Milwaukee Electric Tool Corporation et al v. Hitachi Ltd et al
Filing
101
DECISION AND ORDER signed by Magistrate Judge William E Callahan, Jr on 5/29/12 granting 79 Motion for Leave to File a Sur-Reply in Further Opposition; granting 72 Motion to Strike defendants' inequitable conduct affirmative defense and g ranting 72 Motion to Dismiss defendants inequitable conduct counterclaim; the defendants' eighth affirmative defense, inequitable conduct is STRICKEN WITHOUT PREJUDICE; the defendants inequitable conduct counterclaim, Count III is DISMISSED WITHOUT PREJUDICE; defendants' request for leave to amend their allegations is GRANTED. (cc: all counsel) (kah)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILWAUKEE ELECTRIC TOOL CORPORATION,
METCO BATTERY TECHNOLOGIES, LLC,
AC (COMMERCIAL OFFSHORE DE MACAU)
LIMITADA, and TECHTRONIC INDUSTRIES CO.
LTD.,
Plaintiffs,
v.
Case No. 09-C-948
HITACHI KOKI CO., LTD. and
HITACHI KOKI U.S.A., LTD.,
Defendants.
DECISION AND ORDER GRANTING PLAINTIFFS’ MOTION TO STRIKE
DEFENDANTS’ INEQUITABLE CONDUCT AFFIRMATIVE DEFENSE AND DISMISS
DEFENDANTS’ INEQUITABLE CONDUCT COUNTERCLAIM
I. PROCEDURAL BACKGROUND
On October 1, 2009, Milwaukee Electric Tool Corporation, Metco Battery Technologies LLC,
Techtronic Industries Co. Ltd., and AC Commercial Offshore De Macau Limitada (collectively
“plaintiffs”), filed their complaint against Hitachi Koki Co. Ltd. and Hitachi Koki USA Ltd. (collectively
“defendants”) asserting five counts of patent infringement. (Compl. ¶ 1–47, ECF No. 1.) On November
19, 2009, the plaintiffs amended their complaint, but the substance of the complaint remained unchanged.
(Am. Compl., ECF No. 8.)
On September 30, 2011, the plaintiffs filed a second amended complaint, which added U.S. Patent
No. 7,944,173 (“the ‘173 patent”) and U.S. Patent No. 7,999,510 (“the ‘510 patent”). (Pls.’ Am. Compl.
¶¶ 24–29, ECF No. 65.) The defendants answered on October 20, 2011 and asserted that patents ‘173
and ‘510 are unenforceable due to inequitable conduct during prosecution of the patents. (Counterclaim
¶¶ 19–50, Eighth Affirmative Defense, ECF No. 69.) The plaintiffs filed a motion to strike the
defendants’ inequitable conduct affirmative defense and to dismiss the defendants’ inequitable conduct
counter claim on November 23, 2011, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).
The motion has been fully briefed and is now ready for resolution.1 For the reasons that follow, the court
will grant the plaintiffs’ motion to strike defendants’ inequitable conduct affirmative defense and dismiss
defendants’ inequitable conduct counterclaim without prejudice and allow the defendants to amend their
allegations.
II. FACTUAL BACKGROUND
Although there are seven patents-in-suit, the patents relevant to the plaintiffs’ motion are U.S.
Patent No. 7,554,290 (“the ‘290 patent”), the ‘173 patent, and the ‘510 patent. The ‘290 patent was part
of the initial complaint, but the ‘173 and ‘510 patents were added in September 2011, when the plaintiffs
filed their second amended complaint. (Second Am. Compl. ¶¶ 26–29, ECF No. 65.) Each of the three
patents describes a battery pack for powering a hand held power tool. (‘290 patent, ECF No. 75-5; ‘173
patent, ECF No. 75-6; ‘510 patent, ECF No. 75-7.)
On November 19, 2010, in accordance with this court’s scheduling order, the defendants served
their disclosure of invalidity contentions (“Invalidity Contentions”) on the plaintiffs. (Invalidity
Contentions, ECF No. 75-1.) The Invalidity Contentions identified what the defendants believe to be 56
items of prior art that anticipate and/or render obvious claims 1, 6, and 8-10 of the ‘290 patent.
(Invalidity Contentions 5–9, ECF No. 75-1.)
1
In addition to the regular briefing of the plaintiffs’ motion to dismiss and strike, the defendants filed a motion for
leave to file a sur-reply in further opposition to the plaintiffs’ motion (ECF No. 79). The court will grant that motion and allow
the defendants’ sur-reply to be filed.
2
On May 17, 2011, the PTO issued the ‘173 patent to Todd W. Johnson et al. (Second Am.
Compl. ¶ 24, ECF No. 65.) Three of the plaintiffs are co-owners of the ‘173 patent by assignment and
Milwaukee Battery Technologies, Inc., has a license to certain exclusive rights under the ‘173 patent.
(Second Am. Compl. ¶ 25–26, ECF No. 65.)
On August 16, 2011, the PTO issued U.S. Patent No. 7,999,510 (“the ‘510 patent”) to Todd W.
Johnson et al. (Second Am. Compl. ¶ 27, ECF No. 65.) Again, three of the plaintiffs are co-owners of
the ‘510 patent by assignment and Milwaukee Battery Technologies, Inc., has a license to certain
exclusive rights under the ‘510 patent. (Second Am. Compl. ¶¶ 28–29, ECF No. 65.)
On September 30, 2011, the plaintiffs filed a second amended complaint to add the new patents
to the lawsuit. (Second Am. Compl., ECF No. 65.) The defendants’ answer to the second amended
complaint sets forth a counterclaim for inequitable conduct during prosecution of the ‘173 and ‘510
patents and an affirmative defense that the ‘173 and ‘510 patents are unenforceable due to inequitable
conduct. (Counterclaim ¶¶ 19–50, Eighth Affirmative Defense, ECF No. 69.) Specifically, the
defendants claim that one or more individuals associated with filing or preparing the applications leading
to the ‘173 and ‘510 patents were aware of information material to the patentability of the claims of the
‘173 and ‘510 patents, but withheld such information from the U.S. PTO with an intent to deceive the
U.S. PTO . . . .” (Counterclaim ¶ 25, ECF No. 69.) The defendants claim that the plaintiffs, through
prosecuting attorneys and representatives, failed to disclose (1) the defendants’ Invalidity Contentions;2
(2) forty-two prior art references; (3) a PTO Office Action dated September 15, 2010; and (4) U.S. Patent
No. 6,228,529 (“the ‘529 patent”) to the PTO during prosecution of the ‘173 and ‘510 patents.
2
In their answer, the defendants cite forty-two prior art references that were also included in the defendants’
Invalidity Contentions. For ease, the court will refer to both the defendants’ Invalidity Contentions and the forty-two prior
art references cited in the defendants’ answer collectively as the Invalidity Contentions.
3
(Counterclaim ¶¶ 1–50, ECF No. 69.) Further, the defendants assert that the plaintiffs withheld this
information with the intent to deceive the PTO. (Counterclaim ¶¶ 30, 36, 45, 49, ECF No. 69.)
Turning first to the defendants claim with regard to the Invalidity Contentions, the defendants
assert the following:
20.
Defendant Milwaukee Electric Tool Corp. filed U.S. Patent Application
No. 12/331,088 on December 9, 2008 (“the ‘088 Application”) . . . . The ‘088
Application issued on May 17, 2011 as the ‘173 Patent.
21.
Defendant Milwaukee Electric Tool Corp. filed U.S. Patent Application
No. 13/014,264 on January 26, 2011 (“the ‘264 Application”) . . . . The ‘264
Application is a continuation of the ‘088 Application and issued on August 16, 2011 as
the ‘510 Patent.
22.
Carlo M. Cotrone, Esq. of the law firm of Michael Best & Friedrich LLP
prosecuted the ‘173 and ‘510 patents on behalf of Milwaukee Electric Tool Corp. and
signed substantive documents submitted to the [PTO] on behalf of Milwaukee Electric
Tool Corp.
23.
Upon information and belief, Elizabeth A. Egasti of Milwaukee Electric
Tool Corp. was substantively involved in the prosecution of the ‘173 and ‘510 patents.
24.
Upon information and belief, Dyann Kostello of Milwaukee Electric
Tool Corp. was substantively involved in the prosecution of the ‘173 and ‘510 patents.
25.
The claims of the ‘173 and ‘510 patents are unenforceable due to
inequitable conduct in the procurement of those patents from the U.S. PTO. Upon
information and belief, one or more individuals associated with the filing or preparation
of the ‘088 and ‘264 Applications and/or persons substantively involved in the
prosecution of the applications leading to the ‘173 and ‘510 patents, including, without
limiation, Carlo M. Cotrone, Esq., Elizabeth A. Egasti, and Dyann Kostello were aware
of information material to the patentability of the claims of the ‘173 and ‘510 patents,
but withheld such information from the U.S. PTO with an intent to deceive the U.S.
PTO in violation of the duty of disclosure set forth in 37 C.F.R. § 1.56.
(Counterclaim ¶¶ 20–25, ECF No. 69.)
The defendants then list the forty-two prior art references that were originally identified in the
defendants’ Invalidity Contentions served on the plaintiffs on November 19, 2010, but were not disclosed
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to the PTO during the prosecution of the ‘173 and ‘510 patents. (Counterclaim ¶¶ 26, 28, ECF No. 69.)
They assert that each of the references is material “because each of the prior art references . . . anticipates
or renders obvious the claims of the ‘173 and ‘510 patents . . . .” (Counterclaim ¶ 27, ECF No. 69.)
The defendants further state that, “[u]pon information and belief, one or more persons, including,
without limitation, Elizabeth A. Egasti and Dyann Kostello, were aware of the prior art references . . .
and were also aware of the materiality of each prior art reference.” (Counterclaim ¶ 29, ECF No. 69.)
The paragraph also alleges that the individuals are believed to have been “substantively involved in the
prosecution of the applications leading to the ‘173 and ‘510 patents and intentionally failed to disclose
this material information at any time during the prosecution of the ‘173 and ‘510 patents with an intent
to deceive the U.S. PTO.” (Counterclaim ¶ 29, ECF No. 69.)
The defendants allege that the plaintiffs were aware of the prior art because the defendants served
their Invalidity Contentions on the plaintiffs on November 19, 2010, which identified the prior art as it
related to the ‘290 patent. (Counterclaim ¶ 26, ECF No. 69.) The defendants acknowledge that the
Invalidity Contentions relate to a different patent, but argue that the “Invalidity Contentions were material
to the patentability of the ‘173 and ‘510 patents and non-cumulative of the references cited during the
prosecution of the ‘173 and ‘510 patents because the same basis and reasons articulated in Defendants’
Invalidity Contentions as to anticipation and/or obviousness of claims 1, 6, and 8-10 of the ‘290 patent
also apply to the claims of the ‘173 and ‘510 patents.” (Counterclaim ¶ 33, ECF No. 69.)
The defendants also claim that the plaintiffs withheld an Office Action issued by the PTO on
September 15, 2010 “in connection with U.S. Patent Application No. 12/766,965 (“the ‘965 application”)
and U.S. Patent No. 6,228,529 (“the ‘529 patent”).” (Counterclaim ¶ 37, ECF No. 69). They describe
the importance of the September 15, 2010 Office Action and the ‘529 patent as follows:
5
38.
The ‘965 application is entitled “Battery Pack” and was filed by
Defendant Milwaukee Electric Tool Corp. on April 23, 2010. Carlo M. Cotrone, Esq.
of the law firm of Michael Best & Friedrich LLP prosecuted the ‘965 application on
behalf of Milwaukee Electric Tool Corp. and signed substantive documents submitted
to the U.S. PTO on behalf of Milwaukee Electric Tool Corp., including the Response
to the September 15, 2010 Office Action.
39.
In the September 15, 2010 Office Action, the Examiner rejected thenpending claims 1-13 of the ‘965 application under 35 U.S.C. § 103 as being
unpatentable over U.S. Patent No. 6,329,788 (“the ‘788 patent”) in view of the ‘529
patent. Among other things, the Examiner cited to portions of the ‘788 patent and the
‘529 patent that disclosed each and every element of then-pending claims 1-13 of the
‘965 application and provided an explanation as to why it would have been obvious to
a person of ordinary skill in the art to combine the teachings of the ‘788 patent and the
‘529 patent.
40.
Claim 1-13 of the ‘965 application are substantially the same as many
of the claims of the ‘173 and ‘510 patents and include many of the same limitations.
41.
In response to the September 15, 2010 Office Action, Applicants
cancelled claims 1-13.
42.
The September 15, 2010 Office Action was material to the patentability
of the ‘173 and ‘510 patents because the same basis and reasons articulated by the
Examiner in rejecting then-pending claims 1-13 of the ‘965 application also render the
claims of the ‘173 and ‘510 patents unpatentable.
43.
The Examiner for the ‘965 application was different from the Examiner
for the ‘173 and ‘510 patents.
44.
Upon information and belief, one or more persons, including, without
limitation, Carlo M. Cotrone, Esq., were aware of the September 15, 2010 Office Action
and of the materiality of the September 15, 2010 Office Action. Upon information and
belief, such persons were substantively involved in the prosecution of the applications
leading to the ‘173 and ‘510 patents and intentionally failed to disclose this material
information at any time during the prosecution of the ‘173 and ‘510 patents with an
intent to deceive the U.S. PTO.
45.
Upon information and belief, the conduct of failing to disclose the
September 15, 2010 Office Action was done with an intent to deceive the U.S. PTO and
constitutes inequitable conduct, rendering the ‘173 and ‘510 patents unenforceable.
46.
The ‘529 patent is material to the . . . patentability of the ‘173 and ‘510
6
patents and is non-cumulative of the references cited during the prosecution of the ‘173
and ‘510 patents because it renders the claims of the ‘173 and ‘510 patent obvious under
35 U.S.C. § 103 in combination with the ‘788 patent for the reasons stated in
Defendants’ Invalidity Contentions, including Appendix A attached thereto, and for the
reasons stated by the Examiner in the September 15, 2010 Office Action in rejecting
then-pending claims 1-13 of the ‘965 application under 35 U.S.C. § 103 as being
unpatentable over the ‘788 in view of the ‘529 patent.
47.
The ‘529 patent was not disclosed to the U.S. PTO during prosecution
of the ‘173 and ‘510 patents.
48.
Upon information and belief, one or more persons, including, without
limitation, Carlo M. Cotrone, Esq., Elizabeth A. Egasti, and Dyann Kostello, were
aware of the ‘529 patent and of the materiality of the ‘529 patent due to their knowledge
of the September 15, 2010 Office Action and/or Defendants’ Invalidity Contentions.
Upon information and belief, such persons were substantively involved in the
prosecution of the applications leading to the ‘173 and ‘510 patents and intentionally
failed to disclose this material information at any time during the prosecution of the
‘173 and ‘510 patents with an intent to deceive the U.S. PTO.
(Counterclaim ¶¶ 38–48, ECF No. 69.)
III. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(f), “[t]he court may strike from a pleading an
insufficient defense . . . .” “The standard for deciding a motion to strike an affirmative defense as
‘insufficient’ is the same as for a motion to dismiss a complaint for failure to state a claim.” U.S. S.E.C.
v. Sachdeva, No. 10-C-747, 2011 WL 933967, at *1 (E.D. Wis. Mar. 16, 2011) (citing Renalds v. S.R.G.
Rest. Grp, 119 F. Supp. 2d 800, 802 (N.D. Ill. 2000)). An affirmative defense is therefore sufficient if
“it contains sufficient factual matter, accepted as true, to state an affirmative defense to relief that is
plausible on its face.” Sachdeva, at *1.
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) requires the court to decide whether the
pleadings state a claim upon which relief can be granted. “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
7
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 884 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). The plausibility standard is not akin to the probability standard. Id.
A pleading must contain enough “[f]actual allegations . . . to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555. In other words, the plaintiff must “‘nudge[]’ his claims . . . ‘across
the line from conceivable to plausible.’” Iqbal, 556 U.S. at 885.
Additionally, in determining the merits of a motion to dismiss a counterclaim under Rule 12(b)(6),
the court assumes that the factual allegations set forth in the counterclaim are true. Iqbal, 556 U.S. at
678.
If a party asserts fraud or mistake, the claim must be pled with particularity. Federal Rule of Civil
Procedure 9(b) states that “[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” “‘[I]nequitable conduct, while a broader concept than
fraud, must be pled with particularity’ under Rule 9(b).” Exergen Corp. v. Wal-Mart Stores, Inc., 575
F.3d 1312, 1326 (Fed. Cir. 2009) (quoting Ferguson Beauregard/Logic Controls, Div. of Dover
Resources, Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003)). To put it simply, “Rule 9(b)
requires identification of the specific who, what, when, where, and how of the material misrepresentation
or omission committed before the PTO.” Exergen, 575 F.3d at 1327.
Additionally, Rule 9(b) provides that “[m]alice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.” The conditions of mind relevant to an inequitable conduct
claim include: “(1) knowledge of the withheld material information or of the falsity of the material
misrepresentation, and (2) specific intent to deceive the PTO.” Exergen, 575 F.3d at 1327. Thus, to
8
plead inequitable conduct with particularity, a counterclaim must “recite[] facts from which the court may
reasonably infer that a specific individual both knew of invalidating information that was withheld from
the PTO and withheld that information with a specific intent to deceive the PTO.” Delano Farms Co.
v. Cal. Table Grape Comm’n, 655 F.3d 1337, 1350 (Fed. Cir. 2011). “A reasonable inference is one that
is plausible and that flows logically from the facts alleged, including any objective indications of candor
and good faith.” Exergen, 575 F.3d at 1329 n.5.
The plaintiffs argue that instead of the law discussed above, the court should use the standard
discussed in Therasense, Inc. v. Becton, 649 F.3d 1276, 1290 (Fed. Cir. 2011). Therasense states that
to prevail on a claim of inequitable conduct, “the accused infringer must prove by clear and convincing
evidence that the applicant knew of the reference, knew that it was material, and made a deliberate
decision to withhold it.” Id. However, Therasense does not apply to the pleading stage, so the court will
instead use the standard set forth above. See Delano Farms, 655 F.3d at 1350 (a post-Therasense case
endorsing the Exergen standard when determining whether a pleading states a claim of inequitable
conduct). See also Bayer Cropscience AG v. Dow Agrosciences LLC, No. 10-1045 (RMB/JS), 2012 WL
1253047, at *4 (D. Del. Apr. 12, 2012) (“[I]n a post-Therasense decision, Delano Farms Co., . . . the
Federal Circuit appeared to endorse the Exergen standard when discussing whether a charge of
inequitable conduct based on a failure to disclose will survive a motion to dismiss.”); Sloan Valve Co.
v. Zurn Indus., No. 10-cv-204, 2012 WL 1108129, at *4 (N.D. Ill. Apr. 1, 2012) (“Therasense did not
address inequitable conduct claims at the pleading stage, nor did it override Exergen’s pleading
requirements.”); W.L. Gore & Assocs., Inc. v. Medtronic, Inc., No. 10cv441, 2012 WL 368272, at *3
(E.D. Va. Feb. 3, 2012) (“Although the facts alleged in [the defendant’s] counterclaim may not be enough
to satisfy the Therasense elements by clear and convincing evidence, the alleged facts are sufficient to
9
satisfy Exergen’s pleading requirements.”).
III. DISCUSSION
The plaintiffs seek to strike the defendants’ eighth affirmative defense as well as dismiss the
defendants’ inequitable conduct counterclaim. The affirmative defense and counterclaim allege the same
facts and must both meet the standards of Rule 12(b)(6). The court will therefore address both the
affirmative defense and the counterclaim in the analysis below.
A. The Circumstances Constituting Fraud
To adequately allege the “circumstances constituting fraud” a party must detail the who, what,
when, where, and how of the alleged material omission committed before the PTO. Exergen, 575 F.3d
at 1327. The “who” requirement refers to the individuals responsible for material omissions from the
PTO. Id. at 1329. To meet this requirement, the pleading should “name the specific individual
associated with the filing or prosecution of the application issuing as the [patent-in-suit], who both knew
of the material information and deliberately withheld or misrepresented it.” Id.
Here, the defendants pinpoint Carlo M. Cotrone, Elizabeth A. Egasti, and Dyann Kostello as
persons who knew of the material information and chose not to disclose the information to the PTO. The
defendants have therefore satisfied the “who” requirement.
Second, the pleading must “identify which claims, and which limitations in those claims, the
withheld references are relevant to, and where in those references the material information is found–i.e.,
the “what” and “where of the material omissions.” Id. at 1329. The defendants state that “each of the
prior art references listed in paragraph 26 of the counterclaim, anticipates or renders obvious the claims
of the ‘173 and ‘510 patents,” but do not state exactly which claims the references apply to.
(Counterclaim ¶ 27, ECF No. 69.) This lack of specificity is true of the allegations relating to the
10
Invalidity Contentions, the September 15, 2010 Office Action, and the ‘529 patent as well. Although the
defendants may have intended to allege that all of the independent and dependent claims in the ‘173 and
‘510 patents are rendered invalid, they do not specifically say so and the court will not take it upon itself
to insert assumptions into the pleadings.
Additionally, although the ‘173 and ‘510 patents are substantially similar to the ‘290 patent, they
are not identical. Whether or not the additional limitations are important will not be explored by the court
for the purposes of this motion.3 However, such differences may render the descriptions included in
Appendix A to the defendants’ Invalidity Contentions inapplicable to the ‘173 and ‘510 patents.
(Invalidity Contentions, Appendix A, ECF No. 75-2.) Thus, merely relying on the reasons articulated
in the Invalidity Contentions as to anticipation and/or obviousness of claims 1, 6, and 8-10 of the ‘290
patent does not sufficiently explain where in each item of prior art the elements of the claims of the ‘173
and ‘510 patents are found. Thus, the defendants pleading is insufficient with regard to the “what” and
“where” requirements of the Exergen test.
Despite the defendants’ failure to plead the “what” and “where” requirements with specificity,
they do adequately plead the “when” requirement. The defendants state that the information should have
been disclosed during the pendency of the ‘173 and ‘510 patents’ consideration by the PTO, which began
on December 9, 2008 (the filing of the ‘088 Application leading to the issuance of the ‘173 patent)
3
Of course, the PTO did issue the ‘173 patent after evaluating its distinctiveness with the ‘290 patent and issued the
‘510 patent after evaluating its distinctiveness with the ‘173 patent. In an Office Action dated December 27, 2010, the PTO
rejected then-pending claims 1-11, 12 and 14 of the application leading to the ‘173 patent “on the ground of nonstatutory
obviousness-type double patenting as being unpatentable over claims 1-11 of U.S. Patent No. 7,554,290.” (Office Action
dated Dec. 27, 2010, ECF No. 75-8.) Then, in an Office Action dated March 3, 2011, the PTO rejected pending claims 1-19
of the application leading to the ‘510 patent “on the ground of nonstatutory obviousness-type double patenting as being
unpatentable over claims 1-11, 13 and 14 of U.S. Patent Application No. 12/331,088 [the ‘173 patent].” (Office Action dated
Mar. 3, 2011, ECF No. 75-9.) The same Examiner issuing the Office Actions also issued the ‘173 and ‘510 patents. Thus,
it is likely that the ‘173 and ‘510 patents present distinct limitations not presented in the ‘290 patent.
11
through August 16, 2011 (the issuing of the ‘510 patent). The defendants also pinpoint specific dates
when information became available to the plaintiffs. For example, the defendants served their Invalidity
Contentions on the plaintiffs on November 19, 2010, and the PTO Office Action was rendered on
September 15, 2010. Thus, the defendants meet the “when” requirement.
Finally, to adequately plead the materiality requirement (also known as the “how” and “why”
requirements) of the Exergen test, the allegations must “explain both ‘why’ the withheld information is
material and not cumulative, and ‘how’ an examiner would have used this information in assessing the
patentability of the claims.” Exergen, 575 F.3d at 1329–30. Because the defendants do not cite the
specific claims in the ‘173 and ‘510 patent that would be deemed unpatentable in light of undisclosed
information, the court is unable to determine whether the undisclosed information is material and noncumulative. See id. at 1329 (“[T]he pleading states generally that the withheld references are ‘material’
and ‘not cumulative’ to the information already of record,’ . . . but does not identify the particular claim
limitations, or combination of claim limitations, that are supposedly absent from the information of
record.”). The defendants therefore fail to meet the “how” and “why” requirements of the Exergen test.
B. Knowledge and Intent
In addition to pleading the specific who, what, when, where, and how of the material omission
committed before the PTO, the defendants must also provide “sufficient allegations of underlying facts
from which a court may reasonably infer” that (1) “a specific individual” (2) “knew of the withheld
material information,” and (3) “withheld . . . this information with a specific intent to deceive the PTO.”
Id. at 1328–29. “A reasonable inference is one that is plausible and that flows logically from the facts
alleged, including any objective indications of candor and good faith.” Id. at 1329 n.5.
Turning to the first requirement that the defendants allege misconduct by a specific individual,
12
the court notes that the defendants begin each “intent” allegation stating that “one or more individuals”
associated with filing the applications for the ‘173 and ‘510 patents were aware of material information
and withheld the information from the PTO. (Counterclaim ¶¶ 25, 29, 35, 44, 48, ECF No. 69.)
However, the defendants also cite specific individuals, including Carlo M. Cotrone, Elizabeth A. Egasti,
and Dyann Kostello, as the persons with the knowledge of material information and the intent to deceive
the PTO. Thus, the defendants adequately plead that a “specific individual” acted with the alleged
knowledge and the requisite intent.
The second and third requirements are unattainable because the court has found that the
defendants failed to adequately plead materiality. Thus, the defendants do not allege sufficient facts to
give rise to a reasonable inference that the individuals knew of the withheld material information and
withheld the material information with intent to deceive the PTO. The court will therefore grant the
plaintiffs’ motion to strike the defendants’ inequitable conduct affirmative defense and dismiss the
defendants’ inequitable conduct counterclaim.
V. CONCLUSION
The defendants failed to meet the “what”, “where”, “how”, and “why” requirements under the
Exergen test. The court will therefore grant the plaintiffs’ motion to strike the defendants’ inequitable
conduct affirmative defense and dismiss the defendants’ inequitable conduct counterclaim. Additionally,
because the request for leave to amend the counterclaim and affirmative defense was not made in bad
faith and will not necessarily be futile or result in undue delay or prejudice, I will dismiss the
counterclaim and strike the affirmative defense without prejudice and allow the defendants to amend the
answer and counterclaims. See Fed. R. Civ. P. 15(a)(2) (“The court should freely give leave [to amend]
when justice so requires.”).
13
NOW THEREFORE IT IS ORDERED that the defendants’ motion for leave to file a sur-reply
in further opposition to the plaintiffs’ motion be and hereby is GRANTED;
IT IS FURTHER ORDERED that the plaintiffs’ motion to strike the defendants’ inequitable
conduct affirmative defense and dismiss the defendants’ inequitable conduct counterclaim be and hereby
is GRANTED;
IT IS FURTHER ORDERED that the defendants’ eighth affirmative defense, inequitable
conduct, be and hereby is STRICKEN WITHOUT PREJUDICE;
IT IS FURTHER ORDERED that the defendants’ inequitable conduct counterclaim, Count III,
be and hereby is DISMISSED WITHOUT PREJUDICE;
IT IS FURTHER ORDERED that the defendants’ request for leave to amend their allegations
be and hereby is GRANTED.
SO ORDERED this 29th day of May 2012, at Milwaukee, Wisconsin.
BY THE COURT:
s/ William E. Callahan, Jr.
WILLIAM E. CALLAHAN, JR.
United States Magistrate Judge
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