InvestmentSignals, LLC v. Irrisoft, Inc.

Filing 26

ORDER denying 18 Plaintiff's Motion to Dismiss. So Ordered by Chief Judge Steven J. McAuliffe. (lag) Modified on 8/2/2011 to remove ///(vln).

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
InvestmentSignals, LLC,
Plaintiff
v.

Case No. 10-cv-600-SM
Opinion No. 2011 DNH 124

Irrisoft, Inc.,
Defendant
O R D E R
The parties to this patent litigation are well-known to each
other.

For nearly a decade, InvestmentSignals has been asserting

that Irrisoft infringes its patents, and both parties are
intimately familiar with the two patents at issue here, the
allegedly infringing products manufactured by Irrisoft, and
Irrisoft’s defenses to the claimed infringement (i.e., noninfringement, invalidity, and non-enforceability).

Because they

have been at this for some time, each has made its views and
legal positions quite clear to the other.

See, e.g., Petition

for Declaratory Judgment filed by Irrisoft in the United States
District Court for the Central District of Utah (document no. 222), at 6-12.

Given that history, it is odd that InvestmentSignals filed a
motion that only a lawyer can love — one to dismiss all of
Irrisoft’s counterclaims and affirmative defenses because they

are “so conclusory that they do not provide InvestmentSignals
fair notice as to the nature of their claims.”
memorandum (document no. 19) at 1.

Plaintiff’s

It is odd, as well, because

InvestmentSignals has pleaded its own patent infringement claims
with no greater specificity than the challenged (and allegedly
insufficient) counterclaims advanced by Irrisoft.
InvestmentSignals must think different pleading standards apply
to its claims than apply to Irrisoft’s counterclaims.

In any

event, InvestmentSignals’ motion is denied.

Discussion
Although captioned a “motion to dismiss,” InvestmentSignals’
motion is actually broader than that.

While InvestmentSignals

does not use the applicable term, it actually seeks an order
dismissing Irrisoft’s counter-claims, and striking its
affirmative defense.

The former is governed by Rule 12(b)(6) of

the Federal Rules of Civil Procedure, while the latter is
governed by Rule 12(f).1

1

As an aside, the court notes that motions to strike
under Rule 12(f) are “disfavored” and rarely granted. See Boreri
v. Fiat S.p.A., 763 F.2d 17, 23 (1st Cir. 1985). See generally
5C Charles Alan Wright & Arthur R. Miller, Federal Practice &
Procedure § 1381, at 421-22 (3d ed. 2004) (“Motions to strike a
defense as insufficient are not favored by the federal courts
because of their somewhat dilatory and often harassing character.
Thus even when technically appropriate and well-founded, Rule
12(f) motions often are not granted in the absence of a showing
of prejudice to the moving party.”).
2

Additionally, the legal sufficiency of a counterclaim is
measured by a different standard than that used to assess the
sufficiency of an affirmative defense.

Rule 8(a), which applies

to claims, counterclaims, and cross-claims, requires “a short and
plain statement of the claim showing that the pleader is entitled
to relief.”

Rule 8(c), on the other hand, merely requires a

party to “affirmatively state any avoidance or affirmative
defense.”

See also Fed. R. Civ. P. App. Form 30 (stating that an

affirmative defense is adequately pled if it simply asserts, for
example, that “[t]he complaint fails to state a claim upon which
relief can be granted.”).

In short, and contrary to InvestmentSignals’ suggestion,
the sufficiency of Irrisoft’s counterclaims is measured by one
standard, while the sufficiency of its affirmative defenses is
measured by a different standard.

A.

Irrisoft’s Counterclaims.

Although this is a patent dispute, because InvestmentSignals’
motion is procedural in character, it is governed by the law of
the First Circuit, rather than the Federal Circuit.

See McZeal

v. Sprint Nextel Corp., 501 F.3d 1354, 1355-56 (Fed. Cir. 2007).
The court of appeals for this circuit has yet to address the
specific question posed by plaintiff’s motion: Whether the

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Supreme Court’s recent opinions clarifying the pleading
requirements imposed by Rule 8(a)2 have altered the traditionally
accepted means of pleading patent claims and counterclaims?

See

generally Fed. R. Civ. P. App. Form 18 (setting forth the form
for pleading a patent infringement claim).

See also Fed. R. Civ.

P. 84 (“The forms in the Appendix suffice under these rules and
illustrate the simplicity and brevity that these rules
contemplate.”).

While several district courts have considered

the question, there is a decided lack of agreement as to the
correct answer.

See, e.g., Tyco Fire Products, LP v. Victaulic

Co., __ F. Supp. 2d __, 2011 WL 1399847 (E.D. Pa. April 12, 2011)
(collecting cases).

Having considered the issue, the court concludes that the
better-reasoned view holds that as long as patent claims and
counterclaims meet the minimal pleading standards modeled in Form
18, they adequately state viable causes of action.
This Court agrees with the Federal Circuit and those
district courts that have held that a party alleging
direct infringement need only comply with Form 18. A
patentee “need only plead facts sufficient to place the
alleged infringer on notice as to what he must defend.”
McZeal, 501 F.3d at 1357. This Court additionally
reasons that minimal pleading of direct infringement is
sufficient because this Court requires the prompt
filing of infringement contentions, which put the party

2

See Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007);
Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).
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accused of infringement on detailed notice of the basis
for the allegations against it. Correspondingly, the
Court finds that a declaratory judgment claim of no
direct infringement need only plead facts to put the
patentee on notice and need not be subject to the
heightened pleading standards of Twombly and Iqbal.
With respect to invalidity counterclaims, the Court
agrees with other district courts that it would be
incongruous to require heightened pleading when the
pleading standard for infringement does not require
facts such as “why the accused products allegedly
infringe” or “to specifically list the accused
products.” Teirstein v. AGA Medical Corp., No.
6:08–cv–14, 2009 WL 704138, *5 (E.D.Tex. Mar. 16,
2009).
Microsoft Corp. v. Phoenix Solutions, Inc., 741 F. Supp. 2d 1156,
1159 (C.D. Cal. 2010).

See also Pfizer Inc. v. Apotex Inc., 726

F. Supp. 2d 921, 937-38 (2010).

As noted at the outset, InvestmentSignals has pled its
claims with no greater specificity than the challenged
counterclaims advanced by Irrisoft.

When confronted by a similar

situation, the United States District Court for the District of
New Jersey aptly noted:
[Plaintiff’s] motion to dismiss [Defendant’s]
counterclaims and motion to strike certain affirmative
defenses for lack of factual information is without a
sound foundation. [Defendant’s] language in its
counterclaims and affirmative defenses mirrors the
language [Plaintiff] employed in its own Complaint.
There is no basis for this Court to, on the one hand,
allow [Plaintiff] to plead as it has while, on the
other hand, require [Defendant], inexplicably, to
provide more detailed factual support for its
counterclaims and defenses. The notion that
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[Defendant] must identify what theories of invalidity
it intends to pursue, and the facts supporting such
theories at this stage is not plausible.
Elan Pharma Intern. Ltd. v. Lupin Ltd., 2010 WL 1372316, *5
(D.N.J. March 31, 2010).

B.

Irrisoft’s Affirmative Defenses.

Twombly, Iqbal, and the new “plausibility” requirement
plainly provide the standard by which courts assess the
sufficiency of claims and counterclaims (to the extent those
opinions are not inconsistent with the forms set out in the
appendix to the Federal Rules).

But, with respect to affirmative

defenses, Twombly and Iqbal simply do not apply.

“An affirmative

defense need not be plausible to survive; it must merely provide
fair notice of the issue involved.”

Tyco Fire Products, 2011 WL

1399847 at *5-6 (collecting cases).

See also N.H. Ins. Co. v.

MarineMax of Ohio, Inc., 408 F. Supp. 2d 526, 529-30 (N.D. Ohio
2006); Wireless Ink Corp. v. Facebook, Inc., __ F. Supp. 2d __,
2011 WL 2089917 at *15 (S.D.N.Y. May 26, 2011).

See generally

Fed. R. Civ. P. App. Form 30 (“Answer Presenting Defenses Under
Rule 12(b)(6)”).

Conclusion
Each of Irrisoft’s counterclaims is consistent with the
pleading requirements embodied in Form 18 and contains a short
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and plain statement of why Irrisoft believes it is entitled to
relief.

See Fed. R. Civ. P. 8(a).

Similarly, each of its

affirmative defenses meets the requirements of Rule 8(c) and
provides InvestmentSignals with adequate notice of what defense
is being interposed.

Accordingly, plaintiff’s motion to dismiss

(document no. 18) is denied.
SO ORDERED.
____________________________
Steven J. McAuliffe
Chief Judge
August 1, 2011
cc:

Steven M. Evans, Esq.
Robert P. Greenspoon, Esq.
Jonathan A. Lax, Esq.
Brent P. Lorimer, Esq.
Robert R. Lucic, Esq.
Chad E. Nydegger, Esq.

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