United States District Court, N.D. California
November 18, 2005.
BRITESMILE, INC. and BRITESMILE DEVELOPMENT, INC., Plaintiffs,
DISCUS DENTAL, INC., et al., Defendants. AND RELATED COUNTERCLAIMS.
The opinion of the court was delivered by: JEFFREY WHITE, District Judge
ORDER GRANTING IN PART AND DENYING IN PART BRITESMILE'S MOTION TO
DISMISS DISCUS DENTAL'S COUNTERCLAIMS IV-XII
Now before the Court is the motion of Plaintiffs BriteSmile,
Inc. and BriteSmile Development, Inc. (collectively "BriteSmile")
to dismiss the fourth through twelfth counterclaims filed by
Defendant Discuss Dental, Inc. ("Discus"). Having carefully
considered the parties' arguments and the relevant legal
authority, the Court hereby GRANTS IN PART and DENIES IN PART the
motion to dismiss.
On May 3, 2005, BriteSmile sent a letter to dentists who use
Discus' teeth whitening products. The letter stated in pertinent
. . . BriteSmile believes that your use of certain
teeth whitening products of Discus Dental, Inc.
("Discus") infringes valuable property rights of
BriteSmile, and that this activity must cease and
BriteSmile is the owner of a substantial patent
portfolio dedicated to tooth whitening technology,
including the following U.S. patents which may be of
interest to you: U.S. Patent Nos. 6,343,933;
6,514,543; 6,536,628; 6,331,292; 5,922,307;
6,312,670; 6,322,773; and 6,488,914. BriteSmile has
made a significant investment in its patent portfolio
and is vigorous in its enforcement of these and other
patents. You should be aware that BriteSmile is suing
Discus over Discus' making, using and selling of
technology that infringes several of these patents.
As a seller of Discus products, you are also
infringing one or more of the BriteSmile patents. In particular, Discus' Zoom!
Chairside system infringes one or more BriteSmile
patents. In addition, several of Discus' take home
products, including Zoom! Take Home, Nite White and
Excel, which use a two component gel and a dual
chamber static mixer, infringe other BriteSmile
patents. Your use and sale of these Discus products
constitutes infringement under U.S. patent laws.
As an alternative to Discus' Zoom! Chairside system,
BriteSmile is interested in granting you rights under
BriteSmile's substantial patent portfolio by inviting
you to become a licensed provider of BriteSmile
products and services. Whether or not you are
interested to become part of the BriteSmile
opportunity, BriteSmile insists that you immediately
cease and desist from all infringing use and sale of
the Discus products covered by the above patents.
(Declaration of Shirish Gupta ("Gupta Decl."), Ex. 1.) On June
15, 2005, BriteSmile sent a follow-up letter to dentists stating:
. . . [T]he patent infringement litigation between
BriteSmile and Discus is ongoing, with Discus still
accused of infringement of three BriteSmile patents:
U.S. Patent Nos. 6,343,933; 6,514,543; 6,536,628. In
fact, Discus has changed its formulations for its
products, and many of those changes were just
revealed to BriteSmile.
As a result of Discus' formulation changes,
BriteSmile is not interested at this time in pursuing
Discus' customers, the dentists, for past
infringement based on those old formulations.
BriteSmile will seek damages in that regard from
As far as the new formulations are concerned,
BriteSmile is currently evaluating whether those
formulations infringe any BriteSmile intellectual
property. If so, BriteSmile will consider all of its
legal options for addressing the infringement by
Discus and its customers.
(Gupta Decl., Ex. 3.)
Based in large part on these letters, Discus filed amended
counterclaims against BriteSmile, seeking a declaratory judgment
of non-infringement and invalidity of U.S. Patent Nos. 6,488,914
("'914 Patent"), 6,331,292 ("'292 Patent"), 5,922,307 ("'307
Patent"), 6,312,670 ("'670 Patent"), and 6,322,773 ("'773
Patent") pursuant to 22 U.S.C. § 2201.*fn1 Based on these
letters accusing Discus' products of infringement and initially
threatening to sue the dentists, Discus also filed counterclaims
for tortious interference with prospective economic advantage and
economic business relations, unfair competition under California
Business and Professional Code § 17200, common law unfair
competition, and trade libel.
BriteSmile now moves to dismiss the declaratory relief
counterclaims for lack of subject matter jurisdiction, arguing
that Discus does not have a reasonable apprehension of being sued over the above patents. Alternatively, BriteSmile urges the Court
to exercise its discretion to decline to hear the declaratory
relief counterclaims. BriteSmile also moves to dismiss the state
law counterclaims, arguing that they are preempted by the patent
laws and that Discus failed to sufficiently allege these claims.
The Court will address these arguments in turn.
A. Legal Standards Applicable to Declaratory Relief
In order to establish subject matter jurisdiction, Discus bears
the burden of establishing that an "actual controversy" existed
at, and has continued since, the time it filed its counterclaims.
See Super Sack Mfg. Corp. v. Chase Packaging Corp.,
57 F.3d 1054, 1058 (Fed. Cir. 1995). The Federal Circuit applies a
two-part test to determine if there is an actual controversy.
See, e.g., Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479,
1481 (Fed. Cir. 1998). First, the patentee must make an explicit
threat or take other action that creates a reasonable
apprehension on the part of the declaratory plaintiff that it
will face an infringement suit. Super Sack, 57 F.3d at 1058.
Second, there must be present activity that could constitute
infringement or concrete steps taken with the intent to conduct
such activity. Id. The focus of BriteSmile's motion is whether
Discus has met its burden under the first prong.
B. Discus Has Not Met Its Burden to Show It Had A Reasonable
Apprehension of Suit.
"The reasonableness of a party's apprehension is judged using
an objective standard" based on the totality of the
circumstances. Vanguard Research, Inc. v. Peat, Inc.,
304 F.3d 1249, 1254 (Fed. Cir. 2002). "To put a putative infringer in
reasonable apprehension of suit does not require an express
charge of infringement and threat of suit; rather, such
apprehension may be induced by subtler conduct if that conduct
rises `to a level sufficient to indicate an intent [on the part
of the patentee] to enforce its patent,' i.e., to initiate an
infringement action." EMC Corp. v. Norand Corp., 89 F.3d 807,
811 (Fed. Cir. 1996) (quoting Shell Oil Co. v. Amoco Corp.,
970 F.2d 885, 887 (Fed. Cir. 1992)).
The facts of this case establish that on May 3, 2005,
BriteSmile sent to dentists informing them of its belief that
their use of certain Discus' teeth whitening products "infringes valuable intellectual property rights of BriteSmile." BriteSmile
then listed eight patents, the three of which BriteSmile has sued
Discus for infringement in this action plus the '914, '292, '307,
'670, and '773 Patents, "which may be of interest to [the
dentists]." BriteSmile stated that it is suing Discus over
"several of these patents" and accused the dentists of infringing
"one or more of the BriteSmile patents," without specifying which
one or ones. Due to the number of patents lists in the letter and
the fact that BriteSmile has only sued Discus over three of these
patents in this lawsuit which has been proceeding now for over
three years, the Court concludes that the letter is ambiguous as
to whether it indicates an intent by BriteSmile specifically to
initiate an infringement action on the '914, '292, '307, '670, or
Discus' reliance on Fina Research for the proposition that a
letter referring to multiple patents may create a reasonable
apprehension of suit over any of those patents is misplaced. In
Fina Research, the patentee sent two letters in which it
directly accused the declaratory plaintiff of infringing "one or
both" of two patents and stated the patentee's intent to
"vigorously protect and enforce its rights in the subject
patents, including the filing of suit if necessary." Fina
Research, 141 F.3d at 1482 (emphasis in original). The patentee
averred that the product at issue did not infringe one of these
patents, and thus, the declaratory plaintiff only faced potential
liability over the other patent. Under these circumstances, the
court concluded that the letters created a reasonable
apprehension of suit with respect to the patent on which the
declaratory plaintiff faced potential liability. Id. at
In contrast here, BriteSmile's letter refers to eight patents,
three of which are the subject of the infringement lawsuit which
was been proceeding for over three years. The Court finds that
BriteSmile's stated intent to initiate infringement actions with
respect to the '914, '292, '307, '670, and '773 Patents is much
more ambiguous than the patent at issue in Fina Research.
Moreover, here, BriteSmile sent a follow-up letter in which
BriteSmile only refers to the '933, '543, and '628 Patents and
clarifies that it has no current intent to sue the dentists for
infringement based on Discus' old formulations. These two
letters, read together, in conjunction with the fact that
BriteSmile has sued Discus over only three of the eight patents
in a lawsuit which is now over three years old, do not create a
reasonable apprehension of suit at this time. Accordingly, the Court grants BriteSmile's motion as
to Discus' fourth through eight counterclaims without prejudice
to Discus refiling such claims if BriteSmile makes any further
threatening statements regarding these patents.
Even assuming arguendo that these letters do create a
reasonable apprehension of suit, the Court exercises its "unique
and substantial" discretion to decline to hear these
counterclaims for declaratory relief. See Wilton v. Seven Falls
Co., 515 U.S. 277, 286 (1995); EMC, 89 F.3d at 810. "Even if
there is an actual controversy, the district court is not
required to exercise declaratory judgment jurisdiction, but has
discretion to decline that jurisdiction" EMC, 89 F.3d at 810;
see also Serco Servs. Co., L.P. v. Kelley Co., Inc.,
51 F.3d 1037, 1039 (Fed. Cir. 1995) (court may dismiss declaratory
judgment action if its action is based on "a reasoned judgment
whether the investment of time and resources will be
This case is more than three years old. The Court has already
held a claims construction hearing and construed the disputed
terms of the patents at issue. The Court concludes that
exercising jurisdiction over these declaratory judgment
counterclaims would unduly delay and complicate this patent
litigation case. Thus, the Court exercises its discretion not to
hear these counterclaims. However, if BriteSmile makes any
further threatening statements regarding the '914, '292, '307,
'670, and '773 Patents, the Court would be willing to revisit
C. Legal Standards Applicable to Motions to Dismiss for
Failure to State a Claim.
Motions pursuant to Federal Rule of Civil Procedure 12(b)(6)
challenge the legal sufficiency of the claims asserted in the
complaint. A motion to dismiss should not be granted unless it
appears beyond a doubt that a plaintiff can show no set of facts
supporting his claim. Conley v. Gibson, 355 U.S. 41, 45-46
(1957). Under this liberal standard, motions to dismiss are
viewed with disfavor, and are rarely granted. Hall v. City of
Santa Barbara, 833 F.2d 1270, 1274 (9th Cir. 1986). The
complaint is viewed in a light most favorable to the nonmoving
party, and all factual allegations therein are taken as true.
Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1989).
Generally, "a district court may not consider any material beyond
the pleadings in ruling on a Rule 12(b)(6) motion." Branch v.
Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on other grounds, Galbraith v. County of Santa
Clara, 307 F.3d 1119 (9th Cir. 2002) (citation omitted).
D. Discus Sufficiently Alleges Its State Law Claims.
BriteSmile also moves to dismiss Discus' counterclaims for
tortious interference with prospective economic advantage and
economic business relations, unfair competition under California
Business and Professional Code § 17200, common law unfair
competition, and trade libel. BriteSmile argues that all of these
claims are preempted by federal patent law. However, both parties
agree that these state law claims are not preempted if Discus
sufficiently alleges bad faith by BriteSmile. See Zenith
Electronics Corp. v. Exzec, Inc., 182 F.3d 1340, 1355 (Fed. Cir.
1999) ("to avoid patent law preemption of . . . state law claims,
bad faith must be alleged and ultimately proven, even if bad
faith is not otherwise an element of the tort claim.").
The Federal Circuit explained that while determining exactly
what constitutes bad faith must be assessed on a case by case
basis, "[o]bviously, if the patentee knows that the patent is
invalid, unenforceable, or not infringed, yet represents to the
marketplace that a competitor is infringing the patent, a clear
case of bad faith representations is made out." Id. at 1354.
Here, Discus alleges: "BriteSmile has sent letters to at least
twelve doctors in the Chicago area, threatening a patent
infringement lawsuit based on the `914 patent and other patents
unless the doctors stop using Discus' products and switch to
BriteSmile's products. . . . On information and belief, unless
enjoined, BriteSmile will continue to illegally coerce current
customers and prospective purchasers of Discus' light activated
and dual-barrel teeth whitening system not to purchase and use
Discus' products under threat of suit for breach of an
unenforceable contract and/or infringement of knowingly invalid
and noninfringed patents." (Discus' Amended Answer and
Counterclaims, ¶¶ 141, 142.) Discus further alleges that
"BriteSmile made false and misleading threats of patent
infringement in its at least twelve cease and desist letters sent
to Discus' customers. . . . BriteSmile threatened Discus'
customers with patent litigation based on a patent that
BriteSmile admitted to this Court had `errors in the prosecution
had [sic] affected the ability to enforce the `914 patent
against Discus." (Id. at ¶ 150.) Thus, Discus alleges that
BriteSmile represented to Discus' customers that Discus is
infringing a patent BriteSmile knows is invalid, unenforceable, or not infringed. Therefore, the Court
finds Discus sufficiently alleges bad faith conduct by BriteSmile
to avoid preemption at this procedural stage and denies
BriteSmile's motion on this ground.
BriteSmile also argues that Discus failed sufficiently to
allege facts in support of its counterclaims for tortious
interference with prospective economic advantage and economic
business relations, unfair competition, and trade libel. In
essence, BriteSmile proffers arguments about what the BriteSmile
letters actually convey and whether the statements contained in
those letters were false, misleading or coercive. Because these
letters were not attached to Discus' complaint, the Court cannot
address the actual content of the letters or other facts outside
of the complaint on a motion to dismiss pursuant to Rule
12(b)(6). Accordingly, the Court denies BriteSmile's motion on
1. Discus' Counterclaim for Tortious Interference with
Prospective Economic Advantage and Economic Business Relations.
To state a claim for interference with prospective economic
relations, a plaintiff must plead "that the defendant's
interference was wrongful `by some measure beyond the fact of the
interference itself.'" Della Penna v. Toyota Motor Sales,
U.S.A., Inc., 11 Cal.4th 376, 393 (1995). "[A]n act is
independently wrongful if it is unlawful . . . if it is
proscribed by some constitutional, statutory, regulatory, common
law, or other determinable legal standard." Korea Supply Co. v.
Lockheed Martin Corp., 29 Cal.4th 1134, 1159 (2003). Discus
premises its counterclaim for tortious interference with
prospective economic advantage and economic business relations on
BriteSmile's alleged false and misleading cease and desist
letters and alleged violations of California Business and
Professional Code sections 650 and 16600. Discus has also pled
claims for unfair competition and trade libel based on the cease
and desist letters. Because the Court concludes, as discussed
below, that Discus adequately pled claims for unfair competition
and trade libel, Discus has sufficiently alleged wrongful
conduct.*fn2 2. Discus' Counterclaim for Common Law Unfair Competition.
BriteSmile argues, without any supporting authority, that
Discus' common law unfair competition claim should be dismissed
because it is duplicative of Discus' unfair competition claim
under California Business and Professional Code § 17200.
"California provides both statutory and common law causes of
action for unfair competition. . . . Each of these causes of
action provides a theoretical state law basis for [a plaintiff's]
requested relief." Duncan v. Stuetzle, 76 F.3d 1480, 1489 (9th
Cir. 1996). Moreover, the statutory and common law claims are not
identical. See Smith & Hawken, Ltd. v. Gardendance, Inc., 2004
WL 2496163, *10, 2004 Copr. L. Dec. P. 28,903, RICO Bus. Disp.
Guide 10,787 (N.D. Cal. Nov. 5, 2004) (noting that punitive
damages are available under a common law unfair competition
claim, but not under Cal. Bus. & Prof. Code § 17200).
Accordingly, the Court denies BriteSmile's motion to dismiss the
common law unfair competition claim on this ground.
3. Discus' Counterclaim for Trade Libel
Finally, BriteSmile moves to dismiss Discus' trade libel
counterclaim, arguing that Discus Dentail failed to allege false
statements of fact or that BriteSmile acted with malice. To plead
a claim for trade libel, a plaintiff must allege "that the
defendant: (1) made a statement that disparages the quality of
the plaintif's product; (2) that the offending statement was
couched as fact, not opinion; (3) that the statement was false;
(4) that the statement was made with malice; and (5) that the
statement resulted in monetary loss." Optinrealbig.com, LLC v.
Ironport Systems, Inc., 323 F. Supp. 2d 1037, 1048 (N.D. Cal.
2004) (citing Guess, Inc. v. Superior Court,
176 Cal. App. 3d 473, 479 (1986)). Discus alleges that Britesmile sent letters to
doctors disparaging the quality of Discus' products. Moreover,
Discus alleges that the statements to the doctors were false,
"couched as fact rather than opinion," and were made with malice.
(Discus' Amended Answer and Counterclaims, ¶¶ 154-56.) The Court
thus concludes that Discus sufficiently alleges facts to state a
claim for trade libel. Accordingly, the Court denies BriteSmile's
motion to dismiss Discus' state law counterclaims. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES
IN PART BriteSmile's motion to dismiss as follows:
(1) The Court GRANTS BriteSmile's motion to dismiss
Discus' counterclaims for declaratory relief on the
'914, '292, '307, '670, and '773 Patents (Discus'
fourth through eighth counterclaims); and
(2) The Court DENIES BriteSmile's motion to dismiss
Discus' counterclaims for tortious interference with
prospective economic advantage and economic business
relations, unfair competition under California
Business and Professional Code § 17200, common law
unfair competition, and trade libel (Discus' ninth
through twelfth counterclaims).
IT IS SO ORDERED.
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