Summary
In Northern Engineering, 205 U.S.P.Q. at 609-10, the defendant alleged the defense of unclean hands, but did not plead it with specificity.
Summary of this case from Intel Corp. v. Hyundai Electronics America, Inc.Opinion
No. 78 C 3996.
Decided July 10, 1979.
Gerson E. Meyers, Thomas W. Tolpin, Dressler, Goldsmith, Clement, Gordon Shore, Ltd., all of Chicago, Ill., for plaintiffs.
John S. Fosse, and Trexler, Wolters, Bushnell Fosse, Ltd., both of Chicago, Ill., for defendant.
Action by Northern Engineering Plastics Corp., and Harry Crisci, against Blackhawk Molding Company, Inc., for patent infringement, in which defendant counterclaims. On plaintiffs' motion to strike. Motion granted.
Opinion Text
This matter, brought before the court by plaintiffs, Northern Engineering Plastics Corp. and Harry Crisci, against defendant, Blackhawk Molding Company, Inc., is a motion to strike or dismiss certain portions of defendant's affirmative defenses and counterclaim. For the reasons stated below, the motion will be granted.
The portions of the affirmative defenses and counterclaim in question were in response to an action for alleged patent infringement. The defenses and counterclaim argued in part that plaintiff's suit for patent infringement should be dismissed for want of equity because plaintiff was guilty of "unclean hands" in the original procurement of the underlying patent. Specifically, defendant alleged that plaintiff knowingly concealed from the United States Patent Office material facts, which, if revealed, would have constituted a statutory bar to the validity of the patent.
Plaintiff's motion claims that defendant's response raised allegations of fraud and, therefore, pursuant to Rule 9(b) of the Federal Rules of Civil Procedure, such allegations must be pled with specificity as to time, place and content of any misrepresentations or else be striken. Defendant argues in reply that its allegations were not of "common law fraud" but of a lesser degree of inequitable conduct, namely, nondisclosure, and that, therefore, the allegations need not be pled with specificity.
Rule 9(b) requires that "(i)n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be treated with particularity. * * *" Judicious application of the rule contributes to protecting individuals from the harm that can result from groundless charges of serious wrong-doing, inhibiting allegations of fraud to discover unknown wrongs and assuring charged individuals receive notice of the exact nature of the fraud claimed, sufficient to permit responsive measures. Todd v. Oppenheimer Co., Inc., 78 F.R.D. 415, 419 (1978) citing Segal v. Gordon, 467 F.2d 602, 607 (2d Cir. 1972) and Felton v. Walston Co., Inc., 508 F.2d 577, 581 (2d Cir. 1974).
Defendant's cited case law does not convincingly support the proposition that allegations of "lesser inequitable conduct than fraud" need not be pled with specificity. In fact, the tenor of those cited decisions militates against such a finding. In Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 190 USPQ 273 (8th Cir. 1976), the court held that the same standards of proof of misconduct are required under either theory of fraud or lesser inequitable conduct. Id. at 186, 190 USPQ at 278-279. The court aptly noted that the practical result of a successful "unclean hands" defense is termination of a patent monopoly, regardless of whether fraud or misconduct is alleged.
Clearly, if the jeopardy to the plaintiff is the same under either theory and the standard of proof required is the same, the standards of pleading should be identical.
Plaintiff also cites Essex International v. Industra Products, Inc., 64 F.R.D. 361, 182 USPQ 56 (D.C. Ind. 1974) which presents the exact issue in question. In that case, however, the alleged inequitable conduct was asserted with some specificity. Defendant alleged that plaintiff knew of "prior use, sale and public knowledge" of the invention in question. In the present case, defendant merely alleges that there existed "a statutory bar that was known or should have been known by plaintiffs." The nature of the statutory bar is nowhere specified. This distinction, coupled with the Essex court's further observation that additional specific information detailing the conduct in question was contained in interrogatories supplied by the motioning party, renders the case clearly inopposite.
Accordingly, plaintiffs' motion to strike is granted. Defendant is given leave to amend its counterclaim and affirmative defenses within twenty (20) days.