PHILIP A. BRIMMER, United States District Judge.
This matter is before the Court on Crocs, Inc.'s Motion to Dismiss Counterclaims V-XII [Docket No. 227] and Scott Seamans' Motion to Dismiss Counterclaims VI-IX [Docket No. 231]. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.
Plaintiff Crocs, Inc. ("Crocs") filed Case No. 06-cv-00605-PAB-KMT on April 3, 2006, alleging, inter alia, infringement of United States Patent Nos. 6,993,858 (the "'858 patent") and D 517,789 (the "'789 patent"). Docket No. 1.
On May 12, 2006, defendants Effervescent, Inc., Holey Soles Holdings, Ltd., and former defendant Collective Licensing International, LLC moved to stay this case pending proceedings under Section 337 of the Tariff Act of 1930 before the International Trade Commission ("ITC"). Docket No. 26. The Court granted the motion on May 16, 2006 and administratively closed the case. Docket No. 31. In 2012, during a brief reopening of the case, Crocs added one of the Dawgs
On February 24, 2017, Crocs filed a second amended complaint, adding claims for infringement of U.S. Patent No. D632,-465 ("'465 Patent"). Docket No. 473. On March 10, 2017, Dawgs filed a second amended answer and counterclaims. Docket No. 487. The second amended answer and counterclaims added three claims for declaratory judgment relief related to the '465 Patent. Docket No. 487 at 50-51, ¶¶ 130-33; 52, ¶¶ 143-46; 70-72, ¶¶ 223-35. The second amended answer and counterclaims also added minor factual details to Crocs' remaining counterclaims. Compare Docket No. 209 at 39-83, ¶¶ 75-262 with Docket No. 487 at 49-108, ¶¶ 122-347. The parties dispute the propriety of Dawgs' modifications of its counterclaims in response to the filing of a second amended complaint. See Docket No. 448 at 4-6; Docket No. 493 at 5.
Because the modified factual allegations in the second amended counterclaims do not change the Court's analysis with respect to the pending motions to dismiss, the Court finds it appropriate to consider Crocs and Seamans' motions despite the fact that they are directed to the first amended answer and counterclaims. Where the second amended answer and counterclaims provides relevant additional
Crocs is the leading manufacturer of "molded clog-type footwear products." Id. at 18, ¶ 20. Dawgs is a competitor of Crocs and sells a variety of footwear, including molded clogs. Id. at 20, ¶ 24. According to the counterclaims, Crocs had been manufacturing and selling clog-shaped shoes made from ethyl vinyl acetate ("EVA") since 2002. Id. at 18, ¶ 20. At its inception, Crocs "decided to market the exact shoe that had already been developed and was already being manufactured and distributed by Foam Creations, Inc." Id. That shoe, in turn, was made using molds designed by Ettore Battiston, an Italian inventor. Id. The "Battiston Molded Clog" was sold in the United States as the "AquaClog," "Explorer," and "Waldies," among other names. Id. In the early 2000s, other rubber clogs were available for sale in the United States. For example, BIHOS S.R.L. ("BIHOS"), an Italian shoe designer and manufacturer, distributed and sold molded clog footwear under the brand name Calzuro starting in the mid-1980s. Id. at 19, ¶ 21. By 2001, Calzuro was selling a molded clog that featured a "pivoting strap" in the United States. Id.
On February 7, 2006, the U.S. Patent and Trademark Office ("PTO") issued the '858 patent. Id. at 20, ¶ 25. Crocs' co-founder, Scott Seamans, was listed as the sole inventor. Id. Dawgs alleges that "[e]ach and every functional feature disclosed in the [`858] patent application, except the heel strap, already existed in the Battiston Molded Clog." Id. at 21, ¶ 26. The '858 patent also contains diagrams and descriptions of the Battiston molded clog, with the addition of a pivoting strap. Id. According to Dawgs, "[s]traps have existed for many years on a wide variety of footwear." Id. By 2001, Calzuro sold a molded clog with a pivoting strap attached by a rivet. Id. In addition, the features identified in the '858 patent "were disclosed and described in Italian (utility) Patent 00245068 filed in June 1998, published on December 22, 1999, and granted in March 2002" ("the BIHOS Patent"). Id.
On March 28, 2006, the PTO issued the '789 design patent. Id. at 22, ¶ 28. Seamans was again listed as the sole inventor. Id. According to Dawgs, the '789 patent "contains diagrams of the base shoe that are substantially similar to the diagrams that were created by Ettore Battiston in 2000 and assigned from Battiston to [Foam Creations, Inc.], with a strap added that serves a functional purpose and such as had previously existed for many years on a wide variety of footwear, including clogs."
Crocs has been unable to secure patents similar to the '858 and '789 patents outside the United States because of the "well-known existence of prior sales, the widely-recognized existence of invalidating prior art, and the established identity of the true and proper inventorship and origin of the shoe." Id. at 24-25, ¶ 34; see also id. at 25-30, ¶¶ 35-49.
On March 31, 2006, just after the '789 patent issued, Crocs filed a complaint with the ITC against Double Diamond Distribution, Ltd. ("Double Diamond") and other respondents, alleging infringement and seeking a General Exclusion Order to ban
On April 3, 2006, Crocs filed the instant lawsuit alleging patent infringement even though Crocs "knew the patents identified incorrect inventorship and had been obtained by withholding material information from the patent examiner." Id. at 30, ¶ 51. On August 6, 2012, Crocs filed its first amended complaint, adding U.S.A. Dawgs, Inc. ("U.S.A. Dawgs") as a named defendant. Id. at 32, ¶ 58. Dawgs claims that this litigation is objectively baseless in light of the unenforceability of the patents and because, by the time Crocs filed the first amended complaint, it "knew or should have known" that the BIHOS patent "rendered the claim s of at least the '858 patent" invalid. Id.
On August 3, 2012, Double Diamond filed an application for inter partes reexamination of the '858 patent with the PTO. Id. at 33, ¶ 60. On August 8, 2012, as retaliation for the filing of the application for reexamination, Crocs initiated a lawsuit against CVS Pharmacy, a retailer who sold USA Dawgs products. Id. at 33-34, ¶¶ 61-62. On August 24, 2012, USA Dawgs filed an application for inter partes reexamination with the PTO of the '789 patent. Id. at 34, ¶ 63. On April 29, 2013, the PTO issued a non-final Office Action rejecting the single claim of the '789 patent. Id., ¶ 64. Crocs filed a response on July 29, 2013, which included a declaration from Scott Seamans stating that he is "the sole inventor" of the '789 patent. Id. at 34-35, ¶ 65. On February 11, 2016, the PTO once again rejected the sole claim of the '789 patent as unpatentable and closed the reexamination prosecution related to that patent. Id. at 35, ¶ 66.
Dawgs claims that, as a result of the foregoing conduct, Crocs has secured its own success, obtaining a market share for "molded clog-type footwear" in excess of 90%, and negatively impacted Dawgs. Id. at 36-38, ¶¶ 69-74.
Dawgs brings twelve counterclaims against Crocs, Scott Seamans, and John and Jane Does 1-100. Dawgs seeks several forms of declaratory relief against Crocs: a declaratory judgment for non-infringement of the '858 patent (first claim for relief); a declaratory judgment for non-infringement of the '789 patent (second claim for relief); a declaratory judgment of invalidity of the '858 patent (third claim for relief); a declaratory judgment of invalidity of the '789 patent (fourth claim for relief); and a declaratory judgment of unenforceability of the '858 patent and the '789 patent based on inequitable conduct (fifth claim for relief). Id. at 39-54, ¶¶ 75-149. In addition, Dawgs alleges claims related to anticompetitive conduct against, variously, Crocs, Seamans, and subsets of the John and Jane Does: actual monopolization in violation of § 2 of the Sherman Act (sixth claim for relief); attempted monopolization in violation of § 2 of the Sherman Act (seventh claim for relief); conspiracy to restrain trade in violation of § 1 of the Sherman Act (eighth
Crocs has moved to dismiss counterclaims five through twelve.
Dismissal of a claim under Rule 12(b)(6) is appropriate where a party fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Rule 8 requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. (8)(a)(2). Rule 8(a)'s "short and plain statement" mandate requires that a party allege enough factual matter that, taken as true, makes his "claim to relief . . . plausible on its face." Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
"The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003). In doing so, the Court "must accept all the well-pleaded allegations of the complaint as true and must construe them in the light most favorable to the plaintiff." Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007).
Generally, "[s]pecific facts are not necessary; the statement need only `give the defendant fair notice of what the claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955) (ellipses omitted). The "plausibility" standard requires that relief must plausibly follow from the facts alleged, not that the facts themselves be plausible. Bryson, 534 F.3d at 1286.
However, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not shown — that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and alteration marks omitted). Thus, even though modern rules of pleading are somewhat forgiving, "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Bryson, 534 F.3d at 1286 (quotation marks and citation omitted).
Dawgs contends that the '789 patent and the '858 patent are unenforceable as a result of false declarations of inventorship and Crocs' failure to disclose information
Dawgs argues that the '858 and '759 patents are unenforceable as a result of misrepresentations made by Seamans and Crocs in the patent applications. According to Dawgs, Crocs filed U.S. Application No. 10/603,126 ("'126 application") on June 23, 2003. Docket No. 209 at 41, ¶ 93. The '126 application was granted as the '858 patent. Id. at 45, ¶ 113. The '126 application included a declaration from Scott Seamans, which provided that:
Id. at 43-44, ¶ 109. Dawgs alleges that the Seamans declaration is false because Seamans was not "the original and first inventor of the subject matter which is claimed." Id. at 44, ¶ 110. Dawgs does not specifically allege who should have been named as an additional inventor on the '126 application. Instead, the fifth counterclaim alleges that the three independent claims of the '126 application were "directed to, intended to cover, and [did] in fact cover" the molded clog designed by Ettore Battiston ("Battiston molded clog") and the work-shoe created by Battiston ("Battiston work-shoe"). Id. at 42-43 ¶¶ 96, 100, 102. Dawgs goes on to allege that, "at the time the '126 application was filed," both Seamans and Crocs were "aware" of the Battiston work-shoe, the Battiston molded clog, and that Battiston conceived of the Battiston molded clog. Id. at 43, ¶¶ 104-107. In its response to the motion to dismiss, Dawgs reiterates that the claims of the '858 patent "were directed to the Battiston Molded Clog and the Battiston work-shoe" and that "Seamans was not the inventor of this subject matter." Docket No. 249 at 5. Dawgs asserts that the misrepresentation of inventorship was material to
On May 28, 2004, Crocs filed U.S. Application No. 29/206,427 ("'427 application"), which was granted as the '789 patent. Id. at 47, ¶ 121; 49, ¶ 135. Dawgs states that, because the '427 application claimed priority to the '126 application, the '427 application is infected by the Seamans declaration. Id. at 47, ¶¶ 122-23.
Dawgs claims that Seamans also issued a false declaration during the prosecution of the '858 patent, which Dawgs claims infected the '427 application. Id. at 47, ¶¶ 121-23. During the prosecution of the '858 patent, Seamans submitted a declaration stating:
Id. at 48, ¶ 131. As alleged in regard to the '126 application and the '858 patent, Dawgs refers to the Battiston Molded Clog as being referenced by the claims of the '427 application. Id. at 47, ¶ 125. According to Dawgs, the Seamans declaration was false because Seamans was not "the original, first and sole inventor of the subject matter which is claimed and for which a patent [was] sought." Id., ¶ 132.
During the reexamination of the '789 patent, Seamans and Crocs filed statements that Seamans is "the sole inventor of the '789 patent and that the drawings contained in the '416 and '126 applications "were renderings of a strapped shoe that [Seamans] designed." Id. at 52, ¶ 145. Dawgs alleges that these statements were false. Id. at 53, ¶ 146.
In regard to the inventorship allegations of the fifth counterclaim, Crocs argues that Dawgs has not pled facts suggesting that Ettore Battiston was a joint inventor along with Scott Seamans and, therefore, Seamans' declarations were not false as a matter of law. Docket No. 227 at 3-4. The fifth counterclaim posits that, because the independent claims of the '126 application "cover" the Battiston molded clog and work-shoe, and the figures in the '427 application "depict" the Battiston molded clog, Seamans cannot be the sole inventor. Docket No. 209 at 42-43, ¶¶ 96-97, 99-100, 102-103; 47, ¶¶ 126-28. In other words, Dawgs claims that, because the Battiston molded clog and Battiston work-shoe are prior art, Seamans cannot be the named inventor for purposes of the '126 or '427 applications—or the '858 and '789 patents that were issued as a result. However, "[a] contribution of information in the prior art cannot give rise to joint inventorship because it is not a contribution to conception." Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1362 (Fed. Cir. 2004). Accordingly, Dawgs does not sufficiently allege that Seamans was not the inventor, or the sole inventor, of the patents at issue. Dawgs also cannot show that Battiston and Seamans were joint inventors of the relevant patents because the fifth counterclaim does not allege that Seamans and Battiston collaborated or worked together to conceive of the relevant invention.
Dawgs' fifth counterclaim fails to state a claim for inequitable conduct based on Seamans' allegedly false declarations regarding inventorship and that portion of its counterclaim will be dismissed.
Dawgs also bases its claim for inequitable conduct on Crocs' failure to disclose information material to patentability in the prosecution of the '858 and '789 patents. Docket No. 209 at 49-52, ¶¶ 137-44. Dawgs alleges that Crocs failed to disclose the following: the identity and contributions of Ettore Battiston; correct inventorship; prior sales of the patented shoes; prior art design and sales of "WALDIES"; prior art design and sales of "EXPLORER"; Crocs' and/or Seamans' prior marketing sale and/or offer for sale of the shoes relevant to the patents-in-suit; the BIHOS patent; and the Calzuro molded clog. Id. at 49-51, ¶ 137. "[I]nequitable conduct, while a broader concept than fraud, must be pled with particularity under Rule 9(b)." Exergen, 575 F.3d at 1326.
Crocs first argues that Dawgs' allegations of "intentional concealment are implausible because they contradict the ITC findings." Docket No. 227 at 5. Crocs does not argue that Dawgs' arguments are barred by res judicata or collateral estoppel. ITC findings related to the validity of patents do not have preclusive effect. See Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1563-64 (Fed. Cir. 1996) (ITC decisions do not bind a subsequent federal court under the doctrine of claim preclusion); Texas Instruments, Inc. v. U.S. Int'l Trade Comm'n, 851 F.2d 342, 344 (Fed. Cir. 1988) ("[T]his court has stated that the ITC's determinations regarding patent issues should be given no res judicata or collateral estoppel effect."). Moreover, Crocs cites no authority to use non-binding ITC findings to measure the "plausibility" of claims, although that may be true for certain allegations. The Court finds no basis to dismiss portions of the fifth counterclaim because ITC rulings are inconsistent with them.
Crocs next argues that, even if the information described by Dawgs was withheld from the PTO, Dawgs has failed to plead its claims with particularity. Docket No. 227 at 5. "[T]o plead the `circumstances' of inequitable conduct with the requisite `particularity' [required by Rule 9(b)] ... the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." Exergen, 575 F.3d at 1328. Dawgs' pleadings fail to meet this heightened standard.
Dawgs has failed to plead facts showing that the information withheld by Crocs was material. In the eight paragraphs in this portion of the fifth counterclaim, Docket No. 209 at 49-52, ¶¶ 137-44, there is one reference to materiality, namely, that the "withheld references" were "clearly material." Id. at 51, ¶ 138. In Exergen, the court considered the adequacy of a pleading that alleged inequitable conduct and stated that various withheld references were "material" and "not cumulative to the information already of record." 575 F.3d at 1329. The Federal Circuit found that the allegations were deficient because
Crocs also argues that Dawgs fails to plead the requisite scienter for the claimed omissions. Docket No. 227 at 5. While a party may allege "knowledge" and "intent" generally, the pleadings must allege facts "from which a court may reasonably infer that a party acted with the requisite state of mind." Exergen, 575 F.3d at 1327. In alleging the elements of inequitable conduct, the pleading party must present facts from which it may be "plausibly inferred [that] ... the intent to deceive is the single most likely explanation for the non-disclosure." Pfizer Inc. v. Teva Pharm. USA, Inc., 803 F.Supp.2d 409, 432 (E.D. Va. 2011). A pattern of non-disclosures by a particular individual can support an inference that non-disclosure was made with specific intent to deceive. See Sanders v. The Mosaic Co., 418 Fed.Appx. 914, 919 (Fed. Cir. 2011) (unpublished) (affirming denial of a motion to dismiss where the pleadings alleged that an expert failed to disclose pertinent business relationships, omitted relevant publications from a curriculum vitae submitted to the PTO, and used an expert declaration written in significant part by an employee of another party).
The fifth counterclaim states that deceptive intent is evidenced by several facts: Crocs' withholding of references from the PTO, Crocs' sale of shoes in 2002 that fell within the scope of the '789 patent, Crocs' non-disclosure of a copyright agreement with a third party, Crocs' use of stickers to add a Crocs logo to another manufacturer's shoes it sold, Crocs' refusal to name additional inventors, and Crocs' decision not to enforce its patent against the Calzuro molded clog. Docket No. 209 at 51-52, ¶¶ 138-143. However, non-disclosure of facts, without more, does not show specific intent to deceive the PTO. Pfizer, 803 F.Supp.2d at 432. Dawgs nowhere links the alleged non-disclosures to deceptive intent.
Accordingly, because Dawgs fails to allege facts supporting an inference of inequitable conduct for Crocs' alleged omissions, that portion of Dawgs' fifth counterclaim will be dismissed.
Dawgs' sixth, seventh, and ninth claims for relief all relate to violations of the Sherman Act by Crocs, Seamans, and the John and Jane Does. Docket No. 209 at 54-68, ¶¶ 150-194; 72-75, ¶¶ 213-231. "The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power." Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d 1188, 1192 (10th Cir. 2009) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). Therefore, to state a claim for monopolization, Dawgs must plead power in a relevant market and anticompetitive conduct. Id.
Both Crocs and Seamans raise identical arguments concerning Dawgs' monopoly claims, the sixth, seventh, and ninth claims for relief. See Docket No. 227 at 6-15, 18-19; Docket No. 231 at 3-10. Accordingly, the Court considers these claims together.
The anticompetitive conduct discussed in the first amended counterclaims relates to a pattern of sham litigation and the enforcement of fraudulently procured patents. Docket No. 209 at 61-62, ¶ 173. "Those who petition government for redress are generally immune from antitrust liability." Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) ("PRE"). This protection stems from the First Amendment right to petition the Government. City of Columbia v. Omni Outdoor Advert., Inc., 499 U.S. 365, 379, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991). Even if a party's motives in seeking redress from the government are anti-competitive, the Noerr-Pennington doctrine "shields from the Sherman Act a concerted effort to influence public officials regardless of intent or purpose." Id. at 380, 111 S.Ct. 1344 (citing E. R. R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 141, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657, 670, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965)). This immunity applies to individuals and entities who seek relief in the courts. PRE, 508 U.S. at 56-57, 113 S.Ct. 1920 (discussing California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972)). Because Crocs has invoked the Noerr-Pennington doctrine, the burden is on Dawgs to show that it does not apply. Lala v. Frampton, No. 07-cv-02144-MSK-CBS, 2008 WL 4059874, at *6 (D. Colo. Aug. 28, 2008) (citing Aetna. U.S. Healthcare, Inc. v. Hoechst Aktiengesellschaft, 54 F.Supp.2d 1042, 1053 (D. Kan. 1999)).
There are two relevant exceptions to the Noerr-Pennington doctrine. First, under the so-called Walker Process exception, where a patent is procured by
In order to prevail on a Walker Process claim, Dawgs must allege that the party seeking to enforce a patent "obtained the patent by knowing and willful fraud on the [PTO] and maintained and enforced the patent with knowledge of the fraudulent procurement." TransWeb, LLC v. 3M Innovative Properties Co., 812 F.3d 1295, 1306 (Fed. Cir. 2016). In support of its monopoly allegations, Dawgs refers to the same allegations underlying its claims for inequitable conduct, namely, that Crocs, Seamans, and the John and Jane Does "fraudulently procured patents from the U.S. Patent Office by failing to disclose proper inventorship as well as known material, invalidating prior art, and prior sales." Docket No. 209 at 58, ¶ 163. This anticompetitive conduct relates to the same thing—procuring and enforcing patents. See id. at 58-60, ¶¶ 163-70.
Crocs argues that Dawgs has failed to adequately allege fraud on the PTO as required to state a Walker Process claim. Docket No. 227 at 13. In response, Dawgs directs the Court to its arguments in support of its inequitable conduct claim. Docket No. 249 at 8 ("These arguments all fail for the same reasons that Crocs' criticism of the inequitable conduct claims fails."). "[T]he showing required for proving inequitable conduct and the showing required for proving the fraud component of Walker Process liability may be nearly identical." Transweb, 812 F.3d at 1307. However, the Court has already rejected Dawgs' inequitable conduct claim. For the reasons discussed above, Dawgs' allegations of anticompetitive conduct are factually inadequate and fail to plead the scienter required to support a Walker Process claim. Dawgs has not carried its burden of showing that Crocs' conduct falls within the Walker Process exception to Noerr-Pennington immunity. Accordingly, the Court considers whether Dawgs has adequately alleged a pattern of sham litigation.
The sham litigation exception consists of two parts. First, "the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Second, from the subjective perspective of the accused party, the lawsuit must conceal "an attempt to interfere directly with the business relationships of a competitor." PRE, 508 U.S. at 60-61, 113 S.Ct. 1920. The classic example of a sham lawsuit is the filing of frivolous objections to the license application of a competitor simply to impose expense and delay. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). There is a "presumption that the assertion of infringement of a duly granted patent is made in good faith." iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir. 2011) (quoting Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1382 (Fed. Cir. 2005)).
Crocs states that its patent lawsuits cannot be considered objectively baseless because Crocs has prevailed against Dawgs in the Federal Circuit and the ITC. Docket No. 227 at 10. The Court agrees. "A winning lawsuit is by definition a reasonable effort at petitioning for redress and therefore not a sham." PRE, 508 U.S. at 60 n.5, 113 S.Ct. 1920. The Federal Circuit considered and rejected the argument that the '858 patent was obvious in light of prior art. Docket No. 209 at 31, ¶ 54; see also Crocs, Inc. v. Int'l Trade
Dawgs has not pled sufficient facts to support a claim based on fraud on the PTO or demonstrated that Crocs is engaged in "sham" litigation sufficient to fit within an exception to Noerr-Pennington immunity. Accordingly, the Court finds that Crocs is immune from antitrust liability for the conduct described in the sixth counterclaim, which will be dismissed.
A claim for attempted monopolization must allege "(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." Christy Sports, 555 F.3d at 1192 (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993)). To state a claim for conspiracy to monopolize, Dawgs must plead "conspiracy, specific intent to monopolize, and overt acts in furtherance of the conspiracy." Full Draw Prods. v. Easton Sports, Inc., 182 F.3d 745, 756 (10th Cir. 1999) (quotation omitted). A claim that depends on specific intent to monopolize hinges on "`predatory conduct,' which is `conduct that is in itself an independent violation of the antitrust laws or that has no legitimate business justification other than to destroy or damage competition.'" Re/Max Int'l v. Realty One, Inc., 900 F.Supp. 132, 153 (N.D. Ohio 1995) (quoting Great Escape, Inc. v. Union City Body Co., 791 F.2d 532, 541 (7th Cir. 1986)). Accordingly, in order to state a claim for attempted monopolization or conspiracy to monopolize, Dawgs must allege predatory conduct.
As discussed in the previous section, Crocs is immune from suit for seeking and enforcing its patents. Boulware v. State of Nev., Dep't of Human Res., 960 F.2d 793, 796 (9th Cir. 1992) (dismissal is proper where "the defendant's allegedly anticompetitive conduct is protected by the Noerr-Pennington doctrine."). Such actions by Crocs are the only potentially predatory conduct described in the seventh and ninth counterclaims. See Docket No. 209 at 67-68, ¶ 193; 72, ¶ 216. Accordingly, Dawgs' seventh and ninth counterclaims will be dismissed.
Dawgs alleges that Crocs and Seamans violated § 1 of the Sherman Act by conspiring to restrain trade. Docket No. 209 at 68-72, ¶¶ 195-212. Section 1 of the Sherman Act states: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States or with foreign nations, is declared to be illegal." 15 U.S.C. § 1. To plead a claim for conspiracy to restrain trade, Dawgs must show: "(1) an agreement to enter a conspiracy (2) designed to achieve an unlawful objective." U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 1001 (11th Cir. 1993). Crocs and Seamans argue that Dawgs' claim should be dismissed because the underlying conduct, the assertion of infringement of the '858 and '789 patents, is not anticompetitive.
The eighth counterclaim states that "Crocs and Scott Seamans have and are continuing to conspire to assert the '858 patent and '789 patent against Double Diamond, USA Dawgs, and CVS, despite their knowledge that both patents are invalid and/or unenforceable." Docket No. 209 at 68, ¶ 198. Thus, the objective of the conspiracy between Seamans and Crocs is alleged to be the defense and enforcement of their patents. As discussed above, such conduct is subject to immunity from antitrust liability.
Accordingly, Dawgs' eighth claim for relief will be dismissed.
Dawgs' tenth claim for relief alleges violations by Crocs and a subset of the John and Jane Doe defendants of §§ 1 and 2 of the Sherman Act and § 3 of the Clayton Act for entering into unlawful exclusionary arrangements and agreements with buyers and distributors. Docket No. 209 at 76-80, ¶¶ 232-250. Exclusive dealing arrangements are not unlawful in the absence of anticompetitive effects. Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961). In order to state a claim for unlawful
The tenth counterclaim is bereft of any facts suggesting that Crocs' actions substantially foreclosed a substantial share of the relevant market or Dawgs' ability to compete. Dawgs states that Crocs and the relevant subset of John and Jane Does have engaged in the following actions:
Docket No. 209 at 77-78, ¶ 240.
The tenth counterclaim fails to allege a particular exclusive dealing agreement between Crocs and a buyer or distributor. While the tenth counterclaim states that "Academy Sports, and others, [] informed Counterclaim Plaintiffs that the reason they would not carry Counterclaim Plaintiffs' products is because of agreements with Crocs," Docket No. 209 at 78-79, ¶ 243, nowhere in the counterclaim does Dawgs specify the nature of any such arrangement, e.g., whether the agreements bar purchases from Crocs' competitors, provide discounts for carrying a specified volume, or otherwise incentivize exclusivity. Moreover, Dawgs fails to allege "any facts demonstrating the total volume of commerce involved" in the exclusive dealing agreements. Compliance, 2010 WL 1416823, at *9. There are, accordingly, no allegations in the tenth counterclaim plausibly suggesting that the exclusive dealing arrangements have a substantial effect on the total volume of commerce involved in the market for molded clog-type footwear. Tampa Elec., 365 U.S. at 329, 81 S.Ct. 623
In the absence of factual allegations related to the nature of Crocs' alleged exclusive arrangements
Dawgs' eleventh claim for relief, presumably a state law claim, is brought against Crocs and a subset of John and Jane Does alleging intentional interference with business advantage. Docket No, 209 at 80-82, ¶¶ 251-254. Under Colorado law, "[o]ne who intentionally and improperly interferes with another's prospective contractual relation ... is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation." Harris Grp., Inc. v. Robinson, 209 P.3d 1188, 1195-96 (Colo. App. 2009) (quoting Restatement (Second) of Torts § 766B (1979)). In order to qualify as a protected relationship, "there [must be] a reasonable likelihood or probability that a contract would have resulted; there must be something beyond a mere hope." Klein v. Grynberg, 44 F.3d 1497, 1506 (10th Cir. 1995).
The first amended counterclaims repeat the list of interfering conduct described in Dawgs' tenth counterclaim:
The Court finds that Dawgs has failed to state a claim for intentional interference with business advantage. Accordingly, Dawgs' eleventh claim for relief will be dismissed.
Dawgs' twelfth claim for relief is brought pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), against Crocs. Docket No. 209 at 82-83, ¶¶ 255-262. Section 43(a)(1)(B) provides for liability against any person:
15 U.S.C. § 1125(a)(1)(B). The twelfth counterclaim states that "Crocs has been misleading the public and consumers by claiming that their [sic] footwear is made of an exclusive and proprietary closed-cell resin that they call `Croslite.'" Docket No. 209 at 82, ¶ 256. "Croslite" is in fact ethyl vinyl acetate, which is used by footwear companies around the world, including Dawgs. Id. Dawgs also claims that Crocs' promotional materials refer to "our patented CrosliteTM material" and "our proprietary CrosliteTM material," and that Croslite is a "revolutionary technology." Id. at 19, ¶ 22. Dawgs claims that, on information and belief, "Crocs does not own any exclusive proprietary or patent rights to the material from which its footwear is made." Id. Dawgs alleges that the descriptions of Croslite have misled consumers into believing that Crocs uses a different material from competitors and that Crocs owns the rights to such material. Id., ¶ 257. As a result, Dawgs alleges that consumers are deceived into concluding that the products sold by Dawgs are "made of inferior material compared to Crocs' molded footwear." Id. at 83, ¶ 260. Dawgs claims that, in the absence of an injunction and a court-ordered retraction, Crocs' promotional activities will cause it to "suffer a loss of consumer confidence, sales, profits, and goodwill." Id., ¶ 262.
Crocs argues that Dawgs has failed to allege standing under the Lanham Act or a cognizable injury that was proximately caused by the alleged Lanham Act violation. Docket No. 227 at 19-20. The basis for Crocs' argument is Lexmark Int'l, Inc. v. Static Control Components, Inc., U.S. ___, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). In Lexmark, the Supreme Court laid out a two-step test to determine when a party can sue under § 43(a) of the Lanham Act. Id. at 1388-90. First, the party raising a Lanham Act claim must "fall within the zone of interests protected by
The Supreme Court held that the zone of interests for a false advertising claim under the Lanham Act encompasses plaintiffs who suffer "an injury to a commercial interest in reputation or sales." Id. In order to demonstrate proximate cause under the Lanham Act, a plaintiff "must show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising; and that that occurs when deception of consumers causes them to withhold trade from the plaintiff." Id. at 1391.
Lexmark does not foreclose Dawgs' claim at the pleading stage.
Cross cites Critical Nurse Staffing, Inc. v. Four Corners Health Care Corp., 2014 WL 2739279 (D. Utah June 17, 2014), to show that Dawgs' pleadings are inadequate, but the plaintiff in Critical Nurse failed to plead any facts to suggest "whether the [false or misleading] statements were made in connection with commercial advertising, in commerce, and caused confusion, or were likely to cause confusion, amongst Plaintiff's clients." Id. at *5. Dawgs has pled facts to support its argument that Crocs has advertised its products using the term "Croslite," that its descriptions of Croslite were false, and that those descriptions have misled consumers about Dawgs' products.
Accordingly, Dawgs' twelfth claim for relief sufficiently states a claim at this stage in the proceedings.
For the foregoing reasons, it is