Intellectual Ventures I LLC et al v. Capital One Financial Corporation et al

Filing 328

MEMORANDUM OPINION AND ORDER denying 225 Motion to Dismiss; granting 243 Motion to Seal; setting briefing schedule; The Motion to Strike (ECF No. 225) remains pending. Signed by Judge Paul W. Grimm on 7/1/2015. (ca2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
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INTELLECTUAL VENTURES I LLC,
et al.,

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Plaintiffs,

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v.

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CAPITAL ONE FINANCIAL CORP.,
et al.,

Case No.: PWG-14-111

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Defendants.
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MEMORANDUM OPINION
The ongoing patent litigation between Plaintiffs/Counter-Defendants Intellectual
Ventures I LLC and Intellectual Ventures II LLC (together, “Intellectual Ventures companies” or
“IV”) and Defendants/Counterclaimants Capital One Financial Corp., Capital One Bank (USA),
N.A., and Capital One, N.A. (collectively, “Capital One companies”), based on the Capital One
companies’ alleged infringement of four IV patents, now includes three antitrust counterclaims
in the Capital One Companies’ Third Amended Answer and Counterclaims, ECF Nos. 107
(sealed), 196 (redacted). See Mar. 2, 2015 Mem. Op. & Order, ECF Nos. 194, 195 (granting
leave to file Third Amended Answer and Counterclaims). The Counterclaimants allege that the
Intellectual Ventures companies have amassed monopoly power in violation of Section 2 of the
Sherman Act, 15 U.S.C. § 2, and Section 7 of the Clayton Act, 15 U.S.C. § 18. The CounterDefendants have moved to dismiss the counterclaims, raising largely the same arguments they
presented in their opposition to the Capital One companies’ motion to amend to add these three

counterclaims.1 Indeed, the Counter-Defendants acknowledge the similarity, stating that “[i]f the
Court’s evaluation of the motion for leave to amend was based on the Rule 12(b)(6) standard that
applies to this motion, then aspects of the motion will presumably meet a similar fate,” but the
Intellectual Ventures companies have filed the motion nonetheless because they “had an
obligation to respond to the amended counterclaim” and, “[i]f they are not successful in
achieving dismissal of the counterclaims by way of this motion, the Plaintiffs intend to seek
mandamus relief from the Federal Circuit.” Counter-Defs.’ Reply 1–2. Insofar as the motion to
dismiss raises the same arguments as the opposition to the Capital One companies’ motion for
leave to amend, it is denied for the reasons stated in the Court’s March 2, 2015 Memorandum
Opinion.
The Intellectual Ventures companies do raise one new argument: They contend that,
given that “Plaintiffs are separate legal entities,” and the Capital One companies’ allegations of
agency and alter ego are “conclusory,” the Counterclaimants cannot “establish the existence of a
single 3,500 patent portfolio.” Counter-Defs.’ Mem. 9. In the Intellectual Ventures companies’
view, “[t]he agency relationships Capital One attempts to allege would not justify comingling of
the assets held by the respective purported principals and agents, much less combining the
respective patent portfolios owned by Intellectual Ventures I LLC and Intellectual Ventures II
LLC.” Id. Additionally, they argue that the Capital One companies’ allegations that “all of the
Counter-Defendants ‘are alter egos of one another,’” made “‘on information and belief’ and with

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The parties have briefed the motion fully. ECF Nos. 225, 225-1, 242 & 282. A hearing is not
necessary. See Loc. R. 105.6. Counterclaimants also filed a Motion to Seal, ECF No. 243,
requesting that their Opposition, which contains confidential business information, be sealed.
Given that Counter-Defendants do not oppose the motion to seal; the opposition contains
confidential business information; and Counterclaimants filed a redacted version for the public,
ECF No. 244, the Motion to Seal IS GRANTED. Although the Opposition is sealed, I have
determined, after reviewing this Memorandum Opinion, that none of its contents warrants
sealing this Memorandum Opinion. 

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no supporting facts” are “not sufficient” and “should be stricken. Id. at 9–10 (quoting Third Am.
Ans. & Countercls. ¶ 12). They insist that “[t]he pleaded facts demonstrate the existence of at
least two separate portfolios that cannot, under the allegations of the counterclaim, be treated as
one.” Counter-Defs.’ Reply 2.
As Counterclaimants see it, the Intellectual Ventures companies’ new argument “makes
no sense” because “‘IV use[s] its 2,000 shell companies to fraudulently conceal its acquisition
and ownership of the vast majority of patents in its financial-services portfolio.” Countercls.’
Opp’n 5 (quoting Countercls. ¶ 216).

Yet, they do not explain their reference to the two

plaintiffs as one entity. The Capital One companies also contend that the Intellectual Ventures
companies’ argument is “misplaced” because Counterclaimants “direct [their] agency and alter
ego allegations at the new IV entities named in its counterclaims. . . to establish personal
jurisdiction over them, not the IV entities that brought this motion.” Id. Counterclaimants
otherwise do not address Counter-Defendants’ argument that they are separate entities with
separate patent portfolios, such that there combined portfolios cannot represent a monopoly.
Counterclaimants will brief this issue, in fifteen pages or less, by July 22, 2015. CounterDefendants may file a reply on this issue, in fifteen pages or less, on or before August 12, 2015.
ORDER
Accordingly, it is, this 1st day of July, 2015, hereby ORDERED that
1. The Intellectual Ventures companies’ Motion to Dismiss, ECF No. 225, IS DENIED;
2. The Capital One companies’ Motion to Seal, ECF No. 243, IS GRANTED;
3. The Capital One companies shall brief the issue of whether the Intellectual Ventures
companies are separate companies with separate portfolios in fifteen pages or less by

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July 22, 2015, and the Intellectual Ventures companies may file a reply on this issue,
in fifteen pages or less, on or before August 12, 2015; and
4. The Intellectual Ventures companies’ Motion to Strike, ECF No. 225, REMAINS
PENDING.

/S/
Paul W. Grimm
United States District Judge
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