TVnGO LTD. (BVI) v. LG ELECTRONICS, INC. et al

Filing 47

OPINION. Signed by Judge Renee Marie Bumb on 5/23/2019. (dmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

TVnGO Ltd. (BVI),
Plaintiff,

Civil No. 18-10238 (RMB/KMW)

v.

OPINION

LG ELECTRONICS, INC. and
LG ELECTRONICS U.S.A., INC.,
Defendants.

APPEARANCES:
SANDELANDS EYET LLP
By: Matthew T. Eyet, Esq.
1545 U.S. Highway 206, Suite 304
Bedminster, New Jersey 07921
and
KING & SPALDING LLP
By: Charles E. Cantine, Esq.
Joseph Diamante, Esq.
Timothy H. Caine, Esq.
1185 Avenue of the Americas, 35th Floor
New York, New York 10036
Counsel for Plaintiff
WALSH PIZZI O’REILLY FALANGA LLP
By: Liza M. Walsh, Esq.
Selina M. Ellis, Esq.
One Riverfront Plaza
1037 Raymond Boulevard, Suite 600
Newark, New Jersey 07102
and
MORGAN, LEWIS & BOCKIUS LLP

1

By:

Natalie Bennett, Esq.
Collin W. Park, Esq.
Eric Kraeutler, Esq.
Ghee J. Lee, Esq.
1111 Pennsylvania Avenue, NW
Washington, D.C. 20004-2541
Counsel for Defendants
BUMB, UNITED STATES DISTRICT JUDGE:
In this patent infringement suit, Plaintiff TVnGO Ltd.
(BVI) asserts that Defendants LG Electronics, Inc. and LG
Electronics U.S.A., Inc. (collectively, “LG”), are infringing
five of TVnGO’s patents 1 which claim methods and devices that
make televisions “smart”-- i.e., able to display both television
content and internet streaming content.

LG asserts that the

claims of all five patents are unenforceable based on the
doctrine of inequitable conduct.

LG makes this assertion in

both an affirmative defense and a counterclaim. 2

Before the

Court is TVnGO’s Motion to Dismiss the counterclaim pursuant to
Fed. R. Civ. P. 12(b)(6) / Motion to Strike the affirmative

1

The Patents-in-Suit are U.S. Patent Nos. 8,132,220;
9,124,945; 9,392,339; 9,407,969; and 9,794,621, respectively,
the ‘220 patent, the ‘945 patent, the ‘339 patent, the ‘969
patent and the ‘621 patent. “Each of the ‘945, ‘339, and ‘969
patents are continuations of the ‘220 patent. The ‘621 patent
is a continuation of the ‘969 patent.” (Thirteenth Affirmative
Defense, “TAD”, ¶ 19)
2

The affirmative defense and counterclaim are entirely
coextensive. See Counterclaim Count 11 ¶ 48 (“LGE repeats and
re-alleges paragraphs 13-41 of its Thirteenth Affirmative
Defense (Inequitable Conduct) to TVnGO’s Complaint as fully set
forth herein.”).
2

defense pursuant to Fed. R. Civ. P. 12(f).

For the reasons

stated herein, the motion will be denied.
I.
LG’s inequitable conduct theory is based on alleged
failures to disclose-- or in some instances, with respect to the
‘220 and ‘621 patents 3, alleged failures to properly disclose-prior art to the USPTO during the prosecution of the
applications that resulted in the Patents-in-Suit.

The prior

art is: (1) Japanese Patent Publication No. JP2003-018575 (“the
‘575 Publication”) and (2) additional references disclosing the
same subject matter of the European counterpart to the Patentsin-Suit (“the EP Publications”). 4
A. The ‘220 patent prosecution
The application that would result in the issuance of the
‘220 patent 5 was filed on July 6, 2007, and the ‘220 patent
issued on March 6, 2012. (TAD ¶¶ 19, 24)

LG asserts that at no

time during this prosecution did TVnGO’s prosecuting attorneys,
Mr. Klima and Mr. Kavrukov (nor anyone else), disclose the EP
Publications to the USPTO. (Id. ¶ 38)

Further, LG explains why,

in its view, this nondisclosure matters.

LG asserts that the EP

3

Of the Patents-in-Suit, the ‘220 patent was the first to
issue and the ‘621 patent was the last to issue. (TAD ¶¶ 21, 29)
4

See TAD ¶¶ 14, 17, 35-36. TVnGO does not dispute that
these two items are, indeed, prior art, as LG alleges.
5

U.S. Application No. 11/794,825 (TAD ¶ 19).
3

Publications were “materially relevant” “because these
references were used as a ground for rejecting the counterpart
European patent application” to the Patents-in-Suit. (Id. ¶ 38)
LG elaborates, “[h]ad the USPTO received and considered the EP
Publications and the material relevance of the EP Publications
to the patentability of the Patents-in-Suit, it would have been
evident that at least one independent claim of each of the
Patents-in-Suit was invalid,” which would have led the USPTO to
reject TVnGO’s patent application.

(Id. ¶ 39)

Somewhat similarly, LG alleges that Mr. Klima “disclosed”
the ‘575 Publication to the USPTO in a manner that effectively
prevented the USPTO from considering it.

Specifically, LG

alleges that
[o]n December 23, 2011, more than six months after
the participants in the prosecution of the [‘220
patent] Application became aware of the ‘575
Publication and after the prosecution of the []
Application had already closed, Mr. William L. Klima
of the Nath Law Group filed an Information Disclosure
Statement (“IDS”) in the [] Application, listing
several references, including the ‘575 Publication,
and enclosing a copy of the ‘575 Publication in
Japanese with an English abstract. However, Mr. Klima
did not include in the IDS any requisite certification
statement under 37 C.F.R. 1.97(e) or any explanation
as to the relevance of the listed references,
including the ‘575 Publication, despite the prior
knowledge that the ‘575 Publication was applied by
the Japanese Patent Office to reject the Japanese
counterpart ‘930 JP Application.

(TAD ¶ 22)

4

LG alleges that five days later, the USPTO notified Mr.
Klima that the IDS did not comply with the applicable regulation
and therefore the information in the IDS “had not been
considered.”

(TAD ¶ 23)

LG further alleges that no one sought

to correct the deficiency, and thereafter the ‘220 patent issued
on March 6, 2012.

(Id. ¶ 24)

LG alleges that the ‘575 Publication was materially
relevant to the ‘220 patent application because the Japanese
Patent Office applied the ‘575 Publication “in the rejection of
the [Japanese] counterpart” to the ‘220 patent application.
(TAD ¶ 24)
B. The ‘621 patent prosecution
The application that would result in the issuance of the
‘621 patent was filed on November 25, 2015, and the ‘621 patent
issued on October 17, 2017. (TAD ¶¶ 27, 29)
With respect to the EP Publications, LG alleges they were
disclosed in an IDS filed with the USPTO on January 26, 2017.
(TAD ¶ 38)

LG does not allege that there was any problem with

this particular IDS filed by Mr. Kavrukov in this particular
prosecution, which was last in the chronological order of the
applications at issue.
Somewhat similarly, with respect to the ‘575 Publication,
LG alleges the ‘575 Publication was also disclosed in an IDS
filed by Mr. Kavrukov on January 26, 2017.

5

(TAD ¶ 28)

However,

LG alleges that the IDS merely “listed the ‘575 Publication but
did not provide information regarding the material relevance of
the ‘575 Publication to the patentability of the ‘621 patent.”
(Id.)
Because the ‘621 patent is alleged to be “a continuation of
the ‘969 Patent” which patent is, in turn, allegedly a
continuation of the ‘220 patent (TAD ¶ 19), LG asserts that the
EP Publications and the ‘575 Publication are materially relevant
to the ‘621 patent application in the same way that those
references are allegedly materially relevant to the ‘220 patent
application. (See Id. ¶¶ 33, 41)
C. The prosecutions of the other Patents-in-Suit
LG alleges that neither the EP Publications nor the ‘575
Publication were disclosed at all during the prosecutions of the
applications for the ‘945, ‘339 and ‘969 patents.
38)

(TAD ¶¶ 25,

Because the these patents are each alleged to be

continuations of the ‘220 patent (Id. ¶ 19), LG asserts that the
EP Publications and the ‘575 Publication are materially relevant
in the same way that those references are allegedly materially
relevant to the ‘220 patent application. (See Id. ¶¶ 33, 41)
II.
Fed. R. Civ. P. 12(b)(6) provides in relevant part, “a
party may assert the following defenses by motion: . . . (6)
failure to state a claim upon which relief can be granted.”

6

Similarly, Fed. R. Civ. P. 12(f) provides in relevant part,
“[t]he Court may strike from a pleading an insufficient
defense.” 6
A counterclaim or affirmative defense of inequitable
conduct sounds in fraud and therefore is subject to the
heightened pleading standard of Fed. R. Civ. P. 9(b).

“‘Whether

inequitable conduct has been pleaded with particularity under
Rule 9(b) is a question governed by Federal Circuit law.’”
Sanders v. The Mosaic Co., 418 F. App’x 914, 918 (Fed. Cir.
2011) (quoting Exergen Corp. v. Wal–Mart Stores, Inc., 575 F.3d
1312, 1318 (Fed. Cir. 2009)).

“To plead inequitable conduct,

‘the pleading must identify the specific who, what, when, where,
and how of the material misrepresentation or omission committed
before the PTO.’”

Id. (quoting Exergen).
III.

“A charge of inequitable conduct based on a failure to
disclose will survive a motion to dismiss only if the
plaintiff’s complaint recites facts from which the court may
reasonably infer that a specific individual both knew of
invalidating information that was withheld from the PTO and

6

Rule 12 expressly states that “[a] motion under this rule
may be joined with any other motion allowed by this rule.” Fed.
R. Civ. P. 12(g)(1). Joining a 12(b)(6) motion with a 12(f)
motion is particularly appropriate in this case where the
counterclaim challenged by the 12(b)(6) motion is identical to
the affirmative defense challenged by the 12(f) motion.
7

withheld that information with a specific intent to deceive the
PTO.”

Delano Farms Co. v. California Table Grape Comm’n, 655

F.3d 1337, 1350 (Fed. Cir. 2011) (citing Exergen, 575 F.3d at
1318, 1330 and Therasense, Inc. v. Becton, Dickinson & Co., 649
F.3d 1276 (Fed. Cir. 2011) (en banc)).
LG states its inequitable conduct theory thusly: “the
public record regarding [TVnGO’s] dealings with the [USPTO] and
foreign patent offices [reveals] a pattern of selectively
withholding prior art or ‘disclosing’ the prior art in a noncompliant way that [TVnGO] knew would shield the reference from
consideration.”

(Opposition Brief, Dkt 25, p. 1)

According to

LG, it is this pattern-- demonstrated over the span of all five
patent prosecutions at issue-- that supports a reasonable
inference that Mr. Klima and Mr. Kavrukov had the requisite
intent to deceive the USPTO.

(Id. p. 16-17)

TVnGO asserts that LG’s inequitable conduct claim is
insufficiently particularized and therefore fails as a matter of
law.

Each of TVnGO’s arguments is addressed in turn.

A. Materiality
First, TVnGO argues that “LG makes conclusory allegations
that references are material merely because they were identified
in foreign patent prosecutions.”

(Moving Brief, Dkt 23-1, p.

10; Reply Brief, Dkt 26, p. 2, 6)

This argument misstates the

allegations of LG’s Answer and Counterclaim.

8

LG does not allege

that references were merely identified in foreign patent
prosecutions.

Rather, LG specifically alleges that both the EP

Publications and the ‘575 Publication were the basis for
rejecting claims in the foreign patent applications.
20, 24, 25, 35-36, 38)

(TAD ¶¶

As LG explains, the alleged facts that

“the ‘575 [Publication] and the [EP Publications] [] persuaded
foreign patent offices to question the novelty of the claimed
subject matter” support a reasonable conclusion that those
references were material.

(Opposition Brief, Dkt 25, p. 19, 21)

That is, the factual allegations support a conclusion “that the
PTO examiner in the United States would have considered the
[prior art] as material references” because the examiners in
Europe and Japan did.

(Id.)

As LG persuasively observes, “the [Manual of Patent
Examining Procedure] bolsters the inference of materiality.”
(Opposition Brief, Dkt 25, p. 21)

The MPEP states, “[t]he

inference that such prior art or other information is material
is especially strong where it has been used in rejecting the
same or similar claims in the foreign application.”
2001.06(a). 7

MPEP §

TVnGO does not directly address this argument in

7

See also, LNP Eng’g Plastics, Inc. v. Miller Waste Mills,
Inc., 2000 WL 33341185, at *10 (D. Del. Aug. 8, 2000)
(“Materiality of an uncited prior art reference can be shown by
evidence that the applicant cited the prior art in related
foreign prosecutions. If the uncited prior art provided a basis
for a foreign patent office’s rejection of counterpart
application, then the inference of materiality is especially
9

its reply brief.

Rather, it asserts that LG has not

sufficiently pleaded materiality because it has not provided a
“substantive analysis” of how the ‘575 Publication and the EP
Publications affect each claim of the Patents-in-Suit.
Brief, Dkt 26, p. 7)

(Reply

TVnGO, however, provides no legal support

for its argument which, if accepted, would impose a higher
burden of pleading than Dealno Farms and Exergen require. 8

At

the pleadings stage, TVnGO need only plead “facts from which the
court may reasonably infer” that the omitted information was
material.

Delano Farms, 655 F.3d at 1350 (citing Exergen).

As

the MPEP explains, the facts LG alleges strongly support the
reasonable inference that the ‘575 Publication and the EP
Publications were material to the prosecutions of the Patentsin-Suit.

Accordingly, the Court holds that LG has sufficiently

pleaded facts supporting a reasonable inference of materiality
as to the ‘575 Publication and the EP Publications.
B. Specific Individuals

strong.”) (citing MPEP § 2001.06(a)) aff’d 275 F.3d 1347 (Fed.
Cir. 2001) (quoting MPEP § 2001.06(a)); see generally, Molins
PLC v. Textron, Inc., 48 F.3d 1172, 1180 (Fed. Cir. 1995)
(“While the MPEP does not have the force of law, it is entitled
to judicial notice as an official interpretation of statutes or
regulations as long as it is not in conflict therewith.”).
8

The Court also questions how a meaningful claim analysis
could possibly be done before the Court has construed the claims
of the Patents-in-Suit.
10

Next, TVnGO argues that LG does not identify “which
specific individuals it contends had specific intent to commit
fraud on the PTO.”

(Reply Brief, Dkt 26, p. 5)

While some

paragraphs of LG’s Thirteenth Affirmative Defense are
exceedingly vague 9, other allegations are sufficiently
particularized.

The pleading specifically identifies Mr. Klima

and Mr. Kavrukov and describes what they allegedly did, and
failed to do, during the prosecutions of the Patents-in-Suit.
For example, LG alleges that Mr. Klima untimely filed the noncompliant IDS in the ‘220 patent prosecution, and then failed to
act on the USPTO’s Notification of Non-Compliant IDS.
22-24)

(TAD ¶¶

Similarly, LG alleges that Mr. Kavrukov filed an

incomplete IDS in the ‘621 patent prosecution.

(Id. ¶ 28)

Accordingly, the Court holds that LG’s pleading with
respect to Mr. Klima and Mr. Kavrukov 10 is sufficiently
particularized.

9

See, e.g., TAD ¶ 15 (“one or more of the participants in
the prosecution of the applications that led to the Patents-inSuit failed to satisfy their duty of disclosure with respect to
the Patents-in-Suit.”); see also infra. n. 10.
10

In its Opposition Brief, LG argues that “[a]t the very
least, LGE alleges that Messrs. Klima and Kavrukov and/or Ms.
Hopkins (prosecuting attorneys) and Mr. Yaakov Merlin (named
inventor of the Patents-in-Suit) have committed fraud on the
Patent Office.” (Opposition Brief, Dkt 25, p. 9) The
Thirteenth Affirmative Defense, as currently pleaded, does not
allege with any specificity what Ms. Hopkins or the named
inventor did or did not do during the prosecutions of the
Patents-in-Suit. In the event that discovery reveals additional
relevant information as to these individuals’ participation in
11

C. Intent
Lastly, TVnGo argues that “[a]ny inference that someone at
TVnGO intentionally tried to deceive the PTO based on these
[alleged] facts would be unreasonable 11 because the references
were in fact disclosed.”

(Moving Brief, Dkt 23-1, p. 18; see

also Reply Brief, Dkt 26, p. 3)

Tellingly, however, TVnGO does

not address the details of allegedly when or how the references
were disclosed.

Yet, it is precisely these details that support

LG’s theory of its case.

For example, while LG does, indeed,

allege that the EP Publications were fully disclosed to the PTO
in a compliant IDS (TAD ¶ 38), the more salient alleged fact is
the timing of that disclosure.

LG alleges that the EP

Publications and their materiality were known to Mr. Klima and
Mr. Kavrukov as early as 2011 (Id. ¶ 35), and should have been
fully disclosed as prior art in the prosecutions of all five of
the Patents-in-Suit, but LG alleges that the EP Publications
were not disclosed until 2017, during the prosecution of the
last patent at issue, the ‘621 patent (Id. ¶ 38).

Thus, even if

the disclosure of the EP Publications in the ‘621 patent

the asserted inequitable conduct, LG may file, if appropriate, a
Motion to Amend.
11

“[A]n inference of deceptive intent must be reasonable
and drawn from a pleading’s allegations of underlying fact to
satisfy the Federal Rules of Civil Procedure’s heightened
pleading requirement.” Exergen, 575 F.3d at 1329 n.5.

12

prosecution would preclude a claim of inequitable conduct during
the prosecution of the ‘621 patent 12, it does not preclude claims
of inequitable conduct with regard to the other four Patents-inSuit.
TVnGO invites the Court to conclude, based solely on the
alleged fact that the EP Publications were properly disclosed
one out of five times, that no inference of intent to defraud
may logically be drawn as to any of the Patents-in-Suit.
According to TVnGO, if it had a specific intent to deceive, it
would have withheld the reference altogether, rather than
disclose it, which would only give “future challengers” a
“roadmap” of an invalidity argument.
p. 19)

(Moving Brief, Dkt 23-1,

While this is one possible inference to be drawn from

the alleged facts, it is not the only inference.

An equally

plausible inference is that an intentionally delayed disclosure
during the last patent prosecution is not inconsistent with a
specific intent to deceive in earlier prosecutions. 13

Thus, the

Court disagrees that the allegations concerning disclosure of

12

The Court does not rule on this issue at this time,
because, as explained next, LG has alleged sufficient facts to
support a claim of inequitable conduct during the prosecution of
the ‘621 patent based on the alleged inadequate disclosure of
the ‘575 Publication in the ‘621 patent prosecution.
13

For example, LG suggests that failing to disclose the EP
Publications during the ‘220 patent prosecution could have
benefitted TVnGO independent of that reference’s impact on the
‘621 patent. (See Opposition Brief, Dkt 25, p. 22)
13

the EP Publications during the ‘621 patent prosecution preclude
all inferences of specific intent to deceive in other earlier
related prosecutions.
Moreover, LG alleges that the ‘575 Publication was never
properly disclosed in any prosecution-- another detail TVnGO’s
“disclosure” argument ignores.

TVnGO, through Mr. Klima and Mr.

Kavrukov, should have disclosed the ‘575 Publication on five
separate occasions (i.e., during the prosecution of each Patentin-Suit) yet allegedly completely failed to disclose during the
second, third, and fourth opportunities to do so.
38)

(TAD ¶¶ 25-

During the first and fifth opportunities, LG alleges that

the ‘575 Publication was improperly disclosed (Id. ¶¶ 22, 28)
such that at no time during the prosecutions of any of the
Patents-in-Suit did the USPTO have before it all of the
information materially relevant to the patent prosecutions.
Accordingly, the Court holds that LG has pleaded sufficient
facts to support a reasonable inference of specific intent to
deceive during the prosecutions of all five Patents-in-Suit.
IV.
For the above-stated reasons, TVnGO’s motion will be
denied.

Dated:

An Order accompanies this Opinion.

May 23, 2019

__s/ Renée Marie Bumb____
Renée Marie Bumb, U.S.D.J.

14