Opinion
Case No. C04-316FDB.
May 12, 2004
ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AND FOR MORE DEFINITE STATEMENT
This is a cause of action for patent infringement for a device called a "Fish Attractor." Plaintiff moves to dismiss Defendants' counterclaims for Tortious Interference with Business Expectancies, Antitrust Violation Under § 2 of the Sherman Act, and Washington Consumer Protection Act Violations, asserting that Defendants have not and cannot allege facts sufficient to maintain the first three counterclaims. Plaintiff also moves for a more definite statement on Defendants' request for declaratory judgment of non-infringement, invalidity, and unenforceability.
A Rule 12(b)(6) dismissal is proper only where there is either a "lack of cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). 1. Tortious Interference with Business Expectancies
To prevail on a claim of tortious interference with a contract or business expectancy under Washington law, a plaintiff must allege and prove (1) the existence of a valid contractual relationship or valid expectancy, (2) defendants' knowledge of that expectancy, (3) intentional interference inducing or causing a breach of that relationship or expectancy, (4) defendants' improper purpose or improper means, and (5) resultant damages. Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 157 (1997).
Plaintiff argues that Defendants have failed to allege that Hazelquist's conduct caused or induced the breach of business relationship or expectancy because Defendants allege only that Hazelquist contacted certain Guchi Moochie distributors threatening legal action, and under Washington law tortious interference is not established unless the plaintiff's business relationship or expectancy is actually breached.
Second, Plaintiff argues that "[o]ne who in good faith asserts a legally protected interest is not liable for tortious interference." The Bryant Corp. v. Outboard Marine, 1994 WL 743159 (W.D. Wash. Sept. 29, 1994) (citing Brown v. Safeway Stores, Inc., 94 Wn.2d 359, 365 (1980)). While Defendants allege that Plaintiff had the intent of wrongfully stopping them from selling or distributing Guchi Moochie products," Plaintiff argues that no factual allegations were alleged to support that conclusion. Moreover, "A patentee must be allowed to make its rights known to a potential infringer so that the latter can determine whether to cease its allegedly infringing activities, negotiate a license if one is offered, or decide to run the risk of liability and/or the imposition of an injunction." Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860, 869 (Fed. Cir 1997).
Third, Plaintiff argues that Defendant has failed to adequately allege that it was damaged by Hazelquist's conduct. Defendant states only that it was damaged in an amount to be proven, and no specific business relationship or expectancy is alleged.
Defendants respond that they need only allege that Hazelquist interfered with its business relationships and that Hazelquist had a duty of non-interference, that is, that Hazelquist knew, or reasonably should have known at the time he interfered that his patent was invalid or that Defendants' products did not infringe. Defendants assert that their allegations are sufficient, and that proof is reserved for discovery and trial.
Defendants' response reveals that there is an absence of sufficient facts alleged to support Defendants' counter-claim of tortious interference with a contract or business expectancy, and it must be dismissed.
2. Washington Consumer Protection Act
To prevail on a claim under the Washington Consumer Protection Act, RCW 19.86 et seq. (WCPA), a plaintiff must plead and prove (1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) with a public interest impact, (4) causing an injury to plaintiff's business or property, (5) and the injury must be caused by the unfair or deceptive act or practice. Hangman Ridge Training Stables v. Safeco Title Insurance Co., 105 Wn.2d 778, 780 (1986).
Plaintiff argues that Defendants have failed to allege an unfair or deceptive act, and have only alleged that Hazelquist's contacts with distributors was to enforce patent rights. Plaintiff also argues that no public interest impact is alleged, and that no allegation of specific injury is alleged.
In response, Defendants assert that Hazelquist's patent is invalid for obviousness, lack of novelty, and functionality. Defendants then reassert their allegations of attempt to monopolize the market, that this lawsuit is a sham, and that the public interest is implicated because if Plaintiff's improper contact with non-parties.
Defendants have failed to allege an injury to their business or property cause by the alleged unfair or deceptive act. Defendants' response fails to allege sufficient facts to support the WPCA claim, and it must be dismissed.
3. Sherman Act, Section 2
"[A] patent owner who brings suit to enforce the statutory right to exclude others from making, using, or selling the claimed invention is exempt from the antitrust laws . . . unless the infringement defendant proves one of two conditions." In re Indep. Serv. Orgs. Antitrust Litigation, 203 F.3d 1322, 1326 (Fed. Cir. 2000) ("I.S.O."). "First, he may prove that the asserted patent was obtained through knowing and willful fraud within the meaning of Walker Process Equipment, Inc. v. Food Machinery Chemical Corp., 382 U.S. 172, 177, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)." "Or he may demonstrate that the infringement suit was a mere sham to cover what is actually no more than an attempt to interfere directly with the business relationships of a competitor." I.S.O., 203 F.3d at 1326." As to the exception of asserting a patent knowing it was obtained by fraud, a patentee's "good faith would furnish a complete defense." Id. At 177. As to the sham litigation exception, "First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). Only if the lawsuit is objectively baseless, may the subjective intent of the patentee in bringing the lawsuit be addressed. There must still be a substantive antitrust violation." Prof'l Real Estate, 508 U.S. at 61.
A plaintiff must prove (1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed. 247 (1993).
Plaintiff asserts that Defendants have not adequately identified the relevant market or alleged a dangerous probability of Hazelquist achieving monopoly power. They have simply alleged that "Hazelquist is a dominant player in the narrow niche market for fish flashers." Defendant's allegation that Hazelquist's patent was obtained by fraud because he represented that his device was solely ornamental when he knew it had certain functional attributes has been repeatedly rejected by the Federal Circuit, argues Plaintiff. Moreover, Defendants have failed to state the fraud with particularity as required by Fed.R.Civ.P. 9(b).
Defendants respond that they have sufficiently alleged their claims, that Plaintiff advertised openly prior to filing its lawsuit that the shape of its design was functional, and Defendants restate their conclusions as to the elements of a sham litigation claim, and they assert that the size and scope of the market are matters to be proved through evidence, that the mere allegation of a narrow market niche is sufficient now.
The fact that a device has functional aspects does not prohibit a patentee from obtaining a patent on the device. See, e.g., In re Webb, 916 F.2d 1443 (Fed. Cir. 1990) (upholding the validity of a design patent for a hip prosthesis). Defendants claim that Plaintiff obtained the patents through knowing and willful fraud must be dismissed for failure to allege facts sufficient to support the claim.
4. More Definite Statement re Declaratory Judgment
In their counterclaim, Defendants seek a declaration that the '113 patent is invalid and unenforceable." In support, the Defendants assert that "[t]he '113 patent is invalid and/or unenforceable because it fails to satisfy the requirements of the United States Code, Title 35." Plaintiff argues that Fed.R.Civ.P. 12(3) allows a party to move for a more definite statement "[i]f a pleading to which a responsive pleading is permitted is so vague or ambiguous that [the] party cannot reasonably be required to frame a responsive pleading. . . ."
Defendants respond that plaintiff has failed to point out specific defects and the details desired, discovery is the way to get more detail, and that motions for a more definite statement are disfavored.
Defendants' response is insufficient, and Defendants should specify on what the counterclaim is based.
ACCORDINGLY,
IT IS ORDERED:
1. Plaintiff's Motion to Dismiss for Failure To State A Claim and for More Definite Statement (Doc. # 8) is GRANTED and Defendants' counter-claims for tortious interference with business expectancies, antitrust violation under § 2 of the Sherman Act, and WCPA violations are DISMISSED for failure to state a claim;
2. Defendants shall provide a more definite statement supporting their Counterclaim for a Declaratory Judgment for Non-infringement, Invalidity, and Unenforceability to Plaintiff by May 28, 2004.