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International Test Solutions, Inc. v. Mipox International Corp.

United States District Court, N.D. California

May 16, 2017



          RICHARD SEEBORG, United States District Judge


         In its Amended Answer and Counterclaims, defendant Mipox Corporation (“Mipox”) alleges plaintiff International Test Solutions, Inc. (“ITS”) committed inequitable conduct during the prosecution of the asserted U.S. Patent No. 7, 202, 683 (“‘683 patent”). ITS moves to dismiss Mipox's seventh counterclaim of unenforceability under Federal Rule of Civil Procedure 12(b)(6) and to strike the associated third affirmative defense of unenforceability under Rule 12(f). Mipox's allegations fail to satisfy the standard for pleading inequitable conduct set out in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011). ITS's motions are thus granted. This matter was submitted without oral argument, pursuant to Civil Local Rule 7-1(b).


         On January 1, 2017, ITS filed a Second Amended Complaint (“SAC”) adding Mipox as an additional defendant in this patent infringement lawsuit. In response, Mipox filed an Answer and Counterclaims. Therein, Mipox alleged that ITS engaged in inequitable conduct before the Patent and Trademark Office (“PTO). ITS moved to dismiss Mipox's counterclaim of inequitable conduct and to strike the related affirmative defense. Rather than respond to that motion, Mipox opted to file an Amended Answer and Counterclaims. ITS now moves again to dismiss the counterclaim of inequitable conduct and to strike the related affirmative defense.

         In its Amended Counterclaims, Mipox alleges the named inventors of the ‘683 patent, Gene Humphrey, Jerry Broz, and Joyce Adams, committed inequitable conduct during the prosecution of the ‘683 patent. Asserted claim 1 of the ‘683 patent describes a method for forming a cleaning device for integrated circuit test probes. The cleaning device is formed from four elements: a cleaning pad attached to an adhesive layer, and two release liner layers protecting the exposed cleaning and adhesive surfaces. Once the top release liner layer is removed, the cleaning surface of the device has a matte finish, distinguishing it from the near mirror finishes of the surrounding integrated circuits, so the test machine may automatically detect the cleaning device when the probe is in need of cleaning. The bottom release liner layer is removed to expose the adhesive layer, so the cleaning device may be attached to a substrate which allows it to be placed into the testing machine.

         Mipox avers Humphrey, Broz, and Adams failed to disclose two data sheets available to the public on ITS's website, one for Probe PolishTM and the other for Probe CleanTM. The ITS data sheets both disclose cleaning devices for integrated circuit test probes composed of a cleaning pad layer attached to a polyester substrate which is in turn attached to an adhesive layer. The exposed surfaces of the cleaning layer and the adhesive layer are each protected by a liner layer.

         Mipox alleges inequitable conduct two ways. First, it claims Humphrey, Broz, and Adams, being familiar with ITS products and materials, knew of the ITS data sheets when they applied for the ‘683 patent. Mipox avers that, given the overlap in device elements (i.e., two liner layers, a cleaning layer, and an adhesive layer), Humphrey, Broz, and Adams knew the ITS data sheets were material to the prosecution of the ‘683 patent, but withheld that information from the PTO. Thus, claim 1 of the ‘683 patent was permitted even though Humphrey, Broz, and Adams knew of prior art which anticipated the claim.

         Second, Mipox alleges that Humphrey, Broz, and Adams, as named inventors, were each involved in the prosecution of ‘683 patent. An office action dated July 8, 2005 rejected numerous claims in the patent application, but allowed claim 9 on the grounds that it distinguished itself from the prior art by disclosing two release liner layers and an adhesive layer. Mipox claims Humphrey, Broz, and Adams were informed of this office action and, due to their knowledge of the ITS data sheets, knew of prior art directly contradicting the examiner's stated belief, but failed to correct the examiner. Thus, claim 9, which ultimately was issued as claim 1 of the ‘683 patent, was permitted even though Humphrey, Broz, and Adams knew of prior art combinations which would render the claim obvious.


         A. Motion to Dismiss

         A motion to dismiss for failure to state a claim shall be granted where the pleading party fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To withstand such motion, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Conclusions “are not entitled to the assumption of truth.” Id. at 679. “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.” Id. at 678 (internal quotation omitted). Pleading on “information and belief is permitted . . . only if the pleadings set forth the specific facts upon which the belief is reasonably based.” Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1330 (Fed. Cir. 2009).

         Federal Rule of Civil Procedure 9(b) governs the pleading of inequitable conduct. See Exergen, 575 F.3d at 1326. The circumstances of fraud must be pleaded “with particularity, ” though conditions of the mind may be alleged generally. Fed.R.Civ.P. 9(b). Federal Circuit law defines the sufficiency of inequitable conduct pleading under Rule 9(b). See Exergen, 575 F.3d 1326. The Federal Circuit “requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” Id. at 1327. The pleading must also explain “why” the withheld information is material and not cumulative. Id. at 1329. Facts must be alleged to give rise to a reasonable inference that “the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Therasense, 649 F.3d at 1290. “A reasonable inference is one that is plausible and that flows logically from the facts alleged, including any objective indications of candor and good faith.” Exergen, 575 F.3d at 1329 n. 5.

         B. Motion to Strike

         Rule 12(f) allows a court to “strike from a pleading an insufficient defense.” Fed. R. C. P. 12(f). The function of a motion to strike under Rule 12(f) is to “avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quotation and citation omitted). “Motions to strike are regarded with disfavor [] because of the limited importance of pleadings in federal practice and because they are often used solely to delay proceedings.” Capella Photonics, Inc. v. Cisco Systems, Inc., 77 F.Supp.3d 850 (N.D. Cal. 2014) (citing Zep Solar Inc. v. Westinghouse Solar Inc., 2012 WL 1293873, at *1 (N.D. Cal. April 16, 2012)). “Nonetheless, the Court may properly grant motions to strike when a defense or a claim is insufficient as a matter of law.” Zep Solar, 2012 WL 1293873, at *1 (citing Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982)). “[A] court shall view the pleadings in the light most favorable to the pleader.” Zep Solar, 2012 WL 1293873, at *1. “[A] court should not grant a motion to strike a defense unless the insufficiency of the defense is clearly apparent.” Int'l Bus. Machines Corp. v. Priceline Grp. Inc., 2017 WL 1349175, at *4 (D. Del. Apr. 10, 2017).


         Inequitable conduct is a powerful “equitable defense to patent infringement that, if proven, bars enforcement of a patent.” Therasense, 649 F.3d at 1285. The doctrine enforces a patent applicant's duty of candor. Patent prosecution requires an individual to “disclose to the [PTO] all information known to that individual to be material” to the application. MPEP § 2001 (9th ed. Rev. 7.2015, Nov. 2015), 37 C.F.R. §1.56 (2012). Inequitable conduct addresses “egregious misconduct, including perjury, the manufacture of false evidence, and the suppression of evidence” during patent prosecution before the PTO. Therasense, 649 F.3d at 1287.

         “The substantive elements of inequitable conduct are: (1) an individual associated with the filing and prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) the individual did so with the specific intent to deceive the PTO.” Exergen, 575 F.3d at 1327 n. 3. Materiality requires proof by a preponderance of the evidence of but-for materiality-i.e., the fact the PTO would not have allowed a patent claim “had it been aware of the undisclosed prior art”- or “affirmative acts of egregious misconduct” by the patentee. Therasense, 649 F.3d at 1291-93. Specific intent requires clear and convincing evidence that the patent applicant: (a) “knew of the reference;” (b) “knew that it was material;” and (c) “made a deliberate decision to withhold it.” Id. at 1290. The doctrine applies only “where the ...

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