ALJs Split on Inequitable Conduct Pleading, ITC Blog
ALJ Lord issued an Order Granting a Motion to Strike Affirmative Defense of unclean hands and inequitable conduct. Certain Krill Oil Products and Krill Meat for Production of Krill Oil Products, Order No. 8 (Feb. 7, 2017). Applying a heightened pleading standard for an inequitable conduct defense, ALJ Lord held that this affirmative defense did not satisfy the requirements of particularity articulated by the Federal Circuit in Exergen.
ALJ Lord discussed a split of opinion between ALJs on whether a heightened pleading standard for inequitable conduct is applicable to ITC proceedings. The Federal Circuit requires that inequitable conduct be pled with particularity, in accordance with the requirements of Federal Rule of Civil Procedure 9(b). Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009). Some ALJs (Judges Pender, Rogers, and Charneski) have followed this Federal Circuit precedent.[1] Other ALJs (Judges Gildea, Essex, and Luckern) have declined to impose the heightened pleading standards for inequitable conduct.[2] Generally, the ALJs that have not required heightened pleading have cited to Commission Rule 210.13(b)(3) which requires that the defense of patent invalidity or enforceability be plead to include “the basis for such assertion,” but also allowing the ALJ to “waive the substantive” pleading requirements. 19 C.F.R. § 210.13(b)(3).
ALJ Lord cited to Lannom, where the Federal Circuit considered a defense of patent invalidity and found that “congressional intent [was] that the Commission entertain the same legal defenses to charges of infringement as do the courts.” Lannom Mfg. Co., Inc. v. US. Int’l Trade Comm’n, 799 F.2d 1572, 1577-78 (Fed. Cir. 1986). She concluded that “[t]he principles articulated by the Federal Circuit in Lannom with respect to invalidity defenses apply equally to unenforceability defenses.” Certain Krill Oil Products and Krill Meat for Production of Krill Oil Products, Order No. 8 at 4 (Feb. 7, 2017). Therefore, ALJ Lord analyzed Respondents’ affirmative defense of unclean hands and inequitable conduct under the same heightened pleading standard applicable in federal district courts.
Analyzing facts of the case, ALJ Lord noted that the Respondents alleged that during prosecution of the asserted patents, “the applicants relied upon a table (Table 22) providing certain information about prior art,” while they “were in possession of a report that was not disclosed [to] the patent office, and that this report contains information that contradicts parts of Table 22, making the table incomplete and incorrect.” Id. at 1-2. Applying the heightened standard, ALJ Lord found that Respondents “did not identify specific individuals in their pleading,” “failed to allege specific intent,” and “failed to plead [sufficient] relationship between the alleged inequitable conduct and the other patents.” Id. at 6. As a result, Judge Lord struck the Respondents’ affirmative defense of unclean hands and inequitable conduct. Id. at 7. She permitted Respondents, however, to “fil[e] a motion for leave to amend their response.” Id.
Takeaway
The ITC continues to take inconsistent views regarding the application of pleading standards for inequitable conduct to Commission proceedings. While ALJ Lord has joined those ALJs who apply the same heightened pleading standard for a defense of inequitable conduct as is used in federal district courts, some ALJs still do not require it. Given the Commission’s Rules that provide ALJs the discretion to waive substantive pleading requirements, perhaps this split is to be expected. Respondents should take this split between the ALJs into account when drafting their affirmative defenses.
ALJ Lord discussed a split of opinion between ALJs on whether a heightened pleading standard for inequitable conduct is applicable to ITC proceedings. The Federal Circuit requires that inequitable conduct be pled with particularity, in accordance with the requirements of Federal Rule of Civil Procedure 9(b). Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009). Some ALJs (Judges Pender, Rogers, and Charneski) have followed this Federal Circuit precedent.[1] Other ALJs (Judges Gildea, Essex, and Luckern) have declined to impose the heightened pleading standards for inequitable conduct.[2] Generally, the ALJs that have not required heightened pleading have cited to Commission Rule 210.13(b)(3) which requires that the defense of patent invalidity or enforceability be plead to include “the basis for such assertion,” but also allowing the ALJ to “waive the substantive” pleading requirements. 19 C.F.R. § 210.13(b)(3).
ALJ Lord cited to Lannom, where the Federal Circuit considered a defense of patent invalidity and found that “congressional intent [was] that the Commission entertain the same legal defenses to charges of infringement as do the courts.” Lannom Mfg. Co., Inc. v. US. Int’l Trade Comm’n, 799 F.2d 1572, 1577-78 (Fed. Cir. 1986). She concluded that “[t]he principles articulated by the Federal Circuit in Lannom with respect to invalidity defenses apply equally to unenforceability defenses.” Certain Krill Oil Products and Krill Meat for Production of Krill Oil Products, Order No. 8 at 4 (Feb. 7, 2017). Therefore, ALJ Lord analyzed Respondents’ affirmative defense of unclean hands and inequitable conduct under the same heightened pleading standard applicable in federal district courts.
Analyzing facts of the case, ALJ Lord noted that the Respondents alleged that during prosecution of the asserted patents, “the applicants relied upon a table (Table 22) providing certain information about prior art,” while they “were in possession of a report that was not disclosed [to] the patent office, and that this report contains information that contradicts parts of Table 22, making the table incomplete and incorrect.” Id. at 1-2. Applying the heightened standard, ALJ Lord found that Respondents “did not identify specific individuals in their pleading,” “failed to allege specific intent,” and “failed to plead [sufficient] relationship between the alleged inequitable conduct and the other patents.” Id. at 6. As a result, Judge Lord struck the Respondents’ affirmative defense of unclean hands and inequitable conduct. Id. at 7. She permitted Respondents, however, to “fil[e] a motion for leave to amend their response.” Id.
Takeaway
The ITC continues to take inconsistent views regarding the application of pleading standards for inequitable conduct to Commission proceedings. While ALJ Lord has joined those ALJs who apply the same heightened pleading standard for a defense of inequitable conduct as is used in federal district courts, some ALJs still do not require it. Given the Commission’s Rules that provide ALJs the discretion to waive substantive pleading requirements, perhaps this split is to be expected. Respondents should take this split between the ALJs into account when drafting their affirmative defenses.
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