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Judge Burke recommends denial of defendants’ motion for leave to add claims and defenses of inequitable conduct

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In a recent report and recommendation, Magistrate Judge Christopher J. Burke recommended that defendants’ motion for leave to amend their pleading with inequitable conduct claims and defenses be denied. INVISTA North America S.à.r.l. et al. v. M&G USA Corporation et al., C.A. No. 11-1007-SLR-CJB (D. Del. May 3, 2013). Plaintiffs are asserting U.S. Patent Nos. 7,943,216 (the “’216 Patent”); 7,879,930 (the “’930 Patent”); and 7,919,159 (the “’159 Patent”). Id. at 1. On August 6, 2012, the date which marked the deadline to amend the pleadings pursuant to the Scheduling Order, defendants moved for leave to amend their pleading with inequitable conduct claims and defenses with respect to each of plaintiffs’ asserted patents. Id. at 5. Defendants alleged that those responsible for the prosecution of the asserted patents submitted misleading and incomplete test data to the PTO. Id. at 11, 26. Judge Burke’s analysis was governed by Federal Rule of Civil Procedure 15(a). See id. at 5-6. Because plaintiffs opposed defendants’ motion “on the sole basis that [their] proposed amendments would be futile,” Judge Burke was required to assess only futility of amendment. Id. at 6. As Judge Burke explained, “the standard for assessing futility of amendment is the same standard of legal sufficiency that applies under Fed. R. Civ. P. 12(b)(6).” Id. at 7.

With respect to the ’159 and ’216 Patents, Judge Burke found that defendants failed “to sufficiently plead both the ‘who’ of inequitable conduct as well as the scienter requirement.” Id. at 25. Judge Burke explained that “[n]one of [defendants’] allegations tie specific conduct to any specific individual; instead, as to ‘who’ engaged in misconduct before the PTO, every allegation is pled generally, with reference to ‘Invista,’ ‘Applicant,’ ‘they,’ and ‘their.’” Id. at 17. Judge Burke further found that as to knowledge, the “problem with [defendants’] allegations circle[d] back to the Court’s finding with regard to [defendants’] insufficient pleading as to the ‘who’ of inequitable conduct.” Id. at 21. Specifically, Judge Burke explained that “[w]ith no real facts pled that are specific to any individual, there is a clearly insufficient basis to reasonably infer that any particular person . . . did in fact know of the materiality of this data, and intentionally failed to disclose the data or disclosed incomplete data.” Id. at 22. Moreover, with respect to an intent to deceive, Judge Burke noted that defendants failed to satisfy its burden “under Exergen by asserting that ‘Applicant’ or ‘INVISTA’ as a whole had a ‘desire to acquire patent rights in the gas barrier market,’ and then suggest[ing] that this general statement should lead to the inference that” a particular individual “knowingly withheld or misrepresented material data because of a specific intent to deceive the PTO.” Id. at 25.

Judge Burke further found that defendants’ proposed inequitable conduct defense with respect to the ’930 Patent “suffer[ed] from the same fatal flaws” as those related to the ’159 and ’216 Patents. Id. at 28. Specifically, defendants “failed to sufficiently identify the ‘who’ of [the] inequitable conduct,” which in turn “doom[ed] [defendants’] allegations regarding the scienter requirements of inequitable conduct in relation to the ’930.” Id. Judge Burke additionally found that defendants failed to sufficiently plead “but-for” materiality with respect to the ’930 Patent. Id. at 29. As Judge Burke explained, “[m]ere claims that the PTO would not have granted the patent had it known of the omission or misrepresentation are insufficient because they are conclusory legal conclusions under Iqbal.” Id.

INVISTA North America S.à.r.l. et al. v. M&G USA Corporation et al., C.A. No. 11-1007-SLR-CJB (D. Del….

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