Stowe Woodward, L.L.C. v. Sensor Products, Inc.

Citations: 230 F.R.D. 463; 62 Fed. R. Serv. 3d 988; 2005 U.S. Dist. LEXIS 19313; 2005 WL 2160036Docket: No. CIV.A.5:04 CV 00001

Court: District Court, W.D. Virginia; September 7, 2005; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The court has granted the plaintiff Stowe Woodward, L.L.C.'s motion to dismiss the defendant Sensor Products, Inc. (SPI)'s defense of inequitable conduct in a patent infringement case concerning United States Patent No. 6,568,285 ('285 patent) and United States Patent No. 6,769,314 ('314 patent). SPI asserted three defenses in both cases: failure to state a claim, invalidity, and non-infringement, with the defense of inequitable conduct added in the second case. SPI claimed that Stowe committed inequitable conduct by failing to disclose material prior art, including U.S. Patent No. 5,583,303, during the patent prosecution, allegedly with intent to deceive. In response to Stowe's interrogatories seeking detailed factual and legal bases for the inequitable conduct claim, SPI provided insufficient detail and merely referenced prior art and identified individuals potentially responsible for such conduct. Stowe argued that SPI's defense lacked adequate specificity, prompting the court's decision to dismiss it while allowing SPI the opportunity to seek leave to amend its answers under Federal Rule of Civil Procedure 15(a).

The defense of inequitable conduct must be pled with the heightened particularity required by Federal Rule of Civil Procedure 9(b), which applies to all fraud allegations. While there is some disagreement among district courts about the applicability of Rule 9(b) specifically to inequitable conduct, the majority agree it does apply. Although the Federal Circuit has not definitively ruled on this matter, it has suggested that inequitable conduct, being broader than fraud, still requires particularity in pleading. This requirement aims to prevent the misuse of fraud charges for unwarranted discovery. The court emphasizes that SPI must detail the circumstances of the alleged inequitable conduct, including the time, place, content, and responsible parties.

In SPI's defense, filed on October 28, it claimed the unenforceability of the ’314 patent due to inequitable conduct for failing to disclose material prior art. SPI identified three undisclosed pieces of prior art but the court found these allegations insufficient under Rule 9(b). Additionally, there is a dispute regarding the applicability of this defense to the ’285 patent, which was not included in SPI's original answer. Ultimately, the court concludes that SPI's pleadings do not meet the required standards but allows for an amendment to comply with the heightened pleading requirements.

The heightened pleading standard necessitates that a party specify the time, place, and content of alleged inequitable conduct. SPI claims it adequately identified responsible parties as 'the patentee, inventors, and/or other individuals associated with the prosecution of the patent application.' It asserts that it has clearly outlined what was not disclosed to the Patent Office, including U.S. Patent No. 5,583,303, actions from foreign patent offices, and relevant industry publications or products. SPI also notes that it provided the time and place of the nondisclosure as occurring during the prosecution of the asserted patent and related patents, thus contending it has satisfied Rule 9(b)'s particularity requirements. However, SPI has not fully met heightened pleading standards, as demonstrated in case law. In EMC Corp. v. Storage Tech. Corp., the court found that the plaintiff failed to plead inequitable conduct with sufficient particularity, lacking details on the relevant prior art. In contrast, TruePosition, Inc. v. Allen Telecom, Inc. indicated that naming the withheld prior art and related fraudulent acts could satisfy Rule 9(b). Courts, including the District of Maryland, have indicated that specifying the conduct's timeframe, responsible parties, and undisclosed prior art can meet particularity requirements. SPI's allegations provide adequate notice to the opposing party, facilitating their ability to formulate a defense, aligning with the intent of Rule 9(b).

SPI’s allegations regarding inequitable conduct focus on undisclosed prior art and actions by foreign patent offices, as well as industry publications or products, particularly those of Interlink. Stowe argues that SPI's claims about foreign patent office actions are vague, lacking specifics about which actions, offices, and patents are implicated. Additionally, Stowe contends that SPI fails to identify particular industry publications or relevant sectors, violating Rule 9(b) requirements. The court concurs, emphasizing that SPI must provide clearer identification of these allegations. While referencing U.S. Patent No. 5,583,303 may satisfy pleading standards, the overall defense must be specific; vague allegations cannot rely on a single detailed claim. The court finds SPI’s initial allegations insufficient compared to the more detailed specifications required under Rule 9(b), as demonstrated in the MedImmune case, which involved a more elaborated second amended complaint. Furthermore, interrogatories can clarify adequately pled assertions but cannot supplement deficient pleadings. SPI's reliance on interrogatory responses to enhance its inequitable conduct claims is rejected, as these responses cannot remedy the lack of specificity in the original pleadings.

Removal of vague language in pleadings is essential to comply with Rule 9(b) standards. The court may strike ambiguous language under Rule 12(f), as demonstrated in *Safe Bed Techs. Co. v. KCI USA, Inc.*, where ambiguous terms were removed for failing to meet specificity requirements. However, this court is reluctant to apply Rule 12(f) to selectively strike vague parts of a pleading while retaining others. 

Regarding amendments, Federal Rule of Civil Procedure 15(a) allows parties to amend pleadings with court permission, typically granted unless it prejudices the opposing party, involves bad faith, or is futile. Courts frequently permit amendments for insufficiently pled claims under Rule 9(b). A case in the Middle District of North Carolina granted leave to amend a deficient inequitable conduct claim when no bad faith was shown.

SPI may seek to amend its pleadings to include defenses for both the ’314 and the ’285 patents. However, Stowe argues that SPI has not specifically pled an inequitable conduct defense concerning the ’285 patent, referencing *ResQNet.Com, Inc. v. Lansa, Inc.*, which ruled that discovery cannot be pursued on defenses not explicitly pled.

SPI asserts that in its response to the complaint concerning the ’285 patent, it claimed the patent was "invalid, void, and unenforceable" under the U.S. Patent Act. Additionally, SPI's answer to the complaint regarding the ’314 patent provided a detailed defense of inequitable conduct. The two causes of action have been consolidated, but SPI argues that the language in its pleadings applies to both patents. The ’314 patent is described as a divisional application of the ’285 patent, indicating a direct relationship between the two.

Stowe contends that SPI only mentioned the ’314 patent in its answer and did not plead inequitable conduct for the ’285 patent. The court's decision to consolidate the cases does not merge them into one or alter the parties' rights. Thus, the inequitable conduct defense currently pertains only to the ’314 patent. However, the court may permit SPI to amend its answer to include this defense for the ’285 patent, referencing the absence of undue delay or prejudice to Stowe.

The court is not yet deciding whether the ’314 patent is indeed a divisional application of the ’285 patent but acknowledges that Stowe had sufficient notice regarding their relatedness. Claims of inequitable conduct must meet the heightened pleading standards of Rule 9(b), requiring specific details about the alleged conduct. SPI has not provided enough information to satisfy these requirements, failing to offer sufficient detail for Stowe to adequately respond to its defense.

The language regarding "actions taken by foreign patent offices, and/or industry publications or products, including at least those of Interlink" lacks specificity, hindering Stowe's ability to effectively respond. While SPI provided a specific patent number related to allegations of failing to disclose material prior art, it did not adequately detail the actions taken by foreign patent offices or industry publications. Consequently, the motion to dismiss Stowe's defense of inequitable conduct is granted; however, Stowe may seek permission to amend its answers in accordance with Rule 9(b) regarding this defense. Certified copies of the Memorandum Opinion and accompanying Order will be sent to all counsel of record. Various case precedents are cited, indicating differing interpretations of inequitable conduct and its relation to Rule 9(b), including one case that suggests inequitable conduct does not necessarily equate to common law fraud. The excerpt also notes concerns about the prevalence of inequitable conduct allegations in patent litigation, suggesting that unsupported claims undermine justice.