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Visto Corp. v. Sproqit Technologies

March 17, 2005


The opinion of the court was delivered by: Edward M. Chen United States Magistrate Judge


Plaintiff Visto Corporation has sued Defendant Sproqit Technologies, Inc. for infringement of Visto's '192 patent. In turn, Sproqit has filed counterclaims against Visto for (1) declaration of noninfringement and invalidity of the '192 patent, (2) declaration of noninfringement and unenforceability of another patent (the '708 patent), (3) tortious interference with prospective economic advantage, and (4) defamation. In this motion to dismiss, Visto challenges the state law claims for tortious interference and defamation. Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court here GRANTS the motion to dismiss without prejudice.


In its counterclaims, Sproqit alleges, inter alia, the following facts:

(1) "On numerous occasions, Visto has expressed an interest in acquiring Sproqit [but] Sproqit has not agreed to the acquisition." Countercl. ¶ 6. Visto told Sproqit at one point that, if it did not agree to the acquisition, then Visto would file suit for patent infringement. See id. ¶ 8.

(2) "Visto has threatened to bring a patent infringement lawsuit against Sproqit alleging that Sproqit has infringed the '192 Patent and [the '708 Patent]." Id. ¶ 7. The allegations of patent infringement are baseless. See id. ¶ 29. Visto has made these threats (1) to disrupt financing of Sproqit "and thereby to facilitate Visto's desired acquisition of Sproqit" and (2) to interfere with Sproqit's prospective business relationships with potential customers such as Vodafone Group PLC. Id.

(3) Visto has now actually filed suit alleging infringement of the '192 Patent. See id. ¶ 9.


A. Legal Standard

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). For such a motion, the court must accept the plaintiff's allegations as true and construe them in the light most favorable to the plaintiff. See Janas v. McCracken (In re Silicon Graphics Sec. Litig.), 183 F.3d 970, 983 (9th Cir. 1999). Dismissal is improper "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

In the instant case, both parties have filed and/or referred to declarations in support of their respective positions on the motion to dismiss. Under Rule 12(b), "[i]f, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Fed. R. Civ. P. 12(b) (emphasis added). The Court shall not convert Visto's motion to dismiss to a motion for summary judgment and thus shall not consider any matters outside the pleading, including the above-referenced declarations.

B. Independent Wrongful Conduct

The California Supreme Court laid out the elements for a claim of intentional interference with prospective economic advantage in Della Penna v. Toyota Motor Sales, USA, Inc., 11 Cal. 4th 376 (1995). Those elements are as follows: (1) an economic relationship between the plaintiff and third party containing the probability of future economic benefit to the plaintiff, (2) knowledge by the defendant of the existence of the relationship, (3) intentional acts on the part of the defendant designed to disrupt the relationship, (4) actual disruption of the relationship, and (5) damages to the plaintiff proximately caused by the acts of the defendant. See id. at 389. In addition, "a plaintiff seeking to recover for an alleged interference with prospective contractual or economic relations must plead and prove as part of its case-in-chief that the defendant not only knowingly interfered with the plaintiff's expectancy, but engaged in conduct that was wrongful by some legal measure other than the fact of interference itself." Id. at 393 (emphasis added); see also National Med. Transp. Network v. Deloitte & Touche, 62 Cal. App. 4th 412, 439-40 (1998) (noting that requirement of independent wrongfulness applies to both intentional and negligent interference claims). According to Visto, Sproqit has failed to allege the last element, i.e., independently wrongful conduct, and the fourth element, i.e., actual disruption of the relationship.

"Although the California courts have not provided a definitive meaning of 'wrongful' conduct, in Bed, Bath & Beyond v. La Jolla Village Square Venture Partners, 52 Cal. App. 4th 867 (Cal. Ct. App. 1997), the California Court of Appeal acknowledged that various courts have defined that phrase as follows: (1) conduct that is independently tortious or a restraint of trade; (2) conduct violating a statute, regulation, a recognized rule of common law, or an established standard of a trade or profession,*fn1or (3) conduct that is illegal, unfair, or immoral according to common understandings of society." Formula One Licensing, B.V. v. Purple Interactive Ltd., No. C 00-2222 MMC, 2001 U.S. Dist. LEXIS 2968, at *14 (N.D. Cal. Feb. 6, 2001); Gemini Aluminum, 95 Cal. App. 4th at 1258-59 (characterizing the following as wrongful conduct: where actions of defendant are out of the ream of legitimate business transactions or constitute a violation of a statute or a tort such as fraud or unfair competition). "The focus for determining the wrongfulness of the defendant's intentional acts 'should be on the defendant's objective conduct, and evidence of motive or other subjective states of mind is relevant only to illuminating the nature of the conduct.' Thus, lawful conduct that is 'motivated by a black desire to hurt the plaintiff's business' does not necessarily constitute wrongful conduct." Sebastian Internat'l v. Russolillo, 128 F. Supp. 2d 630, ...

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