IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION EMERSON ELECTRIC CO., ) EMERSON PROCESS MANAGEMENT LLLP, ) FISHER-ROSEMOUNT SYSTEMS, INC., ) and ROSEMOUNT INC., ) ) Plaintiffs, ) ) Civil Action v. ) 1:15-cv-00319-AT ) SIPCO, LLC, and ) IP CO, LLC (d/b/a INTUS IQ), ) ) Defendants. ) ) DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ INEQUITABLE CONDUCT AFFIRMATIVE DEFENSES AND COUNTERCLAIMS IN ANSWER TO SECOND AMENDED COMPLAINT Defendants and Counterclaim Plaintiffs, SIPCO, LLC (“SIPCO”) and IP CO, LLC (d/b/a INTUS IQ) (“IP CO”) (collectively, “SIPCO”), respectfully move the Court for an Order dismissing and striking Plaintiffs and Counterclaim Defendants Emerson Electric Co., Emerson Process Management LLLP, and Fisher-Rosemount Systems, Inc.’s (collectively, “Emerson”) Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims (purportedly alleging inequitable conduct), set forth in Emerson’s Answer to Second Amended Complaint (Doc. 198, 204), because they fail to state Case 1:15-cv-00319-AT Document 214 Filed 02/16/17 Page 1 of 5 a claim upon which relief can be granted and utilize an impermissible and impenetrable “shotgun” format. Accordingly, SIPCO respectfully submits that Emerson’s inequitable conduct allegations should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6), 12(f) and 9(b) (failure to state a claim) and Fed. R. Civ. P. 8 (shotgun pleading). In support thereof, SIPCO relies on its Memorandum in Support of this motion, which is filed herewith. Case 1:15-cv-00319-AT Document 214 Filed 02/16/17 Page 2 of 5 This 16th day of February 2017. /s/ Paul J. Cronin Peter D. Coffman Georgia Bar No. 173120 Alexandra Nelson Georgia Bar No. 241352 Thompson Hine LLP Two Alliance Center, Suite 1600 3560 Lenox Road Atlanta, Georgia 30326 Telephone: 404-541-2900 Facsimile: 404-541-2905 Peter.Coffman@ThompsonHine.com Alex.Nelson@ThompsonHine.com Paul J. Cronin, Pro hac vice James C. Hall, Pro hac vice Timothy J. Reppucci, Pro hac vice Nutter, McClennen & Fish LLP 155 Seaport Boulevard Boston, Massachusetts 02210-2604 Telephone: 617-439-2000 Facsimile: 617-310-9000 pcronin@nutter.com jhall@nutter.com treppucci@nutter.com Counsel for SIPCO, LLC and IP CO, LLC Case 1:15-cv-00319-AT Document 214 Filed 02/16/17 Page 3 of 5 CERTIFICATE OF SERVICE This is to certify that I have this day served all counsel of record with a copy of the within and foregoing DEFENDANTS, SIPCO, LLC and IP CO LLC (D/B/A InutsIQ’s) MOTION TO DISMISS EMERSON’S INEQUITABLE CONDUCT ALLEGATIONS using the Court’s ECF filing system, which will automatically send a copy to all counsel of record registered to receive service thereby upon the following: Donald L. Jackson James D. Berquist J. Scott Davidson Alan A. Wright Walter D. Davis, Jr. Davidson Berquist Jackson & Gowdey, LLP 8300 Greensboro Drive, Suite 500 McLean, Virginia 22102 William V. Custer Damon J. Whitaker Bryan Cave, LLP One Atlantic Center, Fourteenth Floor 1201 W. Peachtree St., N.W. Atlanta, Georgia 30309 Ryan T. Pumpian Bloom Sugarman LLP 977 Ponce de Leon Ave., NE Atlanta, Georgia 30306 /s/ Paul J. Cronin Paul J. Cronin Case 1:15-cv-00319-AT Document 214 Filed 02/16/17 Page 4 of 5 CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1 The undersigned hereby certifies that this filing was prepared using one of the font and point selections approved by this Court in Local Rule 5.1C. Specifically, Times New Roman font was used in 14 point. /s/ Paul J. Cronin Paul J. Cronin 3519876.1 Case 1:15-cv-00319-AT Document 214 Filed 02/16/17 Page 5 of 5 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION EMERSON ELECTRIC CO., ) EMERSON PROCESS MANAGEMENT LLLP, ) FISHER-ROSEMOUNT SYSTEMS, INC., ) and ROSEMOUNT INC., ) ) Plaintiffs, ) ) Civil Action v. ) 1:15-cv-00319-AT ) SIPCO, LLC, and ) IP CO, LLC (d/b/a INTUS IQ), ) ) Defendants. ) ) DEFENDANTS’ MEMORANDUM IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS’ INEQUITABLE CONDUCT AFFIRMATIVE DEFENSES AND COUNTERCLAIMS IN ANSWER TO SECOND AMENDED COMPLAINT Defendants and Counterclaim Plaintiffs, SIPCO, LLC (“SIPCO”) and IP CO, LLC (d/b/a INTUS IQ) (“IP CO”) (collectively, “SIPCO”), respectfully submit this Memorandum in support of their Motion to Dismiss to dismiss and strike Plaintiffs and Counterclaim Defendants Emerson Electric Co., Emerson Process Management LLLP, and Fisher-Rosemount Systems, Inc.’s (collectively, “Emerson”) Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims (purportedly alleging inequitable conduct), Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 1 of 28 2 set forth in Emerson’s Answer to Second Amended Complaint (Doc. 198, 204), because they fail to state a claim upon which relief can be granted and utilize an impermissible and impenetrable “shotgun” format. I. INEQUITABLE CONDUCT IN PATENT LITIGATION The Federal Circuit has long recognized that “the habit of charging inequitable conduct in almost every major patent case has become an absolute plague.” Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed. Cir. 1988). Regrettably, charging inequitable conduct has become a common patent litigation tactic that “has been overplayed . . . and is cluttering up the patent system.” See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1288- 89 (Fed. Cir. 2011) (“One study estimated that eighty percent of patent infringement cases included allegations of inequitable conduct”); see also Lakim Indus., Inc. v. Linzer Prod. Corp., No. CV12-04976-ODW(JEMX), 2012 WL 12547988, at *6 (C.D. Cal. Nov. 7, 2012) (highlighting the fact that patent prosecutors are burying PTO examiners with prior art references, most of which have marginal value, all out of fear that to do otherwise risks a claim of inequitable conduct, which makes identifying the most relevant prior art more difficult); Alps S., LLC v. Ohio Willow Wood Co., No. 8:09-CV-00386-EAK, 2012 WL 275920, at Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 2 of 28 3 *3-4 (M.D. Fla. Jan. 31, 2012) (expressing the Federal Circuit’s concern regarding the overuse of the inequitable conduct doctrine). Allegations of inequitable conduct clog up courts’ resources, inflate the scope of discovery, and increase the complexity, duration and cost of patent infringement litigation. Therasense, 649 F.3d at 1288-89. “Because the doctrine [of inequitable conduct] focuses on the moral turpitude of the patentee with ruinous consequences for the reputation of his patent attorney, it discourages settlement and deflects attention from the merits of validity and infringement issues.” Id. “Reputable lawyers seem to feel compelled to make the charge against other reputable lawyers on the slenderest grounds . . . .” Id.1 (citing Burlington, 849 F.2d at 1422). Therefore, courts disfavor inequitable conduct claims and, to curb the widespread use of this tactic, the Federal Circuit has taken steps to heighten the standards for both pleading and proving inequitable conduct “to redirect a doctrine that has been overused to the detriment of the public.” Polaris Indus. Inc. v. Arctic Cat Inc., No. CIV. 14-3412 JRT/FLN, 2015 WL 4636544, at *4 (D. Minn. Aug. 4, 2015); Therasense, 649 F.3d at 1288. 1 Indeed, Emerson’s allegations seek to impugn the veracity and reputation of a prolific and pioneering inventor-T. David Petite-and indict the professionalism and ethics of numerous patent prosecution attorneys representing SIPCO and IP CO through the years. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 3 of 28 4 II. PROCEDURAL BACKGROUND It is against the backdrop of such litigation tactics that the Special Master issued the December 6, 2016, Report, which recommended granting SIPCO’s “Motion to Dismiss and Strike Counterclaims and Affirmative Defenses of Inequitable Conduct” (Doc. 134) and denying Emerson’s “Motion for Leave to File Amended Complaint to Add Inequitable Conduct Counts” (Doc. 137) on the basis that they were insufficient to meet the requirements of Fed. R. Civ. P. 9(b), as well as applicable Supreme Court and Federal Circuit law (Doc. 183).2 The Report provided Emerson with a road map to curing the deficiencies in its earlier (now defunct) inequitable conduct allegations (Docs. 183, 131 and 137). Indeed, the Report went so far as to suggest ways in which Emerson might alter its allegations to meet the requisite pleading standards (Doc. 183). Emerson did not follow the Special Master’s suggestions. Instead, Emerson objected to the Report and took the Special Master to task on virtually every conceivable point (Doc. 192). Subsequent to SIPCO’s response (Doc. 194) to Emerson’s Objection (Doc. 192), Emerson relented and amended its inequitable conduct allegations (Doc. 198, 204). On February 6 the Court issued an order on 2 The Special Master also recommended granting Emerson leave to amend its affirmative defenses, counterclaims and complaint vis-à-vis inequitable conduct to cure the deficiencies outlined in the Report and Recommendation (Doc. 183). Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 4 of 28 5 the Report, authorizing, nunc pro tunc, Emerson’s amended pleadings (Doc. 211). The Eleventh and Twelfth Affirmative Defenses and Counts I and II of the Declaratory Judgment Counterclaims in Emerson’s Answer to Second Amended Complaint (Doc. 198/204) set forth Emerson’s inequitable conduct allegations.3 Remarkably, the amended allegations include most of the previously-pled inequitable conduct allegations, with the addition of entirely new conclusory inequitable conduct allegations. Emerson did not draft its revised inequitable conduct allegations (Doc. 198, 204) in accordance with the guidance provided in the Special Master’s Report (Doc. 183). Instead, Emerson ignored the Report and doubled-down on the impenetrable, improper and inadequate pleading style that the Report recommended dismissing. The reason Emerson did so is obvious-it has no case. Clearly, if Emerson had a legitimate case of inequitable conduct, SIPCO, the Special Master and the Court would see a pleading laser-focused on the strict elements of inequitable conduct, not one ballooned up over 70 pages of 3 Emerson’s Eleventh Affirmative Defense (Doc. 198, 204 at ¶¶ 347-455) and Declaratory Judgment Count I (id. at ¶¶ 11, 11 [sic] and 12 [sic]), represent Emerson’s amended inequitable conduct allegations with respect to the Brownrigg Patents. Emerson’s Twelfth Affirmative Defense (Doc. 198, 204 at ¶¶ 456-593) and Declaratory Judgment Count II (id. at ¶¶ 13 [sic] and 14 [sic]), represent Emerson’s amended inequitable conduct allegations with respect to the Petite Patents. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 5 of 28 6 convoluted, disjointed and meandering allegations that obfuscate whether Emerson has properly alleged inequitable conduct. It has not submitted such focused allegations because it cannot. Indeed, the longer and more drawn-out Emerson’s allegations have become, the more they have failed to plead inequitable conduct with the requisite specificity. Worse, the actual allegations of inequitable conduct-to the extent any exist even in deficient form-are buried within an impermissible, impenetrable shotgun style of pleading that this Court has previously stricken. See Thompson v. BAC Home Loans Servicing LP, No. 1:12-CV-0221-AT, 2012 WL 12838456, at *2 (N.D. Ga. Jan. 26, 2012). Indeed, neither SIPCO, the Special Master, nor the Court, should have to sift through Emerson’s allegations and piece together a case of so-called inequitable conduct. Id. Because the Federal Circuit in Therasense has tasked the district courts with policing scurrilous charges of inequitable conduct that have become a “common litigation tactic” and “plague[] not only the courts but also the entire patent system,” and given the relentlessness with which Emerson is pursuing these threadbare, deficient allegations and concomitant discovery, SIPCO is duty-bound to seek dismissal of Emerson’s woefully inadequate allegations, and have them Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 6 of 28 7 stricken, thereby focusing this case on the issues that matter. Therasense, 649 F.3d at 1289. Emerson has already served over a dozen third-party subpoenas relating to its so-called inequitable conduct allegations. It is obvious that Emerson will now seek to take costly and time-consuming discovery to the full breadth of its allegations. This will divert time and resources away from legitimate issues already in the case, such as infringement, validity, damages and willful infringement. The Federal Circuit’s firm stance on inequitable conduct stands as a bulwark to this manner of litigation. The bar for alleging inequitable conduct is purposefully and necessarily high. Emerson’s allegations do not come close to clearing it. Accordingly, they should be summarily dismissed and stricken for failure to state a claim upon which relief can be granted, and for attempting to plead inequitable conduct in an impermissible shotgun format. III. LEGAL STANDARDS A. Motion to Dismiss Under Fed. R. Civ. P. 12(b)(6), a pleading may be dismissed for failure to state a claim upon which relief may be granted if it fails to set forth “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 7 of 28 8 Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face if it pleads facts sufficient to “allow[] the court to draw the reasonable inference that the [party] is liable for the misconduct alleged.” Id. In considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a court construes the pleading in the non-movant’s favor and accepts the well-pleaded factual allegations therein as true. Williams v. Fulton County School District, No. 1:14-CV-0296-AT, 2016 WL 3055898, at *3 (N.D. Ga. Mar. 31, 2016) (citing Duke v. Cleland, 5 F.3d 1399, 1402 (11th Cir.1993)). The pleading need not contain detailed factual allegations to survive dismissal, but it must contain “‘more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting Iqbal, 556 U.S. at 678). B. Inequitable Conduct4 To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the U.S. Patent and Trademark Office (“PTO”). Therasense, 649 F.3d at 1287. The accused infringer must prove both elements- 4 The Special Master’s Report and Recommendation contains a thorough discussion of the law of inequitable conduct and the legal standard for pleading inequitable conduct (Doc. 183). For the purposes of brevity and convenience, SIPCO incorporates herein by reference the Report and Recommendation’s discussion of the law of inequitable conduct and the legal standard for pleading inequitable conduct. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 8 of 28 9 intent and materiality-by clear and convincing evidence.5 Id. Intent and materiality are separate requirements. Id. at 1290. If the accused infringer meets its burden with respect to both elements, then the court must weigh the equities to determine whether the applicant’s conduct before the PTO warrants rendering the entire patent unenforceable.6 Id. at 1287. At the pleading stage, accused infringers cannot “simply aver[] the substantive elements of inequitable conduct,” but to satisfy Fed. R. Civ. P. 9(b), they must set forth the “particularized factual bases” for their allegations. Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009) . To that end, the pleader must identify “the specific who, what, when, where, and how of the material misrepresentation or omission.” Exergen, 575 F.3d at 1327. The pleader must, in addition, put forth “sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld 5 “To meet the clear and convincing evidence standard, the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence.” Id. (quotations omitted). The materiality necessary to establish inequitable conduct, moreover, must be “but-for” materiality. Id., at 1291. 6 A district court should not use a “sliding scale” to judge inequitable conduct, “where a weak showing of intent may be found sufficient based on a strong showing of materiality, and vice versa.” Therasense, 649 F.3d at 1290. Moreover, a court “may not infer intent solely from materiality.” Id. “Instead, a court must weigh the evidence of intent to deceive independent of its analysis of materiality.” Id. “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Id. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 9 of 28 10 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. That inference must be “plausible and [] flow[] logically from the facts alleged.” Id. at 1329 n.5 To satisfy the “who” and “when” standards, a pleading must name the person who knew of the material information and deliberately withheld or misrepresented it, and the pleading must indicate when the conduct took place. Id. at 1329. To satisfy the “what” and “where” standards, 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.” Id. A pleading must also set forth “why” the withheld information was material and not merely cumulative, and it must set forth “how” an examiner would have used the information in assessing patentability. Id. at 1329-30. In regard to the “why” and “how” standards, the pleading must indicate “the particular claim limitations, or combination of claim limitations,” that are supposedly absent from the information of record. Id. at 1329. A factual deficiency with respect to any of the foregoing is “fatal under Rule 9(b)” of the Federal Rules of Civil Procedure. Id. at 1330. As to pleading the “intent” element of inequitable conduct, the “relevant ‘conditions of mind’ . . . include: (1) knowledge of the withheld material Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 10 of 28 11 information or of the falsity of the material misrepresentation, and (2) specific intent to deceive the [PTO].” Exergen, 575 F.3d at 1327. Although “knowledge” and “intent” may be averred generally, the pleadings must allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind. Id. As explained below, Emerson’s affirmative defenses and counterclaims alleging inequitable conduct fail to meet these legal standards. IV. ARGUMENT A. The Impenetrable “Shotgun” Style of Emerson’s Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims Warrants Dismissal of Emerson’s Inequitable Conduct Allegations. The Special Master’s Order described Emerson’s now-defunct allegations as “at best, confusing (indeed, overall confounding, and even, in some respects, puzzling), and [] not reasonably, much less plainly, alleg[ing] inequitable conduct as required by the Twombly/Iqbal, Exergen, and Therasense standards” (Doc. 183 at 43). The Order went on to state that Emerson’s pleadings were “a literal labyrinth with no reasonable guide,” and “[i]f there actually is justiciable inequitable conduct, the same is lost in the impenetrable pleadings currently presented.” (Id.) Emerson’s newly-filed inequitable conduct allegations are still replete with these flaws, again, containing a mishmash of names, dates and events that are difficult to understand and confusing to follow. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 11 of 28 12 A party runs afoul of the requirements under Rules 8 and 10 when the party presents the court with a “shotgun pleading,” which is a pleading where the party has failed “to identify [its] claims with sufficient clarity to enable the [opposing party] to frame a responsible pleading.” Holtz v. Harpagon Co., LLC, Civ. No. 1:09-cv-03085, 2010 WL 2595075, at *4 (N.D. Ga. June 25, 2010) (Forrester, J.) (quoting Sledge v. Goodyear Dunlop Tires North America, Ltd., 275 F.3d 1014, 1018 n.8 (11th Cir. 2001)).7 That is precisely the case here. Because Emerson employed the same “shotgun” style of pleading the Report described as “a literal labyrinth with no reasonable guide” (Doc. 183 at 43), Emerson’s affirmative defenses and counterclaims alleging inequitable conduct should be dismissed and stricken. See Frantz v. Walled, 5163 Fed. Appx. 815, 820-21 (11th Cir. 2013) (holding that the Eleventh Circuit has “repeatedly condemned” shotgun pleadings and that dismissal of such pleadings is proper). B. Emerson’s Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims, Alleging Inequitable Conduct Associated with the Brownrigg and Petite Patents, Fail to State a Claim upon which Relief can be Granted under the Exergen Pleading Standard and under the Therasense Standard Employed in the Special Master’s Report. 7 See also Magluta v. Samples, 256 F.3d 1282, 1284-85 (11th Cir. 2001) (holding that a shotgun pleading is “in no sense the ‘short and plain statement of the claim’ required by Rule 8 of the Federal Rules of Civil Procedure.”). Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 12 of 28 13 Emerson’s inequitable conduct allegations are factually and legally deficient. They fail to state a claim upon which relief can be granted no matter what pleading standard is applied. The Special Master’s Report contains a robust discussion of the appropriate standard for pleading inequitable conduct (Doc. 183 at 5-15). SIPCO agrees with the Report that the appropriate standard is the Iqbal/Twombly, Exergen and Therasense standard that courts utilize (Doc. 183 at 5-15).8 It requires that the inference of materiality or intent be the single most reasonable inference at the pleading stage. Id. Emerson disagreed with the Report and argued in its Objection that “[t]here is no requirement that the inference must be the ‘single most reasonable inference’ at the pleading stage” (Doc. 192 at 11). Instead, Emerson argued that “Exergen states the correct legal standard for pleading inequitable conduct,” which, according to Emerson, does not employ the single most reasonable inference standard at the pleading stage (Doc. 192 at 2). 8 On page 15, the Report states that “[i]n the instance of inequitable conduct, the Federal Circuit has emphasized, in Scanner Technologies and Star Scientific, later adopted en banc in Therasense, that ‘[w]henever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference,’ 528 F.3d at 1376, and ‘the inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard.’ 537 F.3d at 1366.”(Doc. 183 at 15). Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 13 of 28 14 The debate over whether materiality or intent must be the “single most reasonable” inference is of no moment to SIPCO’s motion to dismiss. This is because SIPCO moves to dismiss under both standards. Because Emerson’s Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims fail to adequately plead inequitable conduct in accordance with the Exergen standard espoused by Emerson (Doc. 192), SIPCO’s motion to dismiss and strike should be granted. Because they fail to adequately plead inequitable conduct in accordance with the Exergen standard, they certainly fail to plead inequitable conduct in accordance with the higher-and proper- standard that the Report employs. C. The Brownrigg Patents. 1. Emerson’s Eleventh Affirmative Defense and Count I of its Declaratory Judgment Counterclaims, Alleging Inequitable Conduct Associated with the Brownrigg Patents, Fail to State a Claim upon which Relief can be Granted. Emerson’s Eleventh Affirmative Defense and Count I of its Declaratory Judgment Counterclaims, alleging inequitable conduct associated with the ‘314, ‘471, ‘479, ‘516 and ‘062 patents (collectively, the “Brownrigg Allegations”), fail to state a claim upon which relief can be granted. Specifically, they fail to allege that any specific individual involved with the prosecution of the applications that issued as the asserted ‘314, ‘471, ‘479 or ‘516 patents (hereinafter referred to as Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 14 of 28 15 the “Brownrigg Patents”) knew and understood the purported materiality of any allegedly withheld information pertaining to the ‘062 patent reexamination- including the October 14, 2008, After Final Response, the December 16, 2008, Advisory Action, IP CO’s Appeal Brief and/or its Response to First Office Action (hereinafter referred to as the “‘062 Reexamination Documents”). Also absent are allegations that the same person, at the relevant time, withheld one, some or all of the ‘062 Reexamination Documents from the PTO in connection with one, some or all of the patent applications that issued as the asserted Brownrigg Patents, with a specific intent to deceive the PTO. Instead, the allegations at best identify different attorneys from different law firms that are alleged to have acted at different times with respect to different patents. The Brownrigg Allegations are equally devoid of facts from which this Court could reasonably infer that any one of the identified attorneys knowingly withheld one, some or all of the ‘062 Reexamination Documents from the PTO with an intent to deceive the PTO. See Drew Techs., Inc. v. Robert Bosch, L.L.C., No. 12-15622, 2014 WL 562458, at *3 (E.D. Mich. Feb. 13, 2014) (holding that alleging one or more individuals committed a particular act is improper because it fails to allege that any one individual necessarily committed that act). The Brownrigg Allegations also fail to allege the purported materiality of each of the Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 15 of 28 16 allegedly withheld ‘062 Reexamination Documents, how and why each alleged material portion of an ‘062 Reexamination Document relates to a particular asserted claim element, why each ‘062 Reexamination Document is not cumulative of information that was already before the PTO, or that a specific individual withheld one, some or all of the ‘062 Reexamination Documents with an intent to deceive the PTO. See Exergen, 575 F.3d at 1329-30; see also Dayco Products Inc. v Total Containment Inc., 329 F.3d 1358, 1366 (Fed. Cir., 2003) (disclosure of members of the family of applications “points away from an intent to deceive”); see also Manual of Patent Examining Procedure (MPEP) §§ 609, 2001.06(b). Equally fatal is the fact that the Brownrigg Allegations fail to set forth, with requisite specificity, how any of the purported changes to the abstracts, claims or other portions of the ‘892, ‘902 and/or other IP CO patent applications-including any so-called “new matter” purportedly added to the ‘902 application-is material to patentability of the ‘314 or ‘471 patents, or any other asserted Brownrigg Patent. In addition, they fail to allege with requisite specificity that a particular individual knew and understood that the changes constituted alleged new matter, understood the materiality of the alleged new matter and how it relates, if at all, to the asserted claims and claim elements of the Brownrigg Patents, and knowingly included the alleged new matter with the intent to deceive the PTO. See BlackBerry Ltd. v. Typo Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 16 of 28 17 Products LLC, No. 14-CV-00023-WHO, 2014 WL 1867009, at *4 (N.D. Cal. May 8, 2014); Cave Consulting Grp., Inc. v. Optuminsight, Inc., No. 15-CV-03424-JCS, 2016 WL 1611042, at *13 (N.D. Cal. Apr. 22, 2016). The Brownrigg Allegations also include the following conclusory and/or irrelevant allegations that fail to adequately plead inequitable conduct under any pleading standard: • IP CO and/or its attorneys engaged in a “pattern of misconduct” directed to obtaining unsupported claims (Doc. 198/204 at ¶ 393); and • IP CO and/or its attorneys made statements to the PTO that were knowingly false (Doc. 198/204 at ¶¶ 394, 431); and • IP CO and/or its attorneys committed inequitable conduct which renders unenforceable all claims of “any patent that both claims priority to the ‘895a pplication and includes claims directed to route optimization by the server.” (Doc. 198/204 at ¶ 455); and • IP CO and/or its attorneys committed unidentified acts of inequitable conduct which renders unidentified Brownrigg patents unenforceable (Doc. 198/204 at ¶ 455). Bald, unassociated assertions such as these fail to state a claim upon which relief can granted and cannot withstand a motion to dismiss. See Fed. R. Civ. P. 8(a)(2); see also Twombly, 550 U.S. 544 at 545. 2. Emerson’s Eleventh Affirmative Defense and Count I of its Declaratory Judgment Counterclaims, Alleging Infectious Unenforceability with respect to the Brownrigg Patents, Fail to State a Claim upon which Relief can be Granted. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 17 of 28 18 Emerson’s attempts to plead inequitable conduct indirectly through the doctrine of infectious unenforceability with respect to the Brownrigg Patents fails for the following reasons. First, Emerson’s failure to properly plead inequitable conduct with respect to the Brownrigg Patents means that there is no underlying inequitable conduct upon which infectious unenforceability can rely. Second, Emerson’s failure to allege an “immediate and necessary” relationship between any alleged inequitable conduct occurring in connection with the ‘314, ‘471, and ‘496 patents and the enforceability of the ‘062 and ‘516 patents is fatal to its allegations. See Bone Care Int’l, LLC v. Pentech Pharm., Inc., No. 08-CV-1083, 2010 WL 1655455, at *3 (N.D. Ill. Apr. 23, 2010) (“In order to plead inequitable conduct with particularity under Rule 9(b), Defendants must allege an immediate and necessary relation between the ‘116 patent and the specific inequitable conduct alleged. Defendants’ failure to do so means that their first three inequitable conduct allegations cannot stand . . . .”). Third, bald allegations based on “priority” or “relatedness” are insufficient to invoke the infectious unenforceability doctrine. See id. at *3 (finding that the mere fact that a later-issued patent is related to an earlier one is not sufficient to invoke the infectious unenforceability doctrine); see also Pharmacia Corp. v. Par Pharm. Inc., 417 F.3d 1369, 1375 (Fed.Cir. 2005) (“this court’s inequitable conduct cases do not extend inequitable conduct in one Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 18 of 28 19 patent to another patent that was not acquired through culpable conduct.”). Accordingly, Emerson fails to adequately plead inequitable conduct in accordance with the Exergen standard espoused by Emerson or the appropriate standard the Report employs. D. The Petite Patents. 1. Emerson’s Twelfth Affirmative Defense and Count II of its Declaratory Judgment Claims, Alleging Inequitable Conduct Associated with the Petite Patents, Fail to State a Claim upon which Relief can be Granted. Emerson’s Twelfth Affirmative Defense and Count II of Emerson’s Counterclaims, alleging inequitable conduct associated with the asserted ‘692, ‘661, ‘732, ‘780, ‘893, ‘511, 492 and ‘842 patents and unasserted ‘059, ‘767, ‘667, ‘010, ‘931 and ‘930 patents (hereinafter “the Petite Allegations”), fail to state a claim upon which relief can be granted. Specifically, the Petite Allegations fail to allege facts from which this Court could reasonably infer that any specific person involved with prosecution of the asserted or unasserted Petite Patents knew and understood the purported materiality of the Kahn reference at the relevant time. They also fail to allege that the same person, at the relevant time, withheld the Kahn reference in connection with one, some or all of the patent applications that issued as the asserted or unasserted Petite Patents, with a specific intent to deceive the PTO. Instead, the allegations at best identify different attorneys from different Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 19 of 28 20 law firms that are alleged to have acted at different times with respect to different patents. See Exergen, 575 F.3d at 1329-30; see also Drew Techs., 2014 WL 562458, at *3. Worse, the Petite Allegations fail to identify the specific claims and claim limitations in the asserted and unasserted Petite Patents to which the Kahn reference is allegedly relevant. They also fail to allege what the purported materiality of the allegedly withheld Kahn reference is, and how and why that particular portion of the Kahn reference is material to each relevant asserted claim element, if at all. See BlackBerry, 2014 WL 1867009, at *4 (pleading must affirmatively identify the specific claims of the asserted patent to which the withheld reference is relevant, the relevant limitations within those claims of the asserted patent, and where in the withheld references the material information is found); see also Cave Consulting Grp., 2016 WL 1611042, at *13 (pleading must identify the specific claims that are implicated by the various prior art materials). Significantly, Emerson fails to allege how, with requisite legal support and factual specificity, a PTO inter partes review proceeding occurring in 2016 and involving the Kahn prior art reference could somehow retroactively establish the so-called materiality of that reference at the time the asserted and unasserted Petite Patents were being prosecuted many years earlier and under a different standard of Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 20 of 28 21 review. Exergen, 575 F.3d at 1330 (noting that it is improper to “assume that an individual, who generally knew that a reference existed, also knew of the specific material information contained in that reference”). Once again, the allegations fail to allege what the purported materiality of the allegedly withheld Kahn reference is, and how and why that particular portion of the Kahn reference is material to each relevant asserted claim element, if at all. They also fail to allege that a specific person involved with prosecution of the asserted or unasserted Petite Patents knew of the (unidentified) materiality of the Kahn reference and withheld it from the PTO with an intent to deceive at the time those patents were being prosecuted before the PTO. Id. Rather, the Petite Allegations weave a convoluted tale that is “at best, confusing (indeed, overall confounding, and even, in some aspects puzzling)” (Doc. 183 at 43). Indeed, the disparate allegations amount to nothing more than a hodgepodge of patent applications, purported claims rejections and allowances, alleged prior art and arguments, terminal disclaimers, conclusory assertions of what patent examiners knew, did and/or might have done, and other so-called events-none of which are sufficiently explained or connected in a manner that, even if taken as true, would lead to a reasonable inference of materiality under the heightened Exergen pleading standard. 575 F.3d at 1329-30. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 21 of 28 22 Yet another striking example of this impermissible “shotgun” style of pleading is shown in Paragraphs 501 through 564 of Emerson’s Twelfth Affirmative Defense (Doc. 198/204 at ¶¶ 501-564; Count II). Paragraphs 501 through 564 relate to purported activities of SIPCO and/or its attorneys in establishing a priority date in an IPR conducted in 2016-many years after the asserted and unasserted Petite Patents issued. These bizarre, convoluted and disjointed paragraphs fail to allege who knew what information (if any), and how and why the information is purportedly material to any asserted or unasserted Petite Patent claim. They also fail to allege that a specific individual knew of any withheld material information or of any material misrepresentation, and withheld or misrepresented the information with a specific intent to deceive the PTO (Doc. 198/204 at ¶¶ 501-564; Count II); Exergen, 575 F.3d at 1328-30. Paragraphs 565 through 592 of Emerson’s Twelfth Affirmative Defense, which pertain to alleged acts associated with settlements, ownership transfers, copying, amendments, IDS submissions and other purported events in regard to the asserted and unasserted Petite patents, serve as an additional example of Emerson’s impermissible “shot gun” style of pleading (Doc. 198/204 at ¶¶ 565-92; Count II). These paragraphs fail to allege with requisite specificity the who, what, when, where, how and why of any alleged inequitable conduct. Exergen, 575 F.3d at Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 22 of 28 23 1328-30. They also fail to allege that a specific individual knew of any withheld material information or of any material misrepresentation, and withheld or misrepresented the information with a specific intent to deceive the PTO (Doc. 198/204 at ¶¶ 565-92; Count II); Exergen, 575 F.3d at 1328-30. The same is true for Paragraphs 465, 475, 484, and 493-96 of Emerson’s Twelfth Affirmative Defense (Doc. 198/204 at ¶¶ 465, 475, 484, and 493-96; Count II). These paragraphs fail to attribute any alleged acts or omissions to any person at all. Instead, they lodge imprecise, expansive and conclusory assertions regarding purported knowledge some individuals in a group might have allegedly possessed, disclosed to, or concealed from others in that group, so as to render myriad possibilities about who did what, when and why (Doc. 198/204 at ¶¶ 465, 475, 484, and 493-96; Count II); see also Exergen 575 F.3d at 1328-30. Once again, they fail to allege with requisite specificity the who, what, when, where, how and why of any alleged inequitable conduct. Id. They also fail to allege that a specific individual knew of any withheld material information or of any material misrepresentation, and withheld or misrepresented the information with a specific intent to deceive the PTO. Id. Regarding the allegations associated with the correction of a priority claim concerning the ‘780 patent, they clearly fail to adequately allege the who, what, Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 23 of 28 24 when, where, how and why of any alleged action taken with respect to correcting a priority claim concerning the ‘780 patent. Exergen, 575 F.3d at 1327-29. The same is true with respect to Emerson’s allegations concerning the ownership status of the ‘059 patent during prosecution of the ‘739 application. They fail to adequately allege the who, what, when, where, how and why of any alleged action taken with respect to ‘059 patent or ‘739 application. Id. Nowhere do they allege materiality with requisite specificity, including how any of the alleged actions are material to the ‘780 or ‘059 patents, or any other Petite Patent, let alone any claims or claim elements therein. They also fail to allege facts from which a reasonable inference of an intent to deceive the PTO could be drawn. Id. 2. Emerson’s Twelfth Affirmative Defense and Count II of its Declaratory Judgment Counterclaims, Alleging Infectious Unenforceability with respect to the Petite Patents, Fail to State a Claim upon which Relief can be Granted. Emerson’s attempts to plead inequitable conduct indirectly through the doctrine of infectious unenforceability with respect to the Petite Patents fails for the same reasons outlined above for the Brownrigg Patents. First, Emerson’s failure to properly plead inequitable conduct with respect to the Petite Patents means that there is no underlying inequitable conduct upon which infectious unenforceability can rely. Second, Emerson’s failure to allege an “immediate and necessary” relationship between any such alleged inequitable conduct and any Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 24 of 28 25 other patent, including U.S. Patent Nos. 8,212,667, 8,223,010, 8,410,931, and 8,193,930, thereby rendering that other patent unenforceable on account of infectious inequitable conduct, is fatal to its allegations. See Bone Care Int’l, 2010 WL 1655455, at *3. Third, bald allegations based on “priority” or “relatedness” are insufficient to invoke the infectious unenforceability doctrine. See id. at *3 (finding that the mere fact that a later-issued patent is related to an earlier one is not sufficient to invoke the infectious unenforceability doctrine). Accordingly, Emerson fails to adequately plead inequitable conduct in accordance with the Exergen standard espoused by Emerson or the appropriate standard the Report employs. V. CONCLUSION Emerson’s inequitable conduct allegations are set forth in an impermissible, impenetrable shotgun style of pleading that this Court has previously stricken, and ultimately fail to adequately plead inequitable conduct in accordance with the requisite standard. Accordingly, for these and other reasons set forth above, Defendant’s Motion to Dismiss Plaintiffs’ Answer to the Second Amended Complaint should be granted, and Emerson’s Eleventh and Twelfth Affirmative Defenses and Counts I and II of its Declaratory Judgment Counterclaims should be dismissed and stricken. Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 25 of 28 26 This 16th day of February 2017. /s/ Paul J. Cronin Peter D. Coffman Georgia Bar No. 173120 Alexandra Nelson Georgia Bar No. 241352 Thompson Hine LLP Two Alliance Center, Suite 1600 3560 Lenox Road Atlanta, Georgia 30326 Telephone: 404-541-2900 Facsimile: 404-541-2905 Peter.Coffman@ThompsonHine.com Alex.Nelson@ThompsonHine.com Paul J. Cronin, Pro hac vice James C. Hall, Pro hac vice Timothy J. Reppucci, Pro hac vice Nutter, McClennen & Fish LLP 155 Seaport Boulevard Boston, Massachusetts 02210-2604 Telephone: 617-439-2000 Facsimile: 617-310-9000 pcronin@nutter.com jhall@nutter.com treppucci@nutter.com Counsel for SIPCO, LLC and IP CO, LLC Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 26 of 28 27 CERTIFICATE OF SERVICE This is to certify that I have this day served all counsel of record with a copy of the within and foregoing DEFENDANTS, SIPCO, LLC and IP CO LLC (D/B/A InutsIQ’s) MOTION TO DISMISS EMERSON’S INEQUITABLE CONDUCT ALLEGATIONS using the Court’s ECF filing system, which will automatically send a copy to all counsel of record registered to receive service thereby upon the following: Donald L. Jackson James D. Berquist J. Scott Davidson Alan A. Wright Walter D. Davis, Jr. Davidson Berquist Jackson & Gowdey, LLP 8300 Greensboro Drive, Suite 500 McLean, Virginia 22102 William V. Custer Damon J. Whitaker Bryan Cave, LLP One Atlantic Center, Fourteenth Floor 1201 W. Peachtree St., N.W. Atlanta, Georgia 30309 Ryan T. Pumpian Bloom Sugarman LLP 977 Ponce de Leon Ave., NE Atlanta, Georgia 30306 /s/ Paul J. Cronin Paul J. Cronin Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 27 of 28 28 CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1 The undersigned hereby certifies that this filing was prepared using one of the font and point selections approved by this Court in Local Rule 5.1C. Specifically, Times New Roman font was used in 14 point. /s/ Paul J. Cronin Paul J. Cronin Case 1:15-cv-00319-AT Document 214-1 Filed 02/16/17 Page 28 of 28
