MICHAEL H. SIMON, District Judge.
Plaintiff Boydstun Equipment Manufacturing ("Boydstun") brings this action against Defendant Cottrell, Inc. ("Cottrell"), seeking a declaratory judgment of non-infringement of Cottrell's U.S. Patent No. 7,585,140 (the "'140 Patent"). Boydstun also asserts a claim of unlawful monopolization in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, and Oregon's equivalent state law, Oregon Revised Statutes ("ORS") § 646.730. Boydstun also alleges bad faith enforcement of patents in violation of ORS § 646A.810. Cottrell moves to dismiss Boydstun's Sherman Act and state-law causes of action for failure to state a claim. ECF 78 (redacted); ECF 81 (unredacted; filed under seal). Cottrell's motion to dismiss is granted in part and denied in part as set forth below. Cottrell also requests judicial notice. ECF 79. That request is granted.
A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
A complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr, 652 F.3d at 1216. "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." Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
Section 2 of the Sherman Act prohibits monopolization, attempts to monopolize, and conspiracies to monopolize. 15 U.S.C. § 2. To state a civil claim of monopolization under Section 2, an antitrust plaintiff must allege: "(a) the possession of monopoly power in the relevant market; (b) the willful acquisition or maintenance of that power; and (c) causal antitrust injury." Somers v. Apple, Inc., 729 F.3d 953, 963 (9th Cir. 2013) (quoting Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp LP, 592 F.3d 991, 998 (9th Cir. 2010)). The offense of monopolization "requires, in addition to the possession of monopoly power in the relevant market, `the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.'" Verizon Commc'ns., Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)). "To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct." Id. (emphasis in original). The conduct element involves "the use of monopoly power `to foreclose competition, to gain a competitive advantage, or to destroy a competitor.'" Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1208 (9th Cir. 1997)) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 482-83 (1992)).
The following facts come largely from the Third Amended Complaint (ECF 77) ("Complaint"). The alleged relevant product market is the manufacture and sale of commercial car haulers. The relevant geographic market is the United States. Boydstun and Cottrell are competitors in the relevant market. Commercial car haulers, of which there are about fifteen thousand currently in use in the United States, are used to transport throughout the country up to ten automobiles, with one car often riding above another. Nearby drivers may wonder just how all of those cars remain in place. The answer, in part, is the subject of this lawsuit.
Boydstun has participated in the relevant market since late 2014. Boydstun's founder and President, Rob Boydstun, previously also was involved in the business of making and selling commercial car haulers as founder and President of Boydstun Metal Works. Boydstun Metal Works manufactured and sold commercial car haulers from 1989 until 2009, when that company filed for Chapter 7 bankruptcy protection.
Cottrell has been in the business of making and selling commercial car haulers to customers in the United States for several decades. Twenty five years ago, there were at least ten manufacturers of car haulers in the market, including Cottrell and Boydstun Metal Works. In 1996, Cottrell acquired Bankhead Manufacturing, one of Cottrell's primary competitors. At the time of this acquisition, Boydstun Metal Works had a market share of between ten and fifteen percent. By 2008, Cottrell's market share was approximately 50 percent, and the market share of Boydstun Metal Works was approximately 45 percent. Boydstun Metal Works left the market in 2009, leaving Cottrell to be almost the only supplier of commercial car haulers in the country. As of 2010, and at all times relevant to this lawsuit, Cottrell holds a market share of approximately 95 percent.
To build a commercial car hauler, manufacturers like Boydstun and Cottrell first obtain "truck chassis"—essentially a frame—from truck chassis manufacturers. This occurs in one of two ways. First, a truck chassis may be purchased from a chassis dealer and promptly delivered to the car hauler manufacturer. Alternatively, a truck chassis may be purchased from a chassis dealer but held by the dealer and only sent to the car hauler manufacturer when needed. After receiving a chassis, car hauler manufacturers, like Boydstun and Cottrell, customize the chassis by building and attaching the car hauler trailer to the chassis.
Commercial car haulers generally are sold and distributed to customers through dealers. Dealers showcase, market, and promote the car haulers made by manufacturers, typically receiving compensation in return for a sale. Commercial car haulers are sold primarily to two types of customers: larger transport companies that use their own fleet of commercial car haulers ("Fleet Owners"), or smaller companies that own and drive one or more commercial car haulers ("Owner-Operators"). Owner-Operators can work either independently or with a Fleet Owner.
A commercial car hauler can sell for up to $300,000. They are part of a $260 million per year industry. In the three years comprising 2014, 2015, and 2016, approximately 2,000 commercial car haulers were made and sold in the United States.
The process of converting a truck chassis to a commercial car hauler involves specialized components that are built into the chassis and trailer and are part of the commercial car hauler design. Some of these components involve patented features. Two components of commercial car haulers relevant to this case are a tie-down component for fastening cars and a ratcheting winch for use in the tie-down system.
The first Cottrell patent relevant to the parties' dispute is U.S. Patent Number 7,484,917 ("'917 Patent" or "Cottrell soft-tie patent"). On May 17, 2005, Cottrell filed a provisional application for a "Strap Tie Down Apparatus and System"—which would become the '917 Patent.
On the same day that the PTO issued the Boydstun Metal Works soft-tie patent ('897 Patent), and while Cottrell was still prosecuting its '917 Patent, Boydstun Metal Works sued Cottrell for infringement of the '897 Patent, alleging that the subject of the '917 Patent infringed on Boydstun Metal Works' '897 Patent. The parties ultimately settled that dispute, and Cottrell acquired, as part of the settlement, a license to the Boydstun Metal Works soft-tie patent (the '897 Patent) as well as another patent held by Boydstun Metal Works.
After Boydstun entered the market in 2014, it began selling its own soft-tie system with a sliding spool. On November 2, 2015, Cottrell sent a cease and desist letter to Boydstun, demanding that Boydstun stop advertising, manufacturing, and selling commercial car haulers with a sliding spool feature in the soft-tie system. Cottrell threatened to sue Boydstun for infringement of the '917 Patent. Boydstun responded that Cottrell's '917 Patent was invalid. Cottrell neither replied to Boydstun's responsive letter nor withdrew its original cease and desist demand.
The second patent relevant to this dispute is the Cottrell '140 Patent ("ratcheting winch patent").
In February 2016, Boydstun introduced its Rapid Ratchet™ winch, which helps drivers more quickly and easily tie down vehicles. On previous models, drivers had to remove a tiedown bar with each quarter-turn of a ratchet. The Rapid Ratchet™ winch allows drivers to insert the tie-down bar just once to tighten the straps enough to secure a vehicle. On March 31, 2016, Cottrell sent Boydstun a demand letter, asserting that Boydstun's Rapid Ratchet™ winch infringed on Cottrell's '140 Patent. In its letter, Cottrell explained that it based its assertion on information available on Boydstun's website. After Boydstun responded, asserting its belief that the Rapid Ratchet™ winch did not infringe the '140 Patent, Cottrell further explained that its infringement allegation was based in part on viewing a video available on Boydstun's website.
On February 21, 2017, Boydstun filed a petition for Inter Partes Review ("IPR") with the U.S. Patent Trial and Appeal Board ("PTAB"), asserting that all claims in Cottrell's '140 Patent are obvious over Ruan and one of Cottrell's own prior patents, U.S. Patent No. 5,314,275 ("'275 patent"). Boydstun also asserted that the claims of the '140 Patent are obvious over Ruan and U.S. Patent No. US 6,824,121. On August 30, 2017, the PTAB granted the petition on both grounds and instituted an IPR proceeding, after finding a reasonable likelihood that Boydstun would prevail in at least some of its claims.
Boydstun alleges that Cottrell has monopoly power in the U.S. market for commercial car haulers, which Plaintiff and Defendant agree is the relevant market; Cottrell does not dispute that fact for purposes of this motion. Boydstun also alleges that Cottrell has engaged in exclusionary conduct, including bad faith enforcement of patents, "scare-the-customer-and-run" tactics, supply chain restrictions, and interference with suppliers. Boydstun further alleges that it has suffered antitrust injury. Cottrell moves to dismiss Boydstun's monopolization claims on the grounds that: (1) based on the Noerr-Pennington doctrine of antitrust immunity, Cottrell is not subject to antitrust liability for enforcing its patents;
Boydstun alleges that Cottrell acted in bad faith in enforcing two invalid patents and that Cottrell is now using those patents to block and attempt to block Boydstun's ability to compete with Cottrell by threatening to bring patent infringement actions against Boydstun based on invalid patents. Specifically, Boydstun alleges that Cottrell's threatened enforcement of the '917 Patent and the '140 Patent was done in bad faith and constitutes anticompetitive conduct.
Patent law and antitrust law are at odds. "The point of antitrust law is to encourage competitive markets to promote consumer welfare. The point of patent law is to grant limited monopolies as a way of encouraging innovation." F.T.C. v. Actavis, Inc., 133 S.Ct. 2223, 2238 (2013). A patent, in essence, "provides an exception to the antitrust law, and the scope of the patent . . . forms the zone within which the patent holder may operate without facing antitrust liability." Id.
"Under the Noerr-Pennington doctrine . . . defendants are immune from antitrust liability for engaging in conduct (including litigation) aimed at influencing decisionmaking by the government." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1757 (2014). This includes patent infringement litigation. See Handargds, Inc. v. Ethicon, Inc., 601 F.2d 986, 993 (9th Cir. 1979) ("Patentees must be permitted to test the validity of their patents in court through actions against alleged infringers."). The Ninth Circuit has extended Noerr-Pennington immunity to "litigation-related activities preliminary to the formal filing of the litigation," such as presuit demand letters and other "conduct incidental to prosecution of the suit." Sosa v. DIRECTV, Inc., 437 F.3d 923, 934-37 (9th Cir. 2006). Plaintiff and Defendant do not dispute that Cottrell's actions, in sending cease and desist letters and threatening patent infringement litigation, constitute conduct within the prima facie scope of the Noerr-Pennington doctrine.
There are, however, exceptions to Noerr-Pennington immunity. First, under the "sham exception," "activity ostensibly directed toward influencing government action does not qualify for Noerr immunity if it is a mere sham to cover an attempt to interfere directly with the business relationships of a competitor." Octane Fitness, 134 S. Ct. at 1757 (quotation marks and alterations omitted). Second, under the "Walker Process fraud exception," enforcement of a patent obtained by fraud on the PTO is not entitled to Noerr-Pennington immunity. Boydstun argues that both the sham exception and the Walker Process fraud exception apply, and, thus, Cottrell may be subject to antitrust liability based on its patent enforcement actions.
"[W]hile genuine petitioning is immune from antitrust liability, sham petitioning is not." BE & K Constr. Co. v. N.L.R.B., 536 U.S. 516, 525-26 (2002). A bad faith patent enforcement may form the basis for antitrust liability under Section 2. In order "to qualify as a `sham,' a lawsuit must be objectively baseless and must conceal an attempt to interfere directly with the business relationships of a competitor." Octane Fitness, 134 S. Ct. at 1757 (quotation marks and alterations omitted). The Supreme Court has articulated a two-part definition of sham antitrust litigation:
BE & K, 536 U.S. at 526 (quoting Prof'l Real Estate Inv'rs., Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61 (1993)) (emphasis in original) (first alteration added, original alterations omitted). "For a suit to violate the antitrust laws . . . it must be a sham both objectively and subjectively." Id. (emphasis in original). Therefore, "an objectively reasonable effort to litigate cannot be a sham regardless of subjective intent." Prof'l Real Estate Inv'rs., 508 U.S. at 57.
On March 31, 2016, and again on April 18, 2016, Cottrell sent to Boydstun two cease and desist letters, threatening to sue Boydstun for infringement of the '140 Patent. Boydstun alleges that both letters were objectively and subjectively baseless. Thus, according to Boydstun, Cottrell's sending of these letters falls under the sham exception to Noerr-Pennington and subjects Cottrell to antitrust liability.
Boydstun offers several arguments that Cottrell's actions were objectively baseless. First, at the time it sent the cease and desist letters, Cottrell had no idea whether the Rapid Ratchet™ winch infringed the '140 Patent. Boydstun alleges that Cottrell was fully aware that it could not ascertain whether the Rapid Ratchet™ winch infringed without seeing the interior workings of the winch. This assertion, however, is belied by the text of Cottrell's letters themselves, which Boydstun incorporates into its Complaint. Cottrell explained in its demand letter dated March 31, 2016, that it based its allegations on information available on Boydstun's website. In its second letter, dated April 18, 2016, Cottrell further explained that it had reviewed a video on Boydstun's website that showed the Rapid Ratchet™ winch to have a ratchet head "coupled to" and "in mechanical contact" with the ratchet gear—using language from Claim 1 of Cottrell's '140 Patent. Cottrell further stated that the video showed the components to be "coupled" together in a way that allowed them to rotate together both forward and in reverse—again using language from the '140 Patent. Finally, Cottrell noted that the video revealed "a shaft configured to receive at least one of a chain and a strap as recited in claim 8" of the '140 Patent. Far from indicating that Cottrell had no idea whether the Rapid Ratchet™ winch actually infringed, or that Cottrell was fully aware that it could not ascertain whether it infringed without seeing its inner workings, these letters, at least facially, suggest that Cottrell believed that it was able to—and had—concluded that Boydstun's Rapid Ratchet™ winch infringed on Cottrell's '140 Patent.
In alternative support of Boydstun's argument that Cottrell's demand letters were objectively baseless, Boydstun also alleges that Cottrell later "admitted" its inability successfully to advance its patent infringement claim when, on October 28, 2016, Cottrell filed a declaration in this case stating that "Cottrell is currently unable to allege a claim against Boydstun for patent infringement." ECF 77 at 25, ¶ 135. Boydstun also alleges that "[r]ecently, after having inspected a Rapid Ratchet™ winch, counsel for Cottrell called counsel for Boydstun and stated that he agreed that the Rapid Ratchet™ winch did not infringe the '140 ratcheting-winch patent." ECF 77 at 25, ¶ 137. These facts, however, are largely irrelevant. Cottrell's declaration stated that—as of October 28, 2016—it was unable to make a claim of patent infringement. This statement, which Boydstun points out was made nearly seven months after Cottrell sent its first demand letter, says little about whether, seven months earlier, Cottrell had an objectively reasonable basis for sending a demand letter. Similarly, what Cottrell's counsel may have concluded after finally inspecting the winch says little about whether, at some earlier time, and before inspection, it was objectively unreasonable for Cottrell to assert its belief that the winch infringed the '140 Patent.
Boydstun has not alleged sufficient facts from which the Court reasonably may infer that Cottrell's two cease and desist letters regarding the '140 Patent were "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits" at the time that the letters were sent. BE & K, 536 U.S. at 526 (quoting Prof'l Real Estate Inv'rs., 508 U.S. at 60-61) (alterations omitted). Because Boydstun has not sufficiently alleged that Cottrell's enforcement actions with respect to the '140 Patent were objectively baseless, the Court need not assess Boydstun's further argument that the claims also were subjectively baseless.
Boydstun also alleges that Cottrell's cease and desist letter dated November 2, 2015 regarding Cottrell's '917 Patent was sent in bad faith. Boydstun's Complaint alleges:
ECF 77 at 20, ¶ 100. Boydstun does not, however, expressly allege that this letter was either objectively or subjectively baseless, although it does allege that Cottrell knew its assertion of infringement to be "without merit."
The allegation that Cottrell obtained the '917 Patent through fraud is a legal conclusion that the Court need not accept as true. Iqbal, 556 U.S. at 678-79. Boydstun's allegations that Cottrell "had not invented the devices claimed" and that Cottrell's patent covered "Rob Boydstun's invention," without more, do not support the conclusion that the November 2nd demand letter was either objectively or subjectively baseless. In essence, Boydstun is alleging that the demand letter was meritless or "baseless" because of the alleged fraud in obtaining the patent. This conflates the two exceptions to Noerr-Pennington immunity—the sham exception and Walker Process fraud. Boydstun, however, cites no support for the suggestion that fraud on the PTO can itself result in litigation or threatened litigation being labeled a "sham" under the Noerr-Pennington doctrine.
The Supreme Court found in Walker Process "that enforcement of a fraudulently obtained patent claim could violate the Sherman Act." Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 455 (1993); see also California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 512-13 (1972) ("Use of a patent obtained by fraud to exclude a competitor from the market may involve a violation of the antitrust laws, as we held in [Walker Process]."). Boydstun alleges that both the '140 Patent and '917 Patent were obtained through fraud on the PTO, and thus Cottrell is not entitled to immunity with respect to its enforcement actions for either.
To state a claim of fraud on the PTO, Boydstun must first meet the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Rule 9(b) applies to all allegations, or averments, of fraud in all civil cases in federal court, even when fraud is not an essential element of the claim. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-05 (9th Cir. 2003). The Federal Circuit explained in Medimmune, Inc. v. Genentech, Inc. that "[l]ike all fraud-based claims, Walker Process allegations are subject to the pleading requirements of Fed. R. Civ. P. 9(b)." 427 F.3d 958, 967 (Fed. Cir. 2005), rev'd and remanded on other grounds, 549 U.S. 118 (2007) (citing Vess, 317 F.3d at 1103-04). Further, the Federal Circuit applies its "own law, not the law of the regional circuit, to the question of whether inequitable conduct has been pleaded with particularity under Rule 9(b)," Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009), because it "pertains to or is unique to patent law," Cent. Admixture Pharmacy Servs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347, 1356 (Fed. Cir. 2007) (quotation marks omitted). Although the Federal Circuit has not explicitly held that Federal Circuit law also applies to the question of whether Walker Process fraud has adequately been pled under Rule 9(b), the Court concludes that Federal Circuit law would—and should—apply because claims of Walker Process fraud "pertain to or are unique to patent law." Cent. Admixture, 482 F.3d at 1356 (quotation marks omitted).
Rule 9(b) requires that a plaintiff alleging fraud identify "the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." Exergen, 575 F.3d at 1327; see also In re BP Lubricants USA Inc., 637 F.3d 1307, 1311 (Fed. Cir. 2011) ("Exergen's pleading requirements apply to all claims under Rule 9(b), not just inequitable conduct cases."). The elements of "malice, intent, knowledge, and other conditions of mind of a person may be averred generally." Fed. R. Civ. P. 9(b); see also Exergen, 575 F.3d at 1327. But, a plaintiff must still "allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind." Exergen, 575 F.3d at 1327.
The question of "whether conduct in procuring or enforcing a patent is sufficient to strip a patentee of its immunity from the antitrust laws is to be decided as a question of Federal Circuit law." Nobelpharma AB v. Implant Innovations, 141 F.3d 1059, 1068 (Fed. Cir. 1998); see also Dippin' Dots, Inc. v. Mosey, 476 F.3d 1337, 1346 (Fed. Cir. 2007) ("The first barrier for a Walker Process claimant to clear is the requirement that the patent be obtained through actual fraud upon the PTO. This question is governed by Federal Circuit law."). In order to make out a Walker Process fraud claim, an "antitrust-plaintiff must show . . . that the antitrust-defendant obtained the patent by knowing and willful fraud on the patent office and maintained and enforced the patent with knowledge of the fraudulent procurement." TransWeb, LLC v. 3M Innovative Props. Co., 812 F.3d 1295, 1306 (Fed. Cir. 2016).
Thus, a Walker Process plaintiff must allege both materiality and a clear intent to deceive. Nobelpharma, 141 F.3d at 1069-70. The materiality standard "requires that the patent would not have issued but for the patent examiner's justifiable reliance on the patentee's misrepresentation or omission." Dippin' Dots, 476 F.3d at 1347. "Walker Process intent may be inferred from the facts and circumstances of a case . . . ." Id. "[O]missions, as well as misrepresentations, may in limited circumstances support a finding of Walker Process fraud." Nobelpharma, 141 F.3d at 1070. But, "`[a] mere failure to cite a reference to the PTO will not suffice'" to establish Walker Process fraudulent intent. Dippin Dots, 476 F.3d at 1347 (alteration in original) (quoting Nobelpharma, 141 F.3d at 1071). In order "to find a prosecution omission fraudulent there must be evidence of intent separable from the simple fact of the omission." Id.
Boydstun alleges that Cottrell's '140 Patent was obtained through fraud because Cottrell failed to disclose to the PTO a highly relevant patent of its own during the prosecution of the '140 Patent. On March 27, 2008, Cottrell applied for what was ultimately issued as the '140 Patent, and sought expedited review. Under 37 C.F.R. § 1.56, patent applicants have "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 [§ 1.56]."
Boydstun alleges that Cottrell's '275 patent, which Cottrell did not disclose, was highly pertinent to Cottrell's application for the '140 Patent—far more so than the Cummings patent, which Cottrell did disclose. Boydstun specifically explains that the Cummings patent "does not disclose a large external pawl like the claimed invention or the Cottrell '275 patent—it discloses a very different mechanism for a winch." ECF 77 at 21, ¶ 117. Boydstun also alleges that "[i]t is, and was at the time the application was pending, readily apparent that the '140 ratcheting-winch patent is invalid over Ruan in view of Cottrell's own winch patent, the Cottrell '275 patent." Id. ¶ 118. This assertion is supported by the fact that PTAB recently granted Boydstun's petition for IPR, finding a reasonable likelihood that Boydstun would prevail in challenging Cottrell's '140 Patent on this ground.
Boydstun pleads sufficient facts to satisfy the Rule 9(b) pleading standard in the context of an omission. Cottrell argues that Exergen Corp. v. Wal-Mart Stores, Inc., requires that Boydstun allege fraud with greater specificity, including alleging who was obligated to disclose the prior art. 575 F.3d 1312 (Fed. Cir. 2009). Exergen, however, involved a request for leave to amend pleadings after trial in an inequitable conduct case.
In contrast, Boydstun has not had the benefit of discovery, let alone trial. To expect that Boydstun would be able to allege which person at Cottrell was responsible for the patent application is unreasonable. At this stage of the lawsuit, Boydstun has adequately alleged what information was withheld by Cottrell from the PTO, when and in what context it was withheld, and why the omission was both relevant and false or misleading. In the context of an alleged fraudulent omission,
Boydstun's pleading also satisfies the fraudulent intent element of a Walker Process claim. Although "[a] mere failure to cite a reference to the PTO will not suffice" to establish Walker Process intent, Boydstun alleges more than a mere failure to cite to its own patent. Boydstun alleges that Cottrell knew of the other, more relevant patent (since it was Cottrell's own patent), that Cottrell instead disclosed a far less relevant prior art patent along with the Ruan patent, and that it was readily apparent at the time that Cottrell's '140 Patent was obvious over the Ruan patent in view of Cottrell's '275 patent. Boydstun alleges that this was done with an intent to deceive the patent office.
Boydstun further alleges that if Cottrell had disclosed its '275 Patent, Cottrell's '140 Patent would not have issued. Boydstun alleges specific facts about the Cummings prior art that explain why Cottrell's '275 patent was more relevant. Further, the sufficiency of Boydstun's allegations also is supported by the fact that the PTO granted IPR, tentatively concluding that the '140 prior art was obvious over Ruan and the '275 patent.
In Hydril Co. LP v. Grant Prideco LP, the Federal Circuit reversed a lower court's dismissal of an antitrust claim alleging Walker Process fraud. 474 F.3d 1344 (Fed. Cir. 2007). As the Federal Circuit explained:
Hydril Co., 474 F.3d at 1349 (alterations in original) (quoting Walker Process, 382 U.S. at 177). The Federal Circuit concluded that "[u]nder [its] precedent, the conduct alleged in Hydril's complaint would constitute Walker Process fraud." Id. (citing Nobelpharma, 141 F.3d at 1070).
Hydril is persuasive with respect to the question before the Court. Cottrell argues that Hydril is factually distinguishable, but the Court is unpersuaded. The factual differences between the allegations in Hydril and in this case are irrelevant in view of Hydril's holding. Boydstun alleges that Cottrell failed to disclose to the PTO material prior art, that Cottrell was aware of this prior art at the time of its application, and that Cottrell's '140 Patent would not have been granted if the prior art had been disclosed. Under Hydril, if Boydstun "can prove these allegations, they would ground a claim of monopolization in violation of § 2 of the Sherman Act." Id. at 1349. Thus, Boydstun has alleged sufficient facts to state a claim of Walker Process fraud with respect to the prosecution of Cottrell's '140 Patent, and may be subject to antitrust liability for its enforcement of that patent.
Boydstun also alleges Walker Process fraud on the PTO based on the prosecution of Cottrell's '917 Patent. On May 17, 2005, Cottrell filed a provisional (and non-public) application for a patent on its soft-tie system. Eight days later, Boydstun Metal Works filed a utility application for its own soft-tie system. Boydstun Metal Works' soft-tie patent ('897) issued on October 3, 2006, and on that day Boydstun Metal Works sued Cottrell for infringement of that patent. Between October 2006 and December 2007, Boydstun Metal Works and Cottrell were involved in litigation over Boydstun Metal Works' infringement claim. Boydstun alleges that during the litigation, Cottrell learned through discovery that Boydstun Metal Works was in fact the first to invent the soft-tie technology in question. Boydstun further alleges that Boydstun Metal Works' soft-tie patent covers essentially the same scope as Cottrell's '917 patent—an allegation of which Cottrell certainly was aware, since it formed the basis of Boydstun Metal Works' suit. During the pendency of that litigation, Cottrell continued to prosecute what later became Cottrell's '917 Patent.
Boydstun alleges that Cottrell failed to disclose the following relevant and material information to the PTO during Cottrell's prosecution of the '917 patent: the existence of Boydstun Metal Works' soft-tie patent; prior art listed on Boydstun's soft-tie patent; information that Cottrell had about Boydstun Metal Works' earlier invention of the soft-tie system; the patent infringement suit brought by Boydstun Metal Works and the settlement thereof; and Cottrell's acquisition of a license to Boydstun's patent in the settlement agreement.
Cottrell argues that it was under no obligation to disclose the existence of the ongoing litigation in the patent prosecution process. The existence of litigation involving the subject matter of a patent being prosecuted, however, is relevant to the application. The MPEP provides that:
MPEP 2001.06(c)(1994); see also Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1258 (Fed. Cir. 1997) ("There seems little doubt that the litigation involving the patent in question would be relevant to its reissue proceeding."); DaimlerChrysler AG v. Fueling Advanced Techs., Inc., 276 F.Supp.2d 1054, 1061 (S.D. Cal. 2003) (quoting same).
Cottrell also argues that because Boydstun's '897 Patent application was filed after Cottrell's '917 application, Boydstun's '897 Patent was later art, not prior art, and thus Cottrell was under no obligation to disclose it. But if Cottrell knew, as Boydstun alleges, that Cottrell was not in fact the first to invent the technology for which it sought a patent, that would be information material to the PTO's decision of whether to grant a patent to Cottrell—regardless of whether Boydstun's patent application came before or after Cottrell's. See MPEP 2001.06(c)(1994) (listing "questions of inventorship" and "prior art" as material information).
As with Cottrell's '140 Patent, Boydstun has met the Rule 9(b) standard. Boydstun alleges with particularity what was concealed from the PTO, when and in what context, and how the withheld information was relevant to Cottrell's patent application. Walker Process fraudulent intent also is adequately alleged. While Cottrell was prosecuting its '917 Patent, it was defending a lawsuit by Boydstun Metal Works regarding the subject matter of that patent, yet did not disclose this to the PTO. Cottrell also knew of Boydstun Metal Works' claim that Cottrell's proposed patent infringed on Boydstun's patent. Boydstun also alleges that Cottrell knew that Boydstun Metal Works had invented the soft-tie technology before Cottrell's alleged invention of the '917 patented system. When Boydstun specifically asked Cottrell during the litigation about its prior invention, Cottrell did not provide a substantive response. When Boydstun asked Cottrell during the litigation to describe its history of conception and design of the soft-tie system, Cottrell also did not do so, other than to provide the date of a constructive reduction to practice. These facts also support Boydstun's allegation that "Cottrell knew that it did not invent the subject matter of the '917 Patent and that it had copied the soft-tie design from Boydstun." Yet, Cottrell did not disclose this to the PTO.
Boydstun also alleges that all of this information was material to the PTO's determination in whether to grant the '917 Patent. Specifically, Boydstun alleges that had this information been disclosed to the Patent Office, Cottrell's patent application would have been rejected. These allegations are sufficient to state a claim of Walker Process fraud on the PTO. See Hydril Co., 474 F.3d at 1349. Therefore, Cottrell may be subject to antitrust liability for its patent enforcement actions relating to its'917 Patent.
In addition to Cottrell allegedly attempting to enforce invalid patents, Boydstun alleges that Cottrell engaged in several other forms of exclusionary conduct. In evaluating these claims, the Court examines whether Boydstun's Complaint alleges "the use of monopoly power `to foreclose competition, to gain a competitive advantage, or to destroy a competitor.'" Image Tech. Servs., Inc., 125 F.3d at 1208 (quoting Eastman Kodak Co., 504 U.S. at 482-83).
Boydstun alleges that Cottrell's exclusionary conduct also includes a "scare-thecustomer-and-run tactic that is intended to interfere with Boydstun's business relationships with actual and potential customers and intimidate customers into buying commercial car haulers only from Cottrell." ECF 77 at 29, ¶ 155. Boydstun also alleges that "Cottrell's motive and purpose is to cast doubt on Boydstun's product and its ability to remain in the market" and that Cottrell's "actions directed at Boydstun" create a "cloud over Boydstun's products" that deters potential customers. Id. ¶ 163.
Boydstun's customer interference theory relies entirely on Cottrell's patent enforcement actions. As Boydstun explains, the market for commercial car haulers is small, and the key players are relatively few. Boydstun asserts that Cottrell's threats and actions are well-known in the market, including, specifically, Cottrell's threats against other companies, such as AutoMax and Miller, which consisted of sending cease and desist letters. Boydstun alleges that Fleet Owners and Owner-Operators are well-aware of the "success" of Cottrell's threats of patent litigation—i.e., that threats from Cottrell effectively deter other car hauler manufacturers from participating in the market or from offering products they otherwise would. Boydstun specifically points to three cease and desist letters issued to Cottrell's competitors between November 2015 and March 2016.
Boydstun does not allege that Cottrell has directly threatened or improperly influenced any customers. Rather, Boydstun claims that "[t]he threat of an infringement action against Boydstun or any other manufacturer is effectively making the same threat to any Fleet Owner or Owner-Operator that chooses to buy Boydstun's product." ECF 77 at 29, ¶ 156. Boydstun asserts that the Fleet Owners and Owner-Operators fear that buying a commercial car hauler from Boydstun will compromise their future relationship with Cottrell and possibly expose them to expensive infringement litigation.
In addition, as Boydstun suggests, customers may have an incentive to buy from companies that they believe are likely to remain in the market—particularly when buying large, expensive machinery, such as commercial car haulers. The concern that a manufacturer could be forced out of the market may serve as a "disincentive to invest" in that manufacturers' product. Cottrell asserts that Boydstun has not expressly alleged that Cottrell publicized its patent enforcement actions, told customers about them, or otherwise worked to ensure that customers were aware of them. Boydstun does not dispute this assertion. Rather, Boydstun alleges that, because the market for commercial car haulers is small and tight-knit, no such publication is necessary in order for customers to be aware of patent enforcement activities. Boydstun's allegation is a reasonable inference that must be drawn in favor of Boydstun at this stage of the proceedings.
But even to the extent that customers may be concerned over Cottrell's threats to its competitors, that effect derives solely from Cottrell's patent enforcement activities. Boydstun alleges that Cottrell's representatives meet regularly with representatives of Cottrell's customers individually and at industry meetings. Boydstun, however, does not allege that Cottrell threatened, intimidated, or otherwise improperly attempted to influence customers during those meetings. Boydstun also alleges that because of the small size of the market, Cottrell is capable of monitoring customers' buying patterns, and customers understand that Cottrell has this capability. Although this may be true, Boydstun does not allege facts sufficient to suggest that Cottrell actually used that monitoring ability improperly to influence consumers.
The only element of Boydstun's alleged consumer interference theory that is unrelated to Cottrell's patent enforcement activities is that customers "know" that buying "from Boydstun puts them in a position of compromising their future relationship with Cottrell." ECF 77 at 29, ¶156. Boydstun also alleges that it has not received requests or orders from customers who previously indicated a willingness to buy from Boydstun, and that it generally has not received the levels of business that it expected. Boydstun argues that this does not make economic sense and asks the Court to infer from these alleged facts that Cottrell has invoked its market power to dictate consumers' buying decision. These vague allegations, however, are unsupported by facts alleging any anticompetitive conduct by Cottrell itself with respect to customers, and the inference that Boydstun asks this Court to make is too far removed from the facts alleged to be reasonable.
The remainder of Boydstun's allegations relating to customer interference addresses the alleged injury, or effect, of Cottrell's patent enforcement practices. In short, Boydstun alleges that Cottrell's cease and desist letters, news of which has spread through the small auto-hauler community, have the effect of deterring potential customers. As discussed above, Cottrell may be liable in antitrust for its patent enforcement practices because Boydstun has sufficiently alleged Walker Process fraud. Boydstun's allegations that consumers are deterred by Cottrell's exclusionary conduct—in the form of patent enforcement actions—go to the effect, or injury, caused by that exclusionary conduct. Boydstun has not, however, alleged sufficient facts to otherwise state a claim of exclusionary conduct in the form of customer interference.
Boydstun also alleges exclusionary conduct in the form of downstream supply chain restrictions. Commercial car haulers are sold through dealers. Boydstun alleges that dealers have refused to sell commercial car haulers manufactured by Boydstun and other Cottrell competitors, denying them the opportunity to showcase and sell their products to consumers. Specifically, Boydstun alleges that four individual dealerships are de facto exclusive Cottrell dealerships: Jake's Trucks in Chester Springs, Pennsylvania; TEC Equipment in Portland, Oregon; Universal Leasing in Henderson, Colorado; and West Coast Enterprises in Fresno, California. Boydstun alleges that each of these dealers was approached by AutoMax, a competitor of Cottrell's, "and/or another company," offering to sell commercial car haulers through these dealers. Each of the dealers declined, and each stated, as a reason for declining the offer, that selling to other manufacturers would jeopardize their business with Cottrell.
Boydstun's Complaint also provides further allegations. In 2013 or 2014, Paul Lugo ("Lugo"), the owner of AutoMax, approached Jake Grow ("Grow"), owner of Jake's Trucks. The two discussed developing a new type of commercial car hauler that Grow would sell to his customers. Lugo and Grow worked for several months on a prototype. After some time, however, Grow told Lugo that a representative of Cottrell had told Grow that if Grow sold car haulers made by AutoMax then Grow would no longer be able to sell Cottrell car haulers. Grow stated that Cottrell gave him a clear warning: if he kept working with AutoMax, he would not be able to sell Cottrell products. After this, Grow and Lugo ended their discussions, and Jake's Trucks does not sell car haulers made by AutoMax.
Boydstun's Complaint alleges a similar story with respect to TEC Equipment and Universal Leasing. In 2015 or 2016, Lugo approached a sales manager with the Autotransport Division of TEC Equipment about selling AutoMax car haulers. TEC's representative was excited about the prospect of working with AutoMax, and the two had several conversations, all of which seemed positive to Lugo. At some point, TEC Equipment's representative called Lugo and told him that TEC Equipment could not promote AutoMax products because doing so "would jeopardize its relationship with Cottrell." ECF 77 at 33, ¶ 178. Although Boydstun does not explicitly allege that someone from Cottrell told the representative as much, it is a reasonable inference. AutoMax similarly attempted to work with Universal Leasing. A representative of Universal Leasing told Lugo that the company could not work with AutoMax due to concerns that doing so would cause it to lose its supply of Cottrell haulers.
Finally, Boydstun alleges that another (unnamed) car hauler manufacturer that attempted to develop business relationships with West Coast Enterprises and TEC equipment experienced similar treatment and responses. Representatives of each dealer explained that they could not deal with this other manufacturer because they were already selling Cottrell products.
Cottrell characterizes this as an allegation of exclusive dealing and argues that Boydstun has not adequately pled a claim of exclusive dealing in violation of the antitrust laws. Exclusive dealing claims generally arise under Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 3 of the Clayton Act, 15 U.S.C. § 14. When exclusive dealing claims are brought as violations of these provisions, a plaintiff must allege substantial market foreclosure resulting from the arrangement. See, e.g., Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp., LP, 592 F.3d 991, 996 (9th Cir. 2010) ("Section 1 of the Sherman Act, 15 U.S.C. § 1, prohibits `[e]very contract, combination . . . or conspiracy, in restraint of trade or commerce among the several States.' Plaintiffs premise their Section 1 claim on just one theory of liability: exclusive dealing."); Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961) ("[E]ven though a contract is found to be an exclusive-dealing arrangement, it does not violate the section unless the court believes it probable that performance of the contract will foreclose competition in a substantial share of the line of commerce affected.").
Cottrell argues that, even proceeding under § 2 rather than § 1, monopolization plaintiffs alleging exclusive dealing must plead substantial market foreclosure. In support of this proposition, Cottrell cites a Fourth Circuit case involving a claim of exclusive dealing arising under § 2. Kolon Indus. Inc. v. E.I. DuPont de Nemours & Co., 748 F.3d 160 (4th Cir. 2014). In Kolon, the Fourth Circuit noted that, under Supreme Court precedent, "an exclusive dealing arrangement does not violate antitrust laws unless its probable effect is to `foreclose competition in a substantial share of the line of commerce affected.'" Id. at 175 (quoting Tampa Elec. Co., 365 U.S. at 327. Cottrell also cites a case from the Northern District of California, which cited Kolon for the proposition that "to be actionable under section 2, a monopolist's conduct must foreclose competition . . . ." Eastman v. Quest Diagnostics Inc., 108 F.Supp.3d 827, 834 (N.D. Cal. 2015). This portion of Eastman, while citing Kolon, left out the text in Kolon indicating that it was speaking only of claimed exclusive dealing arrangements. This difference is important here.
Cottrell is correct that Boydstun does not assert a separate claim of exclusive dealing.
Finally, Boydstun alleges that Cottrell's monopolization tactics have included interference with suppliers of truck chassis, which are needed to make commercial car haulers. Boydstun alleges the following facts in support of this claim. North Florida Western Star ("North Florida") is a large dealership that sells and delivers truck chassis to Cottrell. Its manager, Dustin Brigman ("Brigman") spoke with Rob Boydstun on several occasions in 2014 and 2015. On or about December 14, 2014, Brigman visited Boydstun's facility and offered to supply Boydstun with truck chassis. Brigman provided quotes for the chassis on five different occasions between July 31, 2014 and May 22, 2015, and told Rob Boydstun that North Florida would be ready to supply chassis whenever Boydstun was ready to place an order. On November 14, 2014, Brigman confirmed that two truck chassis were available for Boydstun to purchase, and in June 2015 Brigman offered to sell Boydstun a Volvo cab. At some point later in 2015, Rob Boydstun called Brigman, ready to place an order. Brigman said that he would get right back to Rob Boydstun, and within a few hours he called Rob Boydstun and told him that North Florida would have to pass on filling Boydstun's order. Brigman told Rob Boydstun that because North Florida sells truck chassis to Cottrell, North Florida could not also sell truck chassis to Boydstun because to do so would be a "conflict of interest." Later, Rob Boydstun related these facts to the President of Western Star, which oversees several dealerships, including North Florida. The President responded to Rob Boydstun that Western Star dealers are required to sell to "all buyers."
Boydstun also alleges that at some time in 2017, a former Cottrell customer told West Coast Enterprises to redirect several Western Star truck chassis from Cottrell to Boydstun, so that Boydstun could build commercial car haulers for that customer. Boydstun alleges that after this, North Florida engaged in tactics that jeopardized the timely delivery of the truck chassis to Boydstun and the completion of a commercial car hauler for that customer. Boydstun alleges that this issue with North Florida occurred because of Cottrell's control over North Florida's business, and was caused by threats from Cottrell.
Cottrell argues that Boydstun's allegation of interference with suppliers is vague and speculative. The Court disagrees. As Boydstun alleges, North Florida told Rob Boydstun that supplying to him would be a "conflict of interest." Western Star's President, however, stated that dealerships were required to sell to all sellers, implying that there is no "conflict of interest" that would prohibit North Florida from selling to two different competing manufacturers. Even after being told to supply to Boydstun, North Florida acted in a way that sought to delay the supply of needed chassis to Boydstun. From this, it is a reasonable inference that North Florida knew that Cottrell, its main purchaser, would view unfavorably North Florida selling to Boydstun and would respond accordingly to the detriment of North Florida. Boydstun also specifically alleges that North Florida's behavior was "caused by threats from Cottrell." ECF 77 at 36, ¶199. Truck chassis are an "essential feature of the commercial car hauler," and interfering with a competitor's ability to obtain truck chassis may constitute exclusionary or anticompetitive behavior. Whether and to what extent this is so may depend upon more specific facts and circumstances, but Boydstun's allegations are sufficient at this stage of the proceedings.
In order to state a claim for unlawful monopolization, in addition to showing unlawful exclusionary conduct, a plaintiff must also adequately allege antitrust injury. Antitrust injury is "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick, 429 U.S. at 489. Antitrust injury generally has four elements: "(1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the type the antitrust laws were intended to prevent." Somers v. Apple, Inc., 729 F.3d 953, 963 (9th Cir. 2013) (quoting American Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1055 (9th Cir. 1999)). The type of injury that the antitrust laws were intended to prevent is injury to competition. See Brunswick, 429 U.S. at 488 ("The antitrust laws . . . were enacted for `the protection of competition not competitors.'") (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)); Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 988 (9th Cir. 2000) ("[T]he central purpose of the antitrust laws . . . is to preserve competition."). The Ninth Circuit has added a fifth element: "that `the injured party be a participant in the same market as the alleged malefactors,' meaning `the party alleging the injury must be either a consumer of the alleged violator's goods or services or a competitor of the alleged violator in the restrained market.'" Somers, 729 F.3d at 963 (quoting Glen Holly Entm't, 343 F.3d at 1008).
As previously discussed, Boydstun adequately alleges anticompetitive conduct. Specifically, Cottrell's alleged patent enforcement practices, alleged interference with suppliers of truck chassis, and alleged interference with dealers sufficiently allege anticompetitive conduct. Thus, the first antitrust injury factor is met. The Ninth Circuit's fifth antitrust injury factor also is met. Cottrell and Boydstun are competitors in the same market for making and selling commercial car haulers.
The Court next considers the second, third, and fourth factors together. Boydstun alleges that Cottrell's actions have caused consumers who would otherwise buy from Boydstun to buy from Cottrell instead. Cottrell allegedly has deterred dealers from working with Boydstun and selling Boydstun's car haulers. As a result of Cottrell's alleged anticompetitive conduct, Boydstun has lost sales, revenue, and profit. Further, Boydstun allegedly would have had a larger share of the relevant market but for Cottrell's anticompetitive conduct. Instead, Boydstun alleges that its sales "have plateaued at three percent (3%) of the market in 2016." ECF 77 at 38, ¶ 208. Boydstun also alleges that, as a result of Cottrell's actions, Boydstun has incurred litigation costs in order to assert its right to sell the products it manufactures.
Boydstun also alleges that its injuries flow from Cottrell's anticompetitive conduct. Boydstun alleges that Cottrell's interference with suppliers of truck chassis has delayed or hindered its ability to obtain this crucial component to car haulers. Boydstun further alleges that Cottrell's interference with dealers has hindered Boydstun's ability to present its car haulers to consumers in the market. Specifically, Boydstun alleges that this "decreases visibility of the manufacturers' products, undermines their ability to gain a foothold in the market and compete with Cottrell, results in less information about competitive products in the market," and otherwise reduces sales to Cottrell competitors. ECF 77 at 32 ¶ 170. Boydstun also alleges that Cottrell's threats of patent infringement litigation have "scared away" potential customers.
Boydstun alleges that "Cottrell's actions have restricted its rivals' business independence, foreclosed distribution channels . . . forced its rivals to provide fewer choices to its customers and potential customers, and delayed innovation." ECF 77 at 36, ¶ 202. The effect of Cottrell's actions, Boydstun alleges, has been to hinder the growth of Cottrell's competitors and prevent them from gaining market share, and to "restrict the market's maximum output of technical advancement." ECF 77 at 37, ¶ 202. Boydstun further alleges that Cottrell's actions have "cast[] doubt, suspicion, and concerns over Boydstun's products and/or the consequences to customers" of buying from Boydstun, which has prevented Boydstun from fully competing in the market. ECF 77 at 37, ¶ 204. Boydstun also alleges that Cottrell's actions have injured competition by "stifling, artificially restraining, and impeding competition on choice of suppliers and products, product quality, supply, innovation, and price." ECF 77 at 37, ¶ 205. As a result, there is less competition in the market, and fewer choices for consumers.
These allegations are sufficient to allege an injury to Boydstun that flows from Cottrell's alleged unlawful conduct and harms competition. Thus, Boydstun has sufficiently alleged the second, third, and fourth factors of antitrust injury, as well as the first and fifth factors.
Cottrell also moves to dismiss Boydstun's claim for tortious patent enforcement in violation of ORS § 646A.810 on the ground that this claim is preempted by federal patent law. The Federal Circuit's decision in Globetrotter Software, Inc. v. Elan Computer Group, Inc. controls this question.
The Federal Circuit explained in Globetrotter that "federal patent law preempts state-law tort liability for a patentholder's good faith conduct in communications asserting infringement of its patent and warning about potential litigation." Id. at 1374. Boydstun's state law claim "can survive federal preemption only to the extent that [the claim is] based on a showing of bad faith action in asserting infringement." Id. (quotation marks omitted). Globetrotter expressly held that state-law tort liability is permitted "for only objectively baseless allegations of infringement," applying the standard from Professional Real Estate. Id. at 1377. Therefore, "[a] plaintiff claiming that a patent holder has engaged in wrongful conduct by asserting claims of patent infringement must establish that the claims of infringement were objectively baseless." Id. Boydstun argues that Globetrotter was wrongly decided, and Boydstun has preserved that argument for later appellate review. Boydstun does not contest, however, that this district court is bound by Globetrotter and that Globetrotter controls the issue of whether Boydstun's state law claim is preempted.
As discussed above regarding Noerr-Pennington immunity, Boydstun has not alleged a sufficient factual basis from which the Court can reasonably infer that Cottrell's patent enforcement actions were "objectively baseless." Therefore, Boydstun's claim under ORS § 646A.810 is preempted by federal law. Cottrell's motion to dismiss this claim is granted.
The Court GRANTS IN PART AND DENIES IN PART Cottrell's motion to dismiss. ECF 78 (redacted); ECF 81 (unredacted). Cottrell's motion to dismiss is granted with respect to Boydstun's claim arising under ORS § 646A.810 and denied in all other respects. The Court also GRANTS Cottrell's request for judicial notice. ECF 79.
