DENNIS JAMES HUBEL, Magistrate Judge.
The plaintiff E.I. Du Pont de NeMours and Company ("DuPont") sues the defendants Heraeus Precious Metals North America Conshohocken LLC ("Heraeus") and SolarWorld Industries America, Inc. ("SolarWorld"), alleging infringement of DuPont's patent for a conductive metallization paste used in the production of photovoltaic solar cells, U.S. Patent No. 8,158,504 ("the `504 Patent"). In Heraeus's original Answer, it asserted three counterclaims, the third of which alleged DuPont had violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), in connection with statements made by DuPont in a press release it issued on July 19, 2012. See Dkt. #25, Counterclaims, ¶¶ 22-26. The court granted DuPont's motion to dismiss that counterclaim because Heraeus had failed to allege a required element; i.e., that DuPont acted in bad faith. See Dkt. # 64, p. 10 (citing, inter alia CollegeNET, Inc. v. Xap Corp., 2004 WL 2303506, at *10 (D. Or. Oct. 12, 2004)). The dismissal was without prejudice to Heraeus's amendment of the counterclaim to allege bad faith.
On March 1, 2013, Heraeus filed its Amended Answer, Affirmative Defenses and Counterclaims. Dkt. #70. Heraeus now asserts two counterclaims for unfair competition under the Lanham Act, one entitled "Bad Faith Marketplace Statements Regarding Intellectual Property Theft" (Count III, the
Chief Judge Aiken of this court set forth the standard for the court's consideration of a motion to dismiss in Gambee v. Cornelius, No. 10-CV-6265-AA, 2011 WL 1311782 (D. Or. Apr. 1, 2011) (Aiken, C.J.). Judge Aiken observed:
Id. at *2.
"As a general matter, a district court may not consider any material outside of the pleadings when ruling on a Rule 12(b)(6) motion." O'Connell-Babcock v. Multnomah County, Oregon, No. 08-cv-459-AC, slip op., 2009 WL 1139441 at *4 (D. Or. Apr. 24, 2009) (King, J.) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). However, the Ninth Circuit recognizes two exceptions to this rule. First, the court may consider documents "`whose contents are alleged in a [pleading] and whose authenticity no party questions, but which are not physically attached to the. . . pleading.'" Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir. 1998) (quoting Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994)), superseded by statute on other grounds as recognized in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 681 (9th Cir. 2006); accord Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citing Parrino); Vanguard Prods. Group v. Merchandising Technologies, Inc., slip op., 2008 WL 939041, at *3 (D. Or. Apr. 3, 2008) (Brown, J.) (same; quoting Lee).
In the current case, Heraeus's Lanham Act counterclaims arise, in part, from statements made by DuPont in a press release issued on July 19, 2012. A copy of the press release is attached as Exhibit 1 to the Declaration of Matthew W. Brewer in support of DuPont's Motion to Dismiss. Dkt. #84-1. Because Heraeus makes allegations regarding the press release and the language of the press release is integral to Heraeus's Lanham Act counterclaims, and further because its authenticity is not at issue, the court may consider the press release in ruling on DuPont's motion to dismiss. See Parrino, supra.
"Second, under Fed. R. Evid. 201, a court may take judicial notice of `matters of public record'" in considering a motion to dismiss. Lee, 250 F.3d at 688-89 (quoting Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)). A district court's decision regarding whether to take judicial notice of documents is reviewed for abuse of discretion. Id.
In connection with the present motions, DuPont asks the court to take judicial notice of two types of documents it asserts are "matters of public record." These include (1) a criminal indictment of Tung Pham, Heraeus's former head of R&D, charging him with theft of trade secrets, see Dkt. #84-3; and (2) public documents relating to prosecution of the `254 Patent, see Dkt. #84-2. The court will take judicial notice of these documents for purposes of the current motions.
DuPont further asks the court to take judicial notice of some of Heraeus's discovery responses. DuPont has not cited any authorities from this court or the Ninth Circuit Court of Appeals in support of its request, although it has cited two cases from federal district courts in Connecticut and California, in which those courts indicated discovery responses may be considered on a Rule 12(b)(6) motion. See Dkt. #83, p. 10 (citing Harris v. Stonecrest Care Auto Ctr., LLC, 559 F.Supp.2d 1088, 1089 (S.D. Cal. 2008); Steiner v. Shawmut Nat'l Corp., 766 F.Supp. 1236, 1241 n.13 (D. Conn. 1991)). The court finds discovery responses are a type of materials "outside the pleadings" that would require the court to treat DuPont's motion to dismiss as one for summary judgment under Rule 56. See Fed. R. Civ. P. 12(d). The court declines to embark on that course of action at this juncture. Therefore, these discovery responses are not considered on this motion to dismiss.
Heraeus's Lanham Act counterclaims are based on representations it alleges DuPont made concerning Heraeus and its products. Both of the counterclaims allege DuPont misrepresented the legitimacy of Heraeus's products in the press release. The press release is titled, "DuPont Addresses Patent Protection at Solarbuzz China Conference; Intellectual Property Theft Growing in Competitive Climate of Photovoltaics." Id. According to Heraeus, the release was issued and published on the internet, and also distributed by DuPont directly to DuPont's and Heraeus's customers via email. Among other things, the press release discusses the growth of intellectual property theft in the photovoltaic industry, and mentions that DuPont filed the present case for patent infringement against Heraeus. In pertinent part, the release states as follows:
Dkt. #84-1, pp. 1-2. Heraeus claims DuPont's intimation that Heraeus has committed theft of intellectual property and infringed DuPont's patents is false; the statements were made for the purpose of confusion and mistake; and Heraeus has been damaged by DuPont's statements. See Dkt. #70, Counterclaims, ¶¶ 21-28.
Most of Heraeus's allegations in the IP Theft Counterclaim regarding the press release mirror the allegations Heraeus made in its previously-dismissed Lanham Act Counterclaim. To address the court's finding that Heraeus must allege DuPont acted in bad faith, Heraeus has added the following to the IP Theft Counterclaim:
Dkt. #70, Counterclaims, ¶ 27.
The Patent Infringement Counterclaim also contains allegations relating to the press release, see Dkt. #70, Counterclaims, ¶¶ 31, 36-39 & 41-43. In addition, Heraeus alleges DuPont made certain communications to four of Heraeus's customers in Taiwan, regarding DuPont's U.S. Patent No. 7,767,254 (the "`254 patent"), as follows:
Id., ¶¶ 32-36. In subsequent paragraphs, Heraeus claims DuPont's communications and representations set forth in the quoted paragraphs were made in bad faith because DuPont knew or should have known they were false, and the statements were intended to discredit Heraeus and its products and promote DuPont's own competing products. See id., ¶¶ 37-43.
To prevail on its claims that DuPont violated Section 43(a) of the Lanham Act, Heraeus must show DuPont made marketplace statements or representations that contained a "false or misleading description of fact, or false or misleading representation of fact," which:
15 U.S.C. § 1125(a)(1).
In Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997), the Ninth Circuit set out the elements of a Section 43(a) false advertising claim, as follows:
Southland, 108 F.3d at 1139 (footnote, internal citations omitted). In addition, "before a patentee may be held liable under § 43(a) for marketplace activity in support of its patent, and thus be deprived of the right to make statements about potential infringement of its patent, the marketplace activity must have been undertaken in bad faith." CollegeNET, 2004 WL 2303506, at *10 (internal citations and quotation marks omitted).
The court previously found that Heraeus's allegations regarding the press release met these pleading standards except for the requirement that Heraeus allege DuPont's bad faith. In its current motion, DuPont has raised the issue of whether Heraeus has pled bad faith properly. DuPont argues that because a bad faith claim is grounded in fraud, the heightened pleading standard of Federal Rule of Civil Procedure 9(b) applies, and Heraeus has failed to meet its obligation to plead DuPont's alleged bad faith with particularity. See Dkt. #83.
In CollegeNET, Inc. v. Xap Corp., 2004 WL 2303506 (D. Or. Oct. 12, 2004), I held that where a Lanham Act plaintiff alleges "a unified course of fraudulent conduct and relies entirely on that course of conduct as the basis of the claim," then "the claim is `grounded in fraud,' and the heightened pleading standard of Rule 9(b) applies." Id., 2004 WL 2303506, at *5; accord Vanguard Prods. Group v. Merchandising Technologies, Inc., 2008 WL 939041, at *4 (D. Or. Apr. 3, 2008) (Brown, J.). "`Rule 9(b) applies to "all averments of fraud or mistake"; it requires that "the circumstances constituting fraud . . . be stated with particularity" but provides that "[m]alice, intent, knowledge, and other condition of mind of a person may be averred generally."'" Learning Internet v. Learn.com, Inc., 2008 WL 2037282, at *2 (D. Or. May 6, 2008) (Marsh, J.) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319, 127 S.Ct. 2499, 2507, 168 L. Ed. 2d 179 (2007), in turn quoting Fed. R. Civ. P. 9(b)). In CollegeNET, I discussed what is necessary to plead fraud with sufficient particularity:
CollegeNET, 2004 WL 2303506, at *6.
Applying these pleading standards to Heraeus's Lanham Act counterclaims requires examination of Heraeus's specific allegations regarding DuPont's alleged bad faith. In the IP Theft Counterclaim, Heraeus alleges the following:
Dkt. #70, ¶¶ 23-27. The court finds these allegations meet Rule 9(b)'s heightened pleading standards. Heraeus has identified the who, what, when, where, why, and how of its bad faith claim.
In the Patent Infringement Counterclaim, Heraeus again alleges DuPont made false representations in the press release, but further alleges DuPont made specific communications with four of Heraeus's customers in Taiwan. Heraeus alleges DuPont's statements and accusations regarding Heraeus and its products "were false and misleading and were made in bad faith," id., ¶ 39, and then sets out the following specific allegations regarding why DuPont "knew or should have known that its accusations of infringement in its July 19, 2012 press release and its communications to Heraeus'[s] customers [were] false":
Id., ¶¶ 40-42.
Many of DuPont's arguments in support of its motion to dismiss the Patent Infringement Counterclaim go more to the merits of Heraeus's claims than to the pleading standards. For example, DuPont claims "Heraeus has admitted to using and shipping infringing front-side paste formulations," and Heraeus has made certain additional admissions in its discovery responses. Dkt. #83, pp. 9-10 (citing Heraeus's discovery responses). As discussed above, the court declines to take judicial notice of Heraeus's discovery responses for purposes of DuPont's motion to dismiss. DuPont also relies on its own conclusory assertion that "Heraeus has infringed DuPont's `504 Patent." Id., p. 11. The issue of whether Heraeus has infringed the `504 Patent is the very object of this case.
DuPont also claims its statements in the press release regarding IP theft "are true because Heraeus's former R&D head is under criminal indictment for converting trade secrets to benefit Heraeus." Dkt. #83, p. 12 (emphasis added). There is nothing in the Indictment to indicate the criminal defendant's actions were taken on behalf of, or to benefit, Heraeus. On the contrary, the indictment in question alleges the defendant took actions in direct violation of his employment agreement with Heraeus, suggesting Heraeus may well be the victim, not the beneficiary, of his actions.
With regard to Heraeus's allegations concerning DuPont's communications to Heraeus's customers in Taiwan, DuPont further argues Heraeus has failed to plead that the alleged statements had "a substantial effect on commerce within the scope of Congress's power," and thus, Heraeus has failed to plead DuPont's alleged statements were made "in commerce" as contemplated by the Lanham Act. Dkt. #83, p. 16 (citing Kiobel v. Royal Dutch Petrol. Co., ___ U.S. ___, 133 S.Ct. 1659 (2013)
Heraeus responds that its allegations regarding DuPont's communications to the Taiwanese customers should not be considered in isolation; rather, Heraeus made those allegations as further support for its claim that DuPont has engaged in widespread dissemination of its damaging communications to the relevant marketplace. The court agrees with Heraeus. In the Patent Infringement Counterclaim, Heraeus is not seeking damages for discrete instances of DuPont's communications with the Taiwan customers; it is seeking damages for DuPont's alleged widespread dissemination of damaging communications in the relevant market-place.
DuPont has correctly cited relevant case law with regard to the identification of "commercial speech," but has drawn erroneous conclusions from those cases. In Coastal Abstract Service, Inc. v. First American Title Insurance Co., 173 F.3d 725 (9th Cir. 1999), the court adopted as "accurate and sound" the following criteria "for determining whether representations constitute `commercial advertising or promotion'":
Id., 173 F.3d at 734 (quoting Gordon & Breach Science Pubs. v. Am. Inst. of Physics, 859 F.Supp. 1521 (S.D.N.Y. 1994)); see Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1384 (5th Cir. 1996) (adopting the Gordon & Breach criteria); see also Cook, Perkiss and Liehe, Inc. v. Northern Calif. Coll. Serv., Inc., 911 F.2d 242, 245 (9th Cir. 1990) (recognizing that a Lanham Act claim for false advertising "extends to false representations made by implication or innuendo"; citations omitted). DuPont also cites Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48 (2d Cir. 2002), where the court held "the touchstone of whether a defendant's actions may be considered `commercial advertising or promotion' under the Lanham Act is that the contested representations are part of an organized campaign to penetrate the relevant market." Id., 314 F.3d at 57.
Heraeus has alleged facts supporting a reasonable inference that DuPont has engaged in "an organized campaign to penetrate the relevant market." Id. Heraeus claims DuPont's alleged communications to the relevant marketplace include a combination of the press release and DuPont's representations to Heraeus's individual customers, allegedly made for the specific purpose of influencing customers to buy DuPont's products rather than Heraeus's. Cf., e.g., Synthes, Inc. v. Emerge Medical, Inc., 2012 WL 4205476 (E.D. Pa. Sept. 19, 2012) (noting defendant's communications, "taken in isolation . . . appear[ed] to identify only sporadic instances of dissemination," but a closer reading raised "reasonable inferences. . . that they merely exemplif[ied] a broad and widespread dissemination of the statements to the relevant purchasing public, such that they constitute[d] advertising or promotion within the industry"). For this purpose, in the context of this case, it is irrelevant whether the customers with whom DuPont allegedly communicated were located within or outside of the United States. There is no dispute that DuPont and Heraeus are both American corporations engaged in commercial competition.
Nevertheless, for purposes of testing the adequacy of Heraeus's pleading, its allegations regarding DuPont's communications with the Taiwanese customers fail to meet Rule 9(b)'s requirements. At oral argument, Heraeus indicated it had not made its allegations more specific regarding these communications for "confidentiality" reasons. If Heraeus fears it would violate some privilege, protective order, or other legitimate "confidentiality" concern, it could file its pleading in redacted form in the public record, with an unredacted version filed under seal. It cannot, however, fail to comply fully with Rule 9(b)'s requirements that its bad faith claims be made with sufficient particularity. Accordingly, DuPont's motion to dismiss will be granted as to Heraeus's Patent Infringement Counterclaim ("Count IV").
In conclusion, DuPont's motion to dismiss is
IT IS SO ORDERED.