Dairy Health Products et al v. IBA

Filing 73

MEMORANDUM DECISION AND ORDER denying 67 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Dale A. Kimball on 9/15/11 (alt)

______________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION

DAIRY HEALTH PRODUCTS, INC.,
Plaintiff,

MEMORANDUM DECISION
& ORDER

vs.
Case No. 1:07CV75DAK
IBA, INC.,
Judge Dale A. Kimball
Defendants.

This matter is before the court on Defendant IBA, Inc.’s Motion to Dismiss Plaintiff
Dairy Health Products, Inc.’s Amended Complaint under Rule 12(b)(1) of the Federal Rules of
Civil Procedure, Article III, Section 2 of the United States Constitution, and 28 U.S.C. §
1367(c)(3). The court held a hearing on the motion on September 15, 2011. At the hearing,
Plaintiff was represented by Mark A. Miller, and Defendant was represented by Grant R. Clayton
and Brett J. Davis. The court has carefully considered the pleadings, memoranda, and other
materials submitted by the parties, as well as the law and facts relating to the motions. Now
being fully advised, the court renders the following Memorandum Decision and Order.
BACKGROUND
This case involves a dispute between two competitors in the livestock powdered teat dip
market. As the owner of U.S. Patent No. 7,208,170 for “Powder Teat Dip Germicide, Fungicide
and Skin Conditioner,” (“the ‘170 patent”), IBA sent a letter to DHP accusing DHP of infringing

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the ‘170 patent. DHP filed a complaint in this court alleging claims for (1) a declaration that
DHP’s powdered teat dip product does not infringe the patent in suit; (2) a declaration that the
patent is invalid; (3) a declaration that the patent is unenforceable due to inequitable conduct; and
(4) tortious interference with economic relations.
DHP also filed a request for inter partes reexamination of the ‘170 Patent with the United
States Patent and Trademark Office (“PTO”). This court stayed the matter pending
reexamination. Following reexamination, the PTO cancelled all claims in the ‘170 Patent.
Accordingly, the parties filed an Attorney Planning Meeting Report in this action agreeing that
DHP’s claims for non-infringement and invalidity are now moot due to the cancellation of all the
claims in Defendant’s patent. DHP has also agreed not to pursue its tortious interference claim.
Accordingly, the only claim remaining is DHP’s claim for attorneys fees based on inequitable
conduct.
DISCUSSION
IBA moves to dismiss DHP’s Amended Complaint for lack of subject matter jurisdiction
under Rules 12(b)(1) of the Federal Rules of Civil Procedure. IBA argues that cancellation of the
‘170 Patent has rendered the claim of unenforceability moot because any declaration by the court
declaring the ‘170 Patent unenforceable would be legally meaningless and irrelevant. DHP,
however, argues that 35 U.S.C. § 285 provides a district court with independent jurisdiction over
a claim for attorneys’ fees even if circumstances may divest the court of jurisdiction over a
declaratory judgment action regarding patents. Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d
1229, 1242 (Fed. Cir. 2008).
District courts routinely retain jurisdiction over claims for attorney fees under § 285
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despite circumstances mooting the issues of infringement and invalidity of the patent. The
Federal Circuit has explained that an event “may eliminate the case or controversy pled in the
patent-related counterclaim and deprive the district court of Article III jurisdiction with respect to
the counterclaim; this type of event does not deprive the district court of jurisdiction to determine
the disposition of the request for attorney fees under 35 U.S.C. § 285.” Highway Equip. Co. v.
FECO, Ltd., 469 F.3d 1027, 1033 (Fed. Cir. 2006). The district court has jurisdiction to make
findings of inequitable conduct concerning the patent in suit and to determine whether to award
attorneys’ fees. See Monsanto, 514 F.3d at 1242.
While a declaratory judgment that the ‘170 Patent is unenforceable may be moot, DHP’s
request for attorneys’ fees based on inequitable conduct before the PTO is not. IBA’s only
argument at the hearing on this motion was that DHP could not meet the high standard required
to establish that this is an exceptional case entitling DHP to attorneys’ fees based on inequitable
conduct. This argument, however, does not relate to whether this court has jurisdiction over the
claim. Tellingly, IBA also does not make the argument that there is no set of facts under which
DHP could state a claim. It is clear to the court that it has jurisdiction based on § 285. Whether
DHP can present evidence sufficient to meet the standard for attorneys’ fees will be decided on
summary judgment or at a bench trial. Accordingly, IBA’s motion to dismiss is denied.
The parties’ current Scheduling Order contains a discovery deadline of December 16,
2011. Based on DHP’s representations at the hearing, this time frame for discovery should be
adequate. Summary judgment motions are then due by January 21, 2012. The court will leave
the current Scheduling Order in place in all respects except the setting of a seven-day jury trial to
begin July 9, 2012, which should be amended to be a three-day bench trial. If the parties believe
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that a change in deadlines and/or trial is necessary, they can submit a motion to the court.
CONCLUSION
For the reasons stated above, Defendant IBA’s Motion to Dismiss is DENIED.
DATED this 15th day of September, 2011.
BY THE COURT:

DALE A. KIMBALL
United States District Judge

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