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Intex Recreation Corp. v. Team Worldwide Corp.

September 30, 2005

INTEX RECREATION CORP., PLAINTIFF,
v.
TEAM WORLDWIDE CORP., DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

MEMORANDUM OPINION

This patent infringement case is before the Court on defendant's motion to dismiss the third claim for relief in plaintiff's complaint and on defendant's motion to strike plaintiff's second affirmative defense to defendant's counterclaim. The claim and affirmative defense both assert inequitable conduct in defendant's application for a patent. Upon consideration of the arguments of the parties, the Court grants defendant's motion to strike and its motion to dismiss.

I. BACKGROUND

On October 15, 2004, plaintiff Intex Recreation Corporation ("Intex") filed a declaratory judgment action against defendant Team Worldwide Corporation ("TWC"), owner of United States Patent No. 6,703,469 B2 (the "'469 patent"), describing an inflatable air mattress and pump. An amended complaint followed on November 24, 2005. The amended complaint seeks a declaration of Intex's non-infringement of the '469 patent, a declaration of the '469 patent's invalidity under 35 U.S.C. §§ 102 and 103, and a declaration of the '469 patent's invalidity on the basis of inequitable conduct in defendant's prosecution of its application for that patent.*fn1

The amended complaint alleges two instances of inequitable conduct. First, it states that TWC "willfully or with gross negligence during the prosecution of the application that became the '469 Patent failed to disclose to the United States Patent and Trademark Office ("PTO") material prior art, including United States Patent No. 5,367,726 relating to a pneumatic support system, which misled the PTO." Am. Compl. ¶ 17. Second, the complaint alleges that TWC "submitted false information to the PTO as to TWC's qualification as a small entity with the intent to mislead the PTO." Id. ¶ 18.*fn2

On January 19, 2005, TWC filed a motion to dismiss plaintiff's claims of inequitable conduct under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. On the same day TWC also filed its answer and a counterclaim for infringement of the '469 patent. On February 7, plaintiff filed an answer to the counterclaim, asserting an affirmative defense of unenforceability of the '469 patent "as a result of TWC's inequitable conduct." Answer of Counterclaim Defendant Intex Recreation Corp. to Counterclaim ¶ 13. On February 28, 2005, TWC filed a motion to strike that affirmative defense on the same grounds it had asserted in its motion to dismiss -- legal insufficiency and failure to plead with particularity.

II. DISCUSSION

A. Standard of Review

A motion to dismiss for failure to state a claim should not be granted unless it appears beyond doubt that plaintiff can demonstrate no set of facts that supports its claim entitling it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1117 (D.C. Cir. 2000). In evaluating the motion to dismiss, the Court must accept the factual allegations in the complaint as true and draw all reasonable inferences in favor of plaintiff. See Harris v. Ladner, 127 F.3d 1121, 1123 (D.C. Cir. 1997). While the complaint is to be construed liberally, the Court need not accept factual inferences drawn by plaintiff if those inferences are not supported by facts alleged in the complaint, nor must the Court accept the plaintiff's legal conclusions. See National Treasury Employees Union v. United States, 101 F.3d 1423, 1430 (D.C. Cir. 1996); Kowal v. MCI Communication Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).

Rule 9(b) of the Federal Rules of Civil Procedure requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Defendant argues (and plaintiff does not dispute) that Rule 9(b) requires claims of inequitable conduct, like claims of fraud, to be pled with particularity. See Memorandum in Support of Motion by Team Worldwide Corporation to Dismiss the Third Claim for Relief of the First Amended Complaint for Declaratory Relief and Patent Invalidity of Plaintiff Intex Worldwide Corporation ("Mot. Dism.") at 5-6; Opp. Mot. Dism. at 1. Although it has never held squarely that Rule 9(b) applies to inequitable conduct claims, the Federal Circuit has suggested in dicta that this requirement is appropriate. See Ferguson Beauregard/Logic Controls v. Mega Sys., 350 F.3d 1327, 1344 (Fed. Cir. 2003) ("in contrast to the willfulness claim discussed above, inequitable conduct, while a broader concept than fraud, must be pled with particularity"). Most other federal courts to have considered the issue have required inequitable conduct claims to be pled with particularity. See, e.g., Magarl v. Lawler Mfg. Co., 2004 U.S. Dist. LEXIS 24283, at *34 (S.D. Ind. 2004); MedImmune, Inc. v. Centocor, Inc., 271 F. Supp. 2d 762, 772 (D.Md. 2003); Agere Sys. Guardian Corp. v. Proxim, Inc., 190 F. Supp. 2d 726, 733-43 (D. Del. 2002); Systemation, Inc. v. Engel Indus. Inc., 183 F.R.D. 49, 51 (D. Mass. 1998). This Court agrees.

The particularity requirement of Rule 9(b) demands that the pleader specify what statements were made and in what context, when they were made, who made them, and the manner in which the statements were misleading. See Firestone v. Firestone, 76 F.3d 1205, 1211 (D.C. Cir. 1996) (plaintiff must state the "time, place and content of the false misrepresentations, the fact misrepresented and what was retained or given up as a consequence of the fraud"); Kowal v. MCI Communications Corp., 16 F.3d 1271, 1277-78 (D.C. Cir. 1994) (same); In re Newbridge Networks Securities Litigation, 767 F. Supp. 275, 282 (D.D.C. 1991); 5 CHARLES ALAN WRIGHT & ARTHURR. MILLER, FEDERALPRACTICE AND PROCEDURE § 1297 (1994). "Malice, intent, knowledge," or other conditions of mind, however, may be averred generally. FED.R. CIV.P. 9(b)

Under Rule 12(f) of the Federal Rules of Civil Procedure, the court may strike from a pleading "any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." A court has "liberal discretion" to strike such filings as it deems appropriate. Stanbury Law Firm v. IRS, 221 F.3d 1059, 1063 (8th Cir. 2000); Pigford v. Veneman, 215 F.R.D. 2, 4 (D.D.C. 2003); see 2 MOORE'S FEDERAL PRACTICE § 12.37[1] at 12-93 to 12-94 (3d ed. 2002). Although striking pleadings is generally disfavored as an extreme remedy, a motion to strike a defense as insufficient "should be granted where it is clear that the affirmative defense is irrelevant and frivolous and its removal from the case would avoid wasting unnecessary time and money litigating the invalid defense." Ass'n of Am. Med. Colleges v. Princeton Review, Inc., 332 F. Supp. 2d 11, 22 (D.D.C. 2004) (quoting SEC v. Gulf & W. Indus., Inc., 502 F. Supp. 343, 345 (D.D.C. 1980)); see also Yurman Design, Inc. v. Chaindom Enters., Inc., 2002 WL 31358991, at *2-*3 (S.D.N.Y. 2002) (affirmative defenses alleging fraud stricken for failure to plead with requisite particularity); Environ Prods., Inc. v. Total Containment, Inc., 951 F.Supp. 57, 61-62 (E.D.Pa. 1996) ("Grant of a motion to strike is appropriate when there are no circumstances under which a defense could succeed.").

B. Plaintiff's Inequitable Conduct Claims

To support a determination that a patent applicant engaged in inequitable conduct, a party must show by clear and convincing evidence that the applicant breached its duty "to prosecute patent applications 'with candor, good faith, and honesty,'" and that it did so "with an intent to deceive or mislead the PTO." Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1233 (Fed. Cir. 2003). Upon finding such facts to be established, the court "weighs the findings and their premises" and makes a ...


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