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Acantha LLC v. Depuy Orthopaedics Inc.

United States District Court, E.D. Wisconsin

November 8, 2017

ACANTHA LLC, Plaintiff,
v.
DEPUY ORTHOPAEDICS INC, et al., Defendants.

          DECISION AND ORDER

          William C. Griesbach, Chief Judge.

         In this action for patent infringement, Plaintiff Acantha LLC accuses Defendants DePuy Synthes Sales, Inc., DePuy Synthes Products Inc., DePuy Synthes Inc., Johnson & Johnson Inc., Synthes Inc., Synthes USA LLC, DePuy Orthopaedics Inc., and DePuy Spine LLC of infringing its patent U.S. Reissued Patent No. RE43, 008 (the ‘008 Patent). Currently pending before the court are Acantha's motion for judgment on the pleadings and motion to strike Defendants' invalidity contentions as well as Defendants' motion to reduce the number of Acantha's asserted claims and motion to compel. The court will address each motion in turn.

         A. Acantha's Motion for Judgment on the Pleadings

         On June 15, 2017, Defendants filed an amended answer and counterclaim asserting numerous affirmative defenses and three counterclaims. Among the affirmative defenses Defendants asserted in their amended answer is an allegation that the ‘008 Patent is unenforceable because Acantha engaged in inequitable conduct before the United States Patent and Trademark Office (USPTO) in its application for re-issuance of Patent No. 6, 261, 291 (the ‘291 Patent) that preceded it. Am. Compl., Aff. Def. ¶ 11, ECF No. 84. Count Three of Defendants' counterclaims against Acantha seeks a declaration that the ‘008 Patent is invalid based on the same allegations of inequitable conduct. Id. at 19. Acantha has filed a motion seeking partial judgment on the pleadings, or alternatively, a motion to strike. ECF No. 91. Acantha contends that Defendants' allegations regarding its inequitable conduct defense are insufficient to support that defense and respective counterclaim for declaratory relief as a matter of law.

         Rule 12(c) of the Federal Rules of Civil Procedure permits a party to seek judgment on the pleadings after the pleadings have been closed. Buchanan-Moore v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Courts apply the same standard in deciding a motion for judgment on the pleadings as they do in deciding a motion to dismiss. Landmark Am. Ins. Co. v. Hilger, 838 F.3d 821, 824 (7th Cir. 2016). The facts are viewed in the light most favorable to the non-movant. Id. To survive a motion to dismiss or for judgment on the pleadings, the challenged pleading 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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2009)).

         “Inequitable conduct is an equitable defense to patent infringement that, if proved, bars enforcement of a patent.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011). To satisfy the elements of inequitable conduct at the pleadings stage, a defendant must allege that the patent applicant “(1) made an affirmative misrepresentation of fact, submitted false material information, or failed to disclose material information; and (2) intended to deceive the PTO.” CIVIX-DDI, LLC v. Hotels.com, L.P., 711 F.Supp.2d 839, 843 (N.D. Ill. 2010) (citing Rentrop v. Spectranetics Corp., 550 F.3d 1112, 1119 (Fed. Cir. 2008); Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1314 (Fed. Cir. 2008)). That is, a patent applicant engages in inequitable conduct if he “misrepresented or omitted material information with the specific intent to deceive the PTO.” Therasense, 649 F.3d at 1287 (emphasis added).

         Allegations of inequitable conduct must be pled with particularity in accordance with Rule 9(b) of the Federal Rules of Civil Procedure. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326-27 (Fed. Cir. 2009) (noting that a “pleading that simply avers the substantive elements of inequitable conduct, without setting forth the particularized factual bases for the allegation, does not satisfy Rule 9(b)”); Cent. Admixture Pharm. Servs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347, 1356 (Fed. Cir. 2007). In Exergen, the Federal Circuit adopted the Seventh Circuit's position on what sufficient pleadings in fraud cases are, as articulated in DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990), and concluded that

to plead the “circumstances of inequitable conduct with the requisite “particularity” under Rule 9(b), the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. Moreover, although “knowledge” and “intent” may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material representation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.

575 F.3d at 1328-29.

         In their amended answer and counterclaim, Defendants allege that the named inventors of the ‘008 Patent sought reissue of the ‘291 Patent based on knowingly false information contained in the reissue declarations they submitted to the Patent Office. In particular, Defendants assert that Talaber, one of the named inventors, submitted a declaration to the USPTO which stated that Acantha had initially claimed less than it had a right to claim and that the new claims it sought to reissue were broader than the original claims in the ‘291 Patent. Specifically, the Declaration states:

Originally issued claims 1-20 of U.S. Patent No. 6, 261, 291 claimed less than patentees had a right to claim because claims 1-20 are directed to an orthopedic implant assembly that requires, inter alia, “a biased stopping member”. New claim 63 is directed to an orthopedic implant assembly that includes a stopping member but the claim does not require the stopping member to be biased.

Am. Compl. at 13-14. Defendants allege that this statement is false because Talaber testified at his deposition more than five years later that the ‘008 Patent and the ‘291 Patent are identical in scope and that Acantha never intended to broaden the scope of the original claims. Instead, Defendants allege, Talaber testified repeatedly that the purpose for the reissue application was only to clarify the scope of the claims. Because it is clear the regulations governing applications for reissue do not allow reissue merely to clarify claims, Defendants contend that Talaber lied to the USPTO when he stated in his declaration that the application sought to broaden the claims to include additional matter covered by the patent that had been inadvertently omitted.

         Regardless of Talaber's testimony five years later, however, it is clear from the declaration and the action taken by the USPTO that he did not engage in inequitable conduct. The plain fact remains that claims 1-20 of the ‘291 Patent were directed to an orthopedic implant assembly that required “a biased stopping member”, whereas new claim 63, which later became claim 44 of the ‘008 Patent, is directed to an orthopedic implant assembly that includes a stopping member, but the claim does not require the stopping member to be biased. In other words, claim 44 removed a limitation contained in the claims of the ‘291 Patent and thereby broadened the scope of the patent. It necessarily follows that Talaber's declaration is not false. The change requested by Talaber, and granted by the USPTO, as a matter of objective fact, broadened the scope of the ‘291 Patent. Because the declaration is objectively true, Defendants' allegations of inequitable conduct necessarily fail. Accordingly, Acantha's motion to dismiss Count Three of Defendants' counterclaims and their affirmative defense, paragraph 11, are granted.

         B. Acantha's ...


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