CATALINA MARKETING INTL., INC. v. COOLSAVINGS.COM, INC., (N.D.Ill. 2003)

Citation Codes

Equivalent Citations

citation codes

Docket Number

No. 00 C 2447.

Motions

Motion to strike : In Part

Motion to dismiss : Granted

Judges

John W. Darrah

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Smart Summary

Factual and Procedural Background

Catalina Marketing International, Inc. sued the defendants for patent infringement. In April 2003, Coolsavings.com, Inc. and Coolsavings, Inc. filed an answer to Catalina’s amended and supplemental complaint asserting affirmative defenses and a counterclaim. Catalina moved to dismiss the counterclaim and strike several affirmative defenses. [1]

Legal Issues Presented

Whether Coolsavings adequately pleaded inequitable conduct in connection with the patent prosecution under Federal Rule of Civil Procedure 9(b). [2][3][4]
Whether Coolsavings’ third, fifth, and sixth affirmative defenses should be stricken under Federal Rules of Civil Procedure 8(c), 12(f), and 15(a). [5][6][7][8][9][10]

Arguments of the Parties

Catalina’s Arguments

Catalina argued that Coolsavings’ counterclaim failed to state a claim and that several affirmative defenses should be stricken. [1]
Catalina argued that Coolsavings should not be permitted to replead its counterclaim. The court rejected that argument because the merits were not to be decided at the pleading stage and Catalina had known of the counterclaim for several years. [11]
Catalina challenged the fifth affirmative defense on its merits. The court found that challenge premature. [9]

Coolsavings’ Allegations

Coolsavings alleged that the patent was unenforceable because the inventors intentionally withheld material information and affirmatively misrepresented material facts to the Patent and Trademark Office. [12][13]
Coolsavings specifically alleged that the inventors failed to disclose “on-sale” and “public use” activities involving the claimed subject matter. [13]

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000)	On a motion to dismiss, alleged facts and reasonable inferences are viewed in the plaintiff’s favor.	The court applied this standard in evaluating the counterclaim. [2]
Swierkiewicz v. Sorema, 534 U.S. 506, 511 (2002)	A plaintiff generally need not plead the facts or elements of a claim, subject to Rule 9.	The court stated the applicable pleading standard. [2]
Walker v. Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002)	A complaint generally need not plead detailed facts or claim elements, subject to Rule 9.	The court relied on this principle in describing dismissal standards. [2]
Conley v. Gibson, 355 U.S. 41, 45–46 (1957)	Dismissal is warranted only when the plaintiff can prove no set of facts entitling it to relief.	The court recited this restrictive dismissal standard. [2]
Graehling v. Village of Lombard, III., 58 F.3d 295, 297 (7th Cir. 1995)	A suit should not be dismissed if facts consistent with the complaint could establish a claim.	The court included this principle in its pleading analysis. [2]
Videojet Sys. Inter., Inc. v. Eagle Inks, Inc., 14 F. Supp. 2d 1046, 1049 (N.D. Ill. 1998)	Inequitable conduct must be pleaded with particularity, including the “who, where, when, and what,” plus a general intent-to-deceive allegation.	The court found the counterclaim deficient because it did not adequately identify the “when” and “what” or allege intent to deceive. [3][4]
Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989)	Motions to strike affirmative defenses are disfavored, and affirmative defenses are subject to pleading requirements.	The court applied these principles to Catalina’s challenges to the affirmative defenses. [6][7]
Mobey v. Kelly Kean Nissan, Inc., 864 F. Supp. 726, 732 (N.D. Ill. 1993)	Striking an affirmative defense is generally appropriate only when it is patently defective and could not succeed under any circumstances.	The court stated this standard before evaluating the defenses. [6]
Renalds v. S.R.G. Restaurant Group, 119 F. Supp. 2d 800, 802 (N.D. Ill. 2000)	A pleading must include direct or inferential allegations of each material element; bare legal conclusions are insufficient.	The court used this principle in determining that the third affirmative defense was inadequately pleaded. [7][8]
Catalina Marketing Inter. v. InterAct Sys., Inc.*	The fifth affirmative defense relied on Catalina’s prior construction of patent claims in that case.	The court declined to resolve the merits of the defense at the pleading stage. [9]

Court's Reasoning and Analysis

The court reviewed the counterclaim under the general motion-to-dismiss standard, viewing alleged facts and reasonable inferences favorably to the claimant and recognizing that dismissal is proper only when no supporting set of facts could entitle the claimant to relief. [2]

Although ordinary claims generally need not plead detailed facts, inequitable-conduct allegations must satisfy Rule 9(b)’s particularity requirement. They must identify who, where, when, and what occurred and generally allege an intent to deceive the Patent and Trademark Office. [2][3]

Coolsavings alleged withholding and misrepresentation of material information and nondisclosure of on-sale and public-use activities, but the allegations did not adequately identify when and what the inequitable conduct involved and did not allege intent to deceive. The counterclaim was therefore dismissed without prejudice. [13][4]

The court explained that affirmative defenses must satisfy the Federal Rules’ pleading requirements and contain allegations addressing the material elements of the defense rather than bare legal conclusions. [6][7]

The third affirmative defense was nearly identical to the deficient counterclaim and was stricken. The fifth defense was not stricken because Catalina’s challenge addressed its merits, making the argument premature. [8][9]

The sixth defense, which purported to reserve a right to assert additional defenses later, was improper because it was not an affirmative defense listed in Rule 8(c), and Rule 15(a) provides that only the court may grant leave to amend pleadings. It was therefore stricken with prejudice. [10]

Holding and Implications

The court granted Catalina’s motion to dismiss and dismissed Coolsavings’ counterclaim without prejudice. The court granted in part and denied in part the motion to strike: Coolsavings’ third and sixth affirmative defenses were stricken, while the fifth affirmative defense remained. Coolsavings was given fourteen days to file amended affirmative defenses and a counterclaim. [14]

The direct effect was to permit Coolsavings to replead the counterclaim and amend its defenses, while permanently eliminating the sixth defense. The opinion discusses no broader implications or new precedent.

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CATALINA MARKETING INTERNATIONAL, INC., Plaintiff, v. COOLSAVINGS.COM, INC.; COOLSAVINGS, INC.; LANDMARK COMMUNICATIONS, INC.; and LANDMARK VENTURES VII, LLC, Defendants.

MEMORANDUM OPINION AND ORDER

JOHN W. DARRAH, District Judge

Plaintiff, Catalina Marketing International ("Catalina"), filed suit against the Defendants, alleging patent infringement. In April 2003, Defendants, Coolsavings.com, Inc. and Coolsavings, Inc. (collectively "Coolsavings"), filed their answer to Catalina's Amended and Supplemental Complaint, including multiple affirmative defenses and a counterclaim. Catalina seeks to dismiss the counterclaim for failure to state a claim and to strike several of the affirmative defenses.

In reviewing a motion to dismiss, the court reviews all facts alleged in the complaint and any reasonable inferences drawn therefrom in the light most favorable to the plaintiff. See Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). A plaintiff is not required to plead the facts or the elements of a claim, with the exceptions found in Federal Rule of Civil Procedure 9. See Swierkiewicz v. Sorema, 534 U.S. 506, 511 (2002); Walker v. Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002). Dismissal is warranted only if "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The "suit should not be dismissed if it is possible to hypothesize facts, consistent with the complaint, that would make out a claim." Graehling v. Village of Lombard, III., 58 F.3d 295, 297 (7th Cir. 1995).

Allegations of inequitable conduct must be pled with particularity as required by Federal Rules of Civil Procedure 9(b). See Videojet Sys. Inter., Inc. v. Eagle Inks, Inc., 14 F. Supp.2d 1046, 1049 (N.D. Ill. 1998) (Videojet). This requires pleading the "who, where, when, and what" of the alleged inequitable conduct, along with a general allegation of intent to deceive the Patent and Trademark Office. See Videojet, 14 F. Supp.2d at 1049.

In its counterclaim, Coolsavings alleges that:

By reason of inequitable conduct during prosecution of the application that resulted in the issuance of the `041 patent, rendering the `041 patent unenforceable, including (i) intentionally withholding material information from the U.S. patent and Trademark Office and (ii) affirmatively misrepresenting material facts to the U.S. Patent and Trademark Office, the `041 patent is unenforceable.

Specifically, the inventors of the `041 patent failed to disclose to the Patent and Trademark Office various "on-sale" and "public use" activities involving the subject matter claimed in the `041 patent.

The above allegations of the counterclaim fail to adequately plead inequitable conduct as required by Rule 9(b), The pleading fails to sufficiently identify the "when" and "what" of the inequitable conduct, as well as an allegation of intent to deceive the Patent and Trademark Office. Accordingly, Coolsavings' counterclaim is dismissed without prejudice.

Catalina's argument that Coolsavings should not be allowed to replead its counterclaim is without merit. The merits of Coolsavings' counterclaim are not to be decided at the pleading stage, and Catalina has been aware of this counterclaim for several years as it was pled in the original response in 1999. Catalina did not move to dismiss or strike the allegation until the amended answer was filed.

Catalina also seeks to strike several of Coolsavings' affirmative defenses.

Federal Rules of Civil Procedure 8(c) requires a party to set forth affirmative defenses in a responsive pleading. Fed.R.Civ.P. 8(c). Under Rule 12(f), "the court may order stricken from any pleading any insufficient defense." Fed.R.Civ.P. 12(f). Generally, motions to strike affirmative defenses are disfavored because they potentially serve only to cause delay. See Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989) (Heller). Such motions are generally granted only when the affirmative defenses are "patently defective and could not succeed under any circumstances." Mobey v. Kelly Kean Nissan, Inc., 864 F. Supp. 726, 732 (N.D.Ill. 1993).

Affirmative defenses, as pleadings, are subject to the pleading requirements of the Federal Rules of Civil Procedure. See Heller, 883 F.2d at 1294. Therefore, affirmative defenses must set forth a "short and plain statement." Fed.R.Civ.Proc. 8(a). The allegation must include either direct or inferential allegations respecting all material elements of the defense asserted. Narrated facts with bare legal conclusions are not sufficient. Renalds v. S.R.G. Restaurant Group, 119 F. Supp.2d 800, 802 (N.D.Ill. 2000).

Catalina seeks to strike Coolsavings' third affirmative defense, which is nearly identical to its counterclaim. Coolsavings' third affirmative defense lacks the same sufficient pleading as the counterclaim. Accordingly, Coolsavings' third affirmative defense is stricken.

Catalina seeks to strike Coolsavings' fifth affirmative defense, which alleges that Catalina is estopped from construing the claims differently than it previously construed the claims in a previous case, Catalina Marketing Inter. v. Inter*Act Sys., Inc. Catalina seeks to strike the affirmative defense on the merits, not the sufficiency of the pleading. Such argument is premature. Accordingly, the motion to strike Coolsavings' fifth affirmative defense is denied.

Catalina seeks to strike Coolsavings' sixth affirmative defense, which states that Coolsavings reserves the right to raise additional affirmative defenses as it becomes aware of additional information. This is an improper affirmative defense. It is not listed in Rule 8(c) as an affirmative defense; and, pursuant to Rule 15(a), only the courts may grant leave to amend pleadings. Accordingly, this affirmative defense is stricken with prejudice.

For the foregoing reasons, Catalina's Motion to Dismiss is granted. Coolsavings' counterclaim is dismissed without prejudice. Catalina's Motion to Strike Affirmative Defenses is granted in part and denied in part. Coolsavings' third and sixth affirmative defenses are stricken. Coolsavings is given leave to file amended affirmative defense(s) and counterclaim within fourteen days of this Order.