Gemcor II, LLC. v. Electroimpact, Inc.

Filing 29

MEMORANDUM AND ORDER granting in part and denying in part 15 plaintiff's Motion to Dismiss. Electroimpact's second and third counterclaims are dismissed without prejudice. Plaintiff's motion to strike is denied. See Memorandum and Order for further details. Signed by District Judge Carlos Murguia on 2/27/2012. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
GEMCOR II, LLC,

)
)
Plaintiff,
)
)
v.
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)
ELECTROIMPACT INC.,
)
)
Defendant.
)
__________________________________________)

Case No. 11-CV-2520-CM

MEMORANDUM AND ORDER
Plaintiff Gemcor II, LLC moves to dismiss defendant Electroimpact Inc.’s counterclaims for
invalidity and patent misuse (Doc. 15). Because neither counterclaim gives Gemcor fair notice of
what the claims are and the grounds upon which they rest, the court dismisses them. Gemcor also
moves to strike Electroimpact’s invalidity and patent misuse affirmative defenses (Doc. 15).
Because both affirmative defenses provide fair notice of the grounds on which Electroimpact intends
to defend this lawsuit, the court does not strike them. Accordingly, the court grants Gemcor’s
motion to dismiss and denies Gemcor’s motion to strike.
I.

FACTUAL BACKGROUND
Gemcor brings this lawsuit and alleges that Electroimpact’s E700 riveting machine infringes

three Gemcor patents. In response to these allegations, Electroimpact asserts four counterclaims and
six affirmative defenses. Gemcor moves to dismiss Electroimpact’s second and third counterclaims.
Electroimpact’s second counterclaim states that the “patents in this suit are invalid because they fail
to meet the requirements of 35 U.S.C. §§ 102, 103, and/or 112.” (Doc. 13 at 7.) And
Electroimpact’s third counterclaim alleges that the “patents in this suit are unenforceable under the
doctrine of patent misuse.” (Doc. 13 at 7.) Gemcor also moves to strike Electroimpact’s second and

third affirmative defenses (invalidity and patent misuse, respectively), which contain identical
allegations to the corresponding counterclaim quoted above.
II.

MOTION TO DISMISS
Federal Rule of Civil Procedure 12(b)(6) provides a vehicle for a party to challenge the legal

sufficiency of a counterclaim. The requirements underlying the legal sufficiency of a counterclaim
stem from Federal Rule of Civil Procedure 8(a). Rule 8(a) requires that a claim for relief must
contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” The
purpose of this rule is to give the opposing party “fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 540, 555 (2007).
The pleader’s obligation to provide the grounds upon which his claim rests requires “more
than labels and conclusions . . . .” Id.; see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (“A
pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of
action will not do.”) (internal quotations omitted). The pleader must include factual allegations that
“raise the right to relief above the speculative level.” Twombly, 550 U.S. at 555. To make this
showing, the pleader must allege “factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949.
Both of Electroimpact’s counterclaims fail to satisfy this standard. Electroimpact’s invalidity
counterclaim pleads the statutory sections in the alternative and, therefore, does not link each patent
with specific statutory references. Because it is unclear which section(s) of Title 35 apply to each
patent, Electroimpact has not come close to providing fair notice of what the claim is and the
grounds upon which it rests. See, e.g., Qarbon.com Inc. v. eHelp Corp., 315 F. Supp. 2d 1046, 1051
(N.D. Cal. 2004) (concluding pre-Twombly that a similar invalidity claim was “radically
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insufficient”). Electroimpact’s patent misuse counterclaim is even more deficient. This
counterclaim contains a mere legal conclusion and no supporting facts. As such, it also fails to
satisfy Rule 8.
Electroimpact urges this court to adopt the rationale outlined in Microsoft Corp. v. Phoenix
Solutions, Inc., 741 F. Supp. 2d 1156 (C.D. Cal. 2010). In that case, the district court denied a
motion to dismiss a patent invalidity claim. In reaching that decision, the court noted that Form 18,
which is appended to the Federal Rules of Civil Procedure, provides an example complaint for
alleging direct patent infringement that requires “little more than a conclusory statement that the
defendant infringed the plaintiff’s patent.” Id. at 1158. Based on this observation, the district court
reasoned that it would be “incongruous to require heightened pleading” for patent invalidity claims
and determined that “the Court does not subject declaratory judgment claims of invalidity to the
heightened pleading standards of Twombly and Iqbal.” Id. at 1159.
As an initial point, the Microsoft case provides no support for Electroimpact’s patent misuse
counterclaim because the opinion is limited to claims for infringement, non-infringement, and
invalidity. Id. at 1159. Indeed, the Microsoft court expressly stated that “[a]ll other claims,
counterclaims and affirmative defenses in a patent case are subject to the requirements of Federal
Rule of Civil Procedure 8(a) as interpreted by the Supreme Court in Twombly and Iqbal, except for
inequitable conduct.” Id. Accordingly, Electroimpact has provided no basis for this court to
disregard the pleading standard discussed above for the patent misuse counterclaim.
The Microsoft case does present an argument for allowing a sparse invalidity claim to survive
a motion to dismiss. And other courts have been persuaded by arguments similar to those articulated
by the Microsoft court. See, e.g., Elan Pharma Int’l Ltd. v. Lupin Ltd., No. 09-1008, 2010 U.S. Dist.
LEXIS 32306, at * 16 (D.N.J. Mar. 31, 2010) (allowing vague invalidity claim to survive a motion to
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dismiss); Pfizer Inc. v. Apotex Inc., 726 F. Supp. 2d 921, 937–38 (N.D. Ill. 2010) (same). But this
court respectfully disagrees with the Microsoft court. Form 18 applies to patent infringement claims.
It is not an example complaint for a patent invalidity claim. And, therefore, there is no legal basis for
this court to ignore the clear mandates of the Supreme Court even though the result is a disparate
pleading burden between a patentee and an accused infringer. See Tyco Fire Prods. LP v. Victaulic
Co., 777 F. Supp. 2d 893, 903 (E.D. Pa 2011) (dismissing invalidity counterclaim even though some
courts have “forgiven similarly sparse counterclaims based on the low bar to which plaintiff’s
averments of patent infringement were subjected”). Accordingly, Electroimpact’s invalidity
counterclaim must comply with the pleading standard discussed in Twombly and Iqbal to survive a
motion to dismiss. And it does not.1
III.

MOTION TO STRIKE
Gemcor also moves to strike Electroimpact’s second and third affirmative defenses

(invalidity and patent misuse, respectively). Federal Rule of Civil Procedure 12(f) allows a court to
strike an insufficient defense. A defense may be insufficient if it fails to meet the pleading
requirements of Federal Rule of Civil Procedure 8(b) and (c). Rule 8(b) requires a party to state a
defense in short and plain terms. And Rule 8(c) requires a responding party that is asserting an
affirmative defense to “affirmatively state” the defense. Indeed, the purpose of pleading an
affirmative defense is to provide the opposing party with fair notice. Falley v. Friends Univ., 787 F.
Supp. 2d 1255, 1257 (D. Kan. 2011). Notably, both of these standards are “markedly less

1

It is unclear to this court how Electroimpact suggests that this court evaluate the sufficiency of a
patent invalidity claim if Twombly and Iqbal did not apply to it. For a direct infringement claim,
the court can compare a claim to Form 18. But Form 18 does not provide a basis for analyzing
the sufficiency of an invalidity claim. The Microsoft court and Electroimpact leave this practical
concern unanswered.
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demanding than that of Rule 8(a) . . . .” Id. at 1258. Despite these more lenient standards, however,
some defenses—such as fraud and mistake—are subject to the heightened pleading standards
contained in Federal Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b) (requiring a party
alleging fraud or mistake to “state with particularity the circumstances constituting fraud or
mistake”).
Both of Electroimpact’s affirmative defenses satisfy this standard. Electroimpact’s invalidity
affirmative defense provides notice that invalidity is a possible issue for trial, and Gemcor can
determine the details of this defense through targeted discovery. See Tyco 777 F. Supp. 2d at 903
(denying motion to strike a terse invalidity affirmative defense because “[it] provides Plaintiff with
notice that Defendant anticipates defending this suit on grounds of invalidity, the details of which
Plaintiff can flesh out through discovery”). Accordingly, the invalidity affirmative defense survives
Gemcor’s motion to strike.
Similarly, Electroimpact’s patent misuse affirmative defense provides notice that
Electroimpact intends to defend this lawsuit on grounds of patent misuse. Whitserve v.
GoDaddy.com, Inc., No. 11-cv-948, 2011 U.S. Dist. LEXIS 132636, at *8–9 (D. Conn. Nov. 17,
2011) (denying motion to strike invalidity and patent misuse affirmative defense because each
defense “clearly states a basis on which [defendant] plans to defend this lawsuit”). Gemcor argues
that this defense might be subject to the heightened pleading standard of Rule 9(b) to the extent it is
based on fraud before the United States Patent and Trademark Office. If Electroimpact’s patent
misuse affirmative defense implicates fraud, then Electroimpact must seek leave to re-plead this
affirmative defense with particularity. See Bayer CropScience AG. v. Dow AgroSciences LLC, No.
10-1045, 2011 U.S. Dist. LEXIS 149636, at *9–10 (D. Del. Dec. 30, 2011) (declining to strike patent

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misuse affirmative defense but requiring defendant to re-plead this defense to the extent it sounds in
fraud). But, for now, the court will not strike this affirmative defense on this basis.
IT IS THEREFORE ORDERED that Gemcor’s motion (Doc. 15) is granted in part and
denied in part. Gemcor’s motion to dismiss is granted. Electroimpact’s second and third
counterclaims are dismissed without prejudice. Gemcor’s motion to strike is denied.
Dated this 27th day of February 2012, at Kansas City, Kansas.

s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

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