STC.UNM v. Intel Corporation

Filing 208

MEMORANDUM OPINION AND ORDER by District Judge Robert C. Brack DENYING 169 MOTION to Strike 162 Answer to Counterclaim, Answer to Complaint, - Plaintiff's Motion to Strike Intel's Affirmative Defense Nos. 1, 3, 6, 9 & 10 and to Dismiss Intel's Second Counterclaim (jn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
STC.UNM,
Plaintiff,
vs.

No. 10-cv-1077 RB/WDS

INTEL CORPORATION,
Defendant.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff STC.UNM’s (“STC’s”) Motion to Strike
Intel’s Affirmative Defense Nos. 1, 3, 6, 9 & 10 and to Dismiss Intel’s Second Counterclaim.
(Doc. 169, filed January 4, 2012). Jurisdiction arises under 28 U.S.C. § 1338. Having
considered the submissions and arguments of counsel, relevant law, and being otherwise fully
advised, the Court denies Plaintiff’s Motion.
I.

Background
On November 15, 2010, STC filed a Complaint charging Intel with infringement of

United States Patent No. 6,042,998 (“the ’998 patent”), entitled “Method and Apparatus for
Extending Spatial Frequencies in Photolithography Images.” (Doc. 113 at 4, 10). Intel answered
and filed counterclaims for non-infringement, invalidity, and unenforceability on January 10,
2011. (Doc. 26). On January 31, 2011, STC moved to dismiss Intel’s counterclaim for
unenforceability (doc. 28), but did not move to strike any of Intel’s affirmative defenses or to
dismiss Intel’s counterclaim for invalidity. On February 14, 2011, Intel amended the challenged
counterclaim as of right and re-filed its Answer and remaining counterclaims for noninfringement and invalidity without any additional changes. On February 28, 2011, STC again

moved to dismiss Intel’s amended counterclaim for unenforceability and to strike Intel’s
affirmative defense for unenforceability. (Doc. 45). STC did not move to strike any other
affirmative defenses or counterclaims. The same day, STC answered Intel’s non-infringement
and invalidity counterclaims. (Doc. 44). On September 26, 2011, this Court issued an order
adopting U.S. Magistrate Judge W. Daniel Schneider’s report and recommendations and denying
STC’s motion. (Doc. 144).
On December 7, 2011, Intel filed its First Amended Answer and Second Amended
Counterclaims to STC’s Complaint. (Doc. 162). On January 18, 2012, STC filed the instant
Motion to Strike Intel’s Affirmative Defense nos. 1, 3, 6, 9, and 10, and to Dismiss Intel’s
Second Counterclaim. (Doc. 169).
III.

Discussion
A.

Motion to Strike Affirmative Defenses

Despite captioning its motion as moving to strike Intel’s affirmative defense nos. 1, 3, 6,
9, and 10, STC’s motion and requested relief address only Intel’s third affirmative defense. The
Court will therefore limit its discussion to that defense and denies Plaintiff’s Motion to Strike
Affirmative Defense Nos. 1, 6, 9 & 10.
Intel’s third affirmative defense asserts that “[t]he ’998 Patent is invalid by reason of
having been issued in violation of U.S. patent laws, including but not limited to 35 U.S.C. §§
101, 102, 103, 111, 112, 115, or 256, or judicially created doctrines of invalidity, and the Rules
and Regulations of the United States Patent and Trademark Office (“PTO”) relating thereto.”
(Doc. 162 at 2). STC claims that this affirmative defense violates FED. R. CIV. P. 8 because it
provides no notice as to what Intel truly intends to assert in this matter. It moves to strike the

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affirmative defense pursuant to FED. R. CIV. P. 12(f), which permits courts to strike from a
pleading an “insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” FED. R. CIV. P. 12(f).
The Court denies STC’s motion to strike as untimely under FED. R. PROC. 12(g)(2). With
certain exceptions, Rule 12(g)(2) prevents a party from moving under Rule 12 to assert a defense
or objection that was available to the party but omitted from an earlier Rule 12 motion. STC has
previously filed two Rule 12 motions to dismiss; the first was rendered moot by Intel’s re-filing
of its initial Complaint as of right, and the second was denied by this court on September 26,
2011. (Doc. 144). STC’s second motion also sought to strike Intel’s affirmative defense for
unenforceability pursuant to Rule 12(f), which this Court denied. Neither of STC’s motions
raised any objection to Intel’s third affirmative defense for invalidity. This defense was included
verbatim in both of Intel’s previous two Answers. Thus, STC had the opportunity to move to
strike the defense in its prior Rule 12 motions and its failure to do so precludes it from bringing
the motion at this point in the proceedings. Although the Court has discretion under Rule 12(f)
to strike affirmative defenses on its own initiative, even if prompted by an untimely motion,
Williams v. Jader Fuel Co., Inc., 944 F.2d 1388, 1399 (7th Cir. 1991) (collecting cases), it
declines to exercise this discretion and finds STC’s motion barred by Rule 12(g)(2).
B.

Motion to Dismiss Second Counterclaim

Intel’s Second Counterclaim seeks a declaration that the ’998 patent “is invalid for failure
to comply with the requirements of patentability set forth in 35 U.S.C. §§ 101 et. seq.” (Doc.
162 at 12). STC contends that this counterclaim, which fails to identify any specific provision of
U.S. patent law as a basis for the asserted invalidity, provides no notice as to what Intel is

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actually claiming. In response, Intel first argues that the same Rule 12(g)(2) procedural bar
precluding STC’s Motion to Strike also bars STC’s Motion to Dismiss Intel’s Second
Counterclaim. The Court addresses this argument separately, however, because application of
Rule 12(g)(2) differs between Rule 12(b)(6) and Rule 12(f) motions. While Rule 12(g) generally
requires parties to consolidate certain dismissal actions, including Rule 12(f) motions, as
discussed above, it also carves out an exception for motions listed in Rules 12(h)(2) and (3).
Rule 12(h)(2) provides that motions for failure to state a claim upon which relief can be granted,
to join a person required by Rule 19(b), or to state a legal defense to a claim may be raised: (A)
in any pleading allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) at
trial. Thus, Rule 12(h)(2) specifically preserves a litigant’s right to file a motion to dismiss for
failure to state a claim and allows for a post-answer motion for failure to state a claim under Rule
12(c). FED. R. CIV. P. 12(h)(2)(B); see also Ennenga v. Starns, --- F.3d ----, 2012 WL 1292768
(7th Cir. Apr. 17, 2011) (“a litigant need not consolidate all failure-to-state-a-claim arguments in
a single dismissal motion.”); Nationwide Bi-Weekly Admin., Inc. v. Belo Corp., 512 F.3d 137,
141 (5th Cir. 2007) (“. . . Rule 12(h)(2) explicitly excepts from the consolidation requirement
motions based on the defense of failure to state a claim upon which relief can be granted.”)
Although STC’s motion is styled as a Rule 12(b)(6) motion to dismiss, rather than a Rule
12(c) motion for judgment on the pleadings, the Tenth Circuit has specifically upheld district
courts’ treatment of Rule 12(b)(6) motions as Rule 12(c) motions for Rule 12(g) purposes. See
Lipari v. U.S. Bancorp NA, 345 F. App’x 315, 316 (10th Cir. 2009) (“. . . Rule 12(g)(2)
specifically provides that a party may file a motion for failure to state a claim under Rule 12(c),
and the district court permissibly treated the defendants’ second Rule 12(b)(6) motion as though

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it had been styled under Rule 12(c).”). Courts apply the same standard to 12(c) motions as they
would to motions brought under 12(b)(6). Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 n.2
(10th Cir. 2002).
Motions to dismiss under Rule 12(b)(6) test the sufficiency of a complaint and should be
granted when a cause of action fails to state a claim upon which relief can be granted. FED. R.
CIV. P. 12(b)(6). STC challenges the sufficiency of Intel’s counterclaim as failing to provide the
notice required by FED. R. CIV. P. 8(a)(2), which requires “a short and plain statement of the
claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). “This standard . . .
is intended to ‘give the defendant fair notice of what the plaintiff’s claim is and the grounds upon
which it rests.’ ” Barfield v. Commerce Bank, N.A., 484 F.3d 1276, 1281 (10th Cir. 2007)
(quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). STC does not
specifically allege a lack of facts within the Amended Answer and counterclaim, but rather
contends that the claim itself is too broad to afford STC fair notice of which statutory provisions
form the bases of Intel’s invalidity charge.
Intel asserts that its counterclaim provides more than sufficient notice of its invalidity
theories. First, it contends that despite the seemingly broad language of the counterclaim itself,
the claim incorporates all “foregoing admissions, denials, and allegations,” and that this
foregoing material provides multiple statutory bases for patent ’998’s invalidity. Second, Intel
argues that it has provided STC with extensive invalidity contention interrogatory responses,
identified at least 183 prior art references, and supplied STC with 119 pages of claim charts
explaining why the ’998 patent is invalid. Intel asserts these disclosures provide STC with clear
notice regarding the foundation of its claim.

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Case law is divided on the level of specificity necessary to render counterclaims
sufficient for Rule 8 purposes in the patent context. As noted by Intel in its Response, numerous
courts have held invalidity claims sufficient even where they offered little or nothing more than a
brief listing of statutory provisions under which a patent could be invalidated. (Doc. 175 at 10).
Several of these cases reasoned that it would be “illogical and inequitable” to require
counterclaimants to provide detailed factual allegations when plaintiffs are permitted to plead
only minimal allegations in their patent infringement complaints. See, e.g., Graphic Packaging
Intern., Inc. v. C.W. Zumbiel Co., 2011 WL 5829674 at *4 (N.D. Ga. Aug. 1, 2011) (“Form 18
requires little more than a conclusory statement alleging that the defendant infringed the
claimant’s patent. . . . Nevertheless, the Federal Circuit Court of Appeals held that the form
complaint for patent infringement remains, post-Twombly, sufficient to meet Rule 8’s pleading
requirements.”)
While the Court finds the reasoning of these cases persuasive, it notes that all but one of
them rely in part on their respective districts’ local patent rules requiring invalidity claimants to
file separate invalidity contentions after filing their claims. See, e.g., Graphic Packaging Int’l,
Inc., 2011 WL 5829674 at *4 (“Even if the Court did not find that the statutory pleadings alone
were sufficient to state invalidity claims and affirmative defenses, the Patent Local Rules operate
to make further factual pleading unnecessary.”); Microsoft Corp. v. Phoenix Solutions, Inc., 741
F. Supp. 2d 1156, 1159 (C.D. Cal. 2010) (“In addition, because the Court requires that invalidity
contentions be served promptly after a counterclaim of invalidity is advanced, invalidity claims
are not subject to the heightened pleading standards of Twombly and Iqbal.”); Pfizer Inc. v.
Apotex Inc. 726 F. Supp. 2d 921, 938 (N.D. Ill. June 30, 2010) (“Moreover, dismissal of

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Apotex’s counterclaims for failure to satisfy Rule 8(a) would undermine the Local Patent Rules,
which require more detailed disclosures at a later stage. . . .”); Elan Pharma. Int’l Ltd. v. Lupin
Ltd., 2010 U.S. Dist. LEXIS 32306 at *9-10 (D.N.J. Mar. 31, 2010) (“Local Patent Rule 3.3 also
requires that 45 days after service of the Disclosure of Asserted Claims and Infringement
Contentions, each party opposing a claim of patent infringement, shall serve on all parties its
‘Invalidity Contentions’ . . . .”); and Teirstein v. AGA Medical Corp., 2009 WL 704138, at *5
(E.D. Tex. Mar. 16, 2009) (“Furthermore, such a requirement would undermine the purpose of
the Court’s Local Patent Rules. . . . During the early stages of the litigation, the Local Patent
Rules require parties to serve Invalidity Contentions, which detail anticipating and obviating
prior art; disclose grounds for indefiniteness; and include an claim chart regarding invalidity.”)
In contrast to these cases, the District of New Mexico has no local patent rules. Thus, the Court
cannot rely on separate, forthcoming “Invalidity Contentions” to provide additional clarity as to
the bases of Intel’s invalidity claim.
Furthermore, one of the cases cited by Intel actually undermines its position. In Graphic
Packaging International, the challenged counterclaim alleged that the patents-in-suit were
invalid “for failure to comply with the conditions and requirements for patentability specified in
Title 35 of the United States Code, including, but not limited to Sections ... 102, 103, and/or
112.” 2011 WL 5829674 at *3. The court held that while identification of sections 102, 103,
and/or 112 provided sufficient notice, “the same [could not] be said . . . of any other invalidity
counterclaim . . . that would fall outside the scope of section 102, 103, or 112.” Thus, the court
struck the language “including, but not limited to” from the counterclaim. Id. at *4.
Here, Intel failed to identify any specific sections of the Patent Statute in the invalidity

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claim itself, instead alleging invalidity for failure to comply with every section of the Patent
Statute. This language is exceedingly broad. Intel’s identification of specific statutory
provisions elsewhere in its First Amended Answer, while providing some focus, does not operate
to limit its potential invalidity claims. It would be neither fair nor expedient for Intel, after the
time for discovery had passed, to seek a declaration of invalidity based on a provision of U.S.
patent law it had never given any indication it might pursue.
Given that Intel’s First Amended Answer does identify certain statutory bases for
invalidity and pleads facts in support of at least one invalidity charge, the Court finds that
counterclaim provides notice sufficient to satisfy the requirements of Rule 8(a). It makes this
finding, however, on the assumption that the statutory bases for Intel’s invalidity counterclaim
are those identified in its First Amended Answer and in its response to STC’s interrogatory on
validity. If this is not the case, Intel is required to provide STC with a Bill of Particulars within
10 days of the issuance of this Order identifying the bases of patent ’998’s alleged invalidity.
THEREFORE,
IT IS ORDERED that STC.UNM’s Motion to Strike Intel’s Affirmative Defense Nos. 1,
3, 6, 9 & 10 and to Dismiss Intel’s Second Counterclaim (doc. 169) is DENIED.
IT IS FURTHER ORDERED that Intel Corporation provide STC with a Bill of
Particulars within 10 days of the issuance of this Order detailing the bases of its invalidity
counterclaim if those bases were not previously identified in its First Amended Answer or
response to STC’s interrogatory on validity.

ROBERT C. BRACK
UNITED STATES DISTRICT JUDGE

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