Weiland Sliding Doors and Windows v. Panda Windows and Doors, LLC

Filing 136

ORDER Granting 131 Motion to Dismiss Defendant Panda Windows and Doors, LLC's Third Amended Counterclaims with Prejudice. Signed by Judge Janis L. Sammartino on 8/31/2012. (jao)(jrd)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

WEILAND SLIDING DOORS AND
WINDOWS, INC.,

CASE NO. 10CV677 JLS (MDD)
ORDER GRANTING MOTION TO
DISMISS DEFENDANT PANDA
WINDOWS AND DOORS, LLC’S
THIRD AMENDED
COUNTERCLAIMS

12
Plaintiff,
13

vs.

14
15

PANDA WINDOWS AND DOORS, LLC
and EYAL AVI SHOSHAN,

16

(ECF No. 131)

Defendants.

17
18

Presently before the Court is Plaintiff/Counter-Defendant Weiland Sliding Doors and

19

Windows, Inc.’s (“Weiland”) Motion to Dismiss Third Amended Counterclaims (“TACC”). (Mot.

20

to Dismiss, ECF No. 131) Also before the Court are Panda Windows and Doors, LLC’s (“Panda”)

21

response in opposition, (Resp. in Opp’n, ECF No. 133), and Weiland’s reply in support, (Reply in

22

Supp., ECF No. 134). The hearing set for the motion on May 17, 2012, was vacated, and the

23

matter taken under submission on the papers. Having considered the parties’ arguments and the

24

law, the Court GRANTS Weiland’s motion and DISMISSES Panda’s TACC WITH

25

PREJUDICE.

26

In the Court’s most recent Order granting Weiland’s motion to dismiss Panda’s second

27

amended counterclaims (“SACC”) the Court determined that Panda failed to state a claim for

28

intentional interference with prospective business advantage because it had not sufficiently alleged
-1-

10cv677

1

that Weiland’s verbal communications were made in bad faith. (Order, Jan. 23, 2012, at 5–6, ECF

2

No. 127) The Court granted Panda an opportunity to amend, and Panda filed its TACC on

3

February 21, 2012. (TACC, ECF No. 129) Panda asserts that it has cured the noted deficiencies

4

in its counterclaims:

5
6
7
8
9
10
11

Panda has amended the complaint to include additional facts regarding: the
unlawful statements to Panda’s potential customers were made by Weiland’s
Director of Sales; at least one of Panda’s customer’s (sic) to whom the statement
was made was a customer located in Connecticut; that Weiland did not seek to
confirm whether the potential customer was considering purchasing an accused
drainage track from Panda; and that the communications occurred during the
period following the filing of this lawsuit, including in April 2010.
(Resp. in Opp’n 3–4, ECF No. 133) For the reasons explained, the Court finds that Panda’s
allegations remain insufficient.
As Panda is well aware based on the Court’s prior Orders, in order to state a claim for

12

intentional interference, Panda must allege that Weiland’s verbal communications were made in

13

bad faith. This is so because under Federal Circuit case law, “communication to possible

14

infringers concerning patent rights is not improper if the patent holder has a good faith belief in the

15

accuracy of the communication.” Mikohn Gaming Corp. v. Acres Gaming, 165 F.3d 891, 897

16

(Fed. Cir. 1998); accord GP Indus. v. Eran Indus., 500 F.3d 1369, 1374 (Fed. Cir. 2007) (“[A]

17

patentee has a right to inform potential infringers of a patent and potentially infringing activity

18

unless the communication is made in bad faith.”). Moreover, “[t]he law recognizes a presumption

19

that the assertion of a duly granted patent is made in good faith.” Golan v. Pingel Enter., 310 F.3d

20

1360, 1371 (Fed. Cir. 2002) (internal quotation marks omitted).

21

Thus, Panda must establish that Weiland’s verbal communications were made in bad faith,

22

which includes both objective and subjective components. “The objective component requires a

23

showing that the infringement allegations are ‘objectively baseless.’” 800 Adept, Inc. v. Murex

24

Sec., Ltd., 539 F.3d 1354, 1370 (Fed. Cir. 2008) (quoting Globetrotter Software, Inc. v. Elan

25

Computer Group, Inc., 362 F.3d 1367, 1377 (Fed. Cir. 2004)). “Subjective considerations of bad

26

faith are irrelevant if the assertions are not objectively baseless.” GP Indus., 500 F.3d at 1375.

27

“Infringement allegations are objectively baseless if ‘no reasonable litigant could

28

realistically expect success on the merits.’” 800 Adept, 539 F.3d at 1370 (quoting Prof’l Real
-2-

10cv677

1

Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)). “Obviously, if

2

the patentee knows that the patent is invalid, unenforceable, or not infringed, yet represents to the

3

marketplace that a competitor is infringing the patent, a clear case of bad faith representations is

4

made out.” Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1354 (Fed. Cir. 1999).

5

Panda’s TACC alleges that it replaced the allegedly infringing drainage track that is the

6

subject of this lawsuit with a non-infringing product in April 2010. (TACC ¶ 12, ECF No. 129)

7

And according to Panda, Weiland’s communications—some of which were made in April 2010,

8

(id. ¶ 18)—were objectively baseless because Weiland knew Panda’s replacement drainage track

9

product did not infringe, and yet warned Panda’s customers that they might be sued if they

10

purchased from Panda. (Id. ¶ 17) Specifically, Panda contends that Weiland “communicated these

11

threats to Panda’s potential customers even after knowing that Panda had stopped selling the

12

accused infringing drainage track . . . . [C]learly, a customer cannot purchase an accused infringing

13

product if it is not being offered for sale.” (Resp. in Opp’n 7, ECF No. 133)

14

But Panda still fails to allege beyond a mere conclusory assertion that Weiland had

15

knowledge that Panda was no longer selling—and customers were not purchasing—an infringing

16

drainage track (i.e., that Weiland knew that Panda’s product did not infringe its patent and

17

nevertheless made representations to the contrary in the marketplace). Although Panda correctly

18

asserts that it is “not obligated to prove this fact at the pleading stage,” (id. (emphasis added)), as

19

the Court has already twice indicated, Panda must do more than simply conclusively assert that

20

Weiland’s communications were made in bad faith, (Order, Jan. 23, 2012, at 5, ECF No. 127);

21

(Order, Aug. 29, 2011, at 6–7, ECF No. 110); see also Procongps, Inc. v. Star Sensor LLC, 2011

22

U.S. Dist. LEXIS 137366, at *8 (N.D. Cal. Nov. 29, 2011) (“[Defendant] must also allege facts in

23

support of its allegation that [Plaintiff] is asserting patents it knows are not valid and not infringed;

24

it is not sufficient to simply make such an allegation ‘on information and belief.’”); RPost

25

Holdings, Inc. v. Trustifi Corp., 2010 U.S. Dist. LEXIS 113106, at *11 (C.D. Cal. Oct. 12, 2010)

26

(granting a motion to dismiss where Defendant conclusively alleged that Plaintiffs knew the

27

accused instrumentality did not infringe the patents before communicating otherwise to the

28

marketplace, stating that “Defendant’s belief that Plaintiffs had such knowledge, . . . is not
-3-

10cv677

1

sufficient to overcome the presumption of good faith.”)1; Sandisk Corp. v. LSI Corp., 2009 U.S.

2

Dist. LEXIS 93191, at *4–9 (N.D. Cal. Sept. 17, 2009); but see Epistar Corp. v. Philips Lumileds

3

Lighting Co., LLC, 2008 U.S. Dist. LEXIS 79448, at *20–21 (N.D. Cal. Aug. 26, 2008) (accepting

4

as true the plaintiff’s allegations regarding defendant’s knowledge at the time of defendant’s

5

communications that plaintiff had developed a design-around product that did not infringe).

6

Thus, despite having several opportunities to amend its counterclaim for intentional

7

interference, the Court concludes that Panda has yet again failed to allege sufficient facts to state a

8

claim. Accordingly, the Court GRANTS Weiland’s motion to dismiss. Because Panda has been

9

afforded multiple opportunities to cure the deficiencies but has failed to do so, Panda’s TACC is

10

DISMISSED WITH PREJUDICE. See Allen v. Beverly Hills, 911 F.2d 367, 373 (9th Cir.

11

1990).

12

IT IS SO ORDERED.

13
14

DATED: August 31, 2012

15

Honorable Janis L. Sammartino
United States District Judge

16
17
18
1

19
20
21
22
23
24
25
26
27
28

In RPost Holdings, the court found insufficient Defendant’s conclusory allegation that “it is
objectively clear that [the accused instrumentality] does not infringe the . . . patent and that RPost
knew this prior to [stating otherwise in a press release].” RPost Holdings, 10cv1416 PSG (SH),
Docket No. 23, at ¶¶ 23, 25, 27. Similarly, here, Panda has alleged only that “Weiland communicated
this threat to potential Panda customers even after knowing that Panda had replaced [the allegedly
infringing] drainage track with its new, high-capacity, side-draining track that is not a part of this
lawsuit.” (TACC ¶ 17, ECF No. 129) The TACC is devoid of factual allegations supporting
Weiland’s purported knowledge, however. Cf. Vasudevan Software, Inc. v. TIBCO Software, Inc.,
2012 U.S. Dist. LEXIS 69952, at *13 (N.D. Cal. May 18, 2012) (indicating, with regard to stating a
claim for willful infringement, that “the difference between the barest factual assertion of knowledge
of an issued patent and a bare recitation of the required legal elements for willful infringement is not
exactly easy to draw, given that knowledge of the patent . . . is a required element. That said, it simply
cannot be that an assertion of ‘willful infringement’ is insufficient to state a claim, whereas an
allegation of ‘actual knowledge,’ without more, is enough.” (internal quotation marks omitted)).
Because “there is no way to discern what constitutes the basis for the averment of actual knowledge,”
the TACC, to the extent it relies on Weiland’s knowledge to allege bad faith, is insufficient to state
a claim under Federal Rule of Civil Procedure 8. Id. at *14; accord IPVenture, Inc. v. Cellco P’ship,
2011 U.S. Dist. LEXIS 5955, at *7–8 (N.D. Cal. Jan. 21, 2011) (“Because there are no facts to support
the claim that Defendants actually had knowledge of the issued patent, and there is merely the bare
recitation of the required legal elements for willful infringement, the Court finds that Plaintiff has
failed to state a cause of action for willful infringement.”).
-4-

10cv677