Bayer CropScience AG v. Dow Agrosciences LLC
Filing
127
OPINION. Signed by Judge Renee Marie Bumb on 12/30/2011. (lih)
NOT FOR PUBLICATION
[Docket Nos. 18, 21]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
BAYER CROPSCIENCE AG,
Plaintiff,
Civil No. 10-1045 RMB/JS
v.
DOW AGROSCIENCES LLC,
OPINION
Defendant.
Frederick L. Cottrell, III
Jeffrey L. Moyer
Anne Shea Gaza
Stephen M. Ferguson
Richards, Layton & Finger, P.A.
One Rodney Square
920 North King Street
Wilmington, DE 19801
Robert J. Koch
Jay I. Alexander
Arie M. Michelsohn
Stephanie R. Amoroso
Edwards J. Mayle
Milbank, Tweed, Hadley & McCoy LLP
1850 K Street NW, Suite 1100
Washington, D.C. 20006
Attorneys for Plaintiff Bayer CropScience AG
Steven J. Balick
Lauren E. Maguire
Andrew C. Mayo
Ashby & Geddes, P.A.
500 Delaware Avenue, 8th Floor
P.O. Box 1150
1
Wilmington, Delaware 19899
Peter A. Bicks
Alex V. Chachkes
Joseph A. Sherinsky
Orrick, Herrington & Sutcliffe LLP
51 West 52nd Street
New York, New York 10019
Elizabeth a Howard
Orrick, Herrington & Sutcliffe LLP
1000 Marsh Road
Menlo Park, California 94025
Hardip B. Passananti
Orrick, Herrington & Sutcliffe LLP
4 Park Plaza, Suite 1600
Irvine, California 92614
Attorneys for Defendant Dow AgroSciences LLC
BUMB, United States District Judge
(sitting by designation):
Plaintiff Bayer CropScience AG claims that Defendant Dow
AgroSciences LLC has infringed its patent, patent number
6,153,401 (the “401 patent”).
Defendant has raised various
affirmative defenses and counterclaims.
Plaintiff has moved to
strike Defendant’s fifth and seventh affirmative defenses, as
well as its third counterclaim.
For the reasons that follow,
Plaintiff’s motion is GRANTED, in part, and DENIED, in part.
is GRANTED with respect to Defendant’s fifth affirmative
defense.
It is DENIED with respect to Defendant’s seventh
affirmative defense.
It is DENIED, in part, and GRANTED, in
part, with respect to Defendant’s third counterclaim.
I.
Standard
2
It
Motions to strike an affirmative defense are generally
disfavored and, historically, were only granted in limited
circumstances.
Federal Trade Commission v. Hope Now
Modifications, LLC, No. 09-1204, 2011 WL 883202, at *1 (D.N.J.
March 10, 2011); Vurimindi v. Fuqua School of Business, No. 10234, 2011 WL 3803668, at *2 (E.D.Pa. Aug. 29, 2011).
Those
circumstances included insufficiency: when the moving party
could demonstrate both that the defense was insufficient as a
matter of law or fact and that maintenance of the defense would
prejudice the movant.
Federal Trade, 2011 WL 883202, at *1-2,
4; Vurimindi, 2011 WL 3803668, at *2.
They also included any
defense subject to Federal Rules of Civil Procedure Rule 9(b)’s
requirement of heightened pleading for claims sounding in fraud.
Tyco Fire Prods. LP v. Victaulic Co., 777 F. Supp. 2d 893, 901
n.7 (E.D.Pa. 2011)(noting that affirmative defenses sounding in
fraud must be plead with particularity pursuant to Rule 9(b)).
Following Twombly/Iqbal, however, courts have disagreed as
to whether affirmative defenses are subject to Twombly/Iqbal’s
pleading requirements.
Vurimindi, 2011 WL 3803668, at *2.
While the Third Circuit has not yet opined as to whether
Twombly/Iqbal is applicable to affirmative defenses, this Court
agrees with those courts that have found Twombly/Iqbal
inapplicable to affirmative defenses.
Court, base that decision on:
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Those courts, and this
(1)
textual differences between Rule 8(a), which requires
that a plaintiff asserting a claim show entitlement to
relief, and Rule 8(c), which requires only that the
defendant state any defenses;
(2)
a diminished concern that plaintiffs receive notice in
light of their ability to obtain more information
during discovery;
(3)
the absence of a concern that the defense is
“unlocking the doors of discovery”;
(4)
the limited discovery costs, in relation to the costs
imposed on a defendant, since it is unlikely that
either side will pursue discovery on frivolous
defenses;
(5) the unfairness of holding the defendant to the same
pleading standard as the plaintiff, when the defendant
has only a limited time to respond after service of
the complaint while plaintiff has until the expiration
of the statute of limitations;
(6)
the low likelihood that motions to strike affirmative
defenses would expedite the litigation, given that
leave to amend is routinely granted.
(7)
the risk that a defendant will waive a defense at
trial by failing to plead it at the early stage of the
litigation;
(8)
the lack of detail in Form 30, which demonstrates the
appropriate pleading of an affirmative defense; and
(9)
the fact that a heightened pleading requirement would
produce more motions to strike, which are disfavored.
Federal Trade Commission, 2011 WL 883202, at *3; Tyco, 777
F. Supp. 2d at 898-900; Bennet v. Sprint Nextel Corp., No. 092122-EFM, 2011 WL 4553055, at *1-2 (D.Kan. Sept. 29, 2011).
Therefore, the Court will review Defendant’s affirmative
defenses only for sufficiency and for compliance with Rule 9(b).
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Counterclaims, in contrast, are ordinarily subject to the
demands of Twombly/Iqbal.
Tyco, 777 F. Supp. 2d at 898.
In the
patent infringement context, however, some courts have, whether
expressly or implicitly, declined to apply the rigors of
Twombly/Iqbal to defendants asserting invalidity counterclaims.
These courts reasoned that requiring greater specificity at the
pleading stage would: (1) short-circuit the ordinary disclosure
process under the courts’ local rules; and (2) be inequitable to
defendants given that it would impose on them a higher pleading
burden than the minimal pleading burdens of patent plaintiffs.
Elan Pharma Int’l Ltd. v. Lupin Ltd., No. 09-1008, 2010 WL
1372316, at *5 (D.N.J. Mar. 31, 2010)(finding that there was no
basis to require more specific pleading of the defendant’s
invalidity counterclaims than in the plaintiff’s own complaint
and that holding otherwise would render Local Patent Rules 3.1
and 3.3 superfluous); Teirstein v. AGA Medical Corp., No.
6:08cv14, 2009 WL 704138, at *5 (E.D.Tex. Mar. 16, 2009)(denying
motion to dismiss similarly sparse invalidity counterclaims);
Microsoft Corp. V. Phoenix Solutions, Inc., 741 F. Supp. 2d
1156, 1159 (C.D.Cal. 2010)(noting that a patentee alleging
direct infringement must only comply with Form 18, which allows
for notice pleading, and that “it would be incongruous to
require heightened pleading” from the defendant on an invalidity
counterclaim, particularly given the court’s requirement that
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invalidity contentions be served promptly after a counterclaim
of invalidity is advanced); Pfizer, Inc. V. Apotex, Inc., 726 F.
Supp. 2d 921, 937-38 (N.D.Ill. 2010)(citing to Elan Pharma and
the local patent rules in reaching the same conclusion); but see
Tyco, 777 F. Supp. 2d at 905 (imposing Twombly/Iqbal on
counterclaims in the patent context but recognizing that the
requirement would impose on defendants the burden of responding
to conclusory complaints with non-conclusory factual allegations
and that that court did not have local patent rules militating
against this result as courts holding otherwise did, though
noting that that would not change its conclusion).
An unenforceability counterclaim, not an invalidity
counterclaim, is at issue here.
However, unenforceability
defenses are similarly subject to disclosure requirements under
a schedule established by the District of New Jersey’s Local
Patent Rules.
See District of New Jersey Local Patent Rules 3.1
and 3.2A (requiring that patent plaintiffs set forth their
claims and infringement contentions within 14 days of the
initial scheduling conference and that defendants set forth
responses to each of those claims and contentions and “any
document or thing that it intends to rely on in defense against
any such Infringement Contentions” within 45 days of plaintiffs’
disclosure).
And the concern of imposing incongruous pleading
burdens is no less present here.
Accordingly, the same logic
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that led other courts to conclude that invalidity counterclaims
were not subject to heightened pleading under Twombly/Iqbal
leads this Court to the same conclusion with respect to patent
unenforceability counterclaims.
III. Analysis
Plaintiff has moved to strike Defendant’s fifth and seventh
affirmative defenses, equitable estoppel and patent misuse, as
well as Defendant’s third counterclaim for a declaratory
judgment of invalidity based on prosecution history estoppel,
patent misuse, and equitable estoppel.
A.
Defendant’s Fifth Affirmative Defense
Plaintiff’s motion to strike Defendant’s fifth affirmative
defense – equitable estoppel - is granted.
arguments in support of dismissal.
Plaintiff makes two
Plaintiff first argues that
Defendant’s claim was subject to Rule 9(b) and that Defendant
failed to plead its claim with the particularity required by the
Rule.
This Court agrees.
Because equitable estoppel has
misleading conduct by the patent holder as one of its elements,
Defendant was required to plead this affirmative defense with
particularity under Rule 9(b).
Aspex Eeyewear Inc. v. Clariti
Eyewear, Inc., 605 F.3d 1305, 1310 (Fed. Cir. 2010)(listing
“misleading conduct” by the patentee that led the infringer to
reasonably believe that the patentee did not intend to enforce
its patent against the infringer as an element of equitable
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estoppel); Hemy v. Perdue Farms, Inc., No. 11-888, 2011 WL
6002463, at *17 n. 11 (D.N.J. Nov. 30, 2011)(finding that
allegations of “misleading conduct” triggered Rule 9(b)); Bild
v. Konig, No. 09-CV-5576, 2011 WL 666259, at *6 (E.D.N.Y. Feb.
14, 2011)(finding Rule 9(b) generally applicable to claims of
equitable estoppel).
It failed to do so.
The Court will
therefore dismiss this affirmative defense without prejudice.
Plaintiff also argues that Defendant cannot claim equitable
estoppel based on statements made by Plaintiff to the United
States Patent and Trademark Office because equitable estoppel
must be based on representations made to the party claiming
estoppel by the party against whom estoppel is asserted.
While
the Court need not pass upon this issue, it notes that equitable
estoppel is, as its name implies, an equitable defense that is
flexible and not generally limited, as Plaintiff contends, to
particular factual circumstances.
A.C. Aukerman Co. v. R.L.
Chaides Constr. Co., 960 F.2d 1020, 1041 (Fed. Cir. 1992)(“Like
laches, equitable estoppel is not limited to a particular
factual situation nor subject to resolution by simple or hard
and fast rules.”).
B.
Defendant’s Seventh Affirmative Defense
Plaintiff’s motion to strike Defendant’s seventh
affirmative defense – patent misuse – is denied.
Defendant
alleges that Plaintiff unlawfully attempted to enforce the ‘401
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patent, when it knew or should have known it is invalid,
unenforceable, and/or not infringed.
Plaintiff argues that the
affirmative defense should be stricken for three reasons.
First, Plaintiff argues that the defense was subject to
Rule 9(b)’s heightened pleading requirements.
It is unclear
from the pleadings whether the defense sounds in fraud and this
Court is unaware of any cases that hold that patent misuse
claims inherently sound in fraud.
See Takeda Chem. Indus, Ltd.
V. Alphapharm Pty., Ltd., No. 04 Civ. 1966, 2004 WL 1872707, at
*1 (S.D.N.Y. Aug. 19, 2004)(declining to rule on whether patent
misuse allegations were subject to Rule 9(b) where the parties
disputed the issue).
To the extent that Defendant intends to
rely on a patent misuse defense that implicates fraud, it will
need to re-plead the claim with particularity.
Advanced
Cardiovascular Systems, Inc. v. Medtronic, Inc., No. C-95-3577,
1996 WL 467293, at *13 (N.D.Cal. July 24, 1996)(holding that
defendant was required to plead patent misuse affirmative
defense with particularity to the extent it was premised on
inequitable conduct before the PTO).
For now, however, the
Court will decline to strike the claim on this basis.
Second, Plaintiff argues that the claim is insufficient as
a matter of law because Plaintiff cannot be liable simply for
enforcing the ‘401 patent.
than that.
Defendant has, however, alleged more
Defendant has alleged that Bayer was enforcing a
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patent it knew was invalid, unenforceable, and/or not infringed.
That is all Defendant was required to allege legally to maintain
the defense, at the pleading stage.
In re Gabapentin Patent
Litig., 649 F. Supp. 2d 340, 349 (D.N.J. 2009)( holding that a
patent misuse claim, at the pleading stage, “requires only
allegations of conduct that had the effect of impermissibly
extending the limited protection from competition afforded by
the . . . patent.”).
And even if this defense were insufficient
as a matter of law, Plaintiff has not demonstrated that it would
suffer any prejudice, from maintenance of this defense, as
required for dismissal on this basis.
Federal Trade, 2011 WL
883202, at *1-2.
Third, Plaintiff argues that Defendant’s allegation of
patent misuse is too conclusory under two separate theories:
first, because Twombly/Iqbal applies; or, second, because an
enhanced pleading standard applies to patent misuse claims.
However, as discussed above, this Court does not apply
Twombly/Iqbal to affirmative defenses.
It therefore rejects
Plaintiff’s argument that greater factual substantiation is
needed on this basis.
The Court also rejects Plaintiff’s
argument that, aside from Twombly/Iqbal, there is an enhanced
pleading requirement applicable to patent misuse claims.
Plaintiff cites Advanced Cardiovascular Sys., Inc. v. Scimed
Sys., Inc., No. C-96-0950-DLJ, 1996 WL 467277, at *3-4 (N.D.Cal.
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July 24, 1996), and one case, by the same court, that relies on
it, in support of this proposition.
In both cases, the
heightened pleading requirement was premised on the notion that
more than conclusory allegations of patent misuse were needed to
provide notice, “[g]iven the specific exceptions to patent
misuse provided by Congress[.]”
WL 467277, at *3-4.
Advanced Cardiovascular, 1996
Because this is not an established basis to
elevate the requirements of Rule 8, the Court will not impose
heightened pleading requirements on Defendant on this basis.
Defendant’s affirmative defense provides fair notice under the
liberal pleading standards of the Rule.
This Court therefore
denies Plaintiff’s motion to strike Defendant’s seventh
affirmative defense.
C.
Defendant’s Third Counterclaim
Plaintiff’s motion to strike Defendant’s third
counterclaim, for a declaratory judgment of unenforceability, is
denied, in part, and granted, in part.
That counterclaim is
premised on the ‘401 patent being invalid due to equitable
estoppel, patent misuse, and prosecution history estoppel.
To the extent the counterclaim is based on equitable
estoppel, it is dismissed.
Defendant’s counterclaim for
equitable estoppel, like its affirmative defense of equitable
estoppel, fails to offer the particularity required by Rule 9(b)
for claims sounding in fraud.
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Plaintiff also has moved for dismissal of the patent misuse
aspect of the counterclaim, based on Defendant’s failure to
offer more than conclusory allegations of patent misuse.
Plaintiff’s argument is premised on its contentions that: (1)
patent misuse is subject to Rule 9(b); (2) patent misuse, even
outside of Rule 9(b), has a heightened pleading requirement; and
(3) that the counterclaim is subject to Twombly/Iqbal.
With
respect to Plaintiff’s first two arguments, the Court declines
to dismiss this aspect of Defendant’s counterclaim for the same
reasons discussed in the Court’s consideration of Plaintiff’s
motion to strike the patent misuse affirmative defense.
The
Court also rejects Plaintiff’s third argument based on its
finding that such a requirement would unfairly impose a higher
pleading requirement on patent defendants than on patent
plaintiffs and would contravene the District’s Local Patent
Rules.
Finally, Plaintiff has moved for dismissal of the
prosecution history estoppel aspect of Defendant’s counterclaim
of unenforceability.
Plaintiff argues that the doctrine is a
limitation on claim scope, not on enforceability, and therefore
should be dismissed.
This is form over substance.
While
Plaintiff is correct that the doctrine is a legal limitation on
claim scope, in function it estops the patentee from enforcement
of the patent against the alleged infringer.
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Mannesmann Demag
Corp. v. Engineered Metal Products Co., Inc., 793 F.2d 1279,
1284 (Fed.Cir. 1986)(holding that the doctrine of prosecution
history estoppel is an equitable tool for determining the “scope
of patent claims” that “prevents a patentee from enforcing its
claims”)(emphasis added); Astrazaneca UK Ltd. V. Dr. Reddy’s
Laboratories, Ltd., No. 08-3237, 2010 WL 4721384, at *5 (D.N.J.
Nov. 15, 2010)(noting that the court looks to the doctrine of
prosecution history estoppel “as a limit on the scope of patent
available to a claimant under the [Doctrine of Equivalents]”);
C.R. Bard, Inc. v. U.S. Surgical Corp., 107 F. Supp. 2d 489, 493
(D.Del. 2000)(“Under prosecution history estoppel, the patentee
is estopped from enforcing the patent against an equivalent
[device] if the inventor surrendered, during prosecution of the
patent application, claim scope which included the now-asserted
element or its equivalent.”)(quotation and citation
omitted)(emphasis added).
The Court therefore declines to
dismiss this aspect of Defendant’s counterclaim.
IV.
Conclusion
For the foregoing reasons, Plaintiff’s motion to strike
Defendant’s fifth affirmative defense is GRANTED without
prejudice.
Plaintiff’s motion to strike Defendant’s seventh
affirmative defense is DENIED.
Plaintiff’s motion to dismiss
Defendant’s third counterclaim is GRANTED, in part, without
prejudice, and DENIED, in part.
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The Court notes that Defendant presently has pending a
motion to amend its answer.
If Defendant intends to amend its
Answer in light of this Opinion, it should promptly notify the
Court of its intention and withdraw the pending motion.
Dated:
December 30, 2011
s/Renée Marie Bumb
RENÉE MARIE BUMB
United States District Judge
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