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Judge Burke recommends grant-in-part of motion to dismiss/strike inequitable conduct claims

In a detailed Report and Recommendation issued in International Business Machines Corporation v. The Priceline Group Inc., et al., C.A. No. 15-137-LPS-CJB (D. Del. Apr. 10, 2017), Magistrate Judge Christopher J. Burke recommended that Plaintiff’s motion to dismiss Defendants’ inequitable conduct counterclaim and to strike their corresponding affirmative defense be granted-in-part.

Defendants’ inequitable conduct allegations fell into three separate “theories”: “allegations relating to the failure to disclose (1) certain prior art references against [two asserted patents] . . . (2) commercialization efforts . . . [and] (3) co-pending patent applications and office actions related to those applications.” Id. at 12.  Plaintiff challenged the sufficiency of Defendants’ allegations of materiality and intent, and also that the inequitable conduct allegations regarding certain patents could “infect” others.

As a threshold matter, Defendants contended that because “‘Rule 12(b)(6) doesn’t permit piecemeal dismissals of parts of claims[,]’ . . . if any one theory of inequitable conducts passes muster under Rule 9(b), then all of Defendants’ theories set out in the counterclaim should survive, even if some are clearly insufficiently pleaded.” Id. at 13.  The Court disagreed, citing, inter alia, case law from this District where portions of inequitable conduct claims were dismissed, and further observing that Defendants’ single-count approach to their pleading was confusing and may frustrate the particularity requirements of Rule 9(b). See id. at 13-16.

The Court then concluded that the claims could only survive as they pertained to a specifically-identified prosecuting attorney, and recommended dismissing allegations against unnamed individuals and prosecuting attorneys, corporate entities, and the named inventors, finding these allegations either improper or insufficient. Id. at 16-20.

Turning to the allegations themselves, the Court found Defendants had sufficiently pled that the failure to disclose one prior art reference was material and done with an intent to deceive, but rejected this theory as to another set of references. See id. at 28.  The Court then concluded that Defendants’ second, commercialization theory was sufficiently pled. See id. at 28-35.  As to the final theory regarding co-pending patent applications, Defendants alleged that (1) failure to disclose certain rejections materially impacted the issuance of one asserted patent, and (2) by hiding prosecution of co-pending applications, the prosecuting attorney had avoided double patenting rejections.  The Court granted Plaintiff’s motion in part as to these theories, finding only the “double patenting” theory as to one patent to be sufficiently pled. See id. at 35-44.  Finally, the Court rejected Defendants’ argument that their inequitable conduct allegations as to one patent could infect another, based on its finding that related underlying allegations had been insufficiently pled. Id. at 46.

International Business Machines Corporation v. The Priceline Group Inc., et al., C.A. No. 15-137-LPS-CJB (D. Del. Apr. 10, 2017)

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