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Innovasystems, Inc. v. Proveris Scientific Corporation

United States District Court, D. New Jersey

August 6, 2014


FOX ROTHSCHILD LLP, Samuel H. Israel, Esq., Philadelphia, PA, Counsel for Plaintiff Innovasystems, Inc.

GREENBERG TRAURIG LLP, Alan J. Brody, Esq., Florham Park, NJ, Counsel for Defendant Proveris Scientific Corporation.


JOSEPH E. IRENAS, District Judge.

This unfair trade dispute comes before the Court on Defendant Proveris Scientific Corporation's ("Proveris") motion to dismiss Plaintiff Innovasystems, Inc.'s ("Innova") amended complaint ("Complaint").[1]

Innova, a debtor in possession, alleges Proveris published defamatory statements about its financial stability and intellectual property, thereby violating New Jersey statutory and common law, the Lanham Act, and title 11's automatic stay. Proveris responds by arguing that its statements were truthful and thus not actionable under any theory of liability. For the reasons set forth below, the motion will be granted in part and denied in part.


The parties both specialize in the design and manufacture of laboratory equipment used to test aerosol drug delivery products. They are the only domestic suppliers for the market, and, consequently, compete over a limited universe of prospective customers.

The instant dispute originated in 2005. Proveris sued Innova for patent infringement, claiming Innova's Optical Spray Analyzer ("OSA") infringed United States Patent No. 6, 785, 400 (the "400 patent").

Innova attempted to defend against the allegations on invalidity grounds, but the Massachusetts District Court struck the company's patent validity expert. Innova consequently conceded infringement on nine of the 11 claims and proceeded to trial. (Compl. ¶ 14) A jury found (i) Innova did not infringe the remaining claims, (ii) Innova's conceded infringement was not willful, and (iii) Proveris was not deserving of any damages. The District Court permanently enjoined Innova from manufacturing and marketing the OSA (the "Injunction"). (Id. ¶ 15)

Innova developed a new iteration of the OSA it believed did not violate the Injunction: the Aerosol Drug Spray Analyzer ("ADSA").

Proveris, however, again sued for infringement, this time moving for contempt sanctions. (Compl. ¶ 17) On September 21, 2010, the District Court entered summary judgment in Proveris's favor. (Id. ¶ 18) A trial to determine damages was scheduled for a year later.

Zachary Pitluk, a Proveris employee, began notifying prospective customers of the ruling via email. He wrote to one pharmaceutical executive that "[c]ontempt is a rare and almost always fatal condition for small business." (Compl. ¶ 21(e)) Five days later, he wrote another: "Innova is looking at a lot of expenses in legal costs, > $1 million, and their longevity is in doubt." (Id. ¶ 21 (f))

In several other emails, Pitluk asserted that Innova faced criminal liability, (Compl. ¶ 21(b) ("Innova was found to be in contempt of court, which is a very serious crime.")), and infringed yet further patents, (id. ¶¶ 21(d)-(e), 22 (writing that "Innova's electromechanical actuator" "infringes" additional Proveris patents, and Proveris "will be pursuing that [infringement] next."). Innova alleges these statements damaged its goodwill.

On the eve of the parties' damages trial, Innova filed a voluntary petition for relief under Chapter 11. (Compl. ¶ 25) Although Innova continued to operate as a debtor-in-possession, the filing allegedly "reenergized" Proveris's campaign to "convince" prospective customers "that Innova was going out of business." (Compl. ¶ 26)

Pitluk embarked on a second round of emails: on September 16, 2011, he wrote a pharmaceutical executive that Innova had filed for bankruptcy and had "very limited cash on hand." (Id. 21(1)) To another, he wrote that the bankruptcy filing "could lead to a potential interruption" in Innova servicing. (Id. ¶ 21(k))

In one email, sent to an overseas client, Pitluk implied that the Injunction prevented international sales-an assertion Innova strongly contests. (Compl. ¶ 21(u))

During the immediate aftermath "of this new round of false statements, " one Innova customer canceled a $400, 000 purchase order. (Compl. ¶ 27) Two distributors stopped selling Innova products. (Id. ¶ 28)

In late 2012, with its bankruptcy proceedings ongoing, Innova moved the bankruptcy court for discovery on whether Proveris was publishing defamatory statements.[2] The Court granted the motion and required Proveris to turn over certain documentary evidence. The Pitluk emails were included therein.

Innova subsequently filed its original complaint in the instant matter. Proveris's pending motion soon followed.[3]


Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998) (citing Warth v. Seldin, 422 U.S. 490, 501 (1975)).

Although a complaint need not contain detailed factual allegations, "a plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). "[D]etermining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 663-64 (2009). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant ...

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