Fred Hutchinson Cancer Research Center et al v. Biopet Vet Lab, Inc., et al
Filing
107
MEMORANDUM OPINION AND ORDER denying defendants' motion for leave to amend their amended answers and counterclaims; Plaintiffs' Motion to Strike Defendants' Affirmative Defenses of Inequitable Conduct and Fraud, pursuant to Federal Rul es of Civil Procedure 12(f) is GRANTED. Plaintiffs' Motion to Dismiss Counts III and VI of BioPet's Amended Counterclaims and Counts III and V of PetSafe's Amended Counterclaims is GRANTED. Signed by District Judge Raymond A. Jackson and filed on 6/27/11. (jcow, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
FRED HUTCHINSON CANCER
RESEARCH CENTER; ARGUS
GENETICS, LLC; AND MARS, INC.,
Plaintiffs,
CIVIL ACTION NO. 2:10cv616
v.
BIOPET VET LAB, INC.; AND RADIO
SYSTEMS CORPORATION D/B/A
PETSAFE,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiffs', Fred Hutchinson Cancer Research Center ("FHCRC"), Argus
Genetics, LLC ("Argus"), and Mars, Inc. ("Mars"), (collectively, "Plaintiffs"), Motion to Dismiss
Counts III and VI of Defendant BioPet Vet Lab, Inc.'s ("BioPet") Amended Counterclaim and
Counts III and V of Defendant Radio System Corporation's ("PetSafe") Amended Counterclaim,
pursuant to Federal Rule of Civil Procedure 12(b)(6). Also before the Court is Plaintiffs' Motion
to Strike Defendants' affirmative defenses of fraud and inequitable conduct, pursuant to Federal Rule
of Civil Procedure 12(f). The Parties have fully briefed this matter and it is now ripe for judicial
determination. For the reasons stated herein, Plaintiffs' Motions are GRANTED.
I. FACTUAL AND PROCEDURAL HISTORY
On December 17, 2010, Plaintiffs filed a Complaint in this Court against BioPet Vet Lab,
Inc., alleging that Defendant had infringed and was currently infringing "one or more of the
1
claims of the '863 patent by using, selling and offering to sell the dog breed identification
services associated with its DNA Breed Identification Kit product." Compl. If 14. On January
31, 2011, upon learning that another company planned to market BioPet's product at an
upcoming veterinary conference, Plaintiff filed an Amended Complaint naming Radio Systems
Corp. d/b/a/ PetSafe as a co-defendant in the case. Am. Compl. fflf 5, 18. On February 9,2011,
BioPet filed an Answer and Counterclaim alleging that FHCRC submitted false oaths that the
United States Patent Office relied on in issuing the '863 patent and requesting declaratory
judgments on the grounds of invaldity, non-infringement, and unenforceability, among other
claims.
On February 25, 2011, Plaintiffs filed a Motion to Dismiss Defendants' Counterclaims
III, V, and VI (Dkt. No. 50) and to Strike Affirmative Defenses of Fraud and Inequitable Conduct
(Dkt. No. 52). After responding to the motion on February 28, 1011, Defendants filed an
Amended Answer to the First Amended Complaint and an Amended Courterclaim against
Plaintiffs on March 10,2011. On March 28,2011, Plaintiffs then withdrew the Motion to
Dismiss and Motion to Strike and filed a Motion to Dismiss Amended Counterclaims (Dkt. No.
85) as well as a Motion to Strike Amended Answer to Complaint and Counterclaim (Dkt. No.
87) and memoranda in support of both motions. Defendants filed an Opposition to the Motion to
Dismiss Amended Counterclaims and an Opposition to the Motion to Strike Amended Answer to
Complaint and Counterclaim on May 11,2011. Plaintiffs filed a reply to both opposition filings
on May 18,2011 and requested a hearing on both motions. Accordingly, this matter is now ripe
for judicial determination.
II. LEGAL STANDARD
A.
Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of actions that fail to
state a claim upon which relief can be granted. For purposes of a Rule 12(b)(6) motion, courts
may only rely upon the complaint's allegations and those documents attached as exhibits or
incorporated by reference. See Simons v. Montgomery Cnty. Police Officers, 762 F.2d 30,31
(4th Cir. 1985). Courts will favorably construe the allegations of the complainant and assume
that the facts alleged in the complaint are true. See Erickson v. Pardus, 551 U.S. 89, 94 (2007).
However, a court "need not accept the legal conclusions drawn from the facts," nor "accept as
true unwarranted inferences, unreasonable conclusions, or arguments." Eastern Shore Mkts.,
Inc., v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000).
A complaint need not
contain "detailed factual allegations" in order to survive a motion to dismiss, but the complaint
must incorporate "enough facts to state a belief that is plausible on its face." See Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
2008). This plausibility standard does not equate to a probability requirement, but it entails more
than a mere possibility that a defendant has acted unlawfully. Ashcroft v. lqbal, 129 S. Ct. 1937,
1949-50 (2009). Accordingly, the plausibility standard requires a plaintiff to articulate facts that,
when accepted as true, demonstrate that the plaintiff has stated a claim that makes it plausible he
is entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting lqbal, 129
S. Ct. at 1949, and Twombly, 550 U.S. at 557).
B.
Motion to Strike Pursuant to Fed. R. Civ. P. 12(f)
Federal Rule of Civil Procedure 12(f) allows a district court, acting either on its own or
on motion made by a party, to "strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter." Whether to grant a motion to strike under Rule
12(f) is within the sound discretion of the district court. See GTSICorp. v. Wild/lower Int'l, Inc.,
No. l:09CV123, 2009 WL 2160451, at *4 (E.D. Va. July 17, 2009). However, motions under
Rule 12(f) are generally disfavored "because striking a portion of a pleading is a drastic remedy
and because it is often sought by the movant simply as a dilatory tactic." Waste Mgmt. Holdings,
Inc. v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001) (citing 5A Charles Alan Wright & Arthur R.
Miller, Federal Practice & Procedure § 1380 (2d ed.1990)). Notwithstanding, "a defense that
might confuse the issues in the case and would not, under the facts alleged, constitute a valid
defense to the action can and should be deleted." Id.
III. DISCUSSION
A.
Motion to Dismiss Counts III and VI of BioPet's Amended Counterclaim
In BioPet's Amended Answer and Counterclaims to Plaintiffs' First Amended Complaint,
BioPet alleges that the '863 patent is unenforceable based on fraud, inequitable conduct, and/or
violation of the duty of disclosure. BioPet's Am. Answer to Pis.' First Am. Compl. ^ 41. In
Count III, BioPet claims inequitable conduct on the grounds that that the applicants of the '863
patent, particularly patent inventors Elaine Ostrander and Leonid Kruglak, were aware of prior
art publications that anticipated the patent and supported a finding of obviousness when they
signed the oath for the patent and/or during the time where they had a duty to disclose any
changes under the oath. Id. ffl| 14,24,29; see 37 C.F.R. § 1.56(a) ("each individual associated
with the filing and prosecution of a patent application has a duty of candor and good faith in
dealing with the [U.S.P.T.O.], which includes a duty to disclose to the [U.S.P.T.O.] all
information known to that individual to be material to patentability.").
Plaintiffs assert that BioPet failed to sufficiently plead inequitable conduct as to the '863
patent under Rule 9(b) of the Federal Rules of Civil Procedure. Specifically, they assert that
BioPet failed to sufficiently plead the following: that material prior art was withheld; sufficient
knowledge of the allegedly material prior art; and that such alleged material prior art was
withheld with an intent to deceive the Patent and Trademark Office (hereinafter "PTO"). A
district court evaluating the sufficiency of a pleading alleging inequitable conduct shall apply the
law of the United States Court of Appeals for the Federal Circuit ("Federal Circuit"), rather than
the law of the regional circuit court. Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312,
1326 (Fed. Cir. 2009). Because a claim of inequitable conduct is akin to a claim of fraud, all
claims of inequitable conduct must meet the particularly requirements of Federal Rule of Civil
Procedure 9(b). See Fed. R. Civ. P. 9(b) ("In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake."); Ferguson Beauregard/Logic
Controls, Div. of Dover Res., Inc. v. MegaSys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003)
("[Unequitable conduct, while a broader concept than fraud, must be pled with particularity.").
Under Rule 9(b), inequitable conduct is pleaded with the requisite "particularity" only when the
pleading identifies "the specific who, what, when, where, and how of the material
misrepresentation or omission committed before the PTO." Exergen, 575 F.3d at 1328.
Furthermore, "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."
Id at 1328-29.
In this case, BioPet identifies Drs. Elaine Ostrander and Leonid Kruglak as the "who" by
indicating that they failed to disclose material prior art publications as required by their oath to
the PTO. Specifically, BioPet alleges that Ostrander was "familiar with the material aspects of
the content of the following publications: Randi et al., Detecting rare introgression of domestic
dog genes into wild wolf(canis lupus) populations by Bayesian admixture analyses of
microsatellite variations (2002); Vila et al., Combined use of maternal, paternal, and bi-parental
genetic markers for the identification of wolf-dog hybrids (2003); Rosenberg et al., Genetic
structure of human populations (2002); and Turakulov et al., Number ofSNPS loci needed to
detect population structure (2003). BioPet's Amended Answer to Pis.' First Am. Compl. f 14.
BioPet further alleges that Kruglyak "was aware of a prior art publication [supporting] a finding
of obviousness, namely, Rosenberg et al., Genetic structure of human populations (2002).
BioPet's Amended Answer to Pis.' First Am. Compl. ^ 24. Thus, the Court finds that BioPet's
pleading sufficiently satisfies the "who" prong of Exergen. See Exergen, 575 F.3d at 1329; see
also 37 C.F.R. § 1.56(a) ("Each individual associated with the filing and prosecution of a patent
application has a duty of candor and good faith in dealing with the [PTO]....").
However,
BioPet's cursury allegations that the inventors were aware of the material aspects of the alleged
prior art based on citations to those works in unrelated publications fails to meet the standards for
establishing the "what," "where" and "how" of the material omission. See BioPet's Amended
Answer to Pis.' First Am. Compl. HH 15-18 and 24-26.
In order to satisfy this standard, the
pleading must set forth "which claims, and which limitations in those claims, the withheld
references are relevant to, and where in those references the material information is found" as
well as "the particular claim limitations, or combination of claim limitations, that are supposedly
absent from the information of record." Exergen, 575 F.3d at 1329. BioPet fails to make either
showing, as the pleading does not identify the particular claims of the '863 patent to which
alleged prior art publications would be relevant, nor does it indicate where within those
references the material information may be found. BioPet's assertion that "the named
inventor[s'] own publications [which cite various parts of the alleged prior art publications]" is
too vague to satisfy the heightened pleading requirements of Rule 9(b).'
In light of the factual deficiencies in BioPet's counterclaim, the Court need not evaluate
the sufficiency of BioPet's allegations of intent to deceive the PTO in order to dispose of
Plaintiffs' Motion as it relates to inequitable conduct. See Exergen, 575 F.3d at 1328-29
(indicating that parties must allege facts that would give rise to a reasonable inference 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").
Notwithstanding, the Court concludes that BioPet has failed to provide
factual allegations that would prove by clear and convincing evidence that the co-applicants, Drs.
'Defendants BioPet and PetSafe request leave to amend their respective Amended
Answers and Counterclaims in order to more specifically allege fraud and inequitable conduct.
Defts.' Opp. to Pls.'s Mot. to Dismiss and to Strike at 11. In light of the fact that Defendants
have already amended their respective answers and counterclaims to better conform to the
heightened pleading standards, the Court finds that permitting any further amendment would be
futile. Defendants were on notice of any potential factual deficiencies in their pleading once
Plaintiff filed its initial Motion to Dismiss on February 25, 2011 and have yet to cure the factual
deficiencies. Therefore, the Court believes that any further leave to amend would be similarly
futile and leave is DENIED.
Ostrander and Kruglyak, "knew of the reference, knew that it was material, and made a
deliberate decision to withhold it." Therasense, Inc. VBecton, Dickinson and Co.,
F.3d
,
2011 WL 2028255, at *9-10 (C.A.Fed. May 25, 2011) (emphasis added). BioPet alleges,
"[b]ecause the market for DNA Dog Breed ID products is worth millions of dollars per
year, and because Ostrander [and Kruglyak] had knowledge of the undisclosed prior art
publications, and because evidence supports Ostrander's [and Kruglyak's] knowledge of
the materiality of content of said prior art, coupled with her not disclosing this prior art,
upon information and belief, co-inventor's Ostrander's [and Kruglyak's] oath[s]
submitted to the PTO [were] submitted with Ostrander's [and Kruglyak's] specific intent
to deceive the PTO."
See BioPet's Amended Answer to Pis.' First Am. Compl. HI 19, 27. However, these allegations
merely invite speculation about specific intent rather than alleging any facts pertaining to
knowledge of the reference and its materiality along with a deliberate decision to withhold it.
Therefore, BioPet's pleading lacks the specificity required under Rule 9(b) as to the specific
intent element of inequitable conduct.
BioPet has not identified how the alleged prior art materially relates to any a specific
claim in the patent. It has not shown where in the alleged prior art such material references
occur, nor has it provided an explanation of how such information would have been useful to the
patent examiner. Furthermore, BioPet has not alleged any facts indicating that the co-inventors
knew of a material reference and made a deliberate decision to withhold it. Therefore, BioPet's
counterclaim for inequitable conduct fails to meet the pleading standards required by Rule 9(b).
BioPet also fails to allege fraud with the required particularity. BioPet alleges that Fred
Hutchinson Cancer Research Center ("FHCRC") and Argus Genetics, LLC committed fraud
based on the conduct of its agents, Drs. Otrander and Kruglyak. BioPet further asserts that the
facts alleged in the general allegations of the counterclaims are those which support its claim of
fraud. Defts.' Opp. To Pls.'s Mot. to Dismiss and to Strike at 1. Upon reviewing the general
allegations asserted in BioPet's Amended Answer and Counterclaims, the Court finds that
BioPet's fraud claim and underlying facts simply reassert the inequitable conduct claim.
Consequently, for the reasons outlined above, Count VI of BioPet's Counterclaims also fails to
meet the pleading standards outlined in Rule 9(b). Thus, Plaintiffs' Motion to Dismiss Counts III
and VI of BioPet's Counterclaims to Plaintiffs' First Amended Complaint pursuant to Rule
12(b)(6) is GRANTED.
B.
Motion to Dismiss Counts III and V of Petsafe's Amended Counterclaim
PetSafe has also filed an Amended Answer and Counterclaims to Plaintiffs' First
Amended Answer. In it, PetSafe asserts the same general allegations as BioPet as a factual basis
for its counterclaims. See PetSafe's First Am. Answer and Countercl. at §§ 7-33.
In Counts III
and V of its counterclaims, PetSafe uses the exact same language BioPet articulated to allege
inequitable conduct and fraud, respectively. Therefore, for the reasons stated above, Plaintiffs
Motion to Dismiss Counts III and V of PetSafe's Counterclaims to Plaintiffs' First Amended
Complaint pursuant to Rule 12(b)(6) is GRANTED.
C.
Motion to Strike Defendants' Affirmative Defenses of Fraud and Inequitable
Conduct
Finally, Plaintiffs' have moved to strike both BioPet's and PetSafe's affirmative defenses
which provide that all claims of the '863 patent are unenforceable and/or invalid based on fraud
and inequitable conduct. See BioPet's First Am. Answer and Countercl., Affirmative Defense E;
See PetSafe's First Am. Answer and Countercl., Affirmative Defense E. A defense that "would
not, under the facts alleged, constitute a valid defense to the action can and should be deleted."
Waste Mgmt. Holdings, 252 F.3d at 347. Accordingly, for the reasons stated above, the Court
strikes Defendants' Affirmative Defense E which alleges inequitable conduct and fraud. Thus,
Plaintiffs' Motion to Strike Plaintiffs Affirmative Defenses of fraud and inequitable conduct
pursuant to Rule 12(f) is GRANTED.
IV. CONCLUSION
For the reasons stated above, Plaintiffs' Motion to Strike Defendants' Affirmative
Defenses of Inequitable Conduct and Fraud, pursuant to Federal Rules of Civil Procedure 12(f) is
GRANTED. Plaintiffs' Motion to Dismiss Counts III and VI of BioPet's Amended
Counterclaims and Counts III and V of PetSafe's Amended Counterclaims is GRANTED.
The Court DIRECTS the Clerk to send a copy of this Memorandum Opinion and Order
to counsel and parties of record.
IT IS SO ORDERED.
Raymond A. Jackson
United States District Judge
Norfolk, Virginia
^ ,2011
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