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Judge Robinson Grants Motion to Amend to Add Inequitable Conduct Counterclaim, Denies Leave to Add Other Counterclaims

Judge Robinson recently considered defendants’ motions to amend their answers in a patent infringement case to include counterclaims of false marking, false advertising, deceptive trade practices, and unenforceability due to inequitable conduct. Judge Robinson concluded that the motions to amend should be denied with the exception of one defendant’s motion to add an inequitable conduct counterclaim, which was granted. Cot’n Wash, Inc., et al. v. Henkel Corp, et al., C.A. No. 12-650-SLR, Memo. Op. at 18 (D. Del. July 11, 2014).

Judge Robinson first considered whether the delay in seeking to amend was undue. Because the two defendants had been in possession of the evidence forming the basis of its false marking, false advertising and deceptive trade practices claims since May 2013 and June 2013 but did not contact the plaintiff until October 2013 and then did not file motions to amend until late January and early February 2014, Judge Robinson found that the delay was undue. With respect to inequitable conduct, however, Judge Robinson found that defendant Sun had waited only one week after obtaining relevant information to raise it with the plaintiff. This did not constitute inequitable conduct. Id. at 9-10.

Judge Robinson next considered the prejudice to plaintiff from the amendments. With respect to the proposed false marking, false advertising and deceptive trade practices claims, Judge Robinson found that the plaintiffs would be prejudiced by the amendment because, although the plaintiffs had been in possession of the relevant evidence, they “did not have the opportunity to review and vet this evidence for discovery purposes in the context of false marking claims.” By contrast, the plaintiffs had agreed to stipulate to inequitable conduct claims “nearly identical” to those proposed by defendant Sun in two related cases in August 2013 and Sun had asserted the underlying claims in August 2013, so the plaintiffs had “adequate opportunity to take discovery on the relevant issues” and were not prejudiced. Id. at 10-11.

Finally, turning to futility of amendment, Judge Robinson found that the false marking allegations failed to state a claim and would therefore be futile but the inequitable conduct claims were adequate and not futile. With respect to false marking, there were not sufficient allegations that the plaintiffs had the requisite intent to deceive nor that the defendants had suffered competitive injury. Id. at 12-16. With respect to inequitable conduct, however, Judge Robinson found that the proposed amendment would not be futile, because defendant Sun had properly pled inequitable conduct under Exergen. Sun alleged that the patent applicants had failed to disclose an inventor of the patent-in-suit, failed to disclose that inventor had publicly demonstrated the invention more than one year prior to filing, and failed to disclose pieces of relevant prior art. These allegations properly pled the “who, what, when, where, and how” of the misrepresentation or omission to the PTO. Thus, Sun’s inequitable conduct amendment was not futile and was allowed. Id. at 16-18.

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