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holding that where all patents were part of the same family and contained nearly identical claims, "[patentees'] assertions of the closely related '925 and '237 patents against [declaratory-judgment plaintiff] through patent infringement lawsuits are 'sufficient affirmative acts for declaratory judgment purposes' with respect to the [declaratory-judgment] Patents" to give rise to subject-matter jurisdiction
Summary of this case from Dror v. Kenu, Inc.Opinion
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIMS AND STRIKE AFFIRMATIVE DEFENSES [Doc. No. 37]
MARILYN L. HUFF, District Judge.
On June 20, 2013, Plaintiff-Counterdefendant Seaboard International, Inc. ("Seaboard") filed a partial motion to dismiss Defendant-Counterclaimant Cameron International Corp. ("Cameron")'s counterclaims and to strike Cameron's affirmative defenses. (Doc. Nos. 37-38.) On July 8, 2013, Cameron filed its opposition. (Doc. No. 41.) On July 15, 2013, Seaboard filed its reply. (Doc. No. 42.) On July 26, 2013, the Court held a telephonic hearing on the matter. Laura Wytsma appeared for Seaboard. Charles Rogers and Joe Redden appeared for Cameron. For the reasons below, the Court grants in part and denies in part Seaboard's motion.
Background
On February 26, 2013, Seaboard filed a complaint against Cameron, alleging infringement of U.S. Patent No. 8, 333, 237 (the '237 Patent). (Doc. No. 1.) The '237 Patent entitled "Wellhead Isolation Tool and Wellhead Assembly Incorporating the Same" was issued on December 18, 2012 and "relates to wellhead equipment, and to a wellhead tool for isolating wellhead equipment from the extreme pressures and abrasive materials used in oil and gas well stimulation and to a method of using the same." (Id. Ex. 1.)
On April 9, 2013, Cameron filed an answer and counterclaims to Seaboard's complaint. (Doc. No. 17.) On May 3, 2013, Seaboard filed a motion to dismiss Seaboard's counterclaims and to strike Cameron's defenses. (Doc. No. 22.) On May 27, 2013, Cameron filed a first amended answer as a matter of course pursuant to Federal Rule of Civil Procedure 15(a)(1)(B). (Doc. No. 28.) On May 29, 2013, the Court denied Seaboard's motion to dismiss and to strike as moot in light of Cameron's amended answer and counterclaims. (Doc. No. 30.)
By the present motion, Seaboard moves to dismiss and strike (1) Cameron's patent misuse counterclaim and affirmative defense; (2) Cameron's prosecution laches counterclaim and affirmative defense; (3) Cameron's inequitable conduct counterclaim and affirmative defense to the extent it is based on the non-disclosure of material information and the burying of material information; (4) Cameron's equitable estoppel affirmative defense; and (5) Cameron's declaratory judgment counterclaim to declare six other Seaboard patents unenforceable due to inequitable conduct. (Doc. No. 38.)
Discussion
I. Legal Standards for a Rule 12(b)(6) Motion to Dismiss
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a claim or counterclaim upon a finding that the plaintiff has failed to state a claim upon which relief may be granted. See Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
The court may dismiss a claim as a matter of law for: (1) "lack of cognizable legal theory, " or (2) "insufficient facts under a cognizable legal claim." SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a claim survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Nevertheless, the reviewing court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. It is also improper for the court to assume "the [plaintiff] can prove facts that [he or she] has not alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). On the other hand, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679. In deciding a motion to dismiss, the court only reviews the contents of the complaint, accepting all factual allegations as true, and drawing all reasonable inferences in favor of the nonmoving party. al- Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (citations omitted).
II. Legal Standards for a Rule 12(f) Motion to Strike
Federal Rule of Civil Procedure 12(f) permits a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." "[T]he function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). "Motions to strike are generally regarded with disfavor because of the limited importance of pleading in federal practice, and because they are often used as a delaying tactic." Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1152 (C.D. Cal. 2003); accord Kohler v. Islands Rests., LP, 280 F.R.D. 560, 563-64 (S.D. Cal. 2012). In determining a motion to strike, the court must view the pleadings in the light most favorable to the non-moving party. See Wailua Assocs. v. Aetna Cas. & Sur. Co., 183 F.R.D. 550, 554 (D. Haw. 1998).
"The key to determining the sufficiency of pleading an affirmative defense is whether it gives the plaintiff fair notice of the defense." Wyshak, 607 F.2d at 827 (citing Conley v. Gibson, 355 U.S. 41, 47-48 (1957)); accord Simmons v. Navajo, 609 F.3d 1011, 1023 (9th Cir. 2010). "Fair notice generally requires that the defendant state the nature and grounds for the affirmative defense. It does not, however, require a detailed statement of facts." Kohler, 280 F.R.D. at 564 (citing Conley, 355 U.S. at 47). "[A]n affirmative defense is legally insufficient only if it clearly lacks merit under any set of facts the defendant might allege.'" Id. (quoting McArdle v. AT&T Mobility, LLC, 657 F.Supp.2d 1140, 1149-50 (N.D. Cal. 2009)).
III. Cameron's Counterclaims and Affirmative Defenses
A. Patent Misuse
Cameron asserts as an affirmative defense and counterclaim that the '237 Patent is unenforceable due to patent misuse. (Doc. No. 28 at 5-6 ¶¶ 22-24, at 16-17 ¶¶ 12-15.) Seaboard argues that this counterclaim should be dismissed and the defense stricken because Cameron does not allege a cognizable theory of patent misuse or that the alleged misuse has resulted in anticompetitive effects. (Doc. No. 38 at 2-5.)
"[T]he patent misuse doctrine is an extension of the equitable doctrine of unclean hands, whereby a court of equity will not lend its support to enforcement of a patent that has been misused." B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1427 (Fed. Cir. 1997). To establish the affirmative defense of patent misuse, a defendant must prove that the patentee impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects. Princo, 616 F.3d at 1328. The doctrine of patent misuse is grounded in the policy-based desire to prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right. Id. at 1328; see also id. at 1331 ("[P]atent misuse is about, in short, is patent leverage, ' i.e., the use of the patent power to impose overbroad conditions on the use of the patent in suit that are not within the reach of the monopoly granted by the Government.'").
Cameron alleges that Seaboard is wrongfully asserting the '237 Patent against Cameron's "single load path" products despite Seaboard's predecessor Duhn Oil previously disclaiming that subject matter during the prosecution of the '925 Patent and the '925 patent litigation. (Doc. No. 28 at 5-6 ¶¶ 22-24, at 16-17 ¶¶ 12-15. But, Cameron has failed to sufficiently allege that Seaboard's actions have had anticompetitive effects. Cameron alleges that Seaboard's actions could cause Cameron to remove its products from the market. (Doc. No. 28 at 7 ¶ 27, at 18 ¶ 18; see also Doc. No. 41 at 9.) But, an allegation of injury to a single individual or individual firm is insufficient to plead an anticompetive injury. See McGlinchy v. Shell Chemical Co., 845 F.2d 802, 812 (9th Cir. 1988) ("It is injury to the market or to competition in general, not merely injury to individuals or individual firms that is significant."). In addition, the injury alleged by Cameron is too speculative as Cameron only alleges that it might have to remove its products from the market. See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 321 (3d Cir. 2007) ("The prospective harm to competition must not... be speculative."); see also City of Los Angeles v. Lyons, 461 U.S. 95, 101-02 (1983) (explaining that an injury or threat of injury must be real and immediate, not conjectural or hypothetical). Accordingly, the Court dismisses Cameron's counterclaim for patent misuse and strikes the related affirmative defense.
The '925 Patent refers to U.S. Patent No. 6, 920, 925, which is a parent patent to the '237 Patent. The '925 patent litigation refers to Duhn Oil v. Cooper Cameron Corp., Case No. 1:05-cv-1411 (E.D. Cal. filed Nov. 9, 2005).
Because the Court dismisses Cameron's patent misuse counterclaim for failure to properly plead an anticompetitive injury, the Court declines to address whether the claim is barred by the Noerr-Pennington doctrine.
B. Prosecution Laches
Cameron asserts as an affirmative defense and counterclaim that the '237 Patent is unenforceable due to prosecution laches. (Doc. No. 28 at 6-7 ¶¶ 25-28, at 17-19 ¶¶ 16-19.) Seaboard argues that this counterclaim should be dismissed and the defense stricken because Cameron fails to allege sufficient facts to support a prosecution laches defense. (Doc. No. 38 at 5-6.)
Cameron argues that Seaboard cannot move to dismiss its counterclaim for prosecution laches under Federal Rule of Civil Procedure 12(g)(2) because Seaboard did not move to dismiss this counterclaim through its first motion to dismiss. (Doc. No. 41 at 1, 3.) Rule 12(g)(2) provides: "a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion." But, even assuming Seaboard's arguments technically violate Rule 12(g)(2), Seaboard can move to dismiss the counterclaim under Rule 12(c) and the Court can consider the arguments now in order to expedite a final disposition on the issue. See Davidson v. Countrywide Home Loans, Inc., 2011 U.S. Dist. LEXIS 33404, at *13 (S.D. Cal. Mar. 29, 2011); In re Wash. Mut., Inc., Securities, Derivative & ERISA Litig., 2010 U.S. Dist. LEXIS 119931, at *29 (W.D. Wash. Nov. 3, 2010).
"Prosecution laches is an equitable defense to a charge of patent infringement. The doctrine may render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution' that constitutes an egregious misuse of the statutory patent system under the totality of the circumstances." Cancer Research Tech. Ltd. v. Barr Labs., Inc., 625 F.3d 724, 728 (Fed. Cir. 2010). The requirement of an unreasonable and unexplained delay also requires a finding of prejudice. Id. at 729. "[T]o establish prejudice an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay." Id.
Cameron alleges that Seaboard's predecessor Duhn Oil unreasonably delayed the prosecution of the '237 patent claim for over six and a half years from the date when it first disclaimed the "single load path" design during the prosecution of the parent '925 patent application. (Doc. No. 28 at 6-7 ¶¶ 25-26, at 17-18 ¶¶ 16-17.) In addition, Cameron alleges that it has been prejudiced by the delay because during that time it has continued to manufacture and market "single load path" products, but if it had known of the '237 Patent's claims sooner, it would have shifted to a different design. (Id. at 7 ¶ 27, at 18 ¶ 18.) These allegations are sufficient to state a claim for prosecution laches. See Cancer Research Tech., 625 F.3d at 728-29. Accordingly, the Court denies Seaboard's motion to dismiss Cameron's prosecution laches counterclaim and to strike the related affirmative defense.
Seaboard argues Cameron's allegations are insufficient to allege a delay because the relevant inquiry is not whether the patentee unreasonably delayed in filing specific claims in a patent application, but whether the patentee unreasonable delayed prosecution once the claim was filed. (Doc. No. 42 at 7-8 (citing Novo Nordisk Pharms., Inc. v. Bio-Technology Gen. Corp., 2004 U.S. Dist. LEXIS 14960, at *100-01 (D. Del. Aug. 3, 2004); Intuitive Surgical, Inc. v. Computer Motion, Inc., 2002 U.S. Dist. LEXIS 24808, at *17 (D. Del. Dec. 10, 2002).) Seaboard argues, therefore, that the fact that it did not file claims directed to a single load path system in a parent application cannot constitute prosecution laches. (Id. at 8.) But, the two district court cases relied on by Seaboard where issued prior to the Federal Circuit's decision in Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., LP, 422 F.3d 1378 (Fed. Cir. 2005). In Symbol Techs., the Federal Circuit explained that in evaluating a claim of prosecution laches, the court should consider "the totality of the circumstances, including the prosecution history of all of a series of related patents and overall delay in issuing claims...." Id. at 1386. Therefore, Cameron's allegations of delay are sufficient at this stage of the litigation.
C. Inequitable Conduct
Cameron asserts as an affirmative defense and counterclaim that the '237 Patent is unenforceable due to inequitable conduct. (Doc. No. 28 at 8-10 ¶¶ 30-34, at 19-22 ¶¶ 21-26.) Seaboard argues that this counterclaim should be dismissed and the defense stricken to the extent Cameron is relying on the non-disclosure of material information and the burying of material information as a basis for its claim of inequitable conduct. (Doc. No. 38 at 9-13.)
"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). A finding of inequitable conduct can bar enforcement of an entire family of related patents. Id. at 1288-89 ("[T]he taint of a finding of inequitable conduct can spread from a single patent to render unenforceable other related patents and applications in the same technology family.").
To prevail on a claim of inequitable conduct, the accused infringer must prove by clear and convincing evidence that the patentee acted with the specific intent to deceive the United States Patent and Trademark Office ("PTO"). Therasense, 649 F.3d at 1290. The accused infringer must prove that the applicant knew of a reference, knew it was material to prosecution of the patent at issue, and made a deliberate decision to withhold the reference. Id. Inequitable conduct requires both materiality and intent to deceive. See id. at 1287. The Federal Circuit has explained that these are separate requirements, and "a district court may not infer intent solely from materiality." Id. at 1290.
To prove intent to deceive, an accused infringer may rely on indirect and circumstantial evidence. Id. However, the specific intent to deceive "must be the single most reasonable inference able to be drawn from the evidence.'" Id. "Indeed, the evidence must be sufficient to require a finding of deceitful intent in the light of all the circumstances.'" Id. To meet the standard for materiality, the reference must be "but-for material." Id. at 1291. A prior art reference is but-for material "if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." Id.
An inequitable conduct counterclaim must be pled with "particularity" under Federal Rule of Civil Procedure 9(b). Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009). Therefore, an inequitable conduct counterclaim must set forth the particularized factual bases for the allegations. Id. at 1327. Specifically, the counterclaim "must identify the specific who, what, when, where, and how of the material misrepresentation of omission committed before the PTO." Id. at 1328.
Moreover, although "knowledge" and "intent" may be averred generally, 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 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.
Cameron first alleges inequitable conduct based on the alleged non-disclosure of material information. (Doc. No. 28 at 8 ¶ 30, at 19 ¶ 21.) Cameron alleges: "Specifically, on information and belief, the Applicants failed to disclose information material to the patentability of the claims in the '237 patent, including material prior art, during the prosecution of the applications that led to the issuance of the '237 patent, and buried material prior art and material litigation information in the papers that were disclosed in the final continuation application that issued as the '237 patent." (Id.) These vague allegations fall well short of satisfying Rule 9(b)'s heightened pleading standard. See Exergen, 575 F.3d at 1328-30. The allegations do not identify "what" specific prior art or litigation information was not disclosed to the PTO; "where" the material information can be found within the references; "who" knew it was material and failed to disclose it; and "how" the non-disclosed information was material. Accordingly, the Court dismisses Cameron's inequitable conduct counterclaim and strikes the related defense to the extent it is based on the alleged non-disclosure of material information to the PTO.
Cameron also alleges inequitable conduct based on the alleged burying of material prior art and material litigation information in the papers that were submitted to the PTO. (Doc. No. 28 at 9 ¶ 31, at 20 ¶ 22.) Seaboard argues that the alleged burying of references cannot constitute inequitable conduct. (Doc. No. 38 at 10-11.) In response, Cameron argues that the alleged burying of material prior art within hundreds of thousands of pages of patents and litigation papers that were submitted to the PTO can constitute inequitable conduct, citing Molins Plc v. Textron, Inc., 48 F.3d 1172 (Fed. Cir. 1995). (Doc. No. 41 at 11-12.) In Molins, the Federal Circuit noted that "burying' a particularly material reference in a prior art statement containing a multiplicity of other references can be probative of bad faith." 48 F.3d at 1184. But, in a later case, the Federal Circuit held that "[a]n applicant can not be guilty of inequitable conduct if the reference was cited to the examiner, whether or not it was a ground of rejection by the examiner." Fiskars, Inc. v. Hunt Mfg. Co., 221 F.3d 1318, 1327 (Fed. Cir. 2000); see also Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565, 1582 (Fed. Cir. 1991) ("When a reference was before the examiner, whether through the examiner's search or the applicant's disclosure, it can not be deemed to have been withheld from the examiner.").
In light of these cases, several district courts have held that the alleged burying of material information in a long list of citations to the PTO by itself is insufficient to state a claim for inequitable conduct. See, e.g., Parkervision, Inc. v. Qualcomm Inc., 2013 U.S. Dist. LEXIS 8467, at *9-10 (M.D. Fla. Jan. 22, 2013); Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 749 F.Supp.2d 892, 903 (W.D. Wis. 2010); Symbol Techs., Inc. v. Aruba Networks, Inc., 609 F.Supp.2d 353, 358 (D. Del. 2009). The Court agrees with those decisions. Because Cameron alleges that the disclosure of the references was improperly simply because the references were allegedly buried in the hundreds of thousand of pages of patents and litigation papers that were submitted to the PTO, Cameron fails to state a claim for inequitable conduct. See Fiskar, 221 F.3d at 1327; Parkervision, 2013 U.S. Dist. LEXIS 8467, at *9-10; Semiconductor Energy Lab., 749 F.Supp.2d at 903; Symbol Techs., 609 F.Supp.2d at 358.
In addition, Cameron's "burying" inequitable conduct counterclaim and affirmative defense fails to satisfy Rule 9(b)'s pleading standards. Although Cameron alleges "what" three specific references were allegedly buried, Cameron fails to allege "who" buried them and "why/how" the references are material. See Exergen, 575 F.3d at 1329-30 (explaining what must be alleged to satisfy the "who, " "why, " and "how" requirements of Rule 9(b)). Accordingly, the Court dismisses Cameron's inequitable conduct counterclaim and strikes the related defense to the extent it is based on Seaboard's alleged burying of material information.
Cameron may proceed with its inequitable conduct counterclaim and affirmative defense to the extent it is based on the alleged failure to name all the proper inventors of the '237 Patent subject to further challenges under the law.
D. Equitable Estoppel
Cameron asserts as an affirmative defense that Seaboard's claims are barred, in whole or in part, by the doctrine of equitable estoppel. (Doc. No. 28 at 11 ¶ 37.) Seaboard argues that this defense should be stricken because Cameron fails to plead this defense with sufficient particularity to satisfy Rule 9(b) and because Cameron cannot and does not allege knowledge of the '237 Patent. (Doc. No. 38 at 7-9.)
To prove the affirmative defense of equitable estoppel, a defendant must show: "(1) the patentee, through misleading conduct, led the alleged infringer to reasonably believe that the patentee did not intend to enforce its patent against the infringer; (2) the alleged infringer relied on that conduct; and (3) due to its reliance, the alleged infringer would be materially prejudiced if the patentee were permitted to proceed with its charge of infringement." Aspex Eyewear, Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1310 (Fed. Cir. 2010); accord A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc). "Misleading conduct' may include specific statements, action, inaction, or silence when there was an obligation to speak." Aspex Eyewear, 605 F.3d at 1310.
Because equitable estoppel involves misleading conduct as one of its elements, a defendant must plead equitable estoppel with particularity under Rule 9(b). Bayer CropScience AG v. Dow AgroSciences LLC, 2011 U.S. Dist. LEXIS 149636, at *7-8 (D. Del. Dec. 30, 2011); see also Barnes & Noble, Inc. v. LSI Corp., 849 F.Supp.2d 925, 940 (noting that Rule 9(b)'s heightened pleading standard likely applies to an equitable estoppel claim in a patent case). Therefore, the equitable estoppel claim must be pleaded in detail and provide the who, what, when, where, and how of the alleged misleading conduct. See Exergen, 575 F.3d at 1327.
In support of this claim, Cameron alleges that "Plaintiff Seaboard should be estopped from asserting that Cameron's single load path' products infringe the '237 patent, due to its predecessor in interest Duhn Oil's '925 patent litigation position that defined the invention as limited to dual load path.'" (Doc. No. 28 at 11 ¶ 37.) These allegations are sufficient to satisfy Rule 9(b). Cameron alleges that Duhn Oil-the "who"-represented that the '925 patent was limited to "dual load path" products-the "what"-during the prior litigation-the "when" and "where"-and that this representation is misleading because Seaboard is now asserting that "single load path" products infringe the '237 Patent-the "how." (Id.) See also Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1333-34 (Fed. Cir. 2003) (explaining that a disclaimer made with respect to a parent application can in certain circumstances apply to a continuation-in-part application). In addition, Cameron alleges that it relied on Duhn Oil's representations and was prejudiced by those representations because it continued to market its "single load path" products in light of Duhn Oil's litigation positions. (Doc. No. 28 at 11 ¶ 37.) These allegations are sufficient to plead the defense of equitable estoppel. Accordingly, the Court denies Seaboard's motion to strike Cameron's equitable estoppel affirmative defense.
In denying Seaboard's motion to strike this affirmative defense the Court does not decide whether the alleged statements constitute a disclaimer or whether the alleged statements would apply to the '237 Patent. That issue will be more appropriately addressed during claim construction.
Seaboard argues that Cameron's reliance allegations are insufficient because Cameron does not and cannot allege that it had knowledge of the '237 Patent because the '237 Patent issued after judgment was entered in the '925 patent litigation. (Doc. No. 38 at 8.) See Auckerman, 960 F.2d at 1042 (explaining that a claim for equitable estoppel requires that the alleged infringer must be aware of the patentee and its patent). The '237 Patent is a continuation-in-part of the '925 Patent. (Doc. No. 1 Ex. 1 at 1:23-1:25.) Although a continuation-in-part adds new subject matter not disclosed in the prior application, it partly continues subject matter that was already disclosed in the prior application. See Pfizer, Inc. v. Teva Pharms. USA, Inc., 518 F.3d 1353, 1359 (Fed. Cir. 2008). Therefore, Cameron's allegations are sufficient at this stage of the litigation.
E. Declaration Judgment Counterclaim
i. Article III Jurisdiction
Cameron brings a declaratory judgment counterclaim to declare U.S. Patent Nos. 7, 322, 407 ("the '407 Patent"), 7, 416, 020 ("the '020 Patent"), 7, 493, 944 ("the '944 Patent"), 7, 520, 322 ("the '322 Patent"), 7, 726, 393 ("the '393 Patent"), and 8, 272, 433 ("the '433 Patent") unenforceable due to inequitable conduct (collectively "the DJ Patents"). (Doc. No. 28 at 22-27 ¶¶ 27-42.) Seaboard argues that this counterclaim should be dismissed for failure to satisfy Article III's case or controversy requirement. (Doc. No. 38 at 13-15.) In response, Cameron argues that a justiciable controversy exists with respect to these patents based on Seaboard's continued enforcement of the related '925 and '237 patents. (Doc. No. 41 at 13-18.)
The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides that "In a case of actual controversy within its jurisdiction... any court of the United States... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The phrase "case of actual controversy" in the Act refers to the type of "Cases" and "Controversies" that are justiciable under Article III. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Federal Circuit law governs the determination of subject matter jurisdiction in a patent declaratory judgment action. MedImmune, Inc. v. Centocor, Inc., 409 F.3d 1376, 1378 (Fed. Cir. 2005), overruled on other grounds, MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118.
The purpose of the Declaratory Judgment Act in patent cases is to provide the allegedly infringing party relief from uncertainty and delay regarding its legal rights. Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed. Cir. 2008). An actual controversy sufficient to establish subject matter jurisdiction in a declaratory judgment action exists where "the facts alleged show a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." MedImmune, 549 U.S. at 127. "Although there is no bright line rule to determine whether a declaratory judgment action satisfies Article III's case-or-controversy requirements, the dispute must be definite and concrete, touching the legal relations of parties having adverse legal interests, ' real and substantial, ' and admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'" 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1376 (Fed. Cir. 2012) (quoting MedImmune, 549 U.S. at 127). The Federal Circuit has further stated that Article III jurisdiction exists where the patentee makes an affirmative act and "takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do." SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007).
The declaratory judgment plaintiff bears the burden of proving that there is an actual controversy. Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1481 (Fed. Cir. 1998). Moreover, because "once challenged, allegations alone are insufficient to meet the complainant's burden to establish jurisdiction, " a district court must "satisfy itself that there is a factual basis for it to exercise jurisdiction." 3M, 673 F.3d at 1378 (Fed. Cir. 2012) (quotations and alterations omitted). In doing so, the district court "may review evidence extrinsic to the pleadings, including affidavits and deposition testimony." Id. Finally, even if an actual controversy exists, the exercise of jurisdiction rests within the sound discretion of the district court. Id.
Seaboard argues that Article III jurisdiction does not exist for Cameron's counterclaim because Seaboard has never asserted the DJ Patents against Cameron or demanded royalties for the patents from Cameron. (Doc. No. 38 at 14.) The Federal Circuit has held "that related litigation involving the same technology and the same parties is relevant in determining whether a justiciable declaratory judgment controversy exists on other related patents." Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007); see, e.g., Arkema Inc. v. Honeywell Int'l, 706 F.3d 1351, 1357-58 (Fed. Cir. 2013) (finding a sufficient controversy existed where the patentee had accused the declaratory judgment plaintiff of infringing the technology in a prior litigation involving a closely related patent.).
In the present action, Seaboard accuses Cameron of infringing the '237 Patent. (Doc. No. 1.) In Case No. 1:05-cv-1411, Duhn Oil, the prior owner of the '925 Patent, sued Cameron for infringement of the '925 Patent. Duhn Oil Tool, Inc. v. Cooper Cameron Corp., Case No. 1:05-cv-1411 (E.D. Cal. filed Nov. 9, 2005 [Doc. No. 1]). Cameron alleges that the DJ Patents contain claims that are nearly identical to the claims in the '925 Patent and the '237 Patent. (Doc. No. 28 at 23 ¶ 33.) All the patents-the '925 Patent, the '237 Patent, and the DJ Patents-are part of the same patent family as they are all derived from applications related to parent application No. 10/369, 070. (See Doc. No. 1 Ex. 1 at 1:8-1:28 (listing related applications); Doc. No. 28-1 Ex. D at 1:7-1:20, Ex. F at 1:8-1:27.). All the patents are entitled "Wellhead Isolation Tool[...]"; state that "[t]he present invention relates to wellhead equipment, and to a wellhead tool for isolating wellhead equipment from the extreme pressures and abrasive materials used in oil and gas well stimulation and to a method of using the same;" and contain similar specifications. (Doc. No.1 Ex. 1; Doc. No. 28-1 Exs. A-F.) U.S. Patent No. 6, 920, 925 (filed Jul. 26, 2005). Therefore, Seaboard and Duhn Oil's assertions of the closely related '925 and '237 patents against Cameron through patent infringement lawsuits are "sufficient affirmative act[s] for declaratory judgment purposes" with respect to the DJ Patents. See Arkema, 706 F.3d at 1357-58. Accordingly, the Court declines to dismiss Cameron's declaratory judgment counterclaim for lack of subject matter jurisdiction.
ii. Rule 9(b)
Seaboard argues that even if the Court has jurisdiction over Cameron's declaratory judgment counterclaim, the counterclaim fails to adequately state a claim for inequitable conduct. (Doc. No. 38 at 15-19.)
An inequitable conduct counterclaim must be pled with "particularity" under Federal Rule of Civil Procedure 9(b). Exergen, 575 F.3d at 1326 (Fed. Cir. 2009). Therefore, the counterclaim "must identify the specific who, what, when, where, and how of the material misrepresentation of omission committed before the PTO." Id. at 1328. In addition, the counterclaim 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 PTO. Id. at 1328-29.
Cameron first alleges that the '407, '020, '944, '322, '393, and '433 patents are unenforceable due to inequitable conduct based on the Applicants' failure to disclose material information including material prior art and the existence of the '925 patent litigation. (Doc. No. 28 at 24 ¶ 34.) These vague allegations fall well short of satisfying Rule 9(b)'s heightened pleading standard. See Exergen, 575 F.3d at 1328-30. The allegations do not identify "what" specific prior art or litigation information was not disclosed to the PTO; "where" the material information can be found within the references; "who" knew it was material and failed to disclose it; and "how" the non-disclosed information was material. Accordingly, the Court dismisses Cameron's declaratory judgment counterclaim for inequitable conduct to the extent it is based on the alleged non-disclosure of material information.
Cameron next alleges that the '020, '944, '322, and '393 patents are unenforceable due to inequitable conduct based on Duhn Oil's alleged misrepresentation that it qualified as a "small entity" to the PTO for fee purposes in connection with the applications that issued as the '020, '944, '322, and '393 patents. (Doc. No. 28 at 24 ¶ 35.) The misrepresentation of one's status to justify small entity fees can constitute inequitable conduct. See Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1231 (Fed. Cir. 2007). But, Cameron's allegations fail to satisfy Rule 9(b)'s heightened pleading standards. See Exergen, 575 F.3d at 1328-30. Cameron does not allege "how" Duhn Oil's representation to the PTO that it qualified as a "small entity" was false. In addition, Cameron does not allege the specific individual "who" knew that Duhn Oil did not qualify as a small entity and made the misrepresentation to the PTO. Cameron does not allege sufficient facts from which the Court could reasonably infer an intent to deceive the PTO. See Outside the Box Innovations, LLC v. Travel Caddy, Inc., 695 F.3d 1285, 1294-95 (Fed. Cir. 2012) (explaining that underpayment of fees does not constitute inequitable conduct without bad faith and the specific intent to deceive the PTO); see, e.g., Abaxis, Inc. v. Cepheid, 2011 U.S. Dist. LEXIS 30228, at *23-24 (N.D. Cal. Mar. 22, 2011) (dismissing inequitable conduct counterclaim and affirmative defense based on the alleged misrepresentation of small entity status for failure to state a claim). Accordingly, the Court dismisses Cameron's declaratory judgment counterclaim for inequitable conduct to the extent it is based on the alleged misrepresentation of small entity status.
Finally, Cameron alleges that the '407 and '020 patents are unenforceable due to inequitable conduct based on Duhn Oil's failure to disclose the '925 patent litigation during the prosecution of the '407 Patent and its failure to disclose the '925 patent litigation until five days prior to the issuance of the '020 patent. (Doc. No. 28 at 25-27 ¶¶ 36-42.) But, Cameron's allegations fail to satisfy Rule 9(b)'s heightened pleading standards. See Exergen, 575 F.3d at 1328-30. Cameron's allegations do not identify "who" failed to disclose the '925 litigation to the PTO, and the allegations also do not explain "why" and "how" the existence of the '925 patent litigation is but-for material to the patentability of the '407 and '020 patents. See Therasense, 649 F.3d at 1291-92 (holding that absent egregious misconduct a reference must be but-for material to establish inequitable conduct). Accordingly, the Court dismisses Cameron's declaratory judgment counterclaim for inequitable conduct to the extent it is based on the alleged non-disclosure or delayed disclosure of the '925 patent litigation during the prosecution of the '407 and '020 patents.
Conclusion
For the reasons above, the Court grants in part and denies in part Seaboard's motion to dismiss counterclaims and to strike affirmative defenses. The Court grants Cameron 14 days from the date of this order to amend or cure the deficiencies-if it can-in a second amended answer and counterclaims.
IT IS SO ORDERED.