SecurityProfiling, LLC v. Trend Micro America, Inc. et al

Filing 61

ORDER ADOPTING REPORT AND RECOMMENDATIONS for 52 Report and Recommendations re 22 Motion to Dismiss, Motion to Strike filed by SecurityProfiling, LLC.Plaintiff's Motion to Dismiss 22 is DENIED as to Defendants' inequitable conduct counterclaim, GRANTED as to Defendants' non-infringement and invalidity counterclaims, and GRANTED as to Defendants' first, sixth, eighth, ninth, tenth, and eleventh affirmative defenses. All objections are OVERRULED. Defendants are GRANTED leave to file an amended pleading within 14 days of the issuance of this Order. If Defendants fail to amend their pleading within that time frame, the specified counterclaims and affirmative defenses will be STRICKEN. Signed by Judge Robert W. Schroeder, III on 5/11/17. (mjc, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
SECURITYPROFILING, LLC,
Plaintiff,
v.
TREND MICRO AMERICA, INC.,
TREND MICRO INCORPORATED,
Defendants.

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CIVIL ACTION NO. 6:16-CV-01165RWS-JDL

ORDER ADOPTING REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
The above-entitled and numbered civil action was referred to United States Magistrate
Judge John D. Love pursuant to 28 U.S.C. § 636. The Report and Recommendation of the
Magistrate Judge, which contains his recommendation for the disposition of such action, has been
presented for consideration (Docket No. 52) (“R&R”). The Report recommended granting-in-part
and denying-in-part Plaintiff’s Motion to Dismiss and Motion to Strike Defendants’ counterclaims
and affirmative defenses respectively. R&R at 1. Defendant filed objections to the Report (Docket
No. 55) (“Obj.”). Plaintiff filed a response (Docket No. 57) (“Resp.”). Having made a de novo
review of Defendant’s written objections, the Court concludes that the findings and conclusions of
the Magistrate Judge are correct and the objections are without merit. 28 U.S.C. § 636 (b)(1).
Defendants raise three objections: (1) the Report’s recommendation to dismiss Defendants’
counterclaims for declaratory judgment of invalidity of the patents-in-suit was in error; (2) the
Report’s recommendation to strike Defendants’ eleventh affirmative defense (unclean hands,
waiver, and estoppel) was in error; and (3) the Report’s recommendation to strike Defendants’ first
affirmative defense of failure to state a claim was in error. For the reasons below, Defendants’

Objection is OVERRULED, and Plaintiff’s Motion to Dismiss and Motion to Strike is
GRANTED-IN-PART and DENIED-IN-PART.
Ground 1: Defendants’ Counterclaims for Declaratory Judgment of Invalidity
Defendants first object to the Magistrate Judge’s determination that Defendants’ “invalidity
counterclaims do not meet the particularized pleading requirements set forth in Iqbal and Twombly
to sufficiently state a claim for relief.” Obj. at 2. Defendants argue that this determination cannot
be squared with Defendants’ inequitable conduct allegations, which the Report concluded was
sufficiently pled and thus denied Plaintiff’s motion as to Defendants’ inequitable conduct
counterclaim and affirmative defense. Id. Defendants contend that the allegations as to inequitable
conduct included “detailed facts concerning invalidity—i.e., the prior art underlying inequitable
conduct.” Id. Plaintiff responds that Defendants arguments do not reflect their actual pleadings.
Resp. at 3. Plaintiff further argue that Defendants cite no authority to support their argument
regarding any alleged commonality of inequitable conduct and invalidity defenses. Id.
Defendants’ argument misses the mark. To the extent Defendants argue that the factual
allegations concerning the prior art for inequitable conduct also support a plausible counterclaim
for invalidity, Defendants did not include any allegations regarding such prior art in support of
their counterclaims for invalidity. The Court looks to the relevant portion of the pleading asserting
a counterclaim for invalidity to determine whether Defendants have alleged sufficient facts to
support a plausible claim, not the entire pleading. As the Report correctly stated, Defendants failed
to state a plausible counterclaim for invalidity because Defendants “merely list[] the statutory
provisions without providing any facts supporting [their] counterclaim for invalidity.” R&R at 10.
Citing as an example for one of the patents-in-suit, the Report noted that Defendants simply state
“one or more of the claims of the ’699 Patent are invalid for failure to meet the requirements of

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Title 35, United States Code, including but not limited to Sections 101, 102, 103, 112, and/or 116
. . . .” Based on these skeletal allegations, the Report concluded that those counterclaims are
“conclusory and unsupported by any factual allegations.” Id. Importantly, having asserted
invalidity based on a cursory listing of different sections of the patent statute, Defendants made no
attempt to explain the relation to or incorporate their inequitable-conduct pleadings to any of the
listed statutory defenses. The Court finds no error in the Report’s conclusion that Defendants’
“invalidity counterclaims do not meet the particularized pleading requirements set forth in Iqbal
and Twombly to sufficiently state a claim for relief.” Id. Therefore, the Court agrees with the
Magistrate Judge that Plaintiff’s motion to dismiss Defendants’ counterclaims of invalidity should
be granted.
Ground 2: Defendants’ Eleventh Affirmative Defense
Defendants next object to the Report’s conclusion that Defendants’ “Answer is devoid of
any factual allegations to support [their] . . . eleventh (waiver, estoppel, claim preclusion, laches,
unclean hands) affirmative defense.” Obj. at 4. Defendants argue that for the same reasons stated
above for invalidity counterclaims, Defendants have “pled an abundance of detailed facts
underlying [their] inequitable conduct defense” that are equally relevant to their equitable defenses
of unclean hands, waiver, and estoppel. Id. Plaintiff responds that this defense does not mention
inequitable conduct and that Defendants have not explained how Plaintiff’s alleged inequitable
conduct pleading can support the defenses listed under the eleventh affirmative defense. Resp. at
4.
Defendants’ objection once again misses the mark. First, Defendants cite no legal authority
to support their arguments. Moreover, even though inequitable conduct doctrine “evolved” from
the doctrine of unclean hands, it also “diverged” from it by embracing a broader scope and a

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stronger remedy. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1287 (Fed. Cir.
2011). Second, to the extent Defendants argue that the detailed factual allegations underlying their
inequitable-conduct defense also support their eleventh affirmative defense, Defendants did not
include any such allegations to support their eleventh affirmative defense.
Reciting the eleventh affirmative defense in its entirety, which is skeletal, the Report
correctly stated that Defendants’ “Answer is devoid of any factual allegations to support [their]
. . . eleventh (waiver, estoppel, claim preclusion, laches, unclean hands) affirmative defense.”
R&R at 14–15. The Report further stated that Defendants “merely name[] the affirmative defenses
without providing any additional detail to give SecurityProfiling fair notice of the nature of the
defenses.” Id. at 15. Accordingly, this Court agrees with the Magistrate Judge and finds that the
Report correctly granted Plaintiff’s motion to strike Defendants’ eleventh affirmative defense.
Ground 3: Defendants’ First Affirmative Defense
Finally, Defendants object to the Report’s striking of Defendants’ first affirmative defense
of failure to state a claim. Obj. at 4. Defendants agree with the Report’s statement that failure to
state a claim may be raised in any pleading allowed under Rule 7(a). Id. Defendants further state
that failure to state a claim may be raised in a motion for judgment on the pleadings under Rule
12(c) or even at trial. Id. (citing Fed. R. Civ. P. 12(h)(2)(B)). Defendants submit that their “defense
of failure to state a claim is adequately pled and provides sufficient notice,” and object on such
grounds, but otherwise provide no arguments to support their position. Id. Defendants, however,
request further guidance as to: (1) whether this defense should be pled as an affirmative defense,
and, if not, in what form it should be raised in a responsive pleading, and (2) what sort of supporting
allegations are necessary to properly plead this defense. Plaintiff responds that Defendants have
failed to plead any facts or law to support the alleged failure to state a claim. Resp. at 5.

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As Defendants note, the Report correctly stated that the defense of failure to state a claim
upon which relief can be granted is not a proper affirmative defense. Id. Notably, Defendants
accurately quote from the Report that they are not precluded from raising this defense in their
amended answer and that they could properly plead this defense should they wish to pursue that
course of action. Id. at 5. The Federal Rules are sufficiently clear that this defense could be raised:
(i) in any pleading allowed or ordered under Rule 7(a); (ii) by a motion under Rule 12(c); or (iii)
at trial. Fed. R. Civ. P. 12(h)(2). In sum, the Court agrees with the Report’s conclusion and finds
no error in the Magistrate Judge’s recommendation to grant Plaintiff’s motion to strike
Defendants’ first affirmative defense.
CONCLUSION
Having conducted a de novo review of the Magistrate Judge’s recommended disposition,
the Court ADOPTS the Report and Recommendation of the Magistrate Judge as the Order of this
Court. Plaintiff’s Motion to Dismiss (Docket No. 22) is DENIED as to Defendants’ inequitable
conduct counterclaim, is GRANTED as to Defendants’ non-infringement and invalidity
counterclaims, and is GRANTED as to Defendants’ first, sixth, eighth, ninth, tenth, and eleventh
affirmative defenses. All objections are OVERRULED.
Defendants are GRANTED leave to file an amended pleading to cure the defects to support
their counterclaims for non-infringement and invalidity and their first, sixth, ninth, tenth, and
eleventh affirmative defense within fourteen (14) days of the issuance of this Order. If, however,
with fourteen (14) days of issuance of this Order, Defendants fail to amend their pleading, the
aforementioned counterclaims and affirmative defenses will be STRICKEN.

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SIGNED this 11th day of May, 2017.

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ROBERT W. SCHROEDER III
UNITED STATES DISTRICT JUDGE

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