John W. Holcomb, UNITED STATES DISTRICT JUDGE
Joseph P. Hamilton, Perkins Coie LLP, Los Angeles, CA, Shawn G. Hansen, Seth David Levy, Vincent Cacho Capati, Nixon Peabody LLP, Los Angeles, CA, Rodger K. Carreyn, Gabrielle E. Bina, Pro Hac Vice, Kaitlin Dryden, Pro Hac Vice, Perkins Coie LLP, Madison, WI, for Plaintiff/Counterdefendant.
David B. Abel, Law Office of David B. Abel, Manhattan Beach, CA, Sevag Demirjian, Foundation Law Group LLP, North Hollywood, CA, for Defendant/Counterclaimant.
ORDER GRANTING IN PART AND DENYING IN PART COUNTER-DEFENDANT'S MOTION TO DISMISS INEQUITABLE CONDUCT CLAIM AND AMENDED THIRD AND FOURTH COUNTERCLAIMS [ECF No. 63]John W. Holcomb, UNITED STATES DISTRICT JUDGE
Before the Court is the motion of Plaintiff and Counterdefendant Easton Diamond Sports, LLC to dismiss the inequitable conduct claim and amended third and fourth counterclaims of Defendant and Counterclaimant Monsta Athletics, LLC, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. After considering the papers filed in support and in opposition, as well as the argument of counsel at the hearing on the Motion, the Court orders that the Motion is GRANTED in part and DENIED in part, for the reasons set forth herein.
Pl.'s Mot. to Dismiss the Inequitable Conduct Claim and Amended Third and Fourth Counterclaims (the "Motion") [ECF No. 63].
The Court considered the documents of record in this action, including the following papers: (1) Amended Countercl. (the "Amended Counterclaim") [ECF No. 60]; (2) Motion (including its attachments); (3) Def.'s Opp'n to the Motion (the "Opposition") (including its attachments) [ECF No. 69]; and (4) Pl.'s Reply in Supp. of the Motion (the "Reply") [ECF No. 70].
I. BACKGROUND A. Procedural HistoryIn September 2021, Easton commenced this action by filing a Complaint against Monsta. The next month, Monsta filed its Counterclaim. This case was stayed from November 2021 through July 2023 during the course of a related investigation that
Easton initiated in the United States International Trade Commission (the "ITC"). That ITC proceeding is styled as "In the Matter of Certain Composite Baseball and Softball Bats and Components Thereof," Inv. No. 337-TA-1283 (the "ITC Case").
See Order Granting Joint Mot. to Stay Litigation Pending Completion of U.S. Int'l Trade Comm'n Investigation [ECF No. 23]; Order Granting Mot. to Terminate Stay and Adopting Proposed Schedule [ECF No. 45].
Amended Counterclaim ¶ 4.
In May 2023, in a related action, Monsta filed a Complaint in this Court against Easton. The Court consolidated those two civil actions for the purpose of claim construction.
See Monsta Athletics, LLC v. Easton Diamond Sports, LLC, Case No. 5:23-cv-00963-JWH-KS (C.D. Cal).
See Order Re: Consolidation for Limited Purposes [ECF No. 58].
In July 2023, Easton moved to dismiss Monsta's third and fourth counterclaims. The Court granted that motion but provided Monsta with leave to amend. In November 2023, Monsta filed its Amended Counterclaim. The next month, Easton filed the instant Motion, and it is fully briefed.
Pl.'s Mot. to Dismiss the Third and Fourth Counterclaims [ECF No. 50].
See Order Granting Mot. to Dismiss Third and Fourth Counterclaims [ECF No. 57].
B. Factual AllegationsEaston and Monsta are both companies that sell sporting equipment, including baseball and softball bats. In its Amended Complaint, Easton alleges that Monsta's activities concerning various of its bats infringe Easton's U.S. Patent No. 6,997,826 (the "'826 Patent"). In its Amended Counterclaim, Monsta asserts the following claims for relief against Easton:
See generally Amended Counterclaim.
See generally Amended Compl. (the "Amended Complaint") [ECF No. 46].
• declaratory judgment of invalidity and unenforceability of the '826 Patent;
• declaratory judgment of non-infringement of the '826 Patent;
• attempted monopolization in violation of Section 2 of the Sherman Act; and
• unfair business practices under Cal. Bus. & Prof. Code § 17200, known as the California Unfair Competition Law (the "UCL").
Amended Counterclaim ¶¶ 155-162.
Id. at ¶¶ 163-167. Monsta erroneously referred to "THE '109 PATENTS"—instead of the '826 Patent—in the caption of this claim for relief. See id. at 27:23-24.
Id. at ¶¶ 168-176.
Id. at ¶¶ 177-181.
Monsta's allegations are set forth in more detail below:
In connection with the instant Motion to dismiss, the Court expresses no view regarding the veracity of these allegations. See Am. Family Ass'n v. City & County of San Francisco, 277 F.3d 1114, 1120 (9th Cir. 2002).
Easton "engaged in improper efforts based upon an invalid and non-infringed patent to squash competition in the slow pitch bat market" to "prevent Monsta's expansion into the fast-pitch softball and hardball bat markets, intending to disrupt Monsta's business and stifle competition and consumers purchase options." A Canadian company, CE Composites, also known as "Combat Sports," filed the application that issued as the '826 Patent. Easton acquired the '826 Patent through the course of CE Composites's bankruptcy case. As originally filed, the application that issued as the '826 Patent identified only one individual, William Terrance Sutherland, as the inventor. Near the end of the prosecution of that application, CE Composites added other individuals, including Frederic St. Laurent, as co-inventors. Easton employed St. Laurent as its Director of Composites Engineering. The named inventors of the '826 Patent, including St. Laurent, hold senior positions within Easton, and they were involved in the decision to assert the '826 Patent against Monsta.
Id. at ¶ 54.
Id. at ¶ 55.
Id. at ¶ 57.
Id. at ¶ 55.
Id. at ¶ 56.
Id. at ¶ 58.
Id. at ¶ 59.
As admitted in the '826 Patent, CE Composites was aware that "Eggiman double wall patents" were assigned to nonparty DeMarini. Easton was also aware, before filing the Complaint, that DeMarini had been selling double-wall bats, according to various Eggiman patents, since 1993. But during its prosecution of the '826 Patent, CE Composites withheld from the U.S. Patent Office (the "PTO") information showing that DeMarini had obtained patents claiming double-wall bats with a solid lubricant.
Id. at ¶ 66.
Id. at ¶ 60.
Id. at ¶ 70.
The '826 Patent identifies as prior art a reference known as Vacek US 2004/020716A1 (the "Vacek Publication"). The Vacek Publication corresponds to the ULTRA bat. But Easton was aware, before filing the Amended Complaint, that "Sutherland, and the other later named co-inventors of the '826 Patent including St. Laurent, had not advised the Patent Examiner that CE Composites had purchased the ULTRA bat over six months before the filing of the application for the '826 Patent, and that Sutherland had cut it open to find that it was a triple wall bat having polypropylene tape or sheets separating the outer, middle and interior structural layers." The '826 Patent "essentially cop[ied]" the same structure as the ULTRA bat. Sutherland "admitted to Daniel Russell at Kettering University in Flint, Michigan that the ULTRA bat was a triple wall bat."
Id. at ¶ 66.
Id. at ¶ 65.
Id. at ¶ 67.
Id. at ¶ 71.
Id. at ¶ 62.
The '826 Patent discloses that:
an external laboratory specializing in collision dynamics and a university with expertise in frequency analysis were employed to test numerous bats of the present invention. External testing began a number of years ago and continued through early 2003....
Id. at ¶ 76.
That testing was conducted by Russell at Kettering University up to two years before the filing date, thereby "placing the invention in public use more than one year prior to the filing date and thereby [invalidating
those claims] under 35 U.S.C. § 102." Russell received permission from Sutherland to cut open lengthwise one of the sample bats so that Russell could "use it in a talk." The applicant for the '826 Patent did not advise the PTO that the bats had been in public use or that one of the bats had been cut open lengthwise to be used as a demonstrative exhibit in a talk that Russell delivered. Easton was "aware of the facts concerning the public use invalidity" before it filed its Complaint.
Id. at ¶ 77.
Id. at ¶ 78.
Id. at ¶ 79.
Id. at ¶ 88.
In its complaint in the ITC Case, Easton asserted that Monsta's activities concerning 17 of its bat models infringe the '826 Patent. But Easton filed the ITC complaint after inspecting only a single Monsta bat, which Monsta was not selling or offering for sale at that time. During the pendency of the ITC Case, the ITC Judge granted Easton's motion to add the foreign manufacturer as a respondent. After the target date was extended beyond the date of expiration of the '826 Patent, Monsta moved for summary determination of noninfringement. The ITC Judge concluded that a declaration from Easton's technical expert was not admissible and "held that summary determination would not be appropriate even if [Easton's expert's] declaration was admissible because: 'there are genuine issues of material fact at least as to whether the Monsta Accused Products meet claim limitations 1[f] or 18[f].'" The ITC Judge issued an Order to Show Cause directing Easton to explain why the investigation should proceed. In response, Easton moved to terminate the ITC Case against Monsta, which motion the ITC Judge granted. Easton's assertions of the '826 Patent in its original Complaint and in the ITC complaint were objectively baseless, and Easton made them for an improper purpose, in part, because Easton identified accused products that Easton had never inspected.
Id. at ¶¶ 4, 51, & 53.
Id. at ¶ 116.
Id. at ¶ 119.
Id. at ¶ 125.
Id. at ¶ 127.
Id.
Id. at ¶ 148.
Monsta makes additional allegations regarding Easton's alleged anti-competitive conduct. The baseball and softball bats that Easton sells in the United States must comply with various certification standards set by the United States Specialty Sports Association (the "USSSA") and the Amateur Softball Association (the "ASA/USA"). Accordingly, "the relevant markets are the USSSA certified adult slow pitch softball market and the ASA/USA certified adult slow pitch softball market." The Rawlings companies, including Easton, "have a substantial market share for the non-wood softball bats in the United States USSSA certified adult slow pitch softball market." Non-party Brian Wegman was the Chief Operating Officer of USSSA Softball until July 2023, and he
Id. at ¶ 15.
Id.
Id. at ¶ 16.
was responsible for determining which manufacturers received a license and certification to affix a USSSA stamp to their bats. Easton possesses a USSSA license. From 2015 through 2020 or 2021, Easton's sales accounted for 70% to 80% of the market for USSSA-certified softball bats. In 2021 or 2022, Easton "lost its dominance in the USSSA adult softball market" to bats manufactured by non-party Full Tech Company. But, in May 2023, Wegman notified Full Tech that Full Tech's previously certified bats were being decertified. After that, Easton regained a 70% to 80% share of the USSSA adult softball market. Wegman was also a contracted softball player representing Easton. Wegman used signature Easton bats, and he received royalties from Easton on the sales of those bats, including at least three models that were the subject of Easton's ITC complaint. "Easton has substantial influence over Brian Wegman," and Easton used that influence to "monopolize the USSSA certified softball market." Easton convinced Wegman to withhold a USSSA certification from Monsta; with that USSSA certification, Monsta would have gained a significant share of the USSSA bat market.
Id. at ¶ 21.
Id. at ¶ 23.
Id. at ¶ 24.
Id. at ¶ 25.
Id. at ¶ 26.
Id. at ¶ 27.
Id. at ¶ 31.
Id. at ¶ 32.
Id. at ¶ 33.
Id. at ¶ 38.
"Easton is engaging in sham litigation and attempting to enforce a patent obtained through inequitable conduct and/or fraud on the U.S. Patent Office that Easton was aware of prior to the filing of the complaint in this action[.]"
Id. at ¶ 169.
II. LEGAL STANDARD A. Rule 12(b)(6)—Failure to State a ClaimA motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims for relief asserted in a complaint. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In ruling on a Rule 12(b)(6) motion, "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Am. Family Ass'n, 277 F.3d at 1120. Although a complaint attacked by a Rule 12(b)(6) motion "does not need detailed factual allegations," a plaintiff must provide "more than labels and conclusions." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
To state a plausible claim for relief, the complaint "must contain sufficient allegations of underlying facts" to support its legal conclusions. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)...." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citations and footnote omitted). Accordingly, to 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," which means that a plaintiff must plead sufficient factual content to "allow[ ] the Court to draw the reasonable inference that the
defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). A complaint must contain "well-pleaded facts" from which the Court can "infer more than the mere possibility of misconduct." Id. at 679, 129 S.Ct. 1937.
B. Rule 15(a)—Leave to AmendA district court "should freely give leave when justice so requires." Fed. R. Civ. P. 15(a). The purpose underlying the liberal amendment policy is to "facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). Therefore, leave to amend should be granted unless the Court determines "that the pleading could not possibly be cured by the allegation of other facts." Id. (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)).
III. DISCUSSION A. Inequitable Conduct 1. Applicable Law"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) (en banc). Inequitable conduct must be pleaded with particularity under Rule 9(b). See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009). To meet that standard, the Federal Circuit —like other circuits—requires the pleading party to identify "the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." Id. at 1327. A well-pleaded claim for inequitable conduct must contain allegations demonstrating that "(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 information; and (2) the individual did so with a specific intent to deceive the PTO." Id. at 1327 n.3.
The "materiality required to establish inequitable conduct is but-for materiality." Therasense Inc., 649 F.3d at 1291. "When a patent application fails to disclose prior art to the PTO, the prior art is butfor material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." Id. The "mere fact that a misrepresentation occurred is not enough to show that the PTO would not have issued the patent. Instead, the accused infringer must show facts indicating that the PTO was particularly concerned with a representation, or that the truth, if presented to the PTO, would have rendered the invention unpatentable." Hum. Genome Scis., Inc. v. Genentech, Inc., 2011 WL 7461786, at *4 (C.D. Cal. Dec. 9, 2011). "A reference is not but-for material, however, if it is merely cumulative." Regeneron Pharms., Inc. v. Merus N.V., 864 F.3d 1343, 1350 (Fed. Cir. 2017).
At the pleading stage, inequitable conduct need not be "the single most reasonable inference" drawn from the alleged facts at the pleading stage. See Hangzhou Chic Intelligent Tech. co. v. Razor USA LLC, 2016 WL 10518582, at *2 (C.D. Cal. Dec. 19, 2016) (citation omitted). A "mere reasonable inference is quite enough to survive." Hum. Genome Scis., Inc., 2011 WL 7461786, at *3. Still, "the accused infringer must allege facts from which it is plausible that the applicant had an intent to deceive." Id. "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)." Exergen Corp., 575 F.3d at 1326-27.
2. AnalysisThe Court concludes that Monsta has adequately stated a claim for inequitable conduct. The Amended Counterclaim sufficiently identifies the "who, what, when, where, and how" elements of that claim. See Exergen Corp., 575 F.3d at 1327. Monsta identifies the "who" as William Terrance Sutherland, the first named inventor of the '826 Patent.
The Court considers the inequitable conduct claim to be a part of Monsta's first counterclaim. See Motion 8:28 n.2; Amended Counterclaim ¶ 162.
Amended Counterclaim ¶ 55.
Monsta identifies the "what" element and the "how" element of its inequitable conduct claim. Throughout the Amended Counterclaim, Monsta alleges that the CE Composites attorneys, and the inventors including Sutherland and St. Laurent, had a duty of disclosure, but that they failed to disclose material information to the PTO. For example, Monsta alleges that Sutherland cut open the ULTRA bat more than six months before filing the application for the '826 Patent. According to Monsta, Sutherland cut open the bat "to find that it was a triple wall bat having polypropylene tape or sheets separating the outer, middle and interior structural layers." But no one disclosed that information to the PTO.
Id. at ¶ 70.
Id. at ¶¶ 61, 62, 72, & 162.
Id. at ¶ 67.
Id. at ¶ 72.
Monsta also alleges that Russell and undergraduate students at Kettering University performed testing on the bats "of the invention" up to two years before the filing date. According to Monsta, that testing placed the invention in public use more than one year before the filing date, which, therefore, invalidates the claims as anticipated under 35 U.S.C. § 102. Monsta avers that the applicant for the '826 Patent did not advise the PTO that the bats had been in public use in the United States up to two years before the filing of the application. Monsta further provides declarations regarding the file history of the Vacek Publication. Monsta also asserts that Russell received permission from Sutherland to use a sample bat, which was cut open lengthwise, "in a talk." But that information was never disclosed to the PTO.
Id. at ¶ 77.
Id.
Id. at ¶ 79.
Id. at ¶ 78.
Id. at ¶ 79.
Monsta also alleges the "when" and "where" elements of its inequitable conduct claim. For example, Monsta asserts that Sutherland "signed and submitted his declaration along with the application to the [PTO] acknowledging the duty of disclosure[.]"
Opposition 13:17-19; Motion, Ex. A [ECF No. 63-3] 25-26.
Taken together, the Amended Counterclaim plausibly avers that material information was not disclosed to the PTO by those who had a duty of disclosure. Further, those allegations permit one to make a reasonable inference of specific intent to deceive the PTO. The Court concludes that those allegations are sufficient to state a claim under Rule 9(b). Accordingly, Easton's
instant Motion is DENIED with respect to Monsta's inequitable conduct claim.
B. The Noerr-Pennington DoctrineEaston contends that it is immune from antitrust liability under the Noerr-Pennington doctrine. See Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). Monsta responds that Easton is not entitled to immunity under Noerr-Pennington because Easton engaged in sham litigation and Easton obtained the '826 Patent through fraud.
See generally Motion.
See generally Opposition.
The Noerr-Pennington doctrine is "a judicially created exception to the application of the antitrust laws" based upon the First Amendment. Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1254-55 (9th Cir. 1982); see also Cadence Pharms., Inc. v. Fresenius Kabi USA, LLC, 996 F. Supp. 2d 1015, 1018 n.3 (S.D. Cal. 2014) ("A District court deciding issues in a patent case is required to apply the law of the circuit in which it sits with respect to nonpatent issues and the law of the Federal Circuit to the issues of substantive patent law."). Under that doctrine, "[t]hose who petition [the] government for redress are generally immune from antitrust liability." Profl Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). That protection "extends to actions by citizens with respect to administrative agencies and courts." Catch Curve, Inc. v. Venali, Inc., 2008 WL 11334024, at *3 (C.D. Cal. Nov. 3, 2008); see also In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d 1322, 1326 (Fed. Cir. 2000) ("a patent owner who brings suit to enforce the statutory right to exclude others from making, using, or selling the claimed invention is exempt from the antitrust laws, even though such a suit may have an anti-competitive effect, unless the infringement defendant proves one of two conditions"). The Noerr-Pennington doctrine supports the position that "a legitimate effort to influence government action is part of the guaranteed right to petition." Clipper Exxpress, 690 F.2d at 1255.
A party cannot claim the protection of the Noerr-Pennington doctrine if it engaged in a "sham" litigation. See Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 556, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014). A party also cannot claim the protection of the Noerr-Pennington doctrine if that party engaged in "Walker Process fraud," meaning that the party obtained a patent fraudulently and then used "that patent to exclude a competitor from the market through infringement suits[.]" Kaiser Found. Health Plan, Inc. v. Abbott La'ys, Inc., 552 F.3d 1033, 1045 (9th Cir. 2009) (citing Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)).
"[It] is important that a plaintiff's complaint contain specific allegations demonstrating that the Noerr-Pennington protections do not apply." Boone v. Redevelopment Agency of City of San Jose, 841 F.2d 886, 894 (9th Cir. 1988). "Conclusory allegations are insufficient to strip [defendants] of their Noerr-Pennington protection." Id. Rather, "a plaintiffs allegations [must] be made with specificity." Id. "A defendant may challenge a claim as barred by the Noerr-Pennington doctrine by filing
a motion to dismiss under Rule 12(b)(6)." Brooke v. Patel, 2023 WL 2645648, at *8 (E.D. Cal. Mar. 27, 2023).
1. Sham Litigation a. Applicable LawTo invoke the sham litigation exception, Monsta must allege (1) that Easton's petitioning conduct was "objectively baseless in the sense that no reasonable litigant could reasonable litigant could realistically expect success on the merits"; and (2) that "the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor." Prof'l Real Est. Inv'rs, Inc., 508 U.S. at 60-61, 113 S.Ct. 1920 (internal quotation marks and citation omitted) (emphasis in original). "Only if the challenged litigation is objectively baseless may the Court consider the second factor—i.e., the litigant's subjective motivation." In re Outlaw Lab'ys, LP Litig., 352 F. Supp. 3d 992, 1003 (S.D. Cal. 2018). The Ninth Circuit has held that Noerr-Pennington immunity "is not a shield for petitioning conduct that, 'although ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor.'" Sosa v. DIRECTV, Inc., 437 F.3d 923, 934 (9th Cir. 2006) (citation omitted). A "[p]laintiff's allegations that the sham litigation exception applies are subject to a heightened pleading standard." Wonderful Real Est. Dev. LLC v. Laborers Int'l Union of N. Am. Loc. 220, 2020 WL 91998, at *7 (E.D. Cal. Jan 8, 2020).
b. AnalysisMonsta has failed to plead enough facts to show that Easton's lawsuits are objectively baseless. Monsta's allegations are deficient regarding the Eggiman Patent/DeMarini bat, the Vacek Publication/ULTRA bat, and the Kettering University testing. None of those allegations renders Easton's lawsuits objectively baseless.
Monsta reasserts its allegations concerning amendments made during prosecution regarding new matter allegedly added during the prosecution of the '826 Patent and regarding the possible expiration of the patent. In its Order on Easton's previous motion to dismiss Monsta's counterclaims, the Court rejected those allegations as conclusory and vague. The Court's conclusion has not changed because Monsta does not plausibly allege how the amendments make the litigation objectively baseless and because Monsta fails to tie Easton to those allegations with the requisite particularity.
Amended Counterclaim ¶¶ 97-106.
Order Granting Mot. to Dismiss Third and Fourth Counterclaims 9.
Monsta further argues that the ITC Case was objectively baseless because (1) Easton inspected only a single Monsta Bat that was not being offered for sale or sold by Monsta at the time that Easton filed its ITC complaint; (2) the ITC excluded the declaration of Easton's sole technical expert; and (3) Easton terminated the ITC Case as against Monsta. The Court concludes that those assertions are insufficient to allege sham litigation with sufficient particularity. As Monsta concedes, the ITC Judge held that genuine disputes of material fact exist regarding whether Monsta's accused products meet the claim limitations. For those reasons, the Court concludes that Monsta has not shown that the challenged litigation is objectively baseless. Therefore, the sham litigation exception does not apply.
Amended Counterclaim ¶¶ 4, 51, 53, 124, & 127.
Id. at ¶ 125.
2. Walker Process FraudTo invoke Walker Process fraud, an antitrust claimant must show: (1) that "the asserted patent was obtained by knowingly and willfully misrepresenting the facts to the PTO"; (2) that "the party enforcing the patent was aware of the fraud when bringing suit"; (3) "independent and clear evidence of deceptive intent"; (4) "reliance, i.e., that the patent would not have issued but for the misrepresentation or omission"; and (5) "the necessary additional elements of an underlying violation of the antitrust laws." Delano Farms Co. v. California Table Grape Comm'n, 623 F. Supp. 2d 1144, 1172-73 (E.D. Cal. 2009), aff'd, 655 F.3d 1337 (Fed. Cir. 2011). A finding of Walker Process fraud "requires high threshold showings" of the elements, "supported by clear and convincing evidence." Westlake Servs., LLC v. Credit Acceptance Corp., 2017 WL 8948263, at *5 (C.D. Cal. Dec. 28, 2017).
Monsta has failed to invoke the Walker Process fraud exception. Monsta's pleading regarding the Eggiman Patent/DeMarini bat, the Vacek Publication/ULTRA bat, and the Kettering University testing does not provide independent and clear evidence of deceptive intent because Monsta does not present sufficient allegations, over and above those disclosed to the PTO, to show that any individual intended to deceive the PTO. Monsta has further failed to plead enough facts to demonstrate that the '826 Patent would not have issued but for a misrepresentation. As the Court has previously concluded, Monsta's allegations regarding amendments during the prosecution of the '826 Patent are deficient. Those allegations fail to show that any individual intended to deceive the PTO, and those allegations also fail to show that the '826 Patent was obtained through fraud. Additionally, Monsta's allegations regarding the ITC Case are insufficient to invoke Walker Process fraud.
Monsta's scant assertions regarding the ITC Case do not plausibly allege that that proceeding was fraudulent. Monsta has failed to plead any other facts to show that the '826 Patent was obtained by knowingly and willfully misrepresenting facts to the PTO. Further, Monsta has not alleged sufficient non-conclusory and non-vague facts through its third and fourth counterclaims that, but for the misrepresentation or omission, the patent would not have issued.
Therefore, Monsta has failed to make sufficient allegations to show that the sham litigation exception or the Walker Process fraud exception applies. Accordingly, the Noerr-Pennington doctrine bars Monsta's antitrust counterclaim.
C. Failure to State a ClaimEaston argues that, notwithstanding Noerr-Pennington immunity, Monsta's third and fourth counterclaims fail to state claims for attempted monopolization under the Sherman Act or for a violation of California unfair business practices law. The Court agrees.
Motion 23:7-31:8.
To state a claim for attempted monopolization, the claimant must show: (1) "specific intent to control prices or destroy competition"; (2) "predatory or anticompetitive conduct to accomplish the monopolization"; (3) "dangerous probability of success"; and (4) "causal antitrust
injury." SmileCare Dental Grp. v. Delta Dental Plan of California, Inc., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). "Courts have held that where the alleged conduct does not violate the antitrust laws, a claim based on unfair conduct under the UCL cannot survive." ChriMar Sys., Inc. v. Cisco Sys., Inc., 72 F. Supp. 3d 1012, 1020 (N.D. Cal. 2014) (collecting cases).
As Easton argues—and the Court agrees—Monsta's allegations are insufficient to state a claim for attempted monopolization. For example, Monsta's pleading regarding Easton's predatory or anticompetitive conduct is conclusory because Monsta has not alleged enough facts to support its theory that Easton had substantial influence over Wegman and that it "used that influence to undermine Monsta's attempts to obtain a USSSA license" and to exclude Monsta from the relevant markets. Similarly, Monsta's allegations regarding Easton's dangerous probability of success are vague and contradictory. Further, Monsta has not pleaded enough facts to show that Easton had a specific intent to monopolize the relevant market. Given that Monsta's third counterclaim under the Sherman Act is based upon the same set of facts as its fourth counterclaim under California unfair competition law, the Court concludes that the California-law counterclaim likewise fails to survive Easton's Rule 12(b)(6) challenge.
See Amended Counterclaim ¶ 33.
Monsta has twice failed to allege its third and fourth counterclaims sufficiently. Accordingly, the Court concludes that those defects in Easton's Amended Counterclaim cannot be cured by further amendment. See Fid. Fin. Corp. v. Fed. Home Loan Bank of S.F., 792 F.2d 1432, 1438 (9th Cir. 1986) ("The district court's discretion to deny leave to amend is particularly broad where the court has already given the plaintiff an opportunity to amend his complaint."). Accordingly, those claims are DISMISSED without leave to amend.
IV. DISPOSITIONFor the foregoing reasons, the Court hereby ORDERS as follows:
1. Easton's instant Motion to dismiss is GRANTED in part and DENIED in part, as follows:
a. the Motion is GRANTED with respect to Monsta's amended third and fourth counterclaims, and Monsta's amended third and fourth counterclaims are DISMISSED without leave to amend; and
b. the Motion is DENIED with respect to Monsta's inequitable conduct claim.
2. Easton is DIRECTED to file its Answer to Monsta's Amended Counterclaim no later than March 29, 2024.
IT IS SO ORDERED.
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