LAUREL BEELER, Magistrate Judge.
Plaintiff Idan Dror (under the brand name IDStore) sold a cellphone-holder mount for cars ("IDStore Mount") through the website Amazon.
In December 2017, Amazon told Mr. Dror it was removing the sales listings for the IDStore Mount from its website because it received a notice from defendant Kenu, Inc. saying that the IDStore Mount infringes patents that Kenu owns, namely, patent number 9,080,714 ("714 Patent") and/or patent number 9,718,412 ("412 Patent"). On January 8, 2018, Amazon sent Mr. Dror a notice saying, "[T]he [IDStore Mount] was removed pursuant to a lawsuit settlement between Kenu and Amazon. We will not relist these items without a retraction of the notice from Kenu." On January 9, 2018, Mr. Dror (through his attorneys) sent Kenu a letter arguing that his IDStore Mount does not infringe the 412 Patent. On January 12, 2018, Kenu sent a letter in response, stating:
Mr. Dror sent follow-up letters to Kenu and Amazon but has been unable to convince Amazon to relist his IDStore Mount.
Mr. Dror now brings this declaratory-judgment lawsuit against Kenu, seeking a declaration that (1) his IDStore Mount does not infringe the 714 and 412 Patents and does not infringe two other continuation patents owned by Kenu, patent number 9,956,923 ("923 Patent") and patent number 10,315,585 ("585 Patent," and together with the 714 Patent, the 412 Patent, and the 923 Patent, "Patents"), (2) the Patents are invalid, and (3) the Patents are unenforceable based on purported inequitable conduct by Kenu in prosecuting the Patents. Mr. Dror also brings a claim under the California Unfair Competition Law ("UCL"), California Business and Professions Code § 17200 et seq.
Kenu moves to dismiss on several grounds. First, it argues that the court lacks subject-matter jurisdiction because it did not threaten Mr. Dror, Amazon, or any of Mr. Dror's customers with an infringement lawsuit, and thus there is no "actual controversy" "of sufficient immediacy and reality" to warrant a declaratory-judgment lawsuit. Moreover, it contends that even if Mr. Dror won a declaratory judgment, the declaration would be advisory, and Mr. Dror would lack Article III standing, because Amazon (which is not a party to this litigation) would be under no obligation to relist Mr. Dror's product. In addition, it argues that there is no case or controversy regarding the 923 or 585 Patents because Mr. Dror did not allege that Kenu expressly mentioned the 923 or 585 Patents to anyone in connection with Mr. Dror's IDStore Mount. Finally, it contends that Mr. Dror did not adequately plead plausible invalidity, inequitable-conduct, and UCL claims.
The court held a hearing and grants Kenu's motion to dismiss Mr. Dror's inequitable-conduct and UCL claims and gives Mr. Dror leave to amend. The court otherwise denies Kenu's motion to dismiss.
Plaintiff Idan Dror is an Amazon seller using the seller account "IDStore."
In December 2017, Kenu filed a complaint with Amazon claiming that the IDStore Mount infringes Kenu's 714 and 412 Patents.
To resolve this dispute, we suggest that you contact the patent owner directly:
Amazon removed the listings for the IDStore Mount.
Mr. Dror wrote to Amazon attaching a letter from his intellectual-property attorneys.
On January 8, 2018, Amazon responded, "Thank you for your messages. The items were removed pursuant to a lawsuit settlement agreement between Kenu and Amazon.com. We will not relist these items without a retraction of the notice from Kenu."
On January 9, 2018, Mr. Dror, through his attorneys, sent Kenu a letter asserting that the IDStore Mount does not infringe the 412 Patent.
On January 12, 2019, Kenu's General Counsel sent a letter in response to Mr. Dror, writing:
On January 21, 2018, Mr. Dror, through his attorneys, sent Kenu a letter in response, arguing again that the IDStore Mount does not infringe the 412 Patent.
Kenu did not respond to Mr. Dror's January 21, 2018 letter.
On April 2, 2019, Mr. Dror sent Amazon a letter (via email to patent-evaluation@amazon. com) explaining why the IDStore Mount purportedly does not infringe the 412 Patent and requesting reinstatement of the IDStore Mount sales listings.
On August 9, 2019, Mr. Dror sent Amazon a letter (via email to notice-dispute@amazon.com) explaining why the IDStore Mount purportedly does not infringe the 412 Patent and requesting reinstatement of the IDStore Mount sales listings.
To date, Amazon has refused to reinstate the sales listings for the IDStore Mount.
Mr. Dror alleges that the Patents are unenforceable based on purported inequitable conduct by Kenu in connection with the prosecution of the 714 Patent.
The named inventors listed on the 714 Patent are Kenneth Y. Minn and David E. Yao.
In December 2014, the U.S. Patent and Trademark Office ("USPTO") issued a notice that it was rejecting claims in the 062 Application as obvious in light of certain prior art, including a prior patent application — patent application number 2014/0097306 ("306 Application").
In April 2015, Mr. Yao submitted to the USPTO a declaration stating that he was one of the named inventors on the 062 Application, that he was also one of the named inventors on the 306 Application, and that he was the one who had contributed the adjustable mounting clip and use of gripping clips disclosed in the 306 Application.
In May 2015, Kenu submitted an additional response to the USPTO stating that (among other things) the 306 Application was not prior art for purposes of rejecting claims in the 062 Application because the subject matter from the 306 Application that the USPTO cited had been invented by Mr. Yao himself.
The USPTO accepted Mr. Yao's declaration, disqualified the 306 Application as prior art, and, in July 2015, issued the 062 Application as the 714 Patent.
Mr. Dror alleges that "[o]n information and belief, [Mr. Yao's declaration] was false because other inventors at Joby had contributed to the [306 Application] while Mr. Minn was a co-inventor of the '062 patent application, who also contributed to the conception of these elements."
Separately, Mr. Dror also alleges that Kenu allegedly omitted a John Duran as a co-inventor on the D707 Patent (a predecessor to the Patents at issue).
Kenu argues that Mr. Dror fails to establish subject-matter jurisdiction because he does not plausibly allege a justiciable case or controversy between the parties with respect to any of the four Patents. Kenu therefore moves to dismiss Mr. Dror's complaint under Federal Rule of Civil Procedure 12(b)(1).
Under the Declaratory Judgment Act, "[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The dispute must be "`definite and concrete, touching the legal relations of parties having adverse legal interests'; and . . . `real and substantial' and `admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'" MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118, 127 (internal brackets omitted) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)). "`Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'" Id.
"The party claiming declaratory judgment jurisdiction has the burden to establish that jurisdiction existed at the time the claim was filed." First Data Corp. v. Inselberg, 870 F.3d 1367, 1372 (Fed. Cir. 2017) (citing Powertech Tech. Inc. v. Tessera, Inc., 660 F.3d 1301, 1306 (Fed. Cir. 2011)). To establish jurisdiction, "a declaratory judgment plaintiff must allege an affirmative act by the patentee relating to the enforcement of [its] patent rights." 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1377 (Fed. Cir. 2012) (quoting SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1380-81 (Fed. Cir. 2007)). "And, of course, if `a [declaratory-judgment plaintiff] has actually been charged with infringement of the patent, there is, necessarily, a case or controversy adequate to support declaratory judgment jurisdiction.'" Id. at 1379 (emphasis in original, internal brackets omitted) (quoting Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 96 (1993)).
Mr. Dror alleges that Kenu affirmatively and expressly charged that Mr. Dror's IDStore Mount infringes Kenu's patents, first in a notice to Amazon and then in a letter sent directly to Mr. Dror.
Kenu claims that, in its letter, "it specifically informed [Mr.] Dror that it was not intending to sue him for infringement" and argues that its letter therefore does not give rise to a justiciable controversy.
Kenu points out that it has not sued Mr. Dror in the 21 months since it sent its letter.
Kenu also claims that a favorable judgment here would not redress Mr. Dror's injuries. Kenu asserts that what Mr. Dror really wants is to be able to list his IDStore Mount on Amazon again. But even if Mr. Dror wins a judgment against Kenu in this litigation, Kenu contends that Amazon might independently decide not to relist Mr. Dror's IDStore Mount. Thus, Kenu argues, Mr. Dror lacks Article III standing because a favorable judgment would not give him the relief he seeks.
The Federal Circuit's decision in Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008), is instructive on this point. The declaratory-judgment plaintiff in Caraco sought Food and Drug Administration ("FDA") approval of a generic drug and identified two of the defendant's patents that might cover its generic. Id. at 1288. The defendant sued for infringement on one of its patents (in a separate lawsuit) but not on the other. Id. The plaintiff brought a declaratory-judgment suit against the defendant on the other patent. Id. The Federal Circuit held that the plaintiff had established redressability. Id. at 1293. The plaintiff (1) needed a judgment of invalidity or noninfringement on the first patent (in addition to the patent-in-suit) to obtain FDA approval and (2) needed FDA approval before it could start selling its generic. On those facts, the Federal Circuit held that removing one hurdle on the plaintiff's path to approval and sale of its generic was sufficient to establish redressability and Article III standing in its declaratory-judgment suit. Id.; see generally Larson v. Valente, 456 U.S. 228, 243 n.15 (1982) ("[A] plaintiff satisfies the redressability requirement when he shows that a favorable decision will relieve a discrete injury to himself. He need not show that a favorable decision will relieve his every injury.") (emphasis in original). Similarly, even if Mr. Dror ultimately wants Amazon's approval to sell his IDStore Mount, a favorable judgment here would remove one hurdle to obtaining that approval, which is sufficient for redressability. Kenu cites no on-point cases to the contrary.
Mr. Dror also seeks a declaratory judgment with respect to the 923 and 585 Patents, which are continuations of and claim the benefits of the filing date of the patent applications that led to the issuance of the 714 and 412 Patents and include the same specifications and similar claim elements.
Courts have held that a patentee's accusing a party in litigation of infringing its patents can give rise to jurisdiction for the accused party to bring declaratory-judgment claims with respect to related patents of the patentee. See, e.g., Arkema Inc. v. Honeywell, Int'l, Inc., 706 F.3d 1351, 1358 (Fed. Cir. 2013) ("Here, [patentee] has accused [declaratory-judgment plaintiff] of infringing its rights with respect to [product] in litigation over the closely related '366 patent and the European patent claiming methods of using [product]. This creates a sufficient affirmative act on the part of the patentee for declaratory judgment purposes."); Seaboard Int'l, Inc. v. Cameron Int'l Corp., No. 1:13-CV-00281-MLH-SKO, 2013 WL 3936889, at *9 (E.D. Cal. July 30, 2013) (holding that where all patents were part of the same family and contained nearly identical claims, "[patentees'] assertions of the closely related '925 and '237 patents against [declaratory-judgment plaintiff] through patent infringement lawsuits are `sufficient affirmative acts for declaratory judgment purposes' with respect to the [declaratory-judgment] Patents" to give rise to subject-matter jurisdiction) (internal brackets omitted) (quoting Arkema, 706 F.3d at 1357-58).
Kenu tries to distinguish this line of authority on the ground that it involved patentees that filed full infringement lawsuits with respect to the related patents, whereas it never filed a full lawsuit against Mr. Dror with respect to any patent.
Mr. Dror has pleaded a justiciable case or controversy and has established subject-matter jurisdiction. The court denies Kenu's motion to dismiss the complaint for lack of subject-matter jurisdiction.
Kenu argues that Mr. Dror fails to adequately plead his invalidity claims because he fails to allege facts from which one could plausibly infer that any of the four Patents are invalid. Kenu therefore moves to dismiss Mr. Dror's invalidity claims under Federal Rule of Civil Procedure 12(b)(6).
In patent cases, the law of the regional circuit (rather than that of the Federal Circuit) governs the review of motions to dismiss for failure to state a claim under Rule 12(b)(6). First Data, 870 F.3d at 1372 (citing K-Tech. Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1282 (Fed. Cir. 2013)).
A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief" to give the defendant "fair notice" of what the claims are and the grounds upon which they rest. See Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not need detailed factual allegations, but "a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a claim for relief above the speculative level[.]" Twombly, 550 U.S. at 555 (internal citations omitted).
To survive a motion to dismiss, a complaint must contain sufficient factual allegations, which when accepted as true, "`state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 557). "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of `entitlement to relief.'" Id. (internal quotation marks omitted) (quoting Twombly, 550 U.S. at 557).
If a court dismisses a complaint, it should give leave to amend unless the "pleading could not possibly be cured by the allegation of other facts." United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1182 (9th Cir. 2016) (citations and internal quotation marks omitted). But "leave to amend may be denied when a plaintiff has demonstrated a `repeated failure to cure deficiencies by amendments previously allowed.'" Id. at 1183 (quoting Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003)).
At least one court in this district (a court that Kenu cites) has denied a motion to dismiss invalidity claims where a counterclaim plaintiff bringing a declaratory-judgment claim for invalidity supported its claims with explanations of its theories of invalidity and references to specific pieces of prior art. Fitness Anywhere LLC v. Woss Enters. LLC, No. 14-cv-01725-BLF, 2014 WL 4802432, at *2 & n.3 (N.D. Cal. Sept. 26, 2014). The counterclaim plaintiff there alleged that the patents-in-suit were invalid because the alleged inventions had been disclosed in the prior art (including prior patents), were obvious in light of the prior art, and were vague and indefinite.
Here, Mr. Dror begins by alleging that the Patents are "invalid under the Patent Laws of the United States of America, 35 U.S.C. § 1 et seq., including but not limited to §§ 101, 102, 103 and 112,"
Kenu cites to a number of cases to argue that Mr. Dror's invalidity allegations are insufficient to withstand a motion to dismiss. See J & K IP Assets, LLC v. Armaspec, Inc., No. 3:17-cv-07308-WHO, 2018 WL 3428757, at *2 (N.D. Cal. July 16, 2018); PageMelding, Inc. v. ESPN, Inc., No. C 11-06263 WHA, 2012 WL 3877686, at *3 (N.D. Cal. Sept. 6, 2012); Xilinx, Inc. v. Invention Inv. Fund I LP, No. C 11-0671 SI, 2011 WL 3206686, at *6-7 (N.D. Cal. July 27, 2011).
Kenu moved to dismiss the claims that the Patents are unenforceable due to Kenu's alleged inequitable conduct on the ground that Mr. Dror did not plead his claims with particularity under Federal Rule of Civil Procedure 9(b).
"`Inequitable conduct . . . must be pled with particularity' under Rule 9(b)." Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009) (internal brackets omitted) (quoting Ferguson Beauregard/Logic Controls v. Mega Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003)); see also id. ("[Federal Circuit] law, not the law of the regional circuit, [applies] to the question of whether inequitable conduct has been pleaded with particularity under Rule 9(b).") (citing Cent. Admixture Pharmacy Servs., Inc. v. Advanced Cardiac Sols., P.C., 482 F.3d 1347, 1356 (Fed. Cir. 2007)). "[T]o plead the `circumstances' of inequitable conduct with the requisite `particularity' under 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." Id. at 1328. "Moreover, although `knowledge' and `intent' may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld 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.
"Pleading on `information and belief' is permitted under Rule 9(b) when essential information lies uniquely within another party's control, but only if the pleading sets forth the specific facts upon which the belief is reasonably based." Id. at 1330. "Where pleading is permitted on information and belief, a complaint must adduce specific facts supporting a strong inference of fraud or it will not satisfy even a relaxed pleading standard." Id. at 1330 n.7 (quoting Wexner v. First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990)).
Mr. Dror advances two theories for claiming that the Patents are invalid due to inequitable conduct. He pleaded neither with particularity.
Mr. Dror first claims that David E. Yao's declaration to the USPTO during the prosecution of the 714 Patent was fraudulent. To recap, the USPTO identified the 306 Application's disclosure of an "adjustable clamping element" as prior art that rendered the claims (in what would become the 714 Patent) obvious. In response, Mr. Yao submitted a declaration stating that he invented the adjustable mounting clip and the use of gripping clips in the 306 Application and that those aspects of the 306 Application thus were not disqualifying prior art. Mr. Dror contends that Mr. Yao's declaration is false because (Mr. Dror claims) other inventors contributed to the 306 Application and Kenneth Y. Minn was a co-inventor of the 714 Patent. Mr. Dror does not identify the portions of the 306 Application that had contributions of other inventors (and does not plead that other inventors contributed the adjustable mounting clip and use of gripping clips to the 306 Application) and does not identify the portions of the 714 Patent that had Mr. Minn's contribution (and does not plead that Mr. Minn contributed the adjustable mounting clip and use of gripping clips to the 714 Patent). Mr. Dror's factual allegations about Mr. Minn and other inventors are not inconsistent with Mr. Yao's being truthful when he said that he invented the adjustable-mounting-clip and use-of-gripping-clips portions of the 306 Application (with the other inventors' contributions being to other portions of the 306 Application) and his similarly contributing those clips to the 714 Patent (with Mr. Minn's contributions being to other portions of the 714 Patent). Consequently, Mr. Dror fails to adequately plead with particularity how Mr. Yao's declaration is false. Cf. Finjan, Inc. v. Juniper Network, Inc., No. C 17-05659 WHA, 2018 WL 4181905, at *4-5 (N.D. Cal. Aug. 31, 2018) (similarly rejecting counterclaim plaintiff's inequitable-conduct theory that an inventor's declaration that he invented certain claims in a patent must have been false because other inventors also contributed to the patent because the plaintiff's allegations did not foreclose the possibility that the declarant inventor alone invented the claims at issue and the other co-inventors' contributions were to other claims not at issue).
Mr. Dror next claims that Kenu fraudulently omitted a John Duran as a co-inventor on the D707 Patent, a predecessor to the Patents at issue here, in order to prevent Mr. Duran's employer CamelBak from having an ownership interest in the D707 Patent. Mr. Dror's complaint provides no additional details about who Mr. Duran or CamelBak are, what relationship (if any) they have to Kenu or the D707 Patent, why Mr. Duran should have been listed as an inventor on the D707 Patent, or what Kenu supposedly did to exclude him. This does not satisfy the Rule 9(b) requirement to plead inequitable conduct with particularity. Cf. Brixham Sols. Ltd. v. Juniper Networks, Inc., No. 13-cv-00616-JCS, 2014 WL 250204, at *7 (N.D. Cal. Jan. 22, 2014) ("Merely alleging generally that an inventor shared ideas with other individuals on the same subject matter . . . does not meet the particularity requirement of Rule 9(b) or establish co-inventorship under the guidelines set forth by the Federal Circuit. In the absence of allegations identifying the specific individual or individuals who allegedly co-invented the claimed invention and setting forth specific facts showing how each of these individuals contributed to the conception of a particular claim or claims, [counterclaim plaintiff]'s inequitable conduct allegation based on this theory is insufficient as a matter of law.").
Mr. Dror argues that he has sufficiently pleaded his inequitable-conduct claims "on information in belief" in light of the fact that "the information as to who contributed to the invention of Kenu's patents at issue is uniquely within control of Kenu and the patents' inventors."
Mr. Dror has not sufficiently pleaded his inequitable-conduct claims. The court grants Kenu's motion to dismiss these claims. The court grants Mr. Dror leave to amend.
Kenu argues that Mr. Dror fails to adequately a claim under the California UCL because he does not plead that Kenu engaged in unlawful, unfair, or fraudulent practices. Kenu therefore moves to dismiss Mr. Dror's UCL claim under Rule 12(b)(6) and, with respect to the fraudulent prong of the UCL, under Rule 9(b).
The UCL prohibits any "unlawful, unfair or fraudulent business act or practice[.]" Cal. Bus. & Prof. Code § 17200.
"Under the `unlawful' prong, `the UCL borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.'" AlterG, Inc. v. Boost Treadmills LLC, 388 F.Supp.3d 1133, 1155 (N.D. Cal. 2019) (internal brackets and some nested quotation marks omitted) (quoting Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012)).
"The `unfair' prong of the UCL prohibits a business practice that `violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.'" Id. (quoting McKell v. Wash. Mut., Inc., 142 Cal.App.4th 1457, 1473 (2006)). "The California Supreme Court has held that `when a plaintiff who claims to have suffered injury from a direct competitor's "unfair" act or practice invokes section 17200, the word "unfair" in that section means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.'" Id. (quoting Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 186-87 (1999)).
"To state a claim under the fraudulent prong of the UCL, `it is necessary only to show that members of the public are likely to be deceived' by the business practice or advertising at issue." Id. at 1156 (quoting In re Tobacco II Cases, 46 Cal.4th 298, 312 (2009)). "The UCL limits standing to those individuals who had `suffered injury in fact and has lost money or property as a result of the unfair competition.'" Id. (quoting Cal. Bus. & Prof. Code § 17204). "The California Supreme Court has interpreted this standing provision as `imposing an actual reliance requirement on plaintiffs prosecuting a private enforcement action under the UCL's fraud prong.'" Id. (internal brackets omitted) (quoting In re Tobacco, 46 Cal. 4th at 326). "Thus, `courts have recognized that UCL fraud plaintiffs must allege their own reliance — not the reliance of third parties — to have standing under the UCL.'" Id. (emphasis in original) (citing cases). A claim under the fraudulent prong of the UCL is subject to Rule 9(b)'s heightened pleading requirements. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009).
Mr. Dror does not plead an unlawful business act or practice. Mr. Dror claims that Kenu obtained the Patents by engaging in intentionally untruthful behavior,
Mr. Dror does not plead an unfair business act or practice. As a direct competitor of Kenu, Mr. Dror must allege a practice that amounts to a violation of antitrust law or otherwise significantly threatens or harms competition. Cf. Levitt v. Yelp! Inc., 765 F.3d 1123, 1137 (9th Cir. 2014) (citing Cel-Tech, 20 Cal. 4th at 187). "Injury to a competitor is not equivalent to injury to competition; only the latter is the proper focus of antitrust laws." Cel-Tech, 20 Cal. 4th at 186. "[C]ase law suggests that the misconduct of a direct competitor must rise to significantly more serious levels than what has been alleged here to sustain a finding of unfairness under the UCL." Cf. AlterG, 388 F. Supp. 3d at 1155-56 (citing cases).
Mr. Dror does not plead a fraudulent business act or practice. Setting aside Mr. Dror's allegations about Kenu's allegedly fraudulent behavior before the USPTO (which, as discussed above, are inadequately pleaded), Mr. Dror does not cognizably plead with particularity that Kenu made any false or fraudulent statements, much less that he relied on any such statements. Cf. AlterG, 388 F. Supp. 3d at 1156 (dismissing UCL claim where "the complaint explains that [plaintiff] was harmed by Defendants' fraud because customers relied on the misrepresentations and avoided [plaintiff]'s products, there is no allegation that [plaintiff] itself relied on Defendants' statements") (emphasis in original).
Mr. Dror has not sufficiently pleaded his UCL claim. The court grants Kenu's motion to dismiss this claim. The court grants Mr. Dror leave to amend.
The court grants Kenu's motion to dismiss Mr. Dror's inequitable-conduct and UCL claims and gives Mr. Dror leave to amend. The court otherwise denies Kenu's motion to dismiss.
If Mr. Dror wants to replead his inequitable-conduct and UCL claims, he may file an amended complaint within 21 days of the date of this order. (If he files an amended complaint, he must also file as an attachment a blackline of his new amended complaint against his current First Amended Complaint.)
