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Judge Sleet Grants Motion to Dismiss Invalidity Counterclaims, Motion to Amend adding Inequitable Conduct Counterclaims

Judge Sleet recently considered and granted two motions directed to the pleadings of a patent infringement case: a plaintiff’s motion to dismiss counterclaims of invalidity and a defendant’s motion for leave to amend its answer in order to add counterclaims of inequitable conduct. EMC Corp., et al. v. Zerto, Inc., C.A. No. 12-956-GMS, Memo. at 1 (D. Del. July 31, 2014).

Addressing first the plaintiff’s motion to dismiss counterclaims of invalidity, Judge Sleet followed Judge Robinson’s reasoning in Senju Pharmaceutical v. Apotex, finding that the pleading standards of Twombly and Iqbal apply to counterclaims of invalidity, despite the lower pleading standard for infringement set forth in Form 18. Like Judge Robinson, Judge Sleet found that “the fact that Form 18 (rather than Twombly and Iqbal) remains the standard for pleading [direct] infringement claims is an insufficient justification for deviating from Twombly and Iqbal for pleading other causes of action.” Id. at 2-3. Accordingly, Judge Sleet granted the motion to dismiss the defendant’s counterclaims.

Turning next to the defendant’s motion for leave to amend its answer to add counterclaims of inequitable conduct, Judge Sleet explained that the motion was timely pursuant to the case scheduling order and that the plaintiff had not alleged that it would cause undue prejudice. Accordingly, the question for the Court to resolve was whether the two proposed counterclaims of inequitable conduct would be futile. The defendant sought to add two counterclaims of unenforceability due to inequitable conduct. Id. at 4-6. The first counterclaim alleged that specific “attorneys violated their duty of candor and good faith by intentionally making misrepresentations to the PTO concerning the prior art status of a reference [the defendant] submitted in connection with its petition for IPR.” This allegation “set forth sufficient facts from which the court may reasonably infer that the identified . . . attorneys made statements and withheld information with the intent to deceive the PTO.” Accordingly, the Court “decline[d] to dismiss [the] counterclaim at this early stage.” Id. at 6.

The second inequitable conduct counterclaim alleged that the plaintiff “filed patent applications for an ‘invention’ that was merely a combination of two existing prior art products and failed to provide the PTO with enough detail about either product to allow it to determine whether the combination was inventive.” Id. Judge Sleet found that the proposed counterclaim identified “specific individuals alleged to have violated their duties of candor and good faith,” “alleged prior art products, the relevant claim limitations, and how/why the prior art would have been material to claim limitations.” Id. Furthermore, it “set forth sufficient facts from which the court may reasonably infer that the identified individuals withheld the prior art information with the intent to deceive the PTO.” Id. at 6-7. Accordingly, the counterclaims satisfied both Rule 9(b) and Exergen, and Judge Sleet granted the defendant leave to amend.

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