Coupled Products L L C v. Nobel Automotive Mexico L L C

Filing 149

MEMORANDUM RULING re 105 MOTION to Dismiss In Its Entirety, and Strike Portions of, Amended Counterclaim of Nobel Automotive Mexico and Nobel Automotive Ohio filed by Coupled Products L L C. Signed by Judge S Maurice Hicks on 9/27/2011. (crt,McDonnell, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
COUPLED PRODUCTS, LLC

CIVIL ACTION NO. 09-0323

VERSUS

JUDGE S. MAURICE HICKS, JR.

NOBEL AUTOMOTIVE MEXICO LLC,
NOBEL AUTOMOTIVE OHIO LLC,
MANDO AMERICA CORPORATION, AND
GENERAL MOTORS LLC

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
Before the Court is Plaintiff Coupled Products, LLC’s (“Coupled Products”) Motion
to Strike Portions of and Dismiss in Its Entirety the Nobel Defendants’ Amended
Counterclaim (Record Document 105). Coupled Products moves for dismissal of the
ten-count amended counterclaim pursuant to Federal Rules of Civil Procedure 12(b)(6) and
9(b). Additionally, Coupled Products contends that the amended counterclaim contains
allegations based on statements from a settlement letter, which are inadmissible and
should be stricken pursuant to Federal Rule of Civil Procedure 12(f). While the Nobel
Defendants have withdrawn their counterclaim for negligent misrepresentation, they have
opposed the motion in all other respects. See Record Document 108. For the reasons
which follow, the motion (Record Document 105) is GRANTED IN PART and DENIED IN
PART.
BACKGROUND1
This is a patent case. On April 25, 2006, the United States Patent and Trademark

1

Because this case is currently before the undersigned on a motion to dismiss, the
Court accepts as true the factual allegations in the Nobel Defendants’ Amended
Counterclaim. See Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002);
Glessner v. Kenny, 952 F.2d 702, 712 (3rd Cir. 1991).

Office (“PTO”) issued U.S. Patent No. 7,032,500 (“the 500 Patent”), entitled “Single Point
Steering Gear Hydraulic Connection.” Record Document 68 at ¶ 8. Coupled Products
alleges it owns, by assignment, the 500 Patent. See id. at ¶ 9. Coupled Products contends
that Nobel Automotive Mexico, LLC and Nobel Automotive Ohio, LLC (“the Nobel
Defendants”) have wilfully infringed the 500 Patent. See id. at ¶¶ 10-21.2
The Nobel Defendants filed an Amended Counterclaim on April 1, 2010. See
Record Document 83. It contains ten counts:
Count I:
Count II:
Count III:
Count IV:
Count V:
Count VI:
Count VII:
Count VIII:
Count IX:
Count X:

Declaratory Judgment of Invalidity
Invalidity
Patent Misuse
Inequitable Conduct
Abuse of Right
Fraudulent Procurement of the 500 Patent
Unfair Trade Practices
Tortious Interference with Business Relations
Fraud
Negligent Misrepresentation

Id. The factual allegations contained in the Amended Counterclaim are set forth below.
In Count I (Declaratory Judgment of Invalidity), the Nobel Defendants allege that
“[t]here is an actual, substantial and continuing justiciable controversy” regarding the

2

Coupled Products originally named Mando America Corporation (“Mando”) and
General Motors, LLC (“GM”) as defendants. See Record Document 68. On July 15, 2010,
Coupled Products, Mando, and GM filed a Joint Motion for Dismissal, stating:
Coupled Products . . ., and defendants, [GM] and [Mando] . . . , who jointly
stipulate that all matters of controversy between them relating to this action
have been fully compromised and settled, and therefore jointly move the
Court to dismiss Plaintiff’s claims against Defendants and Defendants’
counterclaims against Plaintiff.
Record Document 110. The Court granted the Joint Motion for Dismissal on July 15, 2010.
See Record Document 111.
Page 2 of 19

infringement, validity and enforceability of the 500 Patent. Id. at ¶ 85. The Nobel
Defendants further contend that they have “not infringed any valid and enforceable claim
of the 500 Patent.” Id. at ¶ 86. More specifically, they allege “upon information and belief”
that the 500 Patent and all claims thereof are invalid and unenforceable for failure to
comply with the conditions for patentability. Id. at ¶ 87. Additionally, they allege “upon
information and belief” that “the 500 Patent and all claims thereof are unenforceable due
to the inequitable conduct of the inventors, the inventors’ representatives, and others
involved in a substantial way with the application that matured into the 500 Patent, including
but not limited to Coupled Products’ predecessor-in-title, Dana Corporation (“Dana”), arising
from the intentional and deliberate decision to file the application despite full knowledge its
claims were barred . . . and from intentionally withholding from the U.S. Patent and
Trademark Office material information related to the commercialization of the invention of
the 500 Patent prior to its filing date.” Id. at ¶ 88. Finally, the Nobel Defendants contend
that they are entitled to a declaration that they have not infringed any valid and enforceable
claim of the 500 Patent. See id. at ¶ 90.
In Count II (Invalidity), the Nobel Defendants re-allege the preceding paragraphs3
and again contend that “[t]he claims of the 500 Patent are invalid for failure to satisfy the
statutory requirements for patentability.” Id. at ¶ 91-92. They also seek “a declaration that

3

Starting with Count II and continuing at the beginning of every count thereafter, the
Nobel Defendants state:
Nobel re-adopts, re-alleges, and re-avers the preceding paragraphs of this
Answer, Affirmative Defenses and Counterclaim by reference.
Record Document 83.
Page 3 of 19

all claims of the 500 Patent are invalid.” Id. at ¶ 93.
Counts III (Patent Misuse) and IV (Inequitable Conduct) contain identical factual
allegations. See id. at ¶¶ 94-103. The Nobel Defendants allege that they are entitled to
a declaration that the 500 Patent is void and unenforceable due to Coupled Products’
“misuse in commencing litigation against Nobel without undertaking the necessary objective
pre-filing investigation to determine whether the accused products or services infringed
valid claims of the 500 Patent and then continuing this litigation knowing that Nobel did not
infringe the claims of the 500 Patent.” Id. at ¶¶ 96, 101. They further contend that despite
knowing its product was non-patentable and/or that its patent was invalid, Coupled
Products attempted to use the 500 Patent for an improper purpose by threatening
competitors, filing this baseless lawsuit, diverting and depriving the Nobel Defendants of
business, and engaging in predatory pricing practices. See id. at ¶¶ 97, 102. The Nobel
Defendants maintain that “the allegations of patent infringement by Coupled Products . .
. are completely baseless and amount to sham litigation.” Id.
As to Count V (Abuse of Right), the Nobel Defendants allege that Coupled Products
asserted its rights in this lawsuit to cause harm and in violation of morals, good faith, and/or
elementary fairness. See id. at 105. Moreover, they contend that Coupled Products’
claims asserting willful infringement are not in furtherance of a serious or legitimate interest
worthy of judicial protection. See id. at 106.
In Count VI (Fraudulent Procurement of the 500 Patent), the Nobel Defendants
allege that Coupled Products, through its predecessor-in-interest Dana, procured the 500
Patent fraudulently by actively concealing and materially representing facts that would show
the patented invention was on sale more than one year before the application date for the
Page 4 of 19

patent. See id. at 109. They contend that if such fact had been known by the Examiner,
it would have resulted in rejection of the patent. See id.
As to Count VII (Unfair Trade Practices), the Nobel Defendants contend that “[a]s
recently as May of 2009, Coupled Products used this baseless lawsuit to divert and deprive
Nobel of business it had or would have received from customers and potential customers,
which amounts to unscrupulous and deceptive trade practices in violation of [Louisiana
Revised Statute] § 51:1401, et seq. and/or the common law and/or other applicable
statutes.” Id. at ¶ 112. The Nobel Defendants further allege that “Coupled Products has
engaged in other unfair methods of competition and unfair or deceptive acts or practices
that are unlawful.” Id. at ¶ 114. Finally, the Nobel Defendants maintain that Coupled
Products continues to use the 500 Patent to threaten parties in the hopes of gaining an
unjust financial advantage and to engage in predatory pricing practices. See id. at ¶ 114.
In Count VIII (Tortious Interference with Business Relations), the Nobel Defendants
allege that Coupled Products’ conduct relating to willful infringement includes “malicious
and wanton interference with Nobel’s customers.” Id. at ¶ 118. They contend that this
intentional and improper conduct constituted “tortious interference with Nobel’s business
relations and are violative of Louisiana Civil Code Article 2315 and/or the common law
and/or other applicable statutes.” Id.
As to Count IX (Fraud), the Nobel Defendants allege that Coupled Products’ conduct
relating to the willful infringement includes “misrepresentations or suppressions of the truth
made with the intention either to obtain an unjust advantage with the [Patent and
Trademark Office ] and/or other and to cause a loss or inconvenience to Nobel.” Id. at ¶
121. They contend that these “actions constitute fraud and are violative of Louisiana Civil
Page 5 of 19

Code Article 1953 and/or the common law and/or other applicable statutes.” Id. at ¶ 122.
In Count X (Negligent Misrepresentation), the Nobel Defendants allege that Coupled
Products’ conduct includes negligent misrepresentations to the Patent and Trademark
Office, as Coupled Products had a legal duty to disclose all material information to the
Patent and Trademark Office and/or others and breached that legal duty. See id. at ¶ 125.
They contend that these “actions constitute negligent misrepresentation and are violative
of Louisiana Civil Code Article 2315 and/or the common law and/or other applicable
statutes.” Id. at ¶ 126.
Now before the Court is Coupled Products Motion to Strike Portions of and Dismiss
in its Entirety the Counterclaims of the Nobel Defendants. See Record Document 105.
Coupled Products argues that the ten-count amended counterclaim is without merit and
fails to meet the basic pleading requirements under Rule 12(b)(6), Rule 9(b), and/or Rule
8(a) for stating a claim on any of the causes of action alleged. See id. It further maintains
that the amended counterclaim contains allegations based on statements from a settlement
letter, which are inadmissible under Federal Rule of Evidence 408. See id.4

4

Pursuant to Rule 12(f), Coupled Products filed a Motion to Strike factual allegations
based on statements from a settlement letter. These allegations are found in paragraphs
68-70 of the Answer and Affirmative Defenses to the Seconded Amended Complaint and
Amended Counterclaims (Record Document 83). Coupled Products also seeks to strike
the settlement letter, which was attached to Record Document 83 as Exhibit A.
The Nobel Defendants do not address the Motion to Strike in their opposition
(Record Document 108); thus, this Court is left to assume that there is no opposition to the
Motion to Strike. Accordingly, the Motion to Strike is GRANTED. Paragraphs 68-70 and
of Record Document 83 and Exhibit A to Record Document 83 are hereby stricken from the
record.
Page 6 of 19

LAW AND ANALYSIS
I.

Rule 12(b)(6) Standard.
“To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed

factual allegations,’ but must provide the plaintiff’s grounds for entitlement to relief-including
factual allegations that when assumed to be true ‘raise a right to relief above the
speculative level.’” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007), quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65 (2007). The plaintiff must
plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550
U.S. at 570, 127 S.Ct. at 1974. “When considering a motion to dismiss, the court accepts
as true the well-pled factual allegations in the complaint, and construes them in the light
most favorable to the plaintiff.” Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir.
2002) (citation omitted). The court generally must not consider any information outside the
pleadings. See Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir.2010).
II.

Rule 9(b) Standard.5
Mirroring the standard set forth above, Federal Rule of Civil Procedure 8(a)(2)

requires that “a pleading that states a claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled to relief.” This standard “does
not require ‘detailed factual allegations,’ but it demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, ––– U.S.––– at –––,
129 S.Ct. 1937, 1949 (2009), quoting Twombly, 550 U.S. 544, 127 S.Ct. 1955. A pleading

5

“A dismissal for failure to plead fraud with particularity under Rule 9(b) is treated as
a dismissal for failure to state a claim under Rule 12(b)(6).” U.S. ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009).
Page 7 of 19

that offers labels and conclusions or a formulated recitation of the elements of a cause of
action will not do, nor will a complaint suffice if it tenders naked assertions devoid of further
factual enhancement. See Iqbal, ––– U.S. at –––, 129 S.Ct. at 1949.
Competing with Rule 8’s demand for brevity is Rule 9(b), which provides:
In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake. Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.
F.R.C.P. 9(b). “[T] he Rule 9(b) standards require specificity as to the statements (or
omissions) considered to be fraudulent, the speaker, when and why the statements were
made, and an explanation why they are fraudulent.” Plotkin v. IP Axess Inc., 407 F.3d 690,
696 (5th Cir.2005); see also Campa v. Nationwide Property & Casualty Ins. Co., No. 102707, 2010 WL 3733469, at *1 (S.D.Tex. Sept. 7, 2010) (“Essentially, the standard requires
the complaint to allege answers to ‘newspaper questions’ (who, what, when, where, and
how) of the alleged fraud.”). However, when ruling on a motion to dismiss based on Rule
9(b), courts are “merely to assess the feasibility of the complaint, not to assay the weight
of the evidence which might be drawn in support thereof.” Blythe v. Deutsche Bank, 282
F.Supp.2d 1032, 1075 (D.Minn. 2003).
III.

Counts I and II.
Counts I and II set forth the Nobel Defendants’ claims for declaratory judgments of

invalidity and noninfringement. Such counterclaims are common place and are asserted
in nearly every patent infringement case. Coupled Products argues these counterclaims
are not supported by sufficient facts and that “Nobel’s ‘kitchen-sink’ approach to pleading
noninfringement and invalidity should not be permitted.” Record Document 109 at 10. The
Court disagrees.
Page 8 of 19

First, Coupled Products contends that the Nobel Defendants cannot state claims
based on alleged conduct by Dana. More specifically, Coupled Products argues that “[a]ll
of Nobel’s counterclaims are improperly based to one degree or another on alleged
inequitable conduct by Dana in the [Patent and Trademark Office] proceedings or
otherwise, prior to Coupled Products’ acquisition of certain Dana assets,” and thus are
“expressly prohibited and barred by the orders entered by the U.S. Bankruptcy Court for
the Southern District of New York,” which provided that “the assets were transferred to
Coupled Products ‘free and clear of all Claims.” Record Document 105-1 at 13. However,
the Court finds that the Nobel Defendants have, at this stage, plead facts sufficient to
overcome this contention. Relying upon Section 363(f) of the Bankruptcy Code,6 the Nobel
Defendants maintain that Counts I and II of the Amended Counterclaim, which seek
declaratory relief in the form of a judgment deeming the 500 Patent invalid due to certain
acts by Dana in the original prosecution of the patent, assert no “interest in property.”
Rather, the Nobel Defendants assertion, as set forth in the factual allegations in the

6

Title 11, United States Code, Section 363(f) provides:

The trustee may sell property . . . free and clear of any interest in such
property of an entity other than the estate, only if –
(1)
(2)
(3)

(4)
(5)

applicable nonbankruptcy law permits sale of such
property free and clear of such interest;
such entity consents;
such interest is a lien and the price at which such
property is to be sold is greater than the aggregate
value of all liens on such property;
such interest is in bona fide dispute; or
such entity could be compelled, in a legal or equitable
proceeding, to accept a money satisfaction of such
interest.
Page 9 of 19

Amended Counterclaim, is that the “property” at issue, i.e., rights to the 500 Patent, do not
even exist because the 500 Patent is invalid and/or unenforceable.
Additionally, the Nobel Defendants argue that in reality, Dana and Coupled Products
are one in the same and differ in name only. The contend that Coupled Products, Inc. was
a division of Dana, that Dana was thereafter restructured, and Coupled Products, LLC was
formed. The Nobel Defendants further note, and factually allege, that many of Coupled
Products’ current employees were previously employed by Dana, including one of the
original patent applicants. See Record Document 83 at ¶ 48(a). This allegation goes to
Coupled Products’ scienter and intent. The Nobel Defendants have also alleged that
Coupled Products knew the patent was invalid, but did not so advise the Patent and
Trademark Office, even after it acquired the patent:
In or about September, 2007, Dana transferred its Coupled Products
division, Coupled Products, Inc., to a new company, Coupled Products, LLC,
. . ., and on information and belief, on that date or thereafter, assigned or
licensed the 500 Patent to Coupled Products.
Coupled Products has at no time corrected any of the aforesaid
material omissions or misrepresentations, or supplemented any of the
omitted and concealed information referred to above.
Id. at ¶ 58-59.
The Court likewise finds that there are sufficient factual allegations, even under Rule
9(b)’s heightened standard, to support the Nobel Defendants’ claims for declaratory relief.
As to the invalidity by virtue of the “on-sale bar” set forth in 35 U.S.C. § 102(b), the
Amended Answer and Counterclaim alleges:7
7

The Court again notes that the Nobel Defendants “re-adopt[ed], re-allege[d], and
re-aver[red] the preceding paragraphs of [its] Answer, Affirmative Defenses and
Counterclaim by reference.”
Page 10 of 19

Coupled Products, through its attorneys, employees and agents, engaged in
the following acts and omissions with regard to the 500 Patent, this litigation,
and uses it has made of both, which violated patent laws and other laws
relating to unfair competition, as more fully specified hereinafter:
(a)

An employee or employees of Coupled Products then working for
Dana Corporation, produced Drawing Number 15167590/3 with
drawing name “POWER STEERING HOSE ASM” on or about October
21, 2002;

(b)

Upon information and belief, Drawing Number 15167590/3 with
drawing name “POWER STEERING HOSE ASM” was based on
technical data provided to an employee or employees of Coupled
Products, then working for Dana, by either GM or Mando America;

(c)

Drawing Number 15167590/3 with drawing name “POWER
STEERING HOSE ASM” shows that the invention of at least one
claim of the 500 Patent was ready for patenting before October 21,
2002;

(d)

Upon information and belief, Coupled Products sent Mando America
a letter on or about November 27, 2002 stating that, as of November
1, 2002, Dana had a new legal entity name, Coupled Products;

(e)

On November 26, 2002, Coupled Products sent Mando America a
commercial offer to sell part number 15167590;

(f)

The invention in issue was fully conceived and in or about November
2002, Coupled Products made commercial offers for sale to Mando
America and/or GM which, upon information and belief, the latter
accepted with consideration so as to constitute a sale under 35 U.S.
C.A. §102(b), all of which was known to Coupled Products and its
employees.

Id. at ¶ 48. The Nobel Defendants further alleged that on February 16, 2006, the last day
for filing supplemental documentation in the file of the patent prosecution and after both
notice of allowability and allowance of the claims in issue, Dana, Coupled Products’
predecessor-in-interest, caused to be to filed the Declaration of James Beatty purporting
to disclose on-sale information pertaining to the invention in issue but only as to matters
not central to patentability, still omitting any reference to the commercial sale of the entire
Page 11 of 19

invention. Id. at ¶ 52. At the same time, Dana also filed an Information Disclosure
Statement (“IDS”) purporting to disclose the Declaration of James Beatty. Id. The Nobel
Defendants go on to allege:
Upon filing the IDS, Dana, Coupled Products’ predecessor-in-interest
with respect to the 500 Patent, instructed the PTO not to consider the said
Declaration . . . and also filed Comments on Statement of Reasons for
Allowance dated February 16, 2006, purporting to argue that the patent
application set forth additional limitations in the claims that were patentable
over the cited references.
By filing the IDS as part of a package of documents and failing to
disclose the important documents showing readiness for patent and
commercial sale, and then instructing the examiner not to consider the IDS,
Dana, Coupled Products’ predecessor-in-interest with respect to the 500
Patent, intentionally omitted information and filed misleading information that
appeared on its face not to address any significant aspect of the application
because it did not pertain to the second portion of the bracket defining a
deformable finger for retaining a hose assembly that deforms after insertion
of the hose assembly, which had gone on sale more than a year before the
patent was applied for, and omitted to call to the Examiner’s attention
grounds for the on-sale bar and that did pertain to the point it knew to be of
greatest significance to the Examiner.
The PTO examiner concluded that the portion of the bracket that
deforms after insertion of the hose assembly was the sole point of novelty for
the invention and without which no patent could have been supported.
Id. at ¶¶ 53-55.
The Nobel Defendants have also specifically identified material information that was
withheld by certain named individuals when the 500 patent was applied for that further
supports the notion that the patent is invalid as a matter of law:
In or about August 2004, Daryl Sinclair, Jim Beatty and Alexander
Grant, employees and agents of Dana, Coupled Products’
predecessor-in-interest with respect to the 500 Patent, with due authority to
so act and with Dana’s full knowledge and intent, withheld material
information from the PTO that would have, if disclosed, led the PTO to deny
it a patent, namely:
Page 12 of 19

(a)

Failing to disclose all of the inventors of the product at issue, including
the person or persons who contributed the principle [sic] idea for the
bracket;

(b)

Failing to disclose specifics about the bracket which would have been
required for enablement;

(c)

Failing to disclose that the bracket considered by the PTO to be the
point of novelty of the 500 Patent and the improvement over the ‘421
Patent would be classified by Coupled Products as a trade secret.

(d)

Failing to disclose the specific secret features of the bracket, treated
as the point of novelty, needed for enablement and best mode.

(e)

Actively concealing the aforesaid Drawing Number 15167590/3 and
the letter from Coupled Products to Mando America, dated November
27, 2002, and other documents that would have demonstrated the
invention was ready for patenting and on sale more than one year
prior to the date the patent was applied for.

...
Dana, Coupled Products’ predecessor-in-interest with respect to the
500 Patent, also concealed from the PTO examiner that none of the three
disclosed inventors was the original inventor of an aspect of the invention
that it now claims to have originated. The vast majority of the patentable
features of the invention were in fact invented by Delphi and/or GM before
Dana, Coupled Products’ predecessor-in-interest with respect to the 500
Patent, applied for the 500 Patent, including the slotted bracket configured
to receive a hose assembly on which Coupled Products now claims it holds
the patent.
At the time Dana, Coupled Products’ predecessor-in-interest with
respect to the 500 Patent, applied for the 500 Patent, it also intentionally
withheld material information from the PTO that was essential to the
invention’s usefulness, or to allow it to be practiced by one of ordinary skill
in the art, as a sealed power steering fluid assembly because the single-point
connection as disclosed did not provide a reliable workable or useful
connection of hose assemblies to a steering gear.
Id. at ¶ 49, 56-57.
These detailed factual allegations are sufficient to state declaratory relief claims that
are plausible on their face. See Twombly, 550 U.S. at 570, 127 S.Ct. at 1974. Moreover,
Page 13 of 19

in the context of particularity, Coupled Products appears to ask this Court to consider the
Nobel Defendants’ allegations in a vacuum, without regard to the totality of the facts
alleged. Yet, “Rule 9(b) does not negate the simplicity and flexibility contemplated by Rule
8, and it would be error to focus on Rule 9(b)’s particularity requirement in a vacuum.” In
re: Catfish Antitrust Litigation, 826 F.Supp. 1019, 1029 (N.D.Miss. 1993). “Rule 9(b)
requires that the circumstances of fraud be pled with enough particularity to put the party
on notice as to the nature of the claim,” such that the defendant may prepare a responsive
pleading. Id. A review of the factual allegations specifically cited above easily meets this
standard and the Motion to Dismiss is denied as to Counts I and II, which set forth the
Nobel Defendants’ claims for declaratory judgments of invalidity and noninfringement.
IV.

Counts III and IV.
As noted previously, Counts III (Patent Misuse) and IV (Inequitable Conduct) contain

identical factual allegations. See Record Document 83 at ¶¶ 94-103. Coupled Products
seeks dismissal of these counts, arguing that the doctrines of patent misuse and
inequitable conduct are defenses to claims of patent infringement, not affirmative claims
for relief. The Court agrees.
As to Count III, the Nobel Defendants argue:
Historically, patent misuse developed as an equitable defense to an
infringement action and was not itself an actionable tort. Transitron
Electronic Corp. v. Hughes Aircraft Co., 487 F. Supp. 885, 893 (D. Mass.
1980). However, the actions by a patentee that result in patent misuse may
also serve as an element of an affirmative claim for damages. See, e.g., B.
Braun Medical, Inc. v. Abbott Laboratories, 124 F.3d 1419, 1428 n. 5 (Fed.
Cir. 1997). As Nobel has asserted an affirmative claim for damages in Count
III based on Coupled Products' unlawful and wrongful conduct, Coupled
Products’ challenge to Count III must fail.
Record Document 108 at 8. The Court finds this argument unconvincing because the
Page 14 of 19

Nobel Defendants have not enumerated what recognized cause of action is plead in Count
III. Stated another way, the Nobel Defendants have not identified the affirmative claim for
damages, i.e., a cognizable cause of action, that employs patent misuse as an element of
the claim. See B. Braun Medical, Inc., 124 F.3d at 1428 n. 5.
As to Count IV, the Nobel Defendants again argue that “inequitable conduct . . . can
form the basis of an affirmative claim for damages.” Record Document 108 at 8-9.
However, the Nobel Defendants’ reliance upon Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347 (1965) is misplaced. In Walker
Process Equipment, the alleged infringer had asserted an antitrust counterclaim and the
United States Supreme Court ruled on whether proof of inequitable conduct could be used
as evidence of an antitrust violation. See id. at 176-177, 86 S.Ct. at 350. Inequitable
conduct was at issue in the context of an antitrust counterclaim and had not been asserted
as an independent basis of recovery. Therefore, Walker Process Equipment is inapplicable
to the instant matter, as the Nobel Defendants have not asserted antitrust violations.
Moreover, the Nobel Defendants have not identified any factual allegations in Count IV that
would support an argument that the count attempts to assert anything other than an
inequitable conduct defense.8

8

Count VI (Fraudulent Procurement of the 500 Patent) is addressed infra at Section
V. However, the Nobel Defendants have also relied upon Walker Process Equipment in
support of their fraudulent procurement claim and the Court notes that the same rationale
applies to Count VI.
Page 15 of 19

V.

Counts V-IX.9
The state law claims set forth in Counts V-IX relate to the Nobel Defendants’

allegations that the 500 Patent was procured through inequitable conduct.10 Coupled
Products seeks dismissal of Counts V-IX on the ground that the state law claims set forth
in these counts are preempted. The Nobel Defendants have quoted Hunter Douglas, Inc.
v. Harmonic Design Inc., 153 F.3d 1318 (Fed. Cir. 1998), to this Court for the principle “that
state unfair competition and other state tort causes of action addressing conduct
concerning patents in the marketplace is not preempted by federal law if the patent holder
acted in bad faith.” Record Document 108 at 3, citing Hunter Douglas, 153 F.3d at
1335-1336.11 The Nobel Defendants also concede that “in order to survive [the] 12(b)(6)
motion, the Court must, in viewing its claims and allegations in a light most favorable to
Nobel, determine whether Nobel has sufficiently alleged bad faith communication on the
part of Coupled Products.” Record Document 108 at 4 (emphasis added).
The Nobel Defendants argue that they have met the bad faith requirement based

9

It is clear that Counts VII-IX set forth state law claims, as the Nobel Defendants
reference Louisiana law. In Count V (Abuse of Right) and Count VI (Fraudulent
Procurement of the 500 Patent), the Nobel Defendants do not reference Louisiana law;
however, in their opposition they clearly state that Counts V-X are state law tort claims.
See Record Document 108 at 2.
10

“[I]nequitable conduct, while a broader concept than fraud, must be pled with
particularity” under Rule 9(b). Ferguson Beauregard/Logic Controls, Div. of Dover
Resources, Inc. v. Mega Systems, LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003).
11

In Hunter Douglas, which has been overruled on other grounds, the court
discussed “conduct that federal patent law immunizes from state tort liability,” namely the
barring of state tort liability “for publicizing a patent in the marketplace unless the plaintiff
can show that the patentholder acted in bad faith.” Hunter Douglas, 153 F.3d at 13351336.
Page 16 of 19

on their specific allegations that Coupled Products’ assertions of willful patent infringement
against Nobel are completely baseless and amount to “sham litigation.” Record Document
108, citing Record Document 83 at ¶ 116. According to the Nobel Defendants, “sham
litigation” by definition means the suit is “objectively baseless.” See id., citing Record
Document 83 at ¶¶ 98, 103, 116, 119, 123 and 127. Conversely, Coupled Products argues
that the Nobel Defendants’ bad faith argument fails on multiple grounds. See Record
Document 109 at 6-7. The Court will focus on Coupled Products’ argument that the Nobel
Defendants have not sufficiently pled bad faith in the marketplace. See id. at 7.
Courts assess claims of bad faith on a case-by-case basis. See GFI, Inc. v. Bean
Station Furniture, 286 F.Supp.2d 663, 666 (M.D.N.C. 2003), citing Zenith Elecs. Corp. v.
Exzec. Inc., 182 F.3d 1340, 1354 (Fed. Cir. 1999). “The party asserting bad faith must
overcome the presumption of good faith enjoyed by a patentholder who asserts his duly
granted patent.” GFI, Inc., 286 F.Supp.2d at 666, citing C.R. Bard, Inc. v. M3 Sys., Inc.,
157 F.3d 1340, 1369 (Fed. Cir.1998). While inequitable conduct before the Patent and
Trademark Office may be evidence of a patentholder’s bad faith in subsequent contacts
with competitors or their customers, the bad faith necessary to establish a state law tort
claim must occur in the marketplace, not before the Patent and Trademark Office.
See GFI, Inc., 286 F.Supp.2d at 667, citing Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470,
1477-1478 (Fed. Cir. 1998) (emphasis added).
Here, the Nobel Defendants have alleged, all upon information and belief, that
Coupled Products communicated with Nobel customers regarding this lawsuit and that such
communications interfered with Nobel’s business. There is no indication as to the identity

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of the person from Coupled Products who made the alleged communications; the identity
of the person from Ford and Chrysler who were the recipients of the alleged
communications; when the communications occurred; and whether the communications
were oral or in writing. Also upon information and belief, the Nobel Defendants allege that
the communications substantially influenced Ford and Chrysler to terminate Nobel as a
supplier, even though it concedes that the terminations did not occur until after Nobel asked
for more favorable payment terms.
The unsupported conclusions set forth by the Nobel Defendants are not sufficient
to allege bad faith in the marketplace. First, the Court notes that the factual allegations are
all made upon information and belief. See generally Heartland Barge Mgmt., LLC v. Dixie
Pellets, LLC, No. 09-00585, 2010 WL 703183, *4 (S.D. Ala. Feb. 22, 2010); Jarl v. Apria
Health, No. 04-50118, 2004 WL 2075119, *2 (N.D. Ill. Sept. 13, 2004). The allegations in
the Amended Counterclaim do not “reasonably notify” Coupled Products of their purported
role in the scheme. See Jarl, 2004 WL 2075119, *2. Moreover, the Court finds that the
facts do not support a strong inference of bad faith “which is required for pleadings based
on information and belief.” Id. Likewise, for the reasons previously discussed, the facts
plead by the Nobel Defendants are insufficient to overcome the presumption of good faith
enjoyed by a patentholder who asserts his duly granted patent. See GFI, Inc., 286
F.Supp.2d at 666. Accordingly, the Motion to Dismiss is GRANTED as to Counts V-IX.
VI.

Count X.
In their opposition, the Nobel Defendants withdrew their claim for negligent

misrepresentation against Coupled Products as set forth in Count X of the Amended

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Counterclaim. See Record Document 108 at 2. Accordingly, the Motion to Dismiss is
DENIED AS MOOT as to Count X, as the Nobel Defendants are no longer pursuing this
claim.
CONCLUSION
For the reasons stated above, the Court DENIES Coupled Products’ Motion to
Dismiss as to Counterclaim Counts I and II; GRANTS as to Counterclaim Counts III
through IX; DENIES AS MOOT as to Counterclaim Count X. Additionally, the Court
GRANTS Coupled Products’ Motion to Strike.
THUS DONE AND SIGNED in Shreveport, Louisiana, this 27th day of September,
2011.

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