation and citation omitted); see also Britesmile, Inc. v. Discus Dental, Inc., No. C 02-03220

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JSW, 2005 WL 1083194, at *3 (N.D. Cal. May 9, 2005) (White, J.) (noting that “documents

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subject to judicial notice … may be considered on a motion to dismiss.” (citing Mullis v. U.S.

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Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987)); Coinstar, Inc. v. Coinbank Automated Sys.,

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Inc., 998 F. Supp. 1109, 1114 (N.D. Cal. 1998) (taking judicial notice of documents from patent

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file history).

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Yahoo’s inequitable conduct allegations based on Mr. Liauw depend entirely on the

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assertion that no statement of an inventorship error “was provided by Mr. Liauw in prosecution of

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the ’311 provisional or the ’456 application” (Dkt. No. 12:10-11), which is demonstrably false

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based on judicially noticeable Patent Office records. Because this foundational allegation is false,

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Yahoo cannot establish either of the elements of an inequitable conduct defense.

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amendment of this theory would be therefore futile and the Court should dismiss it with

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prejudice.

Further

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B.

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Yahoo’s other theory of inequitable conduct is similarly baseless and should be dismissed.

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Yahoo contends that the claims of the ’913 patent-in-suit depend on teachings that were added to

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the specification of the ’913 application when it was filed on August 22, 2011. Yahoo claims that

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these additional disclosures (which are confined to the “Summary” and “Abstract” portions) were

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essential to at least five claim elements in the issued claims of the ’913 patent. (Dkt. No. 28 at

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14, ¶¶ 64-65.)

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’311 provisional, “disclose anything resembling these and other limitations in the claims of the

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[application for the ’913 patent].” (Id.) There are a number of problems with Yahoo’s defense

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Yahoo’s “New Matter” Theory Should Also Be Dismissed

Yahoo further claims that none of the earlier-filed applications, including the

that warrant its dismissal.

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To begin with, Yahoo’s second theory of inequitable conduct fails to allege any facts or

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details supporting the allegation that the revisions to the “Abstract” and “Summary of the

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Invention” constituted improper “new matter,” or that they were made with a “specific intent to

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deceive the PTO.” Exergen Corp., 575 F.3d at 1328-29. The revisions to the introductory

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portions of the application were appropriate because they are supported by the portions of the

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application that were derived from earlier applications. (See, e.g., ’913 patent, Cols. 6-8, 26-27;

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Fig. 4, 12A, 19A-1 and accompanying text.) See Schering Corp. v. Amgen Inc., 222 F.3d 1347,

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1352 (Fed. Cir. 2000) (revisions to specification supported by original application were not “new

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matter”); 4-11 Donald S. Chisum, Chisum on Patents § 11.04 (2012) (revisions to specification

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that “merely clarify or make definite that which an originally-filed application expressly or

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inherently disclosed” are not “new matter”). Yahoo accordingly has failed to plead any “specific

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facts” or circumstances that could “plausibly suggest” a specific intent to deceive the Patent

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Office. Exergen, 575 F.3d at 1330-31.

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In a similar case, the district court in Softview LLC v. Apple Inc., Civil Action No. 10-389-

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LPS, 2011 WL 4571793 (D. Del. Sept. 30, 2011) dismissed an inequitable conduct claim

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substantially identical to the one asserted by Yahoo here. The court found that the accused

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infringer’s theory was “based on a mere disagreement with [the patent holder’s] prosecution

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counsel as to whether certain amendments impermissibly added ‘new matter’” but found that

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“[t]his disagreement does not give rise to a reasonable inference that prosecution counsel knew he

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was amending to add new matter and intended to deceive the PTO of this fact.” Id. at *1.

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Yahoo’s inequitable conduct claim similarly amounts to nothing more than Yahoo’s “mere

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disagreement” as to whether the claims of the ’913 patent were supported by the disclosures of

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the earlier applications to which it claimed priority, which does not state a claim of inequitable

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conduct.

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Yahoo’s second theory is also directly contradicted by its inequitable conduct theory

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relating to the inventorship of Mr. Liauw. As explained in the preceding section, Yahoo’s first

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inequitable conduct theory alleges that Mr. Liauw should have been named as an inventor on the

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’913 patent because he was initially named as such on the ’311 provisional application. See Part

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IV.A, supra. Yahoo affirmatively alleges that Mr. Liauw’s name should have been carried over

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to the ’913 and ’896 patent applications because those applications “contain all of the substantive

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disclosures of the ’311 provisional and claim priority to that provisional application.” (Id. at 12, ¶

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59.) Yahoo’s second theory, on the other hand, directly contradicts that statement by asserting

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that the claims of the ’913 patent “were very different from anything that had previously

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appeared” in the ’311 provisional, and that the provisional did not disclose “anything resembling”

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five limitations in the claims. (Id. at 14-15, ¶ 65.)

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Yahoo cannot have it both ways. Federal Circuit law is clear that Mr. Liauw could be an

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inventor “only if he contributes to the conception of the claimed invention.” Eli Lilly & Co. v.

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Aradigm Corp., 376 F.3d 1352, 1358-59 (Fed. Cir. 2004) (emphasis added). The law is equally

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clear that “conception must encompass all limitations of the claimed invention.” Singh v. Brake,

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317 F.3d 1334, 1340 (Fed. Cir. 2003) (emphasis added). By claiming that Mr. Liauw was an

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inventor on the ’913 and ’896 patents solely because he was listed as such on the provisional,

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Yahoo is alleging that the provisional disclosed all elements of the claimed invention. Its second

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theory, on the other hand, contends that the ’311 provisional was so fundamentally different from

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the later-filed applications that it was lacking at least five limitations of the claimed invention.

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Yahoo did not plead these two theories in the alternative, and no reasonable investigation could

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support both theories.

The irreconcilable contradiction between these theories violates the

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fundamental purpose of the heightened pleading standard under Rule 9(b) – to require the

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plaintiff to articulate a clear and coherent theory and identify “the specific who, what, when,

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where, and how of the material misrepresentation or omission committed before the PTO.”

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Exergen Corp., 575 F.3d at 1327. Yahoo’s contradictory theories of inequitable conduct fail to

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satisfy this standard.

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V.

CONCLUSION

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For the foregoing reasons, Facebook respectfully requests that the Court strike Yahoo’s

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Seventh Affirmative Defense to Facebook’s patent infringement counterclaims, as well as its

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Nineteenth and Twentieth “Counter-Counterclaims” to the extent they rely on allegations of

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inequitable conduct.

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Dated: May 16, 2012

Respectfully submitted,

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/s/ Stephen C. Neal
Stephen C. Neal
Michael C. Rhodes
Heidi L. Keefe
Mark Weinstein
COOLEY LLP
5 Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Telephone:
[phone]
William F. Lee (Pro Hac Vice)
Cynthia D. Vreeland (Pro Hac Vice)
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
Telephone:
[phone]
Mark D. Selwyn
Joseph F. Haag
WILMER CUTLER PICKERING
HALE AND DORR LLP
950 Page Mill Road
Palo Alto, CA 94304
Telephone:
[phone]
Attorneys for Defendant
FACEBOOK, INC.

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