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Ilife Technologies Inc. v. Body Media, Inc.

United States District Court, W.D. Pennsylvania

March 6, 2015

iLIFE TECHNOLOGIES INC., Plaintiff,
v.
BODY MEDIA, INC., Defendant.

MEMORANDUM OPINION

JOY FLOWERS CONTI, Chief District Judge.

This patent infringement case involves five asserted patents, which generally disclose systems and methods for evaluating, detecting, or analyzing movement or activity of a body in relationship to an environment. (ECF No. 66 at 6.) The five patents-in-suit are United States Patent Numbers 6, 307, 481 (the "'481 Patent"), 6, 703, 939 (the "'939 Patent"), 7, 095, 331 (the "'331 Patent"), 7, 145, 461 (the "'461 Patent"), and 7, 479, 890 (the "'890 Patent"). iLife Technologies, Inc. ("iLife") is the owner by assignment of these patents. (ECF No. 66-1 at 7, 24, 50, 76, and 106.) iLife accuses Body Media, Inc. ("Body Media") of infringing certain claims of each of the patents-in-suit. (ECF No. 66-1 at 4-5.) This court recently issued its opinion and order on claim construction. (ECF Nos. 105-06.)

On November 26, 2014, Body Media filed an amended answer and counterclaim in which it asserted, for the first time, an allegation that the asserted patents are unenforceable due to inequitable conduct. (ECF No. 70 at 16-42.) Pursuant to court order, amended pleadings were due by November 28, 2014, and, therefore, Body Media's filing was timely and proper in that respect. (ECF No. 61.) iLife filed a motion to dismiss the inequitable conduct counterclaim, arguing that Body Media failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). (ECF Nos. 79, 80, 94.) The parties argued the motion to dismiss at the end of the February 3, 2015 Markman hearing, and, at the request of the court, submitted additional briefing thereafter. (ECF Nos. 102 and 103.) Body Media attached to its submission a district court decision issued on February 19, 2015, denying iLife's motion to dismiss an identical inequitable conduct counterclaim asserted by Body Media's parent company AliphCom against iLife in litigation pending in the United States District Court for the Northern District of California. (ECF No. 103-3 (iLife Technologies, Inc. v. AliphCom, No. 14-3345 (N.D. Cal. Feb. 19, 2015) (hereinafter "AliphCom").) On February 26, 2015, this court again heard oral argument on iLife's motion to dismiss. (2/26/2015 Minute Entry.)

For the reasons set forth below, the motion is denied with respect to the inequitable conduct counterclaim to the extent it is pled with respect to the '939, '331, '461, and '890 Patents.

I. Legal Standards

The standards for pleading and proving inequitable conduct are related, but different. The pleading standard is set forth in Exergen Corporation v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009), and the merits standard is set forth in Therasense, Inc. v. Becton, Dickinson & Company, 649 F.3d 1276, 1291-92 (Fed. Cir. 2011) (en banc). Delano Farms Co. v. Cal. Table Grape Comm'n, 655 F.3d 1337, 1350 (Fed. Cir. 2011) (applying Exergen's pleading requirements to a motion to dismiss after Therasense was decided).

A. Exergen's Pleading Standard

"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.'" Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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. These requirements apply with equal rigor to pleadings made under Rules 8 and 9 of the Federal Rules of Civil Procedure. Iqbal, 556 U.S. at 686-87.

Inequitable conduct, like similar allegations of fraud or mistake, must be pled with particularity under Rule 9(b). Exergen, 575 F.3d at 1326. "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 misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the United States Patent and Trademark Office ("PTO"). Id. at 1328-29. A "reasonable inference" is "one that is plausible and that flows logically from the facts alleged, including any objective indications of candor and good faith." Id. at 1329 n.5; Delano Farms, 655 F.3d at 1350.

In order to properly plead inequitable conduct in a patent case, Rule 9(b) requires identification of the specific who, what, when, where, why, and how of the material misrepresentation or omission committed before the PTO. Exergen, 575 F.3d at 1328. To satisfy the "who" and "when, " the pleading must name the person who knew of the material information and deliberately withheld or misrepresented it, and indicate when the conduct took place. Id. at 1329. To plead the "what" and "where" of the material omissions, the pleading must identify "which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found." Id. The pleading must set forth "why" the withheld information was material and not cumulative, and "how" an examiner would have used the information in assessing patentability. Id. The pleading must indicate "the particular claim limitations, or combination of claim limitations, " that are supposedly absent from the information of record. Id. A factual deficiency with respect to any of the above elements is "fatal under Rule 9(b)." Id. at 1330.

B. Therasense's Merits Standard

To establish inequitable conduct on the merits, a challenger must prove 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 material information to the PTO; and (2) the individual did so with a specific intent to deceive the PTO. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008); Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178, 1181 (Fed. Cir. 1995); 37 C.F.R. ยง 1.56. The Court of Appeals for the Federal Circuit heightened the standard for proving inequitable conduct based upon nondisclosure of a reference to the PTO in Therasense. Under Therasense, absent evidence of affirmative egregious misconduct, a challenger must prove, by clear and convincing evidence, both that: (1) "the patentee acted with the specific intent to deceive the PTO;" and (2) the nondisclosed reference was a "but for" cause of the PTO's allowance of the claims. Therasense, 649 F.3d at 1291-92. In order to satisfy the first requirement, the challenger must prove that the patentee: (1) knew of the reference; (2) knew that it was material; and (3) made a deliberate decision to withhold it. Id. at 1290. In other words, in a case involving nondisclosure of information, unless the challenger presents clear and convincing evidence that the patentee made a deliberate decision to withhold a known material reference, there can be no inequitable conduct. Id.; 1st Media, LLC v. Electronic Arts, Inc., 694 F.3d 1367, 1373-77 (Fed. Cir. 2012) (reversing district court's finding of inequitable conduct because there was no proof of a "deliberate decision to withhold" or "anything that would support such an inference").

Although intent can always be, and usually is, proven by indirect evidence, "to meet the clear and convincing evidence standard, the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence.'" Therasense, 649 F.3d at 1290. After Therasense, intent to deceive can no longer be inferred from nondisclosure of a reference solely because that reference was known and material; there must be some ...


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