Judge: John Love
Holding: Motion to Dismiss/Strike Inequitable Conduct Counterclaims RECOMMENDED DENIED
Quack, quack - it's goose/gander rule time. (Actually a student at Fordham Law beat me to the analogy in the context of Twombly motions, so props to Anthony Gambol).
In this case, the plaintiff filed a motion to dismiss and strike the defendants' inequitable conduct affirmative defenses and counterclaims. Judge Love denied the motion, holding that the Defendants’ inequitable conduct pleadings meet the standards set forth by the Federal Circuit in Exergen v. Wal-Mart Stores, Inc..
"The Federal Circuit recently reiterated," Judge Love wrote, citing and quoting Exergen, "that, even after Therasense, all that is required at the pleading stage is a plausible inference of deceptive intent". And while Therasense did not heighten the pleading standards set forth in Exergen, the Court noted that the substantive changes to the merits determination required a corresponding change in pleading the elements of inequitable conduct. Therasense clarified that materiality refers to “but-for materiality” and that the specific intent to deceive cannot be inferred solely from the materiality of the withheld reference. Thus, a pleading that does not show but-for materiality or that bases intent solely on the materiality of the withheld reference would be not survive the pleading stage. However, it does not follow, the Court held (although without the underlinings of the word "pleadings" that I have provided) that the pleadings must show by clear and convincing evidence that the patentee had the specific intent to deceive the PTO, i.e., that the specific intent to deceive is the single most reasonable inference able to be drawn.
Moreover, Judge Love observed that while Exergen was decided with the understanding that in order to succeed on the merits, “the inference of deceptive intent must be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard’”, it did not require that the pleadings show that the specific intent to deceive was the single most reasonable inference able to be drawn. "Additionally," Judge Love noted, "Eon’s argument collapses the distinction between pleading determinations and determinations on the merits." See Exergen, 575 F.3d at 1329 n. 5(explaining that under Rule 9(b), an inference of deceptive intent drawn from pleadings must only be “reasonable” whereas, a merits determination under the clear and convincing evidence standard requires the deceptive intent inference to be the single most reasonable inference).
Thus, while Judge Love agreed with Eon that Therasense requires that, on the merits, Defendants show that deceptive intent was the single most reasonable inference, he declined to hold that the Defendants must make such an evidentiary showing at the pleading stage. So what is required? "In sum, to survive a motion to dismiss, the pleadings must “identify the specific, who, what, when, where, and how” of the alleged inequitable conduct occurred and plead “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.”" (Citing Exergen, 575 F.3d at 1328.)
Accordingly, Judge Love concluded that the Defendants had sufficiently pleaded inequitable conduct, and recommended that the Plaintiff's motions to dismiss/strike be denied.