United States District Court, D. New Jersey, Camden Vicinage
Eagle View Technologies, Inc. et al., Plaintiffs,
Xactware Solutions, Inc. et al., Defendants.
B. KUGLER, DISTRICT COURT JUDGE.
a patent infringement action brought by Eagle View
Technologies and Pictometry International (together
“Plaintiffs”) against Xactware Solutions and
Verisk Analytics (together “Defendants”). Before
the Court are two motions by Plaintiffs: one under Federal
Rule of Civil Procedure (“Fed. R. Civ. P.” or
“Rule”) 12(b) 6 to dismiss the Inequitable
Conduct Counterclaim (Count XIX) in Defendants' Second
Amended Answer (“Answer”), and the other under
Fed.R.Civ.P. 12(f) to strike from the Answer Defendants'
Twelfth Affirmative Defense of Inequitable Conduct.
reasons below, Plaintiffs' motion to dismiss under Rule
12(b) (6) is granted without prejudice and with leave for
Defendants to amend; and, Plaintiffs' motion to strike
under Fed.R.Civ.P. 12(f) is also granted without prejudice
and with leave for Defendants to amend in accordance with the
appropriate Order accompanies this Opinion.
Parties' Business Relationship
are the owners of the patents at issue that recite,
among other things, business methods, systems, and computer
readable storage media for providing a roof repair estimate.
The claimed invention applies photogrammetric methods, that
is, trigonometric calculations, to images of rooves in aerial
photographs to compute measurements of those rooves.
Defendant Xactware Solutions, Inc., is a subsidiary of
Defendant Verisk Analytics, and provides online technology
tools and systems to insurance carriers, remodelers and
construction service providers for determining
replacement-cost calculations for damaged buildings and
construction estimates. The parties have asserted they are
competitors to each other (Doc. 15:¶1).
Relevant Procedural History
September 2015, plaintiffs filed their original complaint
against defendants and on 30 November 2015, an amended
complaint. Both of these (Docs. 1 and 30) allege direct and
indirect infringement under 35 U.S.C. § § 271(a)
and (b) of at least one claim of each patent at issue. On 12
November 2015, defendants answered the complaint (Doc. 15)
and counterclaimed, asserting the invalidity of each of
plaintiffs' claims at issue and that defendants'
software tools and systems can therefore not infringe. On 18
May 17, on leave from the Court, Defendants filed a Second
Amended Answer, including affirmative defenses and
counterclaims (“Amended Answer”___) Plaintiffs
filed a joint motion (Doc. 245) to dismiss Defendants'
inequitable conduct Counterclaim (Count XIX in the Amended
Answer) and to strike the twelfth affirmative defense
relating to that counterclaim. On 3 July 2017, defendants
opposed these joint motions (Doc. 255); and on 13 July 2017,
plaintiffs replied to defendants' opposition (Doc. 266).
The parties' arguments focus on whether the inequitable
conduct counterclaim has been pled with required
particularity and therefore complies with the pleading
standards of the Federal Circuit and the Third Circuit.
General Pleading Standard for Motion to Dismiss under Rule
general rule, “[t]o survive a motion to dismiss, 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, 677, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) [quoting
Bell Atl. Corp. v. Twombly, 550 U.S.544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007)]. “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.”
Twombly, 550 U.S. at 556. This pleading requirement
applies to pleadings made under Rule 9. Iqbal, 556
U.S. at 686-87.
reviewing a motion to dismiss pursuant to Rule 12(b)(6),
“the Court must ‘accept all factual allegations
as true and construe the complaint in the light most
favorable to the plaintiff [or challenger].”
Phillips v. County of Allegheny, 515 F.3d 224, 231
(3d Cir. 2008) (quoting Pinker v. Roche Holdings
Ltd., 291 F.3d 361, 374 n. 7 (3d Cir.2002)).
“[J]udging the sufficiency of a pleading is a context-
dependent exercise” (West Penn Allegheny Health
System, Inc. v. UPMC, 627 F.3d. 85, 98 (3d Cir.2010))
since “[s]ome claims require more factual explication
than others to state a plausible claim for relief”.
Id. Specifically, the more complicated ones may
demand more factual allegations. Id. In the
determination of fact sufficiency, courts may consider
allegations in the complaint and exhibits attached thereto,
information in the public record, and documents forming the
basis of a claim. Lum v. Bank of Am., 361 F.3d 271,
222 n. 3 (3d Cir.2004).
v. Levi, 696 F.3d 352, 365 (3d Cir. 2014) details three
steps to determine whether a complaint meets the pleading
standard: 1) the court first outlines the elements a
plaintiff must plead to state claim for relief; 2) then peels
away allegations that are only conclusions, and 3) then
identifies well- pled factual allegations, assumes their
veracity and analyzes “whether they plausibly give rise
to an entitlement of relief.” Id.
Inequitable Conduct Pleading Standard for a Rule 12(b)(6)
of inequitable conduct in acquiring or maintaining a patent
has two elements: intent to deceive and materiality of the
omission / misrepresentation to the PTO. Determining
sufficiency of a motion pleading inequitable conduct before
the PTO is a question of patent law and, as such, governed by
Federal Circuit law. Exergen Corporation v. Wal-Mart
Stores, Inc., 575 F.3d 1312, 1312 (Fed.Cir. 2009).
standard for pleading inequitable conduct is different than
that for proving it. See Phillips v. County of
Allegheny, 515 F.3d 224, 230 (3d Cir.2008)
[stating generally that pleading a claim does not
require proving it]. The Federal Circuit recently heightened
the merits standard of proving inequitable conduct, requiring
that deception before the PTO be “but-for”
material. Therasense, Inc. v. Becton Dickinson and
Co., 649 F.3d 1276, 1291-92 (Fed.Cir. 2011). No longer
is it enough to show the omission/misrepresentation was
highly material to patentability and reasonably implied
intent to deceive. Now, it must be shown that, because of the
misrepresentation or omission, the patent at issue is not
patentable. Id. at 1291.
though different, the pleading standard for inequitable
conduct is related to the merits standard in that both
allegations must be pled with Rule 9(b) specificity. As with
alleging fraud, inequitable conduct must be pled with the
particularity required by Rule 9(b). Exergen, 575
F.3d at 1326.
standard for pleading inequitable conduct standard is set
forth in Exergen 575 F.3d at 1326- 1337, which
demands the inclusion of sufficient allegations of material
facts so that a court may reasonably infer that a specific
individual either knew information was withheld from, or
falsely reported to, the PTO, and did so with specific
intent. Id. at 1328-29. “A reasonable
inference is one that is plausible and that flows logically
from the facts alleged.” Depomed, Inc. v. Purdue
Pharma, L.P. et al., No. 13-571, 2017 WL 2804953, at *4
(D.N.J. 28 June 2017) [quoting Exergen, 575
F.3d at 1329 n.5.] That is, the factual allegations must
present something more than the mere possibility of legal
misconduct. Id. at 1326-27; In re Lipitor
Antitrust Litigation, MDL 2332, 2013 WL 4780496, at *13
(D.N.J. 5 September 2013) [citing Iqbal,
556 U.S. at 681].
point, pleading inequitable conduct properly requires
identifying the specifics of who, what, when, where, why, and
how of the material misrepresentation / omission before the
PTO. Exergen, 575 F.3d at 1328; see also
Fresenius Kabi USA, LLC v. Fera Pharm. LLC, No. 15-3654,
2016 WL 5348866, at * 10 (D.N.J. 23 September 2013). The
“who” must be pled with the name of the person
who withheld or misrepresented the information; the
“what' and “where” pled by identifying
the germane claims and claim terms, their connection to the
withheld or false information, and what segments of the
information are relevant; the “why” pled by
explaining why the information is material; and the
“how” pled by showing how the information is
relevant to a PTO examiner's assessment of patentability
of the claims. Exergen, 575 F.3d at 1327;
Fresenius Kabi USA, 2016 WL 5348866, * 10; Senju
Pharmaceutical Co., Ltd et al. v. Apotex Inc. et al.,
921 F.Supp.2d 297, 306-307 (D.De. 2013).
though Exergen did not concern a Rule 12(b) (6)
motion,  this court has consistently applied the
Exergen pleading standard to such motions relating
to inequitable conduct claims in patent infringement cases.
Judge Simandle of this Court has pointed out the Federal
Circuit extended its Exergen standard in Delano
Farms Co. et al. v. California Table Grape Comm'n,
655 F.3d 1337, 1350 (Fed.Cir. 2011), which expressly
concerned, post-Therasense, a Rule 12(b)(6)
motion of inequitable conduct. Mycone Dental Supply Co.,
Inc. v. Creative Nail Design, Inc.et al., No. 11-4380,
2013 WL 3216145, at *4-5 (D.N.J. 24 June 2013). Moreover,
this Court in Depomed, 2017 WL 280-4953, at *4
acknowledged that Delano Farms exemplified
Exergen's standard in a Rule 12(b)6 context.
See also Warner Chilcott Co., LLC et al. v.
Amneal Pharmaceuticals, LLC, et al., Nos. 11-5989,
11-6936, and 12-1474, 2013 WL 6627694, at *3 (D.N.J. 20
December 2013) and Taro Pharmaceuticals N.A. et al. v.
Suven Life Sciences, Ltd., No. 11- 2452, 2012 WL
2513523, at * 5 (D.N.J. 28 June 2012) [each citing
Exergen and Delano Farms together as setting
the standard]. Further, Judge Wolfson of this Court cites
Exergen 575 F.3d at 1331 to emphasize that fact
allegations must suggest the deliberate nature of the fraud
on the PTO. Jersey Asparagus Farms, Inc. v. Rutgers
University, 803 F.Supp.2d 295, 308 (D.N.J.2011).
other courts in this Circuit have relied on the
Exergen standard in a motion to dismiss inequitable
conduct claims. For example, Chief Judge Conti interpreted
the Exergen standard to mean that a factual
deficiency with respect to the required who, what, where,
where, how, and why elements is “fatal under Rule
9(b).' “ ILIFE Technologies Inc. v Body Media,
Inc., No. 14-990, 2015 WL 1000193, at *2 (W.D.Pa. 6
March 2015). See also IBM Corp. v. The Priceline Group,
Inc., No. 15-137, 2017 WL 1349175 at *4 (D.De. 4 Apr
2017); Courtesy Products, L.L.C. v. Hamilton Beach
Brands, Inc., No. 13-2012, 2015 WL 6159113, at *4 (D.De.
20 October 2015); Senju Pharmaceutical, 921