TENA CAMPBELL, District Judge.
In this patent infringement suit, Plaintiff ZAGG Intellectual Property Holding Company, Inc. (ZAGG) seeks dismissal of the Defendants' inequitable conduct counterclaims
ZAGG contends that the Defendants have infringed the claims of its United States Patent No. 7,784,610 (the `610 Patent). The `610 Patent claims an invention of a kit used to apply protective sheets of clear plastic film to the surfaces of electronic devices, such as cell phones, through use of an adhesive spray and a squeegee. The `610 Patent issued on August 31, 2010, with Andrew Mason listed as the inventor. Mr. Mason assigned the `610 Patent to ZAGG as part of a settlement of an earlier patent suit that was pending before this court (
The Defendants contend that the `610 Patent is invalid based on inequitable conduct, specifically, that the inventor Andrew Mason and Mr. Mason's patent attorney David Duckworth intentionally withheld two sets of material information from the United States Patent & Trademark Office (PTO) while the application for Patent `610 (Application `879) was pending.
The first set of material information was an October 2001 3M Technical Bulletin entitled "Polyurethane Protective Tape: Preparation and Application Instructions." Defendants contend that the 3M Technical Bulletin is "material prior art," was disclosed to Mr. Duckworth in August 2010, before the `610 Patent was issued, and should have been disclosed to the PTO.
The second set of information was the existence and nature of the "BodyGuardz" product line sold by Mason's and ZAGG's competitor, NLU Products, beginning in November 2006. Defendants XO Skins LLC, Fusion of Ideas, and Ghost Armor LLC (collectively, XO Skins Defendants)
"Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the [PTO], which includes a duty to disclose to the [PTO] all information known to that individual to be material to patentability as defined in this section." 37 C.F.R. § 1.56(a). An individual who breaches the duty of candor may have engaged in inequitable conduct.
The duty to disclose exists "until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned."
To establish inequitable conduct, the accused infringer must prove "(1) an individual associated with the filing and prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) the individual did so with a specific intent to deceive the PTO."
The Federal Circuit recognized that "direct evidence of deceptive intent is rare," so the court "may infer intent from indirect and circumstantial evidence."
Inequitable conduct must be pled with particularity under Rule 9(b) of the Federal Rules of Civil Procedure.
ZAGG contends that the inequitable conduct counterclaims fail to state a claim upon which relief may be granted for three reasons. First, ZAGG asserts that the patentee's attorney, David Duckworth, was not substantively involved in the prosecution of the `610 Patent and so had no duty to disclose. Second, ZAGG contends that the pleadings fail to identify how the 3M Technical Bulletin can be considered "but-for" material under the
Defendants allege that David Duckworth, who became the patentee's counsel in approximately July 2010,
The Defendants have clearly identified Mr. Duckworth as an individual they believe withheld information from the PTO. They have also identified Mr. Mason (the inventor listed on the `610 Patent) as a person substantively involved with prosecution of the patent (he is the "patentee" referred to in the counterclaims and is easily identified from the documents).
The Defendants have adequately alleged that Mr. Duckworth and Mr. Mason were "substantively involved" in the preparation or prosecution of the Application `879 and so had a duty to disclose material information to the PTO. The duty of candor is broadly worded in the regulations and the case law. It expressly applies to the inventor, Mr. Mason. And although the August 2, 2010 letter suggests that Mr. Duckworth's involvement began after the vast majority of the `879 Application was prosecuted (that is, he became counsel for Mr. Mason in early July 2010, approximately two months before the `610 Patent was issued), the factual allegations adequately support the inference that he nevertheless was substantively involved.
From Mr. Duckworth's letters one can infer that his participation related to the content of the application or decisions concerning the application and that his involvement was not "wholly administrative or secretarial in nature."
The Defendants' generic reference to "other persons," however, is insufficient to include any other individual in the analysis. The Defendants may not justify their "on information and belief" allegation based on the excuse that the "facts concerning the extent of the work of these employees . . . are uniquely within those individuals' control." Even though it may be reasonable to infer that a group of individuals was substantively involved in prosecution of a patent, allowing an inequitable conduct claim to proceed based on the alleged actions of "Jane Does" and "John Does" would disregard the standards set forth in Rule 9(b),
The Federal Circuit in
ZAGG contends that the Defendants' allegations of materiality concerning the 3M Technical Bulletin are deficient.
(Pl.'s Mem. Supp. Mot. Dismiss (Docket No. 93) at 7.) According to ZAGG, Defendants have failed to do this.
Defendants counter that Paragraph 22 in Count III of the counterclaim brought by the XO Skins Defendants (repeated in Paragraph 7 of SGP's fifth affirmative defense) coupled with a letter sent by Robyn Phillips on August 30, 2010, to Mr. Duckworth (attached as an exhibit to the XO Skins Defendants' Counterclaim) is sufficient to plead materiality. The court disagrees. Both Paragraph 22 and the letter make conclusory statements that fail to specifically "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. . . ."
Although 9(b) states that conditions of the mind may be averred generally, the Federal Circuit requires that "the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind."
ZAGG contends that the court must dismiss the inequitable conduct claims unless the inference of intent is "the single most reasonable inference" that may be drawn from the allegations. But such a standard applies only when the court is evaluating the claim on the merits under the clear and convincing standard. At the pleading stage, the requirement of an inference of deceptive intent is not so rigid. As the Federal Circuit noted in
575 F.3d at 1329 n.5 (emphasis in original; internal citations and quotation marks omitted).
As set forth below, the Defendants have adequately alleged that Mr. Duckworth and Mr. Mason had knowledge of the 3M Technical Bulletin and intent to withhold it from the PTO. But the Defendants have not adequately alleged knowledge or intent concerning the BodyGuardz product line.
Defendants allege that Ms. Phillips, in her August 2, 2010 letter to Mr. Duckworth, told Mr. Duckworth "of the existence of this Technical Bulletin and of his and Mr. Mason's (as the patentee) duty and obligation to disclose this reference to the Examiner of the USPTO." (XO Skins' Counterclaim (ECF No. 87) ¶ 23.) The letter itself, attached as an exhibit to the counterclaim, does not mention Mr. Mason. But at the pleading stage, the court does not find that omission significant. There is a reasonable inference that Mr. Duckworth told Mr. Mason of the letter, particularly since in his response to Ms. Phillips, Mr. Duckworth several times refers to "we." (
In their memorandum and at the hearing, Defendants argued that because the holder of the `610 Patent sued ZAGG and NLU, the manufacturer of the BodyGuardz products, for infringing the `610 Patent in federal court the day after the `610 Patent issued (the "California Suit"), the patentee clearly knew of the existence and significance of the BodyGuardz product line. But Defendants did not refer to the California Suit in their counterclaims and made only conclusory allegations about ZAGG's intent to deceive. The allegations are not sufficient to establish knowledge of the product line's materiality or an intent to withhold it from the PTO.
For the foregoing reasons, the court ORDERS as follows:
1. Plaintiff's Motion to Dismiss (ECF No. 51) is GRANTED WITHOUT PREJUDICE.
2. Plaintiff's Motion to Dismiss (ECF No. 53) is GRANTED WITHOUT PREJUDICE.
3. Plaintiff's Motion to Dismiss (ECF No. 92) is GRANTED WITHOUT PREJUDICE.
4. Plaintiff's Motion to Dismiss (ECF No. 94) is GRANTED WITHOUT PREJUDICE.
5. The Defendants may file, no later than 30 days from the date of this Order, a motion for leave to file amended inequitable conduct counterclaims (nothing else in the counterclaims or answers may be amended) with the proposed amended counterclaims attached. If nothing is filed by the deadline, the inequitable conduct counterclaims and any related affirmative defense will be dismissed WITH PREJUDICE.