MyGo, LLC v. Mission Beach Industries, LLC et al

Filing 24

ORDER Granting in Part and Denying in Part Plaintiff's 10 Motion to Dismiss and Motion to Strike Without Prejudice. The Court denies as moot MyGo's motion to dismiss MBI's first counterclaim, denies MyGo's motion to dismiss MBI's second counterclaim, and grants MyGo's motion to dismiss MBI's third, fourth, and fifth counterclaims. The Court grants MyGo's motion to strike MBI's eighth affirmative defense and denies MyGo's motion to strike MBI's second, third, fourth, and fifth affirmative defenses. The Court grants MBI leave to amend its Answer by February 10, 2017. Signed by Judge Gonzalo P. Curiel on 1/11/17. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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MYGO, LLC, a California corporation,

Case No.: 3:16-cv-02350-GPC-RBB

Plaintiff,

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v.

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ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’s
MOTION TO DISMISS AND
MOTION TO STRIKE WITOHUT
PREJUDICE

MISSION BEACH INDUSTRIES, LLC,
a California corporation,

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Defendant.

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[ECF No. 10.]

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Before the Court is Plaintiff and Counterdefendant MyGo, LLC’s (“Plaintiff’s” or

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“MyGo’s”) motion to dismiss Defendant and Counterclaimant Mission Beach Industries,

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LLC’s (“Defendant’s” or “MBI’s”) first through fifth counterclaims pursuant to Fed. R.

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Civ. P. 12(b)(6) and motion to strike MBI’s second, third, fourth, fifth, and eighth

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affirmative defenses pursuant to Fed. R. Civ. P. 12(f). (Dkt. No. 10 at 1–2.1) The motion

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has been fully briefed. (Dkt. Nos. 19, 20.) The Court deems Plaintiff’s motion suitable

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for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). Having

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reviewed the moving papers and the applicable law, and for the reasons set forth below,

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the Court GRANTS IN PART and DENIES IN PART MyGo’s motion to dismiss and

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All citations to the record are based upon pagination generated by the CM/ECF system.
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GRANTS IN PART and DENIES IN PART MyGo’s motion to strike. (Dkt. No. 10.)

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BACKGROUND

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MyGo designs and sells the MyGo Mouth Mount, a camera mouth mount for

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GoPro® cameras. (Dkt. No. 1, Compl. ¶ 8.) On March 4, 2015, MyGo filed United

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States Patent Application No. 14/639,040. (Id. ¶ 9; Dkt. No. 1-3.) This patent

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application claimed priority to United States Provisional Patent Application No.

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61/948,308, which was filed on March 4, 2014. (Id.) On September 10, 2015, MyGo’s

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patent application was published as United States Patent Application Publication No.

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2015/025361 (“MyGo’s published patent application”). (Id.) On July 5, 2016, the

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United States Patent and Trademark Office (“PTO”) issued United States Patent No.

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9,383,630 (“‘630 Patent” or “patent-in-suit”), entitled “Camera Mouth Mount.” (Compl.

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¶ 9; Dkt. No. 1-2.) MyGo owns all rights to the ‘630 Patent pursuant to an assignment

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recorded at the PTO on May 19, 2015. (Compl. ¶ 9.)

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MyGo alleges that “MBI is and has been making, using, selling, offering for sale,

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and importing a number of camera mouth mount products that infringe the ‘630 Patent,

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including without limitation MBI’s Dummy Mount (in various colors), Dummy Mount

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Kit, Dummy Bundle Kit (in various colors), and Dummy V2 Mouth Mount.” (Id. ¶ 10.)

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MBI sells these products via MBI’s website, third-party websites, and various retailers

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within the United States and worldwide. (Id.) Shortly after filing its patent application,

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MyGo informed MBI of its patent application, MyGo’s potential patent rights, and MBI’s

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potential infringement liability on May 14, 2014. (Id. ¶ 11.)

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On April 28, 2015, MBI filed United States Patent Application No. 14/698,700

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(“MBI’s patent application”) for a patent entitled “Video Mouthpiece Apparatus and

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Method of Making Same.” (Id. ¶ 12.) MBI’s patent application claims priority to United

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States Provisional Patent Application No. 61/985,461, which was filed on April 29, 2014.

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(Id.)

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MyGo alleges that MyGo’s published patent application is prior art to the subject

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matter of MBI’s patent application under 35 U.S.C. § 102(a)(2). (Id. ¶ 13.) On January
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20, 2016, MyGo’s PTO representative submitted a Third-Party Submission Under 37

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C.F.R. § 1.290 in MBI’s patent application to request that the PTO consider MyGo’s

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published patent application as prior art. (Id.) The PTO subsequently issued an Office

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Action on February 3, 2016 rejecting all pending claims of MBI’s patent application as

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being anticipated by prior art references. (Id.) The PTO issued a Notice of

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Abandonment on August 2, 2016 regarding MBI’s failure to reply to the Office Action.

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(Id.)

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Based on publicly accessible information on the PTO’s online Patent Application

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Information Retrieval system, MyGo alleges on information and belief that MBI has no

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patents pending. (Id. ¶ 14.) MyGo alleges that MBI nonetheless advertises on its website

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that it has patents pending in connection with the allegedly infringing products. (Id. ¶ 15;

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Dkt. No. 1-5.)

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On September 16, 2016, MyGo filed a Complaint against MBI asserting five

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claims for relief: (1) patent infringement under 35 U.S.C. §§ 154 and 271; (2) federal

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false marking under 35 U.S.C. § 292; (3) false advertising under 28 U.S.C. § 1125(a); (4)

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unfair competition under California common law; and (5) unfair competition under the

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California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq.

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(Dkt. No. 1.)

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On October 17, 2016, MBI filed an Answer with five counterclaims and eight

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affirmative defenses. (Dkt. No. 7.) MBI asserts the following counterclaims: (1)

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declaratory judgment of non-infringement; (2) declaratory judgment of invalidity of the

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‘630 Patent; (3) invalidity based on fraud on the PTO and inequitable conduct; (4) unfair

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competition under California common law; and (5) unfair competition under the UCL.

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(Id.) MBI asserts the following affirmative defenses to MyGo’s Complaint: (1) failure to

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state a claim under Fed. R. Civ. P. 12(b)(6); (2) non-infringement; (3) invalidity for

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failure to comply with 35 U.S.C. §§ 101, 102, 103, and/or 112; (4) inequitable conduct

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and fraud on the PTO; (5) unclean hands; (6) adequate remedy at law; (7) prosecution

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history estoppel; and (8) patent misuse. (Id.)
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MyGo filed the instant motion to dismiss and motion to strike on November 3,
2016. (Dkt. No. 10.)

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LEGAL STANDARDS
A. Rule 12(b)(6)

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A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the

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sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). While a

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plaintiff need not give “detailed factual allegations,” a plaintiff must plead sufficient facts

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that, if true, “raise a right to relief above the speculative level.” Bell Atlantic Corp. v.

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Twombly, 550 U.S. 544, 545 (2007). “To survive a motion to dismiss, a complaint must

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contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

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plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,

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550 U.S. at 547). A claim is facially plausible when the factual allegations permit “the

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court to draw the reasonable inference that the defendant is liable for the misconduct

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alleged.” Id. In other words, “the non-conclusory ‘factual content,’ and reasonable

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inferences from that content, must be plausibly suggestive of a claim entitling the

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plaintiff to relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).

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“Determining whether a complaint states a plausible claim for relief will . . . be a context-

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specific task that requires the reviewing court to draw on its judicial experience and

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common sense.” Iqbal, 556 U.S. at 679.

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In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the

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truth of all factual allegations and must construe all inferences from them in the light

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most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir.

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2002); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). Legal

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conclusions, however, need not be taken as true merely because they are cast in the form

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of factual allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003); W.

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Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). When ruling on a motion to

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dismiss, the court may consider the facts alleged in the complaint, documents attached to

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the complaint, documents relied upon but not attached to the complaint when authenticity
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is not contested, and matters of which the court takes judicial notice. Lee v. Los Angeles,

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250 F.3d 668, 688–89 (9th Cir. 2001).
Where a motion to dismiss is granted, “leave to amend should be granted ‘unless

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the court determines that the allegation of other facts consistent with the challenged

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pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc.,

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957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture

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Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).

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B. Rule 12(f)

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Under Federal Rule of Civil Procedure 12(f), the Court may, by motion or on its

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own initiative, strike “an insufficient defense or any redundant, immaterial, impertinent

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or scandalous” matter from the pleadings. Fed. R. Civ. P. 12(f). The purpose of Rule

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12(f) is “to avoid the expenditure of time and money that must arise from litigating

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spurious issues by disposing of those issues prior to trial.” Whittlestone, Inc. v. Handi-

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Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d

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1524, 1527 (9th Cir. 1993), rev’d on other grounds by Fogerty v. Fantasy, Inc., 510 U.S.

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517 (1994)).

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The Court must view the pleading in the light more favorable to the pleader when

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ruling on a motion to strike. In re 2TheMart.com, Inc. Sec. Litig., 114 F. Supp. 2d 955,

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965 (C.D. Cal. 2000) (citing California v. United States, 512 F. Supp. 36, 39 (N.D. Cal.

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1981)). Motions to strike are regarded with disfavor because striking is such a drastic

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remedy. Freeman v. ABC Legal Servs., Inc., 877 F. Supp. 2d 919, 923 (N.D. Cal. 2012).

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If a claim is stricken, leave to amend should be freely given when doing so would not

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cause prejudice to the opposing party. Vogel v. Huntington Oaks Delaware Partners,

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LLC, 291 F.R.D. 438, 440 (C.D. Cal. 2013) (citing Wyshak v. City Nat’l Bank, 607 F.2d

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824, 826 (9th Cir. 1979)).

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DISCUSSION
I.

Motion to Dismiss Counterclaims
MyGo moves to dismiss MBI’s first through fifth counterclaims pursuant to Rule
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12(b)(6). (Dkt. No. 10.)
A. MBI’s First Counterclaim
MBI agrees to dismiss its first counterclaim. (Dkt. No. 19 at 9.) Accordingly, the
Court DENIES AS MOOT MyGo’s motion to dismiss MBI’s first counterclaim.
B. MBI’s Second Counterclaim
MBI’s second counterclaim alleges that the ‘630 Patent is invalid for failure to

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comply with the conditions and requirements for patentability under 35 U.S.C. §§ 101,

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102(a)–(b), 103, and/or 112. (Dkt. No. 7 at 14–16.) MBI identifies two bases for

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invalidity: prior art and obviousness. (Id.) MBI first alleges that MyGo’s patent is

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invalid under 35 U.S.C. § 102(a)–(b) for failure to disclose relevant prior art references

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during the examination period. (Id. at 15.) Specifically, MBI alleges that its “own

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Dummy Mount product was used in daylight, on a public beach, in 2013 and disclosed to

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the public and the surf community then and also at least as early as January 2014,” prior

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to MyGo’s provisional filing date. (Id.) MBI next alleges that the ‘630 Patent is invalid

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under 35 U.S.C. § 103, as the “public use and public disclosure” of MBI’s product

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“would render obvious any so-called improvements of [MyGo’s] disclosure.” (Id.)

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MyGo contends that MBI’s second counterclaim fails for a number of reasons.

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First, MyGo argues that MBI fails to explain how the ‘630 Patent is invalid under 35

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U.S.C. §§ 101 and 112. (Dkt. No. 10-1 at 5.)

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Next, with respect to 35 U.S.C. § 102, MyGo contends that MBI’s allegations do

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not spell out a plausible claim of invalidity. (Id. at 5–6.) Specifically, MyGo contends

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that MBI’s allegation of public use is conclusory and lacks specific facts regarding the

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degree of accessibility afforded to the public. (Id.) Moreover, MyGo states that MBI

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never informed the PTO of its alleged pre-filing, public use of its Dummy Mount

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product, violating its duty of candor to disclose all known information material to

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patentability to the PTO. (Id. at 6.) MyGo concludes that MBI’s failure to disclose its

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alleged public use is fatal to MBI’s own patent application and renders MBI’s allegations

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of prior art “highly suspect, unbelievable, and entitled to no weight.” (Id.)
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With respect to 35 U.S.C. § 103, MyGo contends that MBI has not pled sufficient

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facts about the product that it allegedly used publicly. (Id.) For example, MBI does not

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specify whether the Dummy Mount product “fully or only partially encompass[es] any

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claim of the ‘630 patent,” and MBI “identifies no claim of the ‘630 patent that is

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supposedly anticipated or rendered obvious by MBI’s purported public use of its Dummy

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Mount.” (Id.) Nor does MBI identify which version of the Dummy Mount was publicly

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used. (Id.)

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MBI responds that its allegations of public use and disclosure are not conclusory,
but rather prove fatal to MyGo’s Patent. (Dkt. No. 19 at 9–11.) MBI argues that MyGo’s
contention that MBI violated its duty of candor is baseless. (Id.)
MBI’s second counterclaim, while skeletal, states a claim for invalidity at the

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pleading stage. First, MBI alleges some facts that raise reasonable inferences plausibly

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suggestive of a claim. MBI does not conclusorily allege an invalidating public use,

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without more: it alleges that its Dummy Mount product was used “in daylight, on a public

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beach” and made known to members of “the public and the surf community.” (Dkt. No.

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7 at 15.) Second, the Court’s scheduling order (Dkt. No. 18) and Patent L.R. 3.3–3.4

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require that invalidity contentions be served by February 1, 2017. “By requiring the party

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claiming invalidity to flesh out and support its invalidity contentions early on, the Patent

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Local Rules fulfill the function of Twombly and Iqbal.” Wistron Corp. v. Phillip M.

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Adams & Assocs., LLC, No. C-10-4458 EMC, 2011 WL 1654466, at *11 (N.D. Cal. Apr.

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28, 2011) (noting that “requiring a heightened pleading of invalidity would circumvent

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this Court’s Patent Local Rules which require detailed disclosures as to invalidity

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contentions soon after the suit is filed”); accord Elan Pharma Int’l Ltd. v. Lupin Ltd., No.

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CIV. A. 09-1008 JAG, 2010 WL 1372316, at *5 (D.N.J. Mar. 31, 2010). Considering the

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specific rules governing patent cases in this District, and construing MBI’s factual

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allegations in the light most favorable to MBI, the Court concludes that MBI’s second

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counterclaim survives the instant motion to dismiss.

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Finally, although MBI does not explicitly allege that its public use occurred within

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the one-year statutory bar under 35 U.S.C. § 102(b)(1), MBI does allege that the public

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use occurred “in 2013,” and that public disclosure occurred “then and also at least as

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early as January 2014.” (Dkt. No. 7 at 15.) MBI’s Provisional Patent Application was

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filed on April 29, 2014. (Compl. ¶ 12; Dkt. No. 19 at 10.) Construing these allegations

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in the light most favorable to MBI, MBI has sufficiently stated at the pleading stage that

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its public use of the Dummy Mount product occurred within the one-year statutory bar.

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Accordingly, the Court DENIES MyGo’s motion to dismiss MBI’s second
counterclaim.
C. MBI’s Third Counterclaim
MBI alleges in its third counterclaim that “[t]he ‘630 Patent is unenforceable and

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void due to unclean hands, fraud, and inequitable conduct that occurred during the

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application for and prosecution of the Patent.” (Dkt. No. 7 at 16.) As for fraud, MBI

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alleges that MyGo intentionally “misrepresented its status as a micro-entity” to the PTO

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in order “to obtain discounted fees to which it was not entitled” in violation of 37 C.F.R.

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§ 1.29(j). (Id. at 16–17.) MBI alleges that MyGo does not qualify for micro entity status

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under the gross income requirements enumerated in 37 C.F.R. § 1.29. (Id. at 19.) With

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respect to inequitable conduct, MBI alleges that MyGo failed to disclose relevant prior art

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references to the PTO in violation of 37 C.F.R. § 1.56. (Id. at 18–20.)

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MyGo argues that MBI’s third counterclaim, which is based on MyGo’s alleged

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fraud before the PTO, fails to meet the more stringent pleading standard of Fed. R. Civ.

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P. 9(b). (Dkt. No. 10-1 at 8–9.) MyGo contends that MBI cannot plead allegations of

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MyGo’s purported fraud on information and belief, absent a statement of facts upon

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which the belief is founded and the reasons for the belief. (Id.; Dkt. No. 20 at 3–4.)

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MyGo attaches two declarations from the ‘630 Patent’s inventors, Nicholas Brooks and

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Jeffrey Russell, to counter MBI’s allegations and certify that MyGo satisfied the

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requirements for micro entity status. (Dkt. No. 10-1 at 8–9; Dkt. Nos. 10-2, 10-3.)

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In response, MBI argues that it has sufficiently pled the “who, what, when, where,
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and how of the alleged fraud,” and that pleading on information and belief suffices where

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MyGo’s and the inventors’ financial information lies uniquely within MyGo’s control.

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(Dkt. No. 19 at 12.) Although it did not so plead in its counterclaim, MBI conjectures

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that MyGo must not qualify for micro entity status due to its sponsorship of renowned

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professional surfers, who likely are receiving large sums in compensation. (Id. at 14–15.)

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As for inequitable conduct, MBI responds that (1) it pled that MyGo failed to disclose

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various prior art references that would have precluded issuance of the patent; (2) it “is

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able to provide the identities of the prior art in an amended counterclaim, if necessary,

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but is going to have to disclose detailed invalidity contentions under local rules and the

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Court’s scheduling order anyway”; and (3) it pled that MyGo “la[id] claim to inventions

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that belonged to others (like MBI), fil[ed] a patent on the subject matter, then us[ed] the

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patent to sue the actual inventor and tr[ied] to extract royalties on unpatented products.”

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(Id. at 15.)

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As an initial matter, MyGo does not request judicial notice of the Brooks and

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Russell declarations. Nor has it provided any legal basis for the Court to do so. A court

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cannot consider matters outside of the complaint on a Rule 12(b)(6) motion to dismiss,

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unless those matters are: 1) authenticated documents that have been incorporated by the

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complaint or 2) facts subject to judicial notice. Lee v. City of Los Angeles, 250 F.3d 668,

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689–90 (9th Cir. 2001). The declarations are not authenticated documents that have been

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incorporated by the complaint. See U.S. v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

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Nor do they contain facts that are “not subject to reasonable dispute.” Fed. R. Evid.

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201(b). In fact, MyGo submits the declarations to dispute MBI’s allegations. The Court

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thus declines to take judicial notice of the content of the declarations. See In re Applied

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Micro Circuits Corp. Sec. Litig., No. 01-CV-0649 K AJB, 2002 WL 34716875, at *3

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(S.D. Cal. Oct. 4, 2002) (“If the Court were to consider this extrinsic evidence, it would

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in fact convert this motion to dismiss into a motion for summary judgment, and the Court

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is not willing to do so.”).

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To comply with Fed. R. Civ. P. 9(b), allegations of fraud must be “specific enough
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to give defendants notice of the particular misconduct which is alleged to constitute the

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fraud charged so that they can defend against the charge and not just deny that they have

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done anything wrong.” Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)

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(quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993)).

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[T]o plead the ‘circumstances’ of inequitable conduct with the requisite
‘particularity’ under Rule 9(b), the pleading must identify the specific who, what,
when, where, and how of the material misrepresentation or omission committed
before the PTO. Moreover, although “knowledge” and “intent” may be averred
generally, a pleading of inequitable conduct under Rule 9(b) must include
sufficient allegations of underlying facts from which a court may reasonably infer
that a specific individual (1) knew of the withheld material information or of the
falsity of the material misrepresentation, and (2) withheld or misrepresented this
information with a specific intent to deceive the PTO.

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Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1328–29 (Fed. Cir. 2009).
While MBI does allege the basic “who, what, when where, and how” of MyGo’s
purported material misrepresentation and omission before the PTO, MBI includes no
allegations of underlying facts from which this Court may reasonably infer that specific
individuals affiliated with MyGo had the requisite knowledge and specific intent to
deceive the PTO. See id. MBI’s factual allegations suggest nothing about MyGo’s
knowledge and intent: MBI merely lists the actions that inventors Jeffrey Russell and
Nicholas Brooks and their attorneys took in certifying MyGo’s qualification for micro
entity status before the PTO. (Dkt. No. 7 at 16–20.)
Furthermore, while MBI is correct in arguing that “[p]leading on ‘information and
belief’ is permitted under Rule 9(b) when essential information lies uniquely within
another party’s control,” MBI fails to address the requirement that “the pleading set[]
forth the specific facts upon which the belief is reasonably based.” Exergen Corp., 575
F.3d at 1330–31 (concluding that an allegation of deceptive intent that “provide[d]
neither the ‘information’ on which it relies nor any plausible reasons for its ‘belief’”
failed to satisfy Rule 9(b)). MBI provides neither the information on which it relies nor
any plausible reasons for its belief. It simply asserts conclusorily that it believes that
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MyGo intentionally deceived the PTO. (Dkt. No. 7 at 17, 19.)

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Finally, MBI’s assertions regarding MyGo’s sponsorship of professional athletes

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are extrinsic to its pleadings. (Compare Dkt. No. 19 at 14–15 with Dkt. No. 7 at 16–20.)

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Should MBI wish to assert new factual allegations, it should do so in an amended

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pleading.

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Accordingly, the Court GRANTS MyGo’s motion to dismiss MBI’s third
counterclaim.
D. MBI’s Fourth and Fifth Counterclaims

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MBI asserts common law and statutory unfair competition claims. (Dkt. No. 7 at

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20–22.) Both claims are based on MBI’s allegations of MyGo’s “inequitable and

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fraudulent conduct before the PTO.” (Id.) MyGo argues that MBI’s fourth and fifth

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counterclaims fail for the same reasons that MBI’s third counterclaim fails, as the fourth

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and fifth counterclaims are based on the same fraud allegations set forth in MBI’s third

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counterclaim. (Dkt. No. 10-1 at 9.) Because MBI’s fourth and fifth counterclaims flow

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from its third counterclaim, the Court GRANTS MyGo’s motion to dismiss MBI’s fourth

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and fifth counterclaims.

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II.

Motion to Strike Affirmative Defenses
MBI moves to strike MBI’s second, third, fourth, fifth, and eighth affirmative

defenses under Rule 12(f). (Dkt. No. 10.)
In the Ninth Circuit, “[t]he key to determining the sufficiency of pleading an

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affirmative defense is whether it gives plaintiff fair notice of the defense.” Simmons v.

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Navajo County, Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010) (quoting Wyshak v. City Nat’l

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Bank, 607 F.2d 824, 827 (9th Cir. 1979)). “Fair notice generally requires that the

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defendant state the nature and grounds for the affirmative defense.” Roe v. City of San

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Diego, 289 F.R.D. 604, 608 (S.D. Cal. 2013). “It does not, however, require a detailed

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statement of facts.” Id. “What constitutes fair notice . . . depends on the nature of the

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defense being asserted. For well-established defenses, merely naming them may be

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sufficient, but for others, a party may need to allege additional factual matter to provide
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fair notice.” DC Labs Inc. v. Celebrity Signatures Int’l, Inc., No. 12-CV-01454 BEN

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DHB, 2013 WL 4026366, at *4 (S.D. Cal. Aug. 6, 2013).

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District courts within the Ninth Circuit are split on whether the pleading standard

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subsequently articulated in Twombly and Iqbal extends to affirmative defenses. See J & J

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Sports Productions, Inc. v. Scace, No. 10cv2496-WQH-CAB, 2011 WL 2132723, at *1

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(S.D. Cal. May 27, 2011). Here, the parties disagree over which pleading standard

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applies to affirmative defenses. MyGo argues that the Twombly and Iqbal pleading

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standard applies, (Dkt. No. 10-1 at 9–10; Dkt. No. 20 at 5), while MBI responds that the

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fair notice pleading standard applies, (Dkt. No. 19 at 8). Although the Ninth Circuit has

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not yet explicitly addressed the issue, it has continued to articulate the fair notice

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pleading standard in cases decided after Twombly and Iqbal. See, e.g., Simmons, 609

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F.3d at 1023 (2010 decision); Kohler v. Flava Enterprises, Inc., 779 F.3d 1016, 1019 (9th

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Cir. 2015) (stating that “the fair notice required by the pleading standards only requires

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describing the defense in general terms” (internal citation and quotation marks omitted)).

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In light of the Ninth Circuit’s recent decisions, this Court applies the fair notice pleading

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standard to the instant motion to strike.

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A. MBI’s Second Affirmative Defense
MBI asserts that it “has not infringed any valid and enforceable claim(s)” of the

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‘630 Patent. (Dkt. No. 7 at 9.) MyGo contends that this defense is merely a legal

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conclusion. (Dkt. No. 10-1 at 10.) However, given that the pleading standard for

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affirmative defenses is “fair notice,” and that MyGo is well aware that infringement is at

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the heart of this case, MBI’s second affirmative defense, while sparse in detail, provides

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MyGo sufficient notice. Accordingly, the Court DENIES MyGo’s motion to strike

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MBI’s second affirmative defense.

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B. MBI’s Third Affirmative Defense
MBI asserts that “[t]he claims of the ‘630 Patent are invalid for failure to comply

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with the conditions for patentability of, inter alia, 35 U.S.C. §§ 101, 102, 103, and/or

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112.” (Dkt. No. 7 at 9.) This defense overlaps with MBI’s second counterclaim. (Id. at
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14–16.) MyGo requests that this defense be stricken because it is a legal conclusion.

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(Dkt. No. 10-1 at 10.) MBI responds that it provides sufficient notice of the statutory

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provisions on which it relies to assert its defense. (Dkt. No. 19 at 17.) Here, MBI’s

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defense, while skeletal, provides fair notice in the context of this patent infringement

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action. See, e.g., Certusview Techs., LLC v. Usic, LLC, No. 2:14CV373, 2014 WL

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12591937, at *15 (E.D. Va. Dec. 15, 2014) (denying motion to strike identical

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affirmative defense, concluding defense was “contextually comprehensible”); Senju

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Pharm. Co., Ltd. v. Apotex, Inc., 921 F. Supp. 2d 297, 300, 303–04 (D. Del.

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2013) (denying motion to strike identical affirmative defense). Accordingly, the Court

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DENIES MyGo’s motion to strike MBI’s third affirmative defense.
C. MBI’s Fourth Affirmative Defense
MBI asserts that MyGo’s claims are “barred by reason of inequitable conduct and

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fraud” on the PTO. (Dkt. No. 7 at 10–11.) MBI’s allegations regarding this defense

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overlap with its allegations in its third counterclaim. (Id. at 16–20.) MyGo contends that

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this defense fails for the same reasons that MBI’s third counterclaim fails. (Dkt. No. 10-1

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at 10.)

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Here, MBI’s fourth affirmative defense sets forth allegations, made on information

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and belief, that MyGo misrepresented its status as a micro entity to the PTO. (Dkt. No. 7

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at 10–11.) It also sets forth allegations that MyGo failed to disclose “various, relevant

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prior arts, patent and otherwise.” (Id.) MBI’s allegations regarding MyGo’s micro entity

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status, while unable to pass muster under Rules 12(b)(6) and 9(b), nonetheless give

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MyGo fair notice of the grounds for MBI’s defense. Accordingly, the Court DENIES

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MyGo’s motion to strike MBI’s fourth affirmative defense.

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D. MBI’s Fifth Affirmative Defense
MBI asserts that MyGo’s claims are barred by unclean hands. (Dkt. No. 7 at 11.)

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MBI incorporates by reference its allegations from its fourth affirmative defense. (Id.)

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Because MBI’s allegations in its fourth affirmative defense provide fair notice, the Court

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DENIES MyGo’s motion to strike MBI’s fifth affirmative defense.
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E. MBI’s Eighth Affirmative Defense
MBI alleges on information and belief that the ‘630 Patent is invalid and

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unenforceable due to patent misuse by MyGo. (Dkt. No. 7 at 12–13.) MBI incorporates

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by reference its counterclaim allegations and additionally asserts that MyGo has

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“attempted to enforce its claims with respect to products not covered by the claims.”

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(Id.)

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Patent misuse is typically not pleaded in a complaint. Beco Dairy Automation, Inc.

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v. Glob. Tech Sys., Inc., No. 112CV01310LJOSMS, 2015 WL 9583012, at *2 (E.D. Cal.

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Dec. 31, 2015). As such, “a party asserting patent misuse as an affirmative defense must

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provide ‘fair notice’ that a patent-holder has impermissibly broadened the scope of the

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patent in a manner which has caused an anticompetitive effect.” Id. (granting motion to

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strike affirmative defense of patent misuse which stated that the patentee “cannot enforce

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its alleged patents against BECO due to its prior improper attempts to exploit the patents

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beyond their lawful scope”). While MBI’s opposition brief explains in further detail the

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bases for MBI’s assertion that MyGo is impermissibly broadening the scope of the ‘630

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Patent, (Dkt. No. 19 at 19), MBI’s pleading does not itself provide fair notice of the

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nature and grounds for its defense, (Dkt. No. 7 at 12–13). Accordingly, the Court

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GRANTS MyGo’s motion to strike MBI’s eighth affirmative defense.

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CONCLUSION

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For the foregoing reasons, the Court DENIES AS MOOT MyGo’s motion to

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dismiss MBI’s first counterclaim, DENIES MyGo’s motion to dismiss MBI’s second

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counterclaim, and GRANTS MyGo’s motion to dismiss MBI’s third, fourth, and fifth

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counterclaims. (Dkt. No. 10.) The Court GRANTS MyGo’s motion to strike MBI’s

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eighth affirmative defense and DENIES MyGo’s motion to strike MBI’s second, third,

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fourth, and fifth affirmative defenses. (Id.) The Court GRANTS MBI leave to amend its

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Answer by February 10, 2017.

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IT IS SO ORDERED.
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Dated: January 11, 2017

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