Telebrands Corp. v. 1ByOne Products Inc.
Filing
47
MEMORANDUM OPINION. Signed by Judge Sherry R. Fallon on 8/3/2018. (lih)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
TELEBRANDS CORP.,
)
)
)
)
)
)
)
)
)
Plaintiff,
V.
lBYONE PRODUCTS, INC.,
Defendant.
Civil Action No. 17-997-JFB-SRF
lBYONE PRODUCTS, INC.,
Counterclaimant,
v.
TELEBRANDS CORP.,
Counter-defendant.
)
)
)
)
)
)
)
)
)
)
MEMORANDUM OPINION
I.
INTRODUCTION
Presently before the court in this patent infringement action is plaintiff Telebrands
Corp.'s ("Telebrands") motion pursuant to Fed. R. Civ. P. 12(f), to strike the affirmative defense
of inequitable conduct asserted by defendant 1byOne Products, Inc. ("1 byOne"). Telebrands
moves to strike the affirmative defense because it fails to satisfy the heightened pleading
standard of Fed. R. Civ. P. 9(b). (D.I. 27) For the following reasons, Telebrands' motion to
strike is GRANTED.
II.
BACKGROUND
Telebrands owns United States Patent Nos. 9,546,775 and 9,562,673 (collectively, the
"Asserted Patents"), which are entitled "Decorative Lighting Apparatus Having Two Laser Light
Sources" and "Decorative Lighting Apparatus Having an Attenuation Assembly," respectively,
and are decorative lighting for houses and other buildings that use a laser to project moving
colored lights. (D.I. 1 at ,r,r 8-9, 11-12) Telebrands markets and sells the products under the
trademark STAR SHOWER®. (D.I. 1 at ,r 8) 1byOne sells the "l byOne Outdoor Laser Lights
for Christmas" and "1 byOne Magical Laser Light with Green Christmas and Red Star Patterns"
(collectively, the "Accused Products") under the "Garden Laser Light Motion brand," which are
also laser decorative lighting products. (D.1. 1 at ,r 15)
On July 21, 2017, Tele brands filed a complaint against 1byOne for patent infringement.
(D.I. 1) On August 15, 2017, lbyOne responded to the complaint by filing a motion to dismiss
for failure to state a claim. (D.I. 9) However, on November 11, 2017, before the court rendered
a decision on the motion to dismiss, 1byOne filed an answer and a counterclaim. (D.I. 16)
Consequently, the court denied lbyOne's motion to dismiss as moot on November 21, 2017.
(D.I. 21)
On December 11, 2017, 1byOne amended its answer and counterclaim to include an
affirmative defense of inequitable conduct, asserting that "[n]o recovery can be obtained by
[Telebrands] for Patent Infringement because each and every claim of the asserted patents is
invalid and/or unenforceable due to [Telebrands'] inequitable conduct committed to obtain the
[A]sserted Patent[s], at least for the reasons detailed in [lbyOne]'s [c]ounterclaim." (D.1. 25 at ,r
49) In its counterclaim for inequitable conduct, 1byOne alleges the Asserted Patents are invalid
because Telebrands did not cite certain material prior art references and patent publications to the
United States Patent and Trademark Office ("PTO") during prosecution of the Asserted Patents,
2
and also because 1byOne began selling the Accused Product in September 2013, two years
before the Asserted Patents' priority date of December 3, 2015. (D.I. 25 at 1112-13) On
January 5, 2018, Telebrands filed an answer to lbyOne's counterclaims, and simultaneously
moved to strike lbyOne's eleventh affirmative defense of inequitable conduct. (D.I. 26; D.I. 27)
III.
LEGALSTANDARD
Rule 12(f) permits "[t]he court [to] strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "When ruling
on a motion to strike, the [c]ourt must construe all facts in favor of the nonmoving party and
deny the motion if the defense is sufficient under the law. Further, a court should not grant a
motion to strike a defense unless the insufficiency of the defense is clearly apparent." Symbol
Techs., Inc. v. Aruba Networks, Inc., 609 F. Supp. 2d 353,356 (D. Del. 2009) (citations and
internal quotation marks omitted). "As a general matter, motions to strike under Rule 12(f) are
disfavored." Fesnak & Assocs., LLP v. U.S. Bank Nat'[ Ass 'n, 722 F. Supp. 2d 496, 502 (D. Del.
2010).
IV.
DISCUSSION
Telebrands' motion to strike is granted because 1byOne's affirmative defense for
inequitable conduct fails to meet the pleading standard under Rule 9(b). 1 Rule 9(b) requires a
party, when "alleging fraud or mistake, ... [to] state with particularity the circumstances
The court recognizes lbyOne's amended pleading incorporates by reference a lengthy opinion
of counsel letter regarding the validity of the Asserted Patents that may include information
identifying the "what," "where," and "how" factors. (D.I. 25 at 111) However, 1byOne's
incorporation by reference is inadequate because the pleading does not clearly indicate where the
relevant material pertaining to each factor is found within the 136-page document. (D.I. 25, Ex.
1) To satisfy the Rule 9(6) standard, incorporation by reference must be done with particularity
to include only relevant material. See, e.g., Guthrie v. United States, 2012 WL 13014671, at *2
(S.D. Fl. Aug. 24, 2012) (finding it "impermissible to attempt a wholesale incorporation by
reference of all preceding paragraphs" of the pleading).
1
3
constituting fraud or mistake," although, "intent [and] knowledge ... may be alleged generally."
Fed. R. Civ. P. 9(b). When a party claims a patent is unenforceable, and the claim is "premised
upon inequitable conduct, [it] is a claim sounding in fraud." Senju Pharm. Co. v. Apotex, Inc.,
921 F. Supp. 2d 297, 305 (D. Del. 2013). "'[I]nequitable conduct, while a broader concept than
fraud, must be pled with particularity' under Rule 9(b)." Exergen Corp. v. Wal-Mart Stores,
Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009) (quoting Ferguson Beauregard/Logic Controls,
Division of Dover Resources, Inc. v. Mega Sys., LLC, 350 F3d 1327, 1344 (Fed. Cir. 2003)). To
plead 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 [Patent and Trademark Office ('PTO')]." Senju Pharm. Co., 921
F. Supp. 2d at 306 (quoting Exergen Corp., 575 F.3d at 1328-29); see Int'! Bus. Mach. Corp. v.
Priceline Grp., Inc., C.A. No. 15-137-LPS-CJB, 2017 WL 1349175, at *4-5 (D. Del. Apr. 10,
2017). In addition,
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.
Senju Pharm. Co., 921 F. Supp. 2d at 306 (quoting Exergen Corp., 575 F.3d at 132829).
Telebrands argues the court should grant the motion to strike because 1byOne has not
met the heightened pleading requirements of Rule 9(b) by identifying the "who, what, when,
where, and how," and "has not pled any facts to support a finding of but for materiality or to
support an intent to deceive the PTO." (D.I. 28 at 7-8) In response, lbyOne argues Telebrands
based its contentions on the standard of proving inequitable conduct rather than the standard of
pleading inequitable conduct. (D.I. 29 at 4) 1byOne directs the court to its incorporation by
4
reference of a lengthy opinion of counsel letter regarding the alleged invalidity of the Asserted
Patents. (D.1. 29 at 5-6; D.I. 25, Ex. 1)
The pleading does not adequately identify the "who" of the misrepresentation because it
generally refers to the "named inventors." (D.1. 25 at ,i,i 23, 34) The Federal Circuit has held
that a pleading must name a specific individual associated with the patent application to satisfy
the specificity required to plead the "who" of the misrepresentation. Exergen Corp., 575 F.3d at
1329. This ruling is consistent with cases in this district finding adequate identification of the
"who" when the pleading specifically identifies individuals by name who were associated with
the patent application. 2 Andrulis Pharm. Corp. v. Celgene Corp., C.A. No. 13-1644-RGA, 2015
WL 4366118, at *4 (D. Del. July 16, 2015); see Wyeth Holdings Corp. v. Sandoz, Inc., C.A. No.
09-955-LPS-CJB, 2012 WL 600715, at *9 (D. Del. Feb. 3, 2012) (finding listing three specific
individuals by name met the pleading standard for "who"). Consequently, 1byOne's generic
reference to the "named inventors" is insufficient to satisfy the "who" component of the pleading
standard.
Next, the pleading does not adequately identify the "what" of the misrepresentation.
Although 1byOne identifies the misrepresented claims as all claims of the Asserted Patents,
The court has previously held "claims against the 'named inventors' ... could be specific
enough to meet the 'who' requirement, to the extent that they could be understood to accuse each
of the members of a known ... group." IBM Corp. v. Priceline Grp. Inc., C.A. No. 15-137-LPSCJB, 2017 WL 1349175, at *9 (D. Del. Apr. 10, 2017). The facts of the present case could be
construed to satisfy this standard because the Asserted Patents list only two inventors. (D.I. 1,
Exs. A & B) However, 1byOne cannot satisfy the knowledge requirement without specifically
naming the inventors. IBM Corp., 2017 WL 1349175, at *9 ("[E]ven ifthere were enough
information in the pleadings ... to identify each of the persons in these groups, the claims
against them would still fail ... because there are not sufficient facts pleaded to establish ... that
the 'named inventors' ... actually had knowledge of the activities that they allegedly failed to
disclose."). Further, the Federal Circuit requires the identification of specific individuals when
establishing the "who." Exergen Corp., 575 F.3d at 1329.
2
5
1byOne fails to identify any specific limitations in those claims. See Exergen, 575 F.3d at 1325
(finding that the pleading did not sufficiently identify the "what" because it did not disclose
specific claim language or claim numbers to establish the materiality of the omitted prior art
references to the patents-in-suit). Moreover, although lbyOne's pleading references the prior
art, it refers generically to "prior art patents and patent publications published in the United
States and China" without drawing any connection between the asserted claims and the omitted
prior art references. (D.I. 25 at~ 12) This court has determined a party adequately pleads the
"what" of the material omission by identifying "the claims, and the limitations in those claims,
relevant to the [prior art]." LEO Pharma AIS v. Actavis Labs. UT, Inc., C.A. No. 16-333-JFBSRF, 2018 WL 1045816, at *4 (D. Del. Feb. 26, 2018). In the present case, the pleading does
not meaningfully identify the omitted prior art, let alone establish the relevance of the asserted
claims to those prior art references.
The pleading also fails to adequately assert the "when" of the misrepresentation with
respect to the undisclosed prior art references because it does not indicate when the inventors
allegedly submitted a filing to the PTO that should have identified the prior art references. See
Wyeth Holdings Corp., 2012 WL 600715, at *9; Aerocrine AB v. Apieron Inc., C.A. No. 08-787LPS, 2010 WL 1225090, at *9-10 (D. Del. Mar. 30, 2010) (finding the pleading identified the
"when" for two different patents by listing the date "when the inventors became aware of the
alleged[] prior art," for one, and listing the publication date of the prior art, for the other).
However, lbyOne's pleading adequately asserts the "when" of the misrepresentation as it applies
to the Accused Product because it identifies the sale date and the United States publicly known
date of the Accused Product as September 2013, more than two years prior to the earliest priority
date of December 3, 2015. (D.I. 25 at~ 13) These allegations establish Telebrands would have
6
become aware of the Accused Product in September 2013. See Wyeth Holdings Corp., 2012 WL
600715, at *9; Aerocrine AB, 2010 WL 1225090, at *9-10 (finding the pleading identified the
"when" for two different patents by listing the date "when the inventors became aware of' one
prior art reference, and listing the publication date of another reference).
Moreover, the pleading fails to satisfy the "where" of the misrepresentation because it
does not identify a single allegedly withheld prior art reference with specificity, let alone explain
where in the withheld prior art references the information material to the Asserted Patents can be
found. Similarly, the Federal Circuit in Exergen found the pleading failed to satisfy the "where"
because the pleading did not identify "where in [the withheld references] the material
information would be found." Exergen Corp., 575 F.3d at 1329; see also Wyeth Holdings Corp.,
2012 WL 600715, at *9; see Aerocrine AB, 2010 WL 1225090 at 9-10 (finding the pleading
satisfies "where" when it states "where in the prior art the allegedly material information is
found").
The pleading also fails to address the "how" factor, offering no explanation as to how a
reasonable examiner would use the omitted prior art references in determining the patentability
of the Asserted Patents. See Exergen Corp., 575 F.3d at 1330; Wyeth Holdings Corp., 2012 WL
600715, at *9; see also Aerocrine AB, 2010 WL 1225090, at *9-10.
Moreover, 1byOne' s pleading does not include sufficient factual allegations to support a
reasonable inference of but-for materiality. A misrepresentation is material if the PTO would not
have issued the patent but for the misrepresentation. See Leo Pharma AIS, 2018 WL 1045816, at
*5. In Quest Integrity, the court concluded that the pleading satisfied this standard by alleging
the patented "invention was not new, was obvious from existing technology, and had been sold
before the bar date." Quest Integrity USA, LLC v. Clean Harbors Indus. Servs., Inc., C.A. No.
7
14-1482-SLR, Civ. No. 14-1483-SLR, 2015 WL 4477700, at *4 (D. Del. July 22, 2015). In
Andrulis, the court found the pleading satisfied the but for materiality standard by identifying
"the conclusion by the researchers ... [and the] plaintiffs omission of that conclusion and
representation that the interim results instead showed an enhanced effect, on which the examiner
relied in deciding the issue." Andrulis Pharm. Corp., 2015 WL 4366118, at *5. The facts
presented in Quest Integrity and Andrulis are distinguishable from the facts in this case because
1byOne fails to draw any connection between the Asserted Patents and the prior art. Thus, the
court is unable to reasonably infer whether the PTO would not have issued the Asserted Patents
but for the failure to disclose the prior art.
Finally, 1byOne did not include sufficient factual allegations support a reasonable
inference that a specific individual misrepresented the information with the intent to deceive the
PTO. Within its counterclaim, 1byOne alleges:
the failure of the named inventors' of the [Asserted Patents] in their duty of
candor, including regarding the information that 1byOne sold the Accused
Product before the critical date for the Asserted Patents, and the existence
and pubic availability of this 1byOne technology that they copied and
claimed in the application[ s] of the [Asserted Patents] on which they are
wrongly named as the inventors and owners is further cause for a
declaration of the invalidity of the [Asserted Patents].
(D.1. 25 at 1124, 34) This allegation does not allow the court to reasonably infer a specific
individual associated with the patent applications had the requisite knowledge of the
misrepresentation and intent to deceive the PTO.
Therefore, Telebrands' motion to strike is granted. In accordance with lbyOne's
reservation of its right to amend the pleading to reassert its eleventh affirmative defense of
inequitable conduct, 1byOne may amend its pleading within twenty (20) days of the date of this
Memorandum Opinion.
8
V.
CONCLUSION
For the foregoing reasons, Telebrands' motion to strike is granted. 1byOne may amend
its eleventh affirmative defense of inequitable conduct on or before August 23, 2018. An Order
consistent with this Memorandum Opinion shall issue.
This Memorandum Opinion is filed pursuant to 28 U.S.C. § 636(b)(l)(B), Fed. R. Civ. P.
72(b )(1 ), and D. Del. LR 72.1. The parties may serve and file specific written objections within
fourteen (14) days after being served with a copy of this Memorandum Opinion. Fed. R. Civ. P.
72(b)(2). The objections and responses to the objections are limited to ten (10) pages each. The
failure of a party to object to legal conclusions may result in the loss of the right to de novo
review in the District Court. See Sincavage v. Barnhart, 171 F. App'x 924, 925 n. l (3d Cir.
2006); Henderson v. Carlson, 812 F .2d 874, 878-79 (3d Cir. 1987).
The parties are directed to the court's Standing Order For Objections Filed Under Fed. R.
Civ. P. 72, dated October 9, 2013, a copy of which is available on the court's website,
http://www.ded.uscourts.gov.
Dated: August 3, 2018
AGISTRATE JUDGE
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?