Opinion
No. 4:20-cv-00389-RGE-HCA
2024-01-23
DEERE & COMPANY and John Deere Shared Services, Inc., Plaintiffs, v. KINZE MANUFACTURING, INC. and Ag Leader Technology, Inc., Defendants.
Wesley T. Graham, Joseph Graham Gamble, William W. Graham, Duncan Green PC, Des Moines, IA, Brandon Lee Bigelow, Pro Hac Vice, Caleb Jordan Schillinger, Pro Hac Vice, Lisa Kirby Haines, Pro Hac Vice, Seyfarth Shaw LLP, Boston, MA, Brandon H. Brown, Pro Hac Vice, Julien Crockett, Pro Hac Vice, Kyle A. Calhoun, Pro Hac Vice, Kirkland & Ellis LLP, San Francisco, CA, Cole Thomas Tipton, Pro Hac Vice, Gregg F. LoCascio, Pro Hac Vice, Nathan S. Mammen, Pro Hac Vice, Kirkland & Ellis LLP, Washington, DC, Yimeng Dou, Pro Hac Vice, Yungmoon Chang, Pro Hac Vice, Kirkland & Ellis LLP, Los Angeles, CA, for Plaintiffs. R. Scott Johnson, Cara S. Donels, Thomas Merrill Patton, Fredrikson & Byron, P.A., Des Moines, IA, Alyssa Hughes, Pro Hac Vice, Bradley R. Love, Pro Hac Vice, Jeff M. Barron, Pro Hac Vice, Barnes & Thornburg LLP, Indianapolis, IN, Heather B. Repicky, Pro Hac Vice, Barnes & Thornburg LLP, Boston, MA, Kyle A. Forgue, Pro Hac Vice, Mark L. Durbin, Pro Hac Vice, Mark A. Hagedorn, Pro Hac Vice, Mark P. Vrla, Pro Hac Vice, Megan Kay Krivoshey, Pro Hac Vice, Paul Olszowka, Pro Hac Vice, Barnes & Thornburg LLP, Chicago, IL, Trisha Volpe, Pro Hac Vice, Barnes & Thornburg LLP, Minneapolis, MN, for Defendants.
Wesley T. Graham, Joseph Graham Gamble, William W. Graham, Duncan Green PC, Des Moines, IA, Brandon Lee Bigelow, Pro Hac Vice, Caleb Jordan Schillinger, Pro Hac Vice, Lisa Kirby Haines, Pro Hac Vice, Seyfarth Shaw LLP, Boston, MA, Brandon H. Brown, Pro Hac Vice, Julien Crockett, Pro Hac Vice, Kyle A. Calhoun, Pro Hac Vice, Kirkland & Ellis LLP, San Francisco, CA, Cole Thomas Tipton, Pro Hac Vice, Gregg F. LoCascio, Pro Hac Vice, Nathan S. Mammen, Pro Hac Vice, Kirkland & Ellis LLP, Washington, DC, Yimeng Dou, Pro Hac Vice, Yungmoon Chang, Pro Hac Vice, Kirkland & Ellis LLP, Los Angeles, CA, for Plaintiffs.
R. Scott Johnson, Cara S. Donels, Thomas Merrill Patton, Fredrikson & Byron, P.A., Des Moines, IA, Alyssa Hughes, Pro Hac Vice, Bradley R. Love, Pro Hac Vice, Jeff M. Barron, Pro Hac Vice, Barnes & Thornburg LLP, Indianapolis, IN, Heather B. Repicky, Pro Hac Vice, Barnes & Thornburg LLP, Boston, MA, Kyle A. Forgue, Pro Hac Vice, Mark L. Durbin, Pro Hac Vice, Mark A. Hagedorn, Pro Hac Vice, Mark P. Vrla, Pro Hac Vice, Megan Kay Krivoshey, Pro Hac Vice, Paul Olszowka, Pro Hac Vice, Barnes & Thornburg LLP, Chicago, IL, Trisha Volpe, Pro Hac Vice, Barnes & Thornburg LLP, Minneapolis, MN, for Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO HEAR ALL ASPECTS OF INEQUITABLE CONDUCT COUNTERCLAIM IN A SINGLE BENCH TRIAL
Rebecca Goodgame Ebinger, United States District Judge
I. INTRODUCTION
Plaintiffs Deere & Co. and John Deere Shared Services, Inc. assert patent infringement claims against Defendants Kinze Manufacturing, Inc. and Ag Leader Technology, Inc. arising from disputes concerning planting technology. Second Am. Compl. ECF No. 100. Now before the Court is Defendants' motion requesting the Court hear all undismissed aspects of
Defendants' inequitable conduct counterclaim at the upcoming bench trial on March 25, 2024, including the aspects relating to patents no longer asserted by Plaintiffs in this case. Defs.' Mot. Hear All Aspects of Inequitable Conduct Countercl., ECF No. 521. For the reasons set forth below, the Court grants the motion.
Defendants' motion discusses multiple inequitable conduct "claims," ECF No. 521, but the Court refers to these "claims" as aspects of Defendants' single inequitable conduct counterclaim because Defendants' countercomplaint styles the inequitable conduct counterclaim as a single count, ECF No. 290 at 124.
II. BACKGROUND
Plaintiffs patent infringement suit was filed in December 2020, at which time Plaintiffs' complaint asserted eight patents. Compl. ¶¶ 30-58, ECF No. 1. Plaintiffs twice amended their complaint. First Am. Compl., ECF No. 34; Second Am. Compl., ECF No. 100. In June 2021, the second amended complaint asserted eleven patents: U.S. Patent Numbers 8,813,663; 9,480,199; 9,686,906; 9,861,031; 9,699,955; 9,807,924; 10,004,173; 8,850,998; 10,729,063; 9,693,498; and RE48,572. ECF No. 100 ¶¶ 30-69. These asserted patents concern technologies designed to place seed more rapidly and more precisely during planting. ECF No. 100 ¶¶ 21-69.
In July 2021, Defendants filed an answer to the second amended complaint, accompanied by amended and supplemental counterclaims. Answer, Countercls., and Affirmative Defenses to Second Am. Compl., ECF No. 111. Defendants asserted twenty-one counterclaims. Id. ¶¶ 230-436. In April 2022, Defendants sought to add an inequitable conduct counterclaim as Count XXII, and this request was granted. Defs.' Mot. Amend Countercls. 2, ECF No. 190; Order Granting in Part and Denying in Part Defs.' Mots. Amend, ECF No. 288; see also Defs.' Countercls., Answer, and Affirmative Defenses to Pls.' Second Am. and Suppl. Compl., ECF No. 290.
The inequitable conduct counterclaim alleged Plaintiffs committed inequitable conduct through agents who withheld three prior art references from the United States Patent and Trademark Office during patent prosecution. See ECF No. 290 ¶¶ 438, 449-56. First, the counterclaim alleged in-house patent counsel for Deere, Charles Graham, withheld Russian Patent number 2137337 C1 (RU 337) during the prosecution of the patent applications resulting in the '663, '998, '199, '955, '906,-'924, '031, '572, '173 and '063 Patents, each of which were asserted in Plaintiffs' second amended complaint, and during the prosecution of the applications resulting in unasserted United States Patents 8,850,995 and 9,686,905. See ECF No. 290 ¶¶ 471-538. The '995 Patent is related to each of the patents asserted in the second amended complaint except the '998 and '572 Patents, and the '905 Patent is related to the '995,-'955, '173, '906, '063, '924, and '031 Patents. See Claim Construction Order 2, ECF No. 277; Order Re: Mots. 69-75, ECF No. 381 (correcting scrivener's error in priority claim within the '995 Patent Family). Second, the counterclaim further alleged Graham withheld Soviet Union Patent Number 281928 Al (SU 928) during the prosecution of the '199, '955, '906, '924,-'031, '572, '173, and '063 Patents. See id. ¶¶ 501-38. Last, the counterclaim alleged Graham and Deere inventor Daniel Thiemke withheld the 1981 publication Fundamentals of Machine Operation—Planting (Breece 1981), published by John Deere Service Training, during the prosecution of the '995, '663, '199, '031, '955, '173, and '063 Patents. Id. ¶¶ 549-620.
In June 2022, Plaintiffs moved to dismiss Defendants' inequitable conduct counterclaim,
Pls.' Mot. Dismiss Defs.' Countercl. ¶ 4, ECF No. 196, and in May 2023, this motion was granted in part and denied in part. Order Granting in Part and Denying in Part Pls.' Mot. Dismiss Countercl. 20-21, ECF No. 303. The motion was granted as to Graham's nondisclosure of RU 337 during the prosecution of the '663,-'199, '955, '173, '063, and '031 Patents. Id. at 28. The motion was also granted as to Graham's nondisclosure of SU 928 and Breece 1981 during all patent prosecutions, id. at 33, 34-35, and as to Thiemke's nondisclosure of Breece 1981 during the prosecution of the '995, '031, '955, '173, and '063 Patents, id. at 38. These aspects of Defendants' inequitable conduct counterclaim were thus dismissed. Id. at 38-39. Defendants' allegations concerning Graham's nondisclosure of RU 337 during the prosecution of the '995, '998, '924, '572, and '906 Patents and Thiemke's nondisclosure of Breece 1981 during the prosecution of the '663 and '199 Patents survived. Id.
The Order did not address Defendants' allegations concerning the second related but unasserted patent, the '905 Patent. See generally ECF No. 303; ECF No. 290 ¶¶ 503-04.
In April 2023, during the pendency of Plaintiffs' motion to dismiss Defendants' inequitable conduct counterclaim, the parties filed a joint notice stating the patents asserted in the case had been reduced to seven. Joint Status Report 2, ECF No. 294 (indicating the '906, '924, and '955 Patents were no longer asserted). They stipulated to the reduction in May 2023. Joint Stipulation, ECF No. 304. Later in May, the parties each filed motions for summary judgment on several issues. Defs.' Mot. Summ. J., ECF No. 312; Pls.' Mot. Partial Summ, J., ECF No. 314. Plaintiffs' motion for summary judgment included a request for judgment disposing of the remaining aspects of Defendants' inequitable conduct counterclaim. ECF No. 314 at 26-31. In August 2023, the Court bifurcated trial of the pending issues, reserving the October 2023 jury trial for legal issues and later scheduling a bench trial to be held in March 2024 on Defendants' inequitable conduct counterclaim. Order Bifurcating Trial, ECF No. 365; Order Granting in Part Mot. Continue Deadlines and Setting Hr'gs and Trial, ECF No. 132; Text Order Setting Bench Trial, ECF No. 490. Later in August, the Court ruled on the parties' motions for summary judgment, addressing all issues other than Plaintiffs' motion for summary judgment of Defendants' inequitable conduct counterclaim. ECF No. 381 at 7. This aspect of Plaintiffs' partial motion for summary judgment remains pending. The part of the order addressing Defendants' motion for summary judgment granted summary judgment on non-infringement as to the asserted claims of the '998 Patent. Id. at 78-81, 102.
Prior to October's jury trial, Plaintiffs further narrowed the asserted patents to three: the '663, '031, and '063 Patents. Pls.' Notice of Claim Reduction, ECF No. 407; Pls.' Notice of Claim Reduction, ECF No. 421; Final Pretrial Order ¶ 3, ECF No. 424. On October 30, 2023, the jury returned a verdict finding Defendants had infringed the '031 and '063 Patents but not the '663 Patent and finding none of the patents invalid. Jury Verdict 2-10, ECF No. 496.
Several aspects of Defendants' inequitable conduct counterclaim have been dismissed. The aspects not dismissed are the allegations concerning Graham's nondisclosure of RU 337 during the prosecution of the '995, '905, '998, '924, '572, and '906 Patents and the allegations concerning Thiemke's nondisclosure of Breece 1981 during the prosecution of the '663 and '199 Patents. ECF No. 303 at 38-39. Plaintiffs' infringement claims relying on some of these patents have also been removed
from their case by summary judgment, Plaintiffs' withdrawal, or jury verdict: the '998, '924, '572, '906, '663, and '199 Patents. ECF No. 304; ECF No. 381 at 78-81, 102; ECF No. 407; ECF No. 421; ECF No. 496 at 2-10.
III. DISCUSSION
Defendants' motion asks the Court to enter an order holding that all aspects of Defendants' inequitable conduct counterclaim not previously dismissed by the Court are part of the upcoming bench trial. ECF No. 521 at 2. Defendants argue the Court retains subject matter jurisdiction over all aspects of the inequitable conduct counterclaim not dismissed by the Court—including aspects relating to patents no longer asserted by Plaintiffs—in light of Defendants' request for attorney fees under 35 U.S.C. § 285. Id.; Defs.' Br. Supp. Mot. Hear All Aspects of Inequitable Conduct Countercl. 6-9, ECF No. 521-1. Further, Defendants argue it will be more efficient for the Court and the parties to "resolve all [aspects] of Defendants' inequitable conduct claim[ ] at one time," at the March bench trial rather than, presumably, resolving at that trial only those undismissed aspects of the counterclaim that relate to patents still asserted by Plaintiffs and later resolving remaining undismissed inequitable conduct allegations if and when Defendants' file a § 285 motion. Id. at 8. Defendants argue it would be more efficient to try all aspects now because the different aspects of the counterclaim "are overlapping" and although they "involve different arguments, ... they implicate the same witnesses and many of the same documents." Id. at 9. In their resistance, Plaintiffs do not dispute that the Court has retained jurisdiction to make findings of inequitable conduct as to the undismissed aspects of the inequitable conduct counterclaim concerning patents Plaintiffs no longer assert. Pls.' Br. Resist. Defs.' Mot. Hear All Aspects of Inequitable Conduct Countercl. 3, ECF No. 524. But Plaintiffs dispute that such findings are "required at this juncture" and they suggest that making such findings now would not be "an efficient use of the Court's time." Id. Plaintiffs emphasize that the authorities cited by Defendants indicate the issue is a matter of discretion: "a court may exercise such jurisdiction if it wishes." Id.
As the parties appear to agree, Federal Circuit precedent indicates that neither Plaintiffs' withdrawal of now unasserted patents, the Court's summary judgment of noninfringement of the '998 Patent, nor the jury's verdict of non-infringement of the '663 Patent preclude the Court from finding those patents unenforceable due to inequitable conduct. This is because Defendants' countercomplaint asks the Court to award Defendants attorney fees under 35 U.S.C. § 285. ECF No. 290 ¶ 630. Pursuant to 35 U.S.C. § 285, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." Further, "the types of conduct which can form a basis for finding a case exceptional [include]... inequitable conduct before the P.T.O." Taltech Ltd. v. Esquel Enters. Ltd., 604 F.3d 1324, 1328 (Fed. Cir. 2010) (modifications in original) (quoting Hoffman-La Roche, Inc. v. Invamed, Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000)). Accordingly, as set forth in Monsanto Co. v. Bayer Bioscience N.V., a request for attorney fees under § 285 provides the district court "independent jurisdiction" to determine the disposition of that request, which "encompasse[s] the jurisdiction to make findings of inequitable conduct." 514 F.3d 1229, 1242 (Fed. Cir. 2008). Moreover, because the Federal Circuit has "long held that the unenforceability of a patent follows automatically once a patent
is found to have been obtained via inequitable conduct" "jurisdiction to decide whether a patent was obtained through inequitable conduct necessarily includes the jurisdiction to declare a patent unenforceable as a result of that inequitable conduct." Id. at 1243.
Several district courts have parsed Monsanto, and some have argued that the case does not stand for the proposition that § 285 provides an independent basis for retaining subject matter jurisdiction over a declaratory judgment of enforceability after a patentee has filed a covenant not to sue for infringement. See Gordon-Darby Sys., Inc. v. Applus Techs., Inc., No. 10 C 1863, 2010 WL 5419068, at *2 (N.D. Ill. Dec. 23, 2010) ("I therefore see no basis for retaining jurisdiction over a declaratory judgment claim for unenforceability after a covenant not to sue has been filed and agreed upon by the parties."); Panasonic Corp. v. Getac Tech. Corp., No. SA CV 19-01118-DOC, 2022 WL 1599634, at *3 (C.D. Cal. 2022) ("[T]he attorneys' fees claim does not provide an independent jurisdictional hook for Getac's fifth and eighth declaratory judgment counterclaims [asserting, respectively, invalidity and unenforceability due to inequitable conduct]."). Even these cases, however, acknowledge § 285 authorizes the Court to find inequitable conduct and unenforceability; they simply suggest these findings are properly made on a motion for attorney fees under that statute. Gordon-Darby Sys., 2010 WL 5419068, at *3-4 ("Defendant is given leave to move for fees and costs under 35 U.S.C. § 285, and we may progress to a theory of inequitable conduct (and therefore ultimately unenforceability) as required in that context, if that remains the Defendant's intention."); Panasonic Corp., 2022 WL 1599634, at *3 ("Getac may still bring evidence of inequitable conduct relating to the D'994 patent in a future motion for attorneys' fees, and if it obtains a finding of inequitable conduct at that point, the D'994 patent could be held unenforceable.")
Other district courts, however, have read Monsanto to affirm that § 285 creates subject matter jurisdiction to hear claims for declaratory judgment of unenforceability for inequitable conduct. Jovanovich v. Redden Marine Supply, Inc., No. C10-924-RSM, 2011 WL 4073197, at *4 (W.D. Wash. Sept. 13, 2011) ("Since any request for attorney's fees under § 285 that is predicated on allegations of inequitable conduct implicates the enforceability of plaintiff's patent, the Court retains jurisdiction over defendant's counterclaim for a declaratory judgment of unenforceability...."); Cheng v. AIM Sports, Inc., No. CV 10-3814 PSG, 2012 WL 12953830, at *1 (C.D. Cal. May 14, 2012) (explaining Monsanto held "the district court had subject matter jurisdiction to consider inequitable conduct related to the dismissed patents and award costs and attorney fees for such conduct"); U.S. Rubber Recycling, Inc. v. Encore Int'l, Inc., No. CV 09-09516 SJO, 2011 WL 311014, at *7 (C.D. Cal. Jan. 7, 2011) (explaining that, under Monsanto, "§ 285 grants district courts independent jurisdiction to review inequitable conduct"); see also Z Trim Holdings, Inc. v. Fiberstar, Inc., No. 07-cv-161-bbc, 2008 WL 2717656, at *2 (W.D. Wis. April 10, 2008) (finding Monsanto held "that a district court retains jurisdiction over counterclaims of unenforceability in light of a related request for attorney fees under § 285").
The latter set of cases provides the more persuasive reading of Monsanto. In that case, the plaintiff, Monsanto, brought an action seeking declaratory judgment that the defendant's four patents were invalid and unenforceable and that certain Monsanto products did not infringe the defendant's patents. 514 F.3d at 1231. The defendant,
Bayer, counterclaimed, alleging infringement of each patent. Id. at 1232-33. Bayer later dismissed with prejudice its infringement counterclaims as to three patents and filed a covenant to not sue for infringement of these patents. Id. at 1242. The Federal Circuit recognized that the dismissal and covenant "divest[ed] the court of jurisdiction over a declaratory judgment action regarding these patents" but also held that "the court had an independent grant of jurisdiction under § 285 to consider inequitable conduct relating to the withdrawn patents." Id. at 1242-43. Jovanovich aptly notes Monsanto's statement that the covenant to not sue for infringement divests jurisdiction over "a declaratory judgment action regarding these patents" could be read to include "any counterclaims seeking declaratory relief" including inequitable conduct counterclaims, making the language in Monsanto less than clear "as to the precise point of whether a district court retains jurisdiction over a counterclaim seeking a declaratory judgment of unenforceability when a defendant seeks attorneys fees under § 285 on the basis of inequitable conduct, or whether the court may determine whether inequitable conduct has occurred merely in the context of a § 285 motion." 2011 WL 4073197, at *3-4 (citing Monsanto, 514 F.3d at 1242). Nonetheless, Jovanovich notes that Monsanto "explicitly provides that a district court has jurisdiction to 'declare a patent unenforceable'" under § 285 and reasons that this statement implies the court "retains jurisdiction over defendant's counterclaim for a declaratory judgment of unenforceability" under § 285 after a plaintiff has dismissed all infringement claims and filed a covenant not to sue. Id. at *4. This Court agrees with this reading.
The Court thus follows Jovanovich and others—including the parties—in reading Monsanto to not require the Court to wait until Defendants have filed a motion for attorney fees under § 285 to hear their evidence and argument as to inequitable conduct during the prosecution of patents no longer asserted in this case. Cf. Monsanto, 514 F.3d at 1242; see also, e.g., Jovanovich, 2011 WL 4073197, at *3-4; U.S. Rubber Recycling, Inc., 2011 WL 311014, at *6. The Court has advised the parties that due to Plaintiffs' withdrawal of now unasserted patent claims, the Court lacks subject matter jurisdiction over those infringement claims. October 13, 2023 Hr'g Tr. 13:1-13, ECF No. 426. The Court has not, however, lost such jurisdiction over the aspects of Defendants' inequitable conduct counterclaim that relate to these now unasserted patents, nor jurisdiction as to the aspects relating to the '998 and '663 Patents, patents for which Defendants have received, respectively, a judgment and jury verdict of noninfringement. Cf. Monsanto, 514 F.3d at 1242. The Court may rule on Defendants' inequitable conduct allegations as to these now unasserted patents in connection with a motion for attorney fees under § 285. Id. Further, "trial judges are entitled to arrange the priority of issues in a manner that they consider efficient," Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1230 (Fed. Cir. 2007), and given that the inequitable conduct allegations concerning the now unasserted patents are related to and substantially overlapping with allegations concerning asserted patents, see ECF No. 290 ¶¶ 437-629, Defendants rightly suggest that serial bench trials would be a far less efficient use of judicial resources than a single bench trial, especially if the same witnesses and many of the same documents are implicated, see ECF No. 521-1 at 9.
For the foregoing reasons, Defendants' motion is granted. The bench trial scheduled for March 25, 2024, will include hearing
of all undismissed aspects of Defendants' inequitable conduct counterclaim that either relate to patents still asserted in this case or relate to Defendants' request for relief under 35 U.S.C. § 285. Cf. Monsanto, 514 F.3d at 1242; Nilssen, 504 F.3d at 1230.
IV. CONCLUSION
Defendants' motion is granted.
IT IS ORDERED that Defendants Kinze Manufacturing, Inc. and Ag Leader Technology, Inc.'s Motion to Hear All Aspects of Inequitable Conduct Counterclaim in a Single Bench Trial, ECF No. 521, is GRANTED.
IT IS SO ORDERED.