Moldex Metric, Inc. v. 3M Company et al

Filing 62

ORDER denying 3M's 22 Motion to Dismiss the Complaint. (Written Opinion) Signed by Judge Joan N. Ericksen on February 9, 2015. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Moldex Metric, Inc.,
Plaintiff,
v.

Civil No. 14-1821 (JNE/FLN)
ORDER

3M Company and 3M Innovative Properties
Company,
Defendants.

Harold A. Barza, Quinn Emanuel Urquhart & Sullivan, LLP, and Kevin D. Conneely and
Katherine A. Moerke, Stinson Leonard Street LLP, appeared for Moldex Metric, Inc.
Lawrence B. Friedman and Leah Brannon, Cleary Gottlieb Steen & Hamilton LLP, and
Wendy J. Wildung, Faegre Baker Daniels LLP, appeared for 3M Company and 3M
Innovative Properties Company.

Approximately one year after the dismissal of an action for patent infringement
brought against Moldex Metric, Inc., by 3M Company and 3M Innovative Properties
Company, Moldex Metric brought this action against 3M Company and 3M Innovative
Properties Company for monopolization and attempted monopolization, malicious
prosecution, and unfair competition under the California Business and Professions Code.
The action is before the Court on 3M Company and 3M Innovative Properties
Company’s Motion to Dismiss the Complaint. For the reasons set forth below, the Court
denies the motion.

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I.
A.

BACKGROUND

Civil No. 12-611
In March 2012, 3M Company and 3M Innovative Properties Company

(collectively, 3M) sued Moldex Metric for patent infringement. Complaint for Patent
Infringement, 3M Co. v. Moldex-Metric, Inc., Civil No. 12-611 (D. Minn. Mar. 8, 2012).
3M claimed that Moldex Metric’s BattlePlug earplug infringed U.S. Patent No. 6,070,693
(filed Jan. 20, 1999) and that Moldex Metric’s M-series earmuffs infringed U.S. Patent
No. 7,036,157 (filed June 15, 2000). Moldex Metric denied 3M’s infringement claims
and asserted counterclaims for declarations of noninfringement and invalidity with
respect to each patent.
In November 2012, the parties filed a joint claim construction statement. The
parties asked the Court to schedule a claim construction hearing to interpret the following
terms in the ’693 Patent: (1) “a first end” and “said first . . . end[]”; (2) “a second end”
and “second end[]”; (3) “channel extending from said first and second ends to said center
of said cylindrical body”; (4) “acoustic filter”; (5) “first acoustic filter and a second
acoustic filter,” “first and second acoustic filters,” and “acoustic filters”; (6) “each of said
first and second filters being in communication with one of said first and second ends”;
and (7) “cylindrical body.” For each claim term, 3M stated that it did “not believe that
construction . . . is necessary” and that, “[i]f the Court believes construction is necessary,
. . . the plain and ordinary meaning of the term or phrase should apply.” Moldex Metric
offered a construction of each claim term. The Court declined to hold a claim

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construction hearing. Instead, the Court directed that issues of claim construction would
be considered in connection with dispositive motions or trial.
In January 2013, Moldex Metric moved for summary judgment of
noninfringement of the ’693 Patent. In February 2013, 3M moved for summary
judgment of infringement of the ’157 Patent and for summary judgment on Moldex
Metric’s affirmative defense of governmental immunity. By early March 2013, the
motions were fully briefed. They were scheduled to be heard on March 21, 2013.
The parties disputed the issue of infringement of the ’693 Patent, which is entitled
“Hearing Protector Against Loud Noise.” The patent has one independent claim, which
recites:
1. A hearing protector for selectively or automatically reducing noises
having intensities up to 190 dB, the hearing protector being intended to be
sealingly inserted into an auditory canal of a user, the hearing protector
comprising:
a cylindrical body having a center, a first end and a second end;
a channel extending from said first and second ends to said center of said
cylindrical body; and
said channel containing a first acoustic filter and a second acoustic filter,
each of said first and second filters being in communication with one of
said first and second ends.
In its motion for summary judgment of noninfringement of the ’693 Patent, Moldex
Metric argued that the ’693 Patent requires an earplug with two insertable ends, a channel
opening to the outside of the earplug at the center of the earplug, and two acoustical
filters, and that the BattlePlug lacks each feature.

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The parties did not dispute the issue of infringement of the ’157 Patent, which is
entitled “Method of Producing a Hood, and a Hood Produced According to the Method.”
Moldex Metric argued that it was “premature (and unnecessary) to enter an interlocutory
order of infringement” because Moldex Metric did “not intend to defend 3M’s claims
based on the absence of infringement” of the ’157 Patent. Instead, Moldex Metric
maintained that the ’157 Patent was invalid because Moldex Metric had invented the
accused products years before the application for the patent was filed.
By letter dated March 15, 2013, 3M informed the Court that 3M had provided to
Moldex Metric a covenant not to sue with respect to the ’693 Patent. According to 3M,
the covenant “effectively ended” all claims related to the ’693 Patent. 3M represented
that the parties were discussing the form of appropriate documents for dismissal and that
3M would file a motion under Rule 41 of the Federal Rules of Civil Procedure if the
parties failed to agree to the terms of a stipulation. 3M also stated that a hearing on its
motion for summary judgment with respect to the ’157 Patent was not necessary, that
Moldex Metric wished to be heard on the motion, and that Moldex Metric maintained the
hearing should be continued in light of the covenant not to sue with respect to the ’693
Patent. The Court cancelled the March 21 hearing.
After the parties had failed to agree to the terms of a stipulated dismissal of the
claims related to the ’693 Patent, 3M moved to dismiss its claim of infringement of the
’693 Patent with prejudice and to dismiss Moldex Metric’s counterclaims related to the
’693 Patent, as well as the affirmative defense of governmental immunity, without
prejudice. Although Moldex Metric did not oppose the motion, it wanted to avoid
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waiving any rights it may have as a result of having to defend against 3M’s claim of
infringement of the ’693 Patent.
By letter dated May 17, 2013, Moldex Metric informed the Court that it had
received from 3M a covenant not to sue with respect to the ’157 Patent. Two days before
3M’s motion to dismiss was scheduled to be heard, the parties filed a letter in which they
agreed that 3M’s claims with respect to the ’157 Patent should be dismissed with
prejudice and that Moldex Metric’s counterclaims with respect to the ’157 Patent should
be dismissed without prejudice. They remained unable to agree to the terms of a
stipulated dismissal. The Court cancelled the hearing, dismissed 3M’s infringement
claims with prejudice, dismissed Moldex Metric’s counterclaims and affirmative defense
of governmental immunity without prejudice, and entered judgment. Moldex Metric did
not seek an award of attorney fees and costs.
B.

Civil No. 14-1821
Approximately one year after the dismissal of Civil No. 12-611, Moldex Metric

brought this action, Civil No. 14-1821, against 3M. A summary of Moldex Metric’s
complaint appears in the following paragraphs.
Nature of trade and commerce
“Non-linear” or “selective attenuation” earplugs purchased and used by the U.S.
military are at issue in this case. In the United States, the military purchases the vast
majority of non-linear earplugs. The military may purchase them if they meet certain
standards. By using a sound channel that has various constrictions and openings for the
passage of sound from the exterior to a wearer’s ear canal, non-linear earplugs block or
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attenuate sounds of different amplitude and frequency to differing degrees. Soldiers wear
the earplugs to protect themselves from intense impulse sounds of battlefield explosions
while maintaining their ability to communicate by speech with their colleagues.
Another type of hearing protector, an earmuff, is also at issue in this case. An
earmuff protects its wearer from the harmful effects of excessive sound energy by
covering the exterior of the wearer’s ear.
Hearing protectors are sold with a listed noise reduction rating, which “represents
the amount of sound attenuation perceived by a test group, when tested under certain
required conditions, and adjusted pursuant to the test methodology.” An independent
laboratory performs the testing to determine noise reduction ratings for Moldex Metric.
3M personnel perform the testing to determine noise reduction ratings for 3M.
Markets
According to Moldex Metric, 3M’s conduct relates to “the following product
markets, in the conjunctive or in the alternative”:
(a) a product market for non-linear earplugs that are approved for purchase
by the United States military; (b) the product market for non-linear
earplugs; (c) the product market for non-linear earplugs that have dual
modes of setting, with one mode including a non-linear sound channel and
one mode including a fully blocked earplug; and/or (d) the product market
for passive (non-electronic) industrial earmuffs.
The United States is the geographic market for each product market.
3M’s conduct
For many years, 3M has manufactured and sold a non-linear earplug called
Combat Arms. Each of the four different versions of Combat Arms uses a sound channel

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with constrictions and openings to produce a non-linear sound attenuation effect. Such
sound channels have been used for decades. Combat Arms earplugs allow the wearer to
set the earplug to a second mode of operation by, for example, inserting a plug into the
channel so that the earplugs function like a traditional, fully blocked earplug. The dual
mode feature is well known in the art.
In 2011, Moldex Metric introduced BattlePlug, which is a non-linear, dual-mode
earplug. Moldex Metric’s BattlePlug provided the first actual competition to 3M’s
Combat Arms in the market for non-linear earplugs approved for purchase by the
military. The U.S. military made its first order of BattlePlug in May 2011.
3M wanted to block Moldex Metric’s entry into the market for non-linear earplugs
approved for purchase by the military. To do so, 3M brought an action, Civil No. 12611, against Moldex Metric in which 3M claimed Moldex Metric infringed the ’693
Patent.
According to Moldex Metric, 3M’s claim of infringement of the ’693 Patent was
“objectively baseless.” Non-linear earplugs that feature a second mode of attenuation
with the sound channel blocked were well known in the art. The ’693 Patent claimed an
alternative way of achieving two different levels of sound attenuation in a single earplug:
a dual-ended earplug, where each end was insertable into the user’s ear and each end
provided a different level of attenuation. Moldex Metric’s BattlePlug does not infringe
because, among other reasons, it has but one end that may be inserted into the user’s ear.
Moldex Metric responded to 3M’s claim of infringement of the ’693 Patent by
immediately informing 3M the BattlePlug could not possibly infringe the patent. 3M
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nevertheless pursued its claim, seeking injunctive relief to force Moldex Metric from the
market.
3M also asserted a claim against Moldex Metric for infringement of the ’157
Patent in Civil No. 12-611. According to 3M, Moldex Metric’s M-series earmuff
infringed the patent. Moldex Metric first introduced the M-series earmuff in 2001,
almost five years before the ’157 Patent issued. “[B]ecause of the length of time it takes
to develop a such product,” Moldex Metric alleged, “3M knew, or should have known,
that Moldex [Metric] had in fact invented its accused M-series earmuffs well before the
priority date of the ’157 [P]atent.” Moldex Metric responded to 3M’s lawsuit by
immediately informing 3M of Moldex Metric’s prior invention of the M-series earmuffs.
3M nevertheless persisted in its infringement claim.
In January 2013, Moldex Metric moved for summary judgment of
noninfringement of the ’693 Patent. 3M sent to Moldex Metric a covenant not to sue
with respect to the ’693 Patent and the BattlePlug one week before the motion hearing.
According to Moldex Metric, 3M did so to avoid adjudication of 3M’s claim as baseless.
3M asserted that the covenant not to sue deprived the Court of jurisdiction to hear the
claims related to the ’693 Patent. Later, 3M moved to dismiss with prejudice its claim of
infringement of the ’693 Patent and to dismiss without prejudice Moldex Metric’s
counterclaims of invalidity and noninfringement with respect to the ’693 Patent. In June
2013, the Court dismissed with prejudice 3M’s claim of infringement of the ’693 Patent
and dismissed without prejudice Moldex Metric’s counterclaims of noninfringement and
invalidity with respect to the ’693 Patent.
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After it had sent the covenant not to sue with respect to the ’693 Patent to Moldex
Metric, 3M continued to assert its claim of infringement of the ’157 Patent. 3M
demanded extensive discovery that imposed great expense on Moldex Metric. According
to Moldex Metric, “3M undertook this campaign of intense discovery in order to impose
huge costs on Moldex [Metric], so as to attempt to force Moldex [Metric] to settle the
case, and not pursue Moldex[ Metric’s] rights, including those asserted [in Civil No. 141821], all as part of 3M’s efforts to unlawfully obtain and/or maintain monopoly power.”
In May 2013, after the close of fact discovery and as Moldex Metric was preparing a
motion for summary judgment of invalidity of the ’157 Patent, 3M sent to Moldex Metric
a covenant not to sue with respect to the ’157 Patent and the M-series earmuffs. 3M
asserted that the covenant not to sue left the Court without jurisdiction to determine the
’157 Patent’s validity. After the parties had informed the Court of the covenant not to
sue, the Court dismissed with prejudice 3M’s claim of infringement of the ’157 Patent
and dismissed without prejudice Moldex Metric’s counterclaim of invalidity.
In connection with the dismissal of its infringement claims, 3M sent letters to
Moldex Metric in which 3M claimed that it dismissed its claims not because they were
without merit but because pursuit of the claims did not make economic sense given the
amount of sales of Moldex Metric’s accused products. According to Moldex Metric,
3M’s explanation “was clearly a mere pretext, designed to try to construct a defense to
the claims being asserted [in Civil No. 14-1821].” Because Moldex Metric continues to
sell its BattlePlug products to the U.S. military and because 3M continues to try to
interfere with those sales, 3M did not dismiss its infringement claims for economic
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reasons. Instead, Moldex Metric alleged, “3M did so because it knew they were baseless
and that it was going to lose the claims on the merits.” 3M’s pursuit of its infringement
claims imposed costs on Moldex Metric in the form of legal fees, costs, and lost
employee time of more than $1 million.
In addition to 3M’s alleged misconduct in Civil No. 12-611, Moldex Metric
alleged that 3M “attempted to use a federal program designed to further the use of
disabled workers . . . to exclude Moldex [Metric] from [the alleged markets] by engaging
in misleading assertions concerning BattlePlug and a comparison of it to Combat Arms.”
Moldex Metric also alleged that 3M uses misleading noise reduction ratings for its
hearing protection products. In particular, 3M sells its “dual-ended version of Combat
Arms with [a noise reduction rating] of zero in the open or unblocked position, thus
suggesting that the open earplug will not in any way impair the sounds one hears from
fellow soldiers or combatants in the field.” The zero rating is based on tests that do not
comply with proper procedures.
Moldex Metric’s claims
Moldex Metric’s complaint contains three claims for relief: (1) monopolization
and attempted monopolization; (2) malicious prosecution; and (3) unfair competition
under California Business and Professions Code § 17200. 3M moved to dismiss the
complaint.
II.

DISCUSSION

When ruling on a motion to dismiss for failure to state a claim pursuant to Rule
12(b)(6), a court must accept the facts alleged in the complaint as true and grant all
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reasonable inferences in favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th
Cir. 2009). Although a complaint is not required to contain detailed factual allegations,
“[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the
elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S. at 570). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id.
A.

Monopolization and attempted monopolization
3M contended that Moldex Metric failed to state a claim for monopolization or

attempted monopolization because Moldex Metric failed to allege an antitrust injury;
failed to allege an exception to the Noerr-Pennington doctrine; failed to allege that 3M
has market power in a properly defined product market and that 3M willfully acquired or
maintained that power through exclusionary or predatory conduct; and failed to allege
that 3M engaged in anticompetitive conduct with the specific intent to monopolize and
that there was a dangerous probability of achieving monopoly power. Moldex Metric
disputed 3M’s contentions.
It is illegal to monopolize or attempt to monopolize “any part of the trade or
commerce among the several States, or with foreign nations.” 15 U.S.C. § 2 (2012).
“[A]ny person who shall be injured in his business or property by reason of anything
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forbidden in the antitrust laws may sue therefor . . . and shall recover threefold the
damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.”
Id. § 15(a).
To establish a monopolization claim under Section 2 of the Sherman Act, a
plaintiff must prove the defendant “(1) possessed monopoly power in the relevant market
and (2) willfully acquired or maintained that power as opposed to gaining that power as a
result ‘of a superior product, business acumen, or historical accident.’” Amerinet, Inc. v.
Xerox Corp., 972 F.2d 1483, 1490 (8th Cir. 1992) (quoting United States v. Grinnell, 384
U.S. 563, 571 (1966)). “To establish an attempted monopolization claim under the
Sherman Act, a plaintiff must prove: ‘(1) a specific intent by the defendant to control
prices or destroy competition; (2) predatory or anticompetitive conduct undertaken by the
defendant directed to accomplishing the unlawful purpose; and (3) a dangerous
probability of success.’” HDC Med., Inc. v. Minntech Corp., 474 F.3d 543, 549 (8th Cir.
2007) (quoting Gen. Indus. Corp. v. Hartz Mountain Corp., 810 F.2d 795, 801 (8th Cir.
1987)). To recover under § 15, a plaintiff “must prove an ‘injury of the type that the
antitrust laws were intended to prevent and that flows from that which makes defendants’
acts unlawful.’” In re Canadian Import Antitrust Litig., 470 F.3d 785, 791 (8th Cir.
2006) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977));
see Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1386-87
(2014).
“Those who petition government for redress are generally immune from antitrust
liability.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S.
12

49, 56 (1993); see United Mine Workers of Am. v. Pennington, 381 U.S. 657, 669 (1965);
E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961). A
patentee’s assertion of an infringement claim generally does not give rise to antitrust
liability:
A patent owner who brings a suit for infringement, without more, is
generally exempt from the antitrust laws for that action; however, the patent
owner may be subject to antitrust liability for the anticompetitive effects of
that suit if the accused infringer proves either of two conditions. First, the
accused infringer may show that the asserted patent was obtained through
knowing and willful fraud. Alternatively, the accused infringer may show
that the infringement suit was “‘a mere sham to cover what is actually
nothing more than an attempt to interfere directly with the business
relationships of a competitor.’”
Q-Pharma, Inc. v. Andrew Jurgens Co., 360 F.3d 1295, 1304-05 (Fed. Cir. 2004)
(citations omitted) (quoting Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d
1059, 1068 (Fed. Cir. 1998)). “Conduct prohibited under antitrust law includes bringing
suit to enforce a patent with knowledge that the patent is invalid or not infringed, and the
litigation is conducted for anti-competitive purposes.” C.R. Bard, Inc. v. M3 Sys., Inc.,
157 F.3d 1340, 1368 (Fed. Cir. 1998).
In Noerr, the Supreme Court “withheld immunity from ‘sham’ activities because
‘application of the Sherman Act would be justified’ when petitioning activity, ‘ostensibly
directed toward influencing governmental action, is a mere sham to cover . . . an attempt
to interfere directly with the business relationships of a competitor.’” Prof’l Real Estate
Investors, 508 U.S. at 56 (quoting Noerr, 365 U.S. at 144). “Sham” litigation is defined
according to objective and subjective elements:

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First, the lawsuit must be objectively baseless in the sense that no
reasonable litigant could realistically expect success on the merits. If an
objective litigant could conclude that the suit is reasonably calculated to
elicit a favorable outcome, the suit is immunized under Noerr, and an
antitrust claim premised on the sham exception must fail. Only if
challenged litigation is objectively meritless may a court examine the
litigant’s subjective motivation. Under this second part of our definition of
sham, the court should focus on whether the baseless lawsuit conceals “an
attempt to interfere directly with the business relationships of a competitor”
through the “use [of] the governmental process—as opposed to the outcome
of that process—as an anticompetitive weapon.” This two-tiered process
requires the plaintiff to disprove the challenged lawsuit’s legal viability
before the court will entertain evidence of the suit’s economic viability. Of
course, even a plaintiff who defeats the defendant’s claim to Noerr
immunity by demonstrating both the objective and the subjective
components of a sham must still prove a substantive antitrust violation.
Proof of a sham merely deprives the defendant of immunity; it does not
relieve the plaintiff of the obligation to establish all other elements of his
claim.
Id. at 60-61 (alteration in original) (footnote omitted) (citations omitted).
“[W]hether conduct in procuring or enforcing a patent is sufficient to strip a
patentee of its immunity from the antitrust laws is to be decided as a question of Federal
Circuit law. This conclusion applies equally to all antitrust claims premised on the
bringing of a patent infringement suit.” Nobelpharma, 141 F.3d at 1068 (footnote
omitted). “[T]he law of the appropriate regional circuit [applies] to issues involving other
elements of antitrust law such as relevant market, market power, damages, etc., as those
issues are not unique to patent law . . . .” Id.
Moldex Metric has sufficiently alleged that 3M’s infringement action against it,
Civil No. 12-611, was objectively baseless. Cf. Tyco Healthcare Grp. LP v. Mut. Pharm.
Co., 762 F.3d 1338, 1345 (Fed. Cir. 2014) (stating “it will be a rare case in which a
patentee’s assertion of its patent in the face of a claim of invalidity will be so

14

unreasonable as to support a claim that the patentee has engaged in sham litigation”
because a patent is presumed to be valid and the patent challenger bears the burden to
prove invalidity by clear and convincing evidence); Q-Pharma, 360 F.3d at 1304-05
(concluding that infringement claim was not objectively baseless where reasonable
litigant could—based on the asserted patent, its prosecution history, and the defendant’s
statements—expect to prevail). The sole independent claim of the ’693 Patent claims a
hearing protector comprising “a cylindrical body having a center, a first end and a second
end”; “a channel extending from said first and second ends to said center of said
cylindrical body”; and “said channel containing a first acoustic filter and a second
acoustic filter, each of said first and second filters being in communication with one of
said first and second ends.” Citing intrinsic evidence, Moldex Metric asserted that the
patent plainly claims an earplug whose two ends may be inserted into the user’s ear. Cf.
Thorner v. Sony Computer Entm’t Am. LLC, 669 F.3d 1362, 1366-67 (Fed. Cir. 2012)
(summarizing standard for disavowal of claim scope); Phillips v. AWH Corp., 415 F.3d
1303, 1323-24 (Fed. Cir. 2005) (en banc) (discussing “the distinction between using the
specification to interpret the meaning of a claim and importing limitations from the
specification into the claim”). The intrinsic evidence includes, for example, the summary
of the invention, which states:
The hearing protector has two ends, both of which can be inserted
into the auditory canal and is referred to as a “double-ended” device. This
contrasts with the well-known hearing protector that typically has one end
that can be inserted into the auditory canal, while the other end allows the
hearing protector to be gripped so the user can position it in the auditory
canal. The present invention has two ends, that may or may not be
identical, either of which can be inserted into the auditory canal, thus
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making it possible to choose between two operating modes of attenuation
that may or may not be identical.
’693 Patent, col.1, ll.57-67. Moldex Metric’s BattlePlug has but one end that may be
inserted into the user’s ear. As to the ’157 Patent, Moldex Metric alleged that 3M
asserted the patent notwithstanding 3M’s knowledge of the patent’s invalidity due to
Moldex Metric’s invention of the M-series earmuffs before the patent’s priority date.
The Court concludes that Moldex Metric alleged 3M’s infringement claims were
objectively baseless. Cf. Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1324-26 (Fed.
Cir. 2011) (affirming district court’s finding that case was exceptional and concluding
that “district court did not clearly err in finding that Eon-Net pursued objectively baseless
infringement claims” because “the written description clearly refutes Eon-Net’s claim
construction”). 1
Drawing all reasonable inferences in favor of Moldex Metric, the Court also
concludes that Moldex Metric sufficiently alleged that 3M’s infringement action against
it was subjectively baseless. 3M brought Civil No. 12-611 only after Moldex Metric’s
BattlePlug provided the first actual competition to 3M’s Combat Arms in the market for
non-linear earplugs approved for purchase by the U.S. military. To force Moldex Metric
from the market, 3M asserted the ’693 Patent and the ’157 Patent against Moldex Metric.
Days before a motion for summary judgment of noninfringement of the ’693 Patent was
to be heard, 3M issued a covenant not to sue. 3M persisted in its assertion of the ’157

1

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014),
established a standard to determine whether a case is exceptional under 35 U.S.C. § 285
that differs from the one employed in Eon-Net.
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Patent, imposing substantial costs on Moldex Metric. As Moldex Metric prepared a
motion for summary judgment of invalidity of the ’157 Patent, 3M against issued a
covenant not to sue. Moldex Metric has adequately alleged that 3M’s infringement
action was subjectively baseless. Having concluded that Moldex Metric adequately
alleged 3M’s infringement action was objectively and subjectively baseless, the Court
considers 3M’s arguments that Moldex Metric failed to allege antitrust violations.
3M asserted that Moldex Metric had failed to allege plausible product markets,
that Moldex Metric offered only conclusory assertions for each alleged product market,
and that Moldex Metric’s failure to plead facts regarding interchangeability and crosselasticity renders dismissal appropriate. Moldex Metric countered that it had sufficiently
alleged at least three product markets: (1) non-linear earplugs that are approved for
purchase by the United States military; (2) the general market for non-linear earplugs;
and (3) non-linear earplugs that have dual modes of setting. Moldex Metric asserted that
there are no reasonable substitutes for selective attenuation earplugs. “Traditional, fullyblocked earplugs are not a reasonable substitute,” Moldex Metric argued, “not only
because they do not comply with military testing standards, but also because soldiers
would have to remove the traditional earplugs, in the heat of battle, every time they
needed to communicate verbally with their colleagues.”
“The outer boundaries of a product market are determined by the reasonable
interchangeability of use or the cross-elasticity of demand between the product itself and
substitutes for it.” Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). “Where
the plaintiff fails to define its proposed relevant market with reference to the rule of
17

reasonable interchangeability and cross-elasticity of demand, or alleges a proposed
relevant market that clearly does not encompass all interchangeable substitute products
even when all factual inferences are granted in plaintiff’s favor, the relevant market is
legally insufficient and a motion to dismiss may be granted.” Queen City Pizza, Inc. v.
Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997); see Todd v. Exxon Corp., 275
F.3d 191, 200 (2d Cir. 2001). The Court concludes that Moldex Metric has adequately
alleged product markets.
3M asserted that Moldex Metric failed to allege 3M has monopoly power. “In a
typical section 2 case, monopoly power is ‘inferred from a firm’s possession of a
dominant share of a relevant market that is protected by entry barriers.’” Harrison Aire,
Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 381 (3d Cir. 2005) (quoting United States v.
Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001) (per curiam)). Moldex Metric alleged
that 3M has a dominant market share and that there are significant barriers to entry, such
as approval by the military. The Court concludes that Moldex Metric adequately alleged
3M has monopoly power.
According to 3M, Moldex Metric failed to allege that 3M willfully acquired or
maintained monopoly power through exclusionary or predatory conduct. 3M
acknowledged that “patent infringement suits that qualify as exclusionary conduct . . . are
those initiated and conducted in bad faith.” According to 3M, Moldex Metric failed to
allege that 3M’s infringement suit was initiated and conducted in bad faith. For the
reasons set forth above, the Court disagrees. The Court concludes that Moldex Metric

18

has adequately alleged 3M willfully acquired or maintained monopoly power through
exclusionary or predatory conduct.
With respect to Moldex Metric’s claim for attempted monopolization, 3M asserted
that Moldex Metric had failed to allege 3M engaged in anticompetitive conduct with the
specific intent to monopolize or that there was a dangerous probability of success.
Moldex Metric alleged that 3M brought sham litigation to drive Moldex Metric out of the
market. Drawing all reasonable inferences in Moldex Metric’s favor, the Court
concludes that it adequately alleged its claim of attempted monopolization. See Lenox
MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114, 1130 (10th Cir. 2014).
Finally, 3M asserted that Moldex Metric’s antitrust claims should be dismissed
because Moldex Metric failed to allege antitrust injury. According to Moldex Metric, 3M
brought sham litigation to maintain its monopoly power. Moldex Metric incurred costs to
defend against the sham claims. The Court concludes that Moldex Metric adequately
alleged antitrust injury. See Rickards v. Canine Eye Registration Found., Inc., 783 F.2d
1329, 1334-35 (9th Cir. 1986); Am. Infra-Red Radiant Co. v. Lambert Indus., Inc., 360
F.2d 977, 996-97 (8th Cir. 1966).
B.

Malicious prosecution
3M asserted that Moldex Metric’s claim of malicious prosecution should be

dismissed for essentially the same reasons that Moldex Metric failed to allege an
exception to the Noerr-Pennington doctrine. For essentially the same reasons set forth
above, the Court rejects this argument. See Porous Media Corp. v. Pall Corp., 186 F.3d
1077, 1079-80 & n.4 (8th Cir. 1999).
19

3M also asserted that Moldex Metric’s claim of malicious prosecution should be
dismissed under Minnesota’s anti-SLAPP (strategic litigation against public
participation) statutes, Minn. Stat. ch. 554 (2014). 2 Moldex Metric countered that 3M
had failed to satisfy 3M’s burden of demonstrating Civil No. 12-611 constituted public
participation, that Minnesota’s anti-SLAPP statutes are unconstitutional, and that Moldex
Metric presented clear and convincing evidence in support of its claim of malicious
prosecution.
A party may file a “motion in a judicial proceeding to dispose of a judicial claim
on the grounds that the claim materially relates to an act of the moving party that involves
public participation.” Minn. Stat. § 554.02, subd. 1; see Middle-Snake-Tamarac Rivers
Watershed Dist. v. Stengrim, 784 N.W.2d 834, 841 (Minn. 2010) (noting moving party’s
“minimal” burden). “‘Public participation’ means speech or lawful conduct that is
genuinely aimed in whole or in part at procuring favorable government action.” Minn.
Stat. § 554.01, subd. 6. “[T]he responding party has the burden of proof, of going
forward with the evidence, and of persuasion on the motion.” Minn. Stat. § 554.02, subd.
2(2); see Leiendecker v. Asian Women United of Minn., 848 N.W.2d 224, 229-30 (Minn.
2014); Stengrim, 784 N.W.2d at 841. “[T]he court shall grant the motion and dismiss the
judicial claim unless the court finds that the responding party has produced clear and

2

Recognizing that Moldex Metric’s claim of unfair competition does not seek
damages, 3M abandoned its argument that the claim should be dismissed under
Minnesota’s anti-SLAPP statutes. See Minn. Stat. § 554.01, subd. 3 (defining “judicial
claim” or “claim” as “any civil lawsuit, cause of action, claim, cross-claim, counterclaim,
or other judicial pleading or filing seeking damages for an alleged injury” and expressly
excluding “a claim solely for injunctive relief”).
20

convincing evidence that the acts of the moving party are not immunized from liability
under section 554.03.” Minn. Stat. § 554.02, subd. 2(3); see Leiendecker, 848 N.W.2d at
230. “Lawful conduct or speech that is genuinely aimed in whole or in part at procuring
favorable government action is immune from liability, unless the conduct or speech
constitutes a tort or a violation of a person’s constitutional rights.” Minn. Stat. § 554.03.
3M maintained that its “assertion of patent infringement claims in [Civil No. 12611] indisputably constitutes an act to petition the government within the meaning of”
Minnesota’s anti-SLAPP statutes. The Court concludes that 3M has satisfied its minimal
burden of showing that Moldex Metric’s claim of malicious prosecution materially
relates to an act of 3M that involves public participation. See Leiendecker v. Asian
Women United of Minn., Nos. A12-1978, A12-2015, 2014 WL 7011061, at *2-4 (Minn.
Ct. App. Dec. 15, 2014) (“[N]othing indicates that the legislature intended for the moving
party to first establish that no merit exists to the responding party’s claims in order to
invoke the anti-SLAPP statute.”). 3
Moldex Metric asserted that 3M is not immune from liability because Moldex
Metric has clear and convincing evidence to support its claim of malicious prosecution.
See Leiendecker, 848 N.W.2d at 229. To satisfy its burden, Moldex Metric relied on its
motion for summary judgment of noninfringement in Civil No. 12-611, “as well as 3M’s
abandonment of the suit immediately before [Moldex Metric’s] dispositive motions could
3

“[U]npublished opinions of the court of appeals are not precedential.” Vlahos v. R
& I Constr. of Bloomington, Inc., 676 N.W.2d 672, 676 n.3 (Minn. 2004); see Skyline
Vill. Park Ass’n v. Skyline Vill. L.P., 786 N.W.2d 304, 309 (Minn. Ct. App. 2010)
(“Unpublished opinions are of persuasive value ‘[a]t best’ and not precedential.”
(alteration in original)).
21

be heard and by 3M’s pretextual assertion that it did so because Moldex [Metric] was too
small a competitor to try to step on.” 3M contended that Moldex Metric “failed to meet
its burden to show with clear and convincing evidence that 3M’s litigation conduct is not
immune . . . for the same reasons that Moldex [Metric] has failed to plead plausible
claims under the Sherman Act and for malicious prosecution.” The Court finds that
Moldex Metric has satisfied its burden to show by clear and convincing evidence that 3M
is not immune. 4 Cf. Dunham v. Roer, 708 N.W.2d 552, 569 (Minn. Ct. App. 2006)
(reciting elements of claim of malicious prosecution).
C.

Unfair competition
1.

Patent litigation

Insofar as Moldex Metric’s claim of unfair competition is based on 3M’s
infringement action, 3M asserted that the claim should be dismissed because Moldex
Metric failed to state a claim under the Sherman Act. For the reasons set forth above, the
Court rejects this argument.
2.

False advertising

Insofar as Moldex Metric’s claim of unfair competition is based on 3M’s alleged
false advertising in connection with the marketing and sale of Combat Arms earplugs,
3M argued that the claim should be dismissed because the claim “rests on improperly
suggesting that 3M might have omitted the zero [noise reduction rating] or included a
higher [noise reduction rating] on the Combat Arms label, neither of which 3M can do

4

The Court expresses no opinion on Moldex Metric’s assertion that Minnesota’s
anti-SLAPP statutes are unconstitutional.
22

under EPA mandates.” Because its publication of the noise reduction rating complies
with federal law, 3M argued, it is not actionable under California’s unfair competition
law. Finally, 3M asserted that Moldex Metric’s claim is barred by the statute of
limitations. The Court declines to dismiss the claim on the basis of the first two
arguments because Moldex Metric alleged that the noise reduction rating of zero is the
result of tests that did not comply with applicable procedures. The Court declines to
dismiss the claim on the basis of the statute of limitations because 3M relied on matters
outside the pleadings, which the Court excludes, see Fed. R. Civ. P. 12(d), to support its
argument. See Joyce v. Armstrong Teasdale, LLP, 635 F.3d 364, 367 (8th Cir. 2011)
(“As a general rule, the possible existence of a statute of limitations defense is not
ordinarily a ground for Rule 12(b)(6) dismissal unless the complaint itself establishes the
defense.” (internal quotation marks omitted)).
III.

CONCLUSION

Based on the files, records, and proceedings herein, and for the reasons stated
above, IT IS ORDERED THAT:
1.

3M’s Motion to Dismiss the Complaint [Docket No. 22] is DENIED.

Dated: February 9, 2015
s/Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge

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