Industrial Technology Research Institute v. LG Corporation et al
Filing
164
OPINION. Signed by Judge Jose L. Linares on 9/25/2012. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
INDUSTRIAL TECHNOLOGY RESEARCH
INSTITUTE,
Civil Action No. 12-929 (JLL)
Plaintiff,
OPINION
v.
LG CORPORATION, et al.,
Defendants.
LINARES, District Judge.
This matter comes before the Court by way of Plaintiff’s motion to dismiss Defendants’
Fourth Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike
Defendants’ Eleventh Affirmative Defense pursuant to Federal Rule of Civil Procedure 12(f)
[Docket entry No. 159]. The Court has considered the submissions made in support of and in
opposition to the instant motion. No oral argument was heard. Fed. R. Civ. P. 78. Based on the
reasons that follow, Plaintiff’s motion is denied.
BACKGROUND1
Plaintiff, Industrial Technology Research Institute (“ITRI”), commenced the instant
cause of action in November 2010 in the Eastern District of Texas. Plaintiff, a scientific research
institution based in Taiwan, alleges patent infringement claims against various LG entities. In
1
The Court accepts the following facts as true solely for purposes of the instant motion.
1
particular, Count One of Plaintiff’s Complaint alleges that Defendants infringe U.S. Patent No.
6,349,761, titled “Fin-Tube Heat Exchanger With Vortex Generator,” (hereinafter “the ‘761
patent”). The ‘761 Patent relates generally to air conditioners.
The case was transferred to this Court in February 2012. This Court’s jurisdiction is
premised on 28 U.S.C. §§ 1331 and 1338(a).
In January 2012, Defendants filed an Amended Answer, asserting an affirmative defense
and counterclaim based on inequitable conduct [Docket Entry No. 107]. Generally, the Eleventh
Affirmative Defense alleges that “despite acknowledging his duty of good faith and candor, Mr.
Wang withheld the Wang Article, a material reference, with the intent to deceive the U.S. Patent
and Trademark Office” and that Mr. Wang’s failure to disclose the Wang Article, combined with
his intent to deceive the U.S. Patent and Trademark Office, renders the ‘761 Patent
unenforceable. (Answer at ¶¶ 44-45). In particular, the Eleventh Affirmative Defense alleges the
following:
Chi-Chuan Wang, an inventor of the ‘761 Patent, authored and was aware of a
journal article, Technology Review – A Survey of Recent Patents of Fin-andTube Heat Exchangers (hereinafter “the Wang Article”) (Answer at ¶ 34).
Mr. Wang, being skilled in the design and operation of fin-and-tube heat
exchangers, would have recognized that the patents and heat exchanger structures
disclosed in the Wang Article would have been material to the patentability of
one or more claims of the ‘761 Patent and not cumulative of any other
information considered by the U.S. Patent and Trademark Office (“PTO”) during
the prosecution of the ‘761 Patent. (Id. at ¶ 41)
2
On November 1, 2011 and in response to an Office Action from the PTO, an
attorney, on behalf of Mr. Wang and the other inventors, amended claim 1 to
recite “each of the protuberance ribs having an arcuate contour in a plane normal
to the respective heat transfer tube, the plurality of arcuate protuberance ribs
together forming a circular pattern concentrically spaced from the respective heat
transfer tube.” The attorney also argued that the applied reference “fail[ed] to
disclose protuberance ribs having an arcuate contour in a plane normal to the
respective heat transfer tube, which plurality of protuberance ribs together form a
circular pattern.” However, the shape and layout of this structure of the claimed
invention were known in the art and were known to the Applicants, as shown in
the Wang Article and its exemplary teachings. (Id. at ¶42).
Mr. Wang did not disclose the Wang Article during the prosecution of the ‘761
Patent, even though he claimed the concept of showing protuberance ribs
together forming a circular pattern as in claim 1 was new and nonobvious. The
teachings of the Wang Article, either alone or in combination with other
reference of record, would render at least claims 1, 2, and 3 of the ‘761 Patent
obvious. (Id. at ¶ 43).
Defendants’ Fourth Counterclaim similarly seeks a declaration that the ‘761 Patent is
unenforceable due to Mr. Wang’s inequitable conduct. In particular, the Fourth Counterclaim
alleges that: (1) Mr. Wang and/or his representatives knew of the Wang Article and the Tanaka
Patent, both of which are material and not cumulative of the information considered by the PTO
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during the prosecution of the ‘761 Patent, and (2) Mr. Wang and/or his representatives failed to
disclose these material references to the PTO with the intent to deceive.
Thus, at issue in this motion is Defendants’ claim that the ‘761 Patent is unenforceable
due to inequitable conduct by the Plaintiff in the form of a material false representation or
omission before the United States Patent and Trademark Office (“PTO”). Plaintiff now argues
that all counterclaims and/or affirmative defenses based on such inequitable conduct should be
dismissed and/or stricken because the allegations upon which they are based fail to meet the
pleading standard of Federal Rule of Civil Procedure 9(b), as interpreted by the Federal Circuit
in Exergen Corp. v. Wal–Mart Stores, Inc., 575 F.3d 1312, 1328 (Fed. Cir. 2009).
LEGAL STANDARD
Rule 12(f) of the Federal Rules of Civil Procedure provides: “[t]he court may strike from
a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” Fed. R. Civ. P. 12(f). A motion to strike an affirmative defense pursuant to 12(f) is
governed by the same standards as a motion to dismiss pursuant to 12(b)(6). See In re
Gabapentin Patent Litig., 648 F. Supp. 2d 641, 647–48 (D.N.J. 2009) (“Because a motion [to
strike] challenges the legal sufficiency of the pleading, it is governed by the same standards as a
motion to dismiss . . . . An affirmative defense is insufficient as a matter of law if it cannot
succeed under any circumstances.”). In this district, motions to strike “are generally viewed with
disfavor and will generally be denied unless the allegations have no possible relation to the
controversy and may cause prejudice to one of the parties or if the allegations confuse the issue.”
Garlenger v. Verbeke, 223 F. Supp. 2d 596, 609 (D.N.J. 2002). In this regard, the Third Circuit
has cautioned that courts “should not grant a motion to strike a defense unless the insufficiency
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of the defense is ‘clearly apparent.’ ” Cipollone v. Liggett Group, Inc., 789 F.2d 181, 188 (3d
Cir. 1986).
For a complaint to survive dismissal, it “must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 129 S.Ct. 1937,
1949, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007)). “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id. In determining the sufficiency of a
complaint, the Court must accept all well-pleaded factual allegations in the complaint as true and
draw all reasonable inferences in favor of the non-moving party. See Phillips v. County of
Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). But, “the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 129 S.Ct.
at 1949. Thus, legal conclusions draped in the guise of factual allegations may not benefit from
the presumption of truth. Id. at 1940; In re Nice Sys., Ltd. Sec. Litig., 135 F. Supp. 2d 551, 565
(D.N.J. 2001). With this framework in mind, the Court turns now to Plaintiff’s motion.
ANALYSIS
Plaintiff now moves to dismiss Defendants’ Fourth Counterclaim and to strike
Defendants’ Eleventh Affirmative Defense on the basis that Defendants have “failed to show that
Mr. Wang had actual knowledge of any of the allegedly material information contained in either
reference” at the point in time when he could have disclosed it to the PTO (Pl. Br. at 2, 7).
According to Plaintiff, Defendants’ allegation that Mr. Chan “would have recognized” the
materiality of the two references that were not disclosed to the PTO is insufficient to show that
Mr. Wang actually knew of specific material information contained therein.
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According to
Plaintiff, “this lack of knowledge renders it impossible for the Court to reasonably infer that Mr.
Wang’s failure to disclose these references shows a specific intent to deceive the PTO.” (Id.).
Generally speaking, “a patent may be rendered unenforceable for inequitable conduct if
an applicant, with intent to mislead or deceive the examiner, fails to disclose material
information or submits materially false information to the PTO during prosecution.” Digital
Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). In this regard, the
party asserting inequitable conduct must ultimately “prove a threshold level of materiality and
intent by clear and convincing evidence.” Id. Although such a showing is clearly not required at
the pleading stage, the Federal Circuit has held that inequitable conduct is analogous to fraud,
which, under Federal Rule of Civil Procedure 9(b), must be pled with particularity. See Exergen,
575 F.3d at 1326. The Exergen court summarized the applicable pleading standard for
inequitable conduct as follows:
In sum, to plead the “circumstances” of inequitable conduct with
the requisite “particularity” under Rule 9(b), the pleading must
identify the specific who, what, when, where, and how of the
material misrepresentation or omission committed before the PTO.
Moreover, although “knowledge” and “intent” may be averred
generally, a pleading of inequitable conduct under Rule 9(b) must
include sufficient allegations of underlying facts from which a
court may reasonably infer that a specific individual (1) knew of
the withheld material information or of the falsity of the material
misrepresentation, and (2) withheld or misrepresented this
information with a specific intent to deceive the PTO.
Exergen, 575 F.3d at 1328–29.
The Court has carefully reviewed Defendants’ Answer and, based on the reasons that
follow, finds that Defendants have alleged sufficient facts from which the Court may “reasonably
infer” that a particular inventor, Mr. Wang, both knew of invalidating information that was
withheld from the PTO—the entirety of the Wang Article, including its discussion of the Tanaka
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Patent—and withheld such information with the intent to deceive the PTO. See generally
Delano Farms Co. v. California Table Grape Comm'n, 655 F.3d 1337, 1350 (Fed. Cir. 2011).
First, Defendants have alleged the “who, what, when, where, and how of the material
misrepresentation or omission committed before the PTO.” Exergen, 575 F.3d at 1328–29. In
particular, Defendants’ pleading alleges that: (1) the ‘761 Patent stated “[t]he design of the first
embodiment of the present invention is quite different from the traditional louver or slit fin,
because the traditional structure promotes the heat transfer efficiency by damaging the heat
boundary layer which causes a drawback of increasing the pressure drop significantly,” (2) on
November 1, 2011, an attorney acting on behalf of Mr. Wang amended claim 1 of the ‘761
Patent to recite “each of the protuberance ribs having an arcuate contour in a plane normal to the
respective heat transfer tube, the plurality of arcuate protuberance ribs together forming a
circular pattern concentrically spaced from the respective heat transfer tube,” (3) that said
attorney argued that the applied reference “fail[ed] to disclose protuberance ribs having an
arcuate contour in a plane normal to the respective heat transfer tube, which plurality of
protuberance ribs together form a circular pattern,” and (4) that the shape and layout of the
structure of the claimed invention were known in the art and were known to Mr. Wang, in
particular, by virtue of the fact that an article he had previously authored (the Wang Article)
contained a discussion of the Tanaka Patent which, according to Defendants’ interpretation,
included the limitations found missing from the cited prior art.
Based on these factual
allegations, the Court finds that Defendants have sufficiently pled the “circumstances” of
inequitable conduct with the requisite level of particularity. See Exergen, 575 F.3d at 1328–29.
Second, although the Court agrees that the specific theory underlying the intent to
deceive element could have been more fleshed out in Defendants’ pleading, the Court finds that
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Defendants have alleged sufficient facts from which a reasonable juror could infer that Mr.
Wang acted with the requisite state of mind. See Exergen, 575 F.3d at 1327.
As previously
stated, Defendants’ Eleventh Affirmative Defense alleges that that the shape and layout of the
structure of the claimed invention were known in the art and were known to Mr. Wang, in
particular, by virtue of the fact that an article he previously authored (the Wang Article)
contained a discussion of the Tanaka Patent which, according to Defendants’ interpretation,
included the limitations found missing from the cited prior art. (Answer, ¶¶ 55, 56).
The
Eleventh Affirmative Defense also alleges, by way of example that “the vortex generators
discussed in the background are the same prior art structures disclosed in the Wang Article as
vortex generators. While the Applicants made the [PTO] aware of these structures, they did not
disclose the known structures illustrated in the Wang Article having the shape and/or layouts that
the Applicants argued constitute an improvement to the prior art.” (Answer, ¶ 44). Defendants’
pleading goes on to allege that “Mr. Wang, being skilled in the design and operation of fin-andtube heat exchanges, would have recognized that the patents and heat exchanger structures
disclosed in the Wang Article would have been material to the patentability of one or more
claims of the ‘761 patent.” (Id., ¶ 54). Defendants’ brief in opposition to Plaintiff’s motion to
dismiss elaborates on the theory underlying the intent to deceive element by stating that Mr.
Wang’s selective disclosure of structures discussed in his own article (the Wang Article), while
withholding the entirety of the article itself (which included a discussion of the Tanaka Patent)
could lead a reasonable juror to infer that Wang acted with the requisite state of mind. Having
carefully considered this argument, in conjunction with the factual allegations set forth in
Defendants’ pleading, this Court agrees. See Exergen, 575 F.3d at 1327.
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Lastly, the Court finds that the arguments raised by Plaintiff concerning the degree of the
materiality of the Wang Article (and the contents thereof), the extent of Mr. Wang’s knowledge
of the materiality of same, as well as the alleged temporal flaw in the substance of Defendants’
overarching theory of inequitable conduct,2 are more appropriately considered on a more
developed record.
See, e.g., Mars Inc. v. JCM American Corp., No. 05-3165, 2006 WL
1704469, at *8-9 (D.N.J. June 14, 2006) (denying plaintiff’s motion to strike defendant’s
inequitable conduct defense, noting that defendant’s arguments “would be more appropriately
raised in summary judgment motions or at trial,” and reiterating that it will ultimately be
“defendants’ burden to establish by clear and convincing evidence the materiality and intent
elements of a successful inequitable conduct claim.”).
CONCLUSION
In light of the foregoing, Plaintiff’s motion to dismiss Defendants’ Fourth Counterclaim
and to strike their Eleventh Affirmative Defense is denied.
An appropriate Order accompanies this Opinion.
DATED: September 25, 2012
s/ Jose L. Linares
Jose L. Linares
United States District Judge
2
In particular, Plaintiff argues that: (1) according to Defendants, the Wang Article and Tanaka
Patent were not material until after claim 1 was amended—on November 2, 2001, (2) Defendants
have failed to allege that Mr. Wang knew of this amendment to claim 1, and (3) absent this
knowledge, Mr. Wang would not have recognized that the Wang Article or the Tanka Patent
were material to the patentability of claim 1 of the ‘761 Patent. (Pl. Br. at 7).
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