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Unverferth Mfg. Co., Inc. v. Par-Kan Co.

United States District Court, N.D. Indiana

May 27, 2014

PAR-KAN CO., Defendant.


RESA L. SPRINGMANN, District Judge.

On February 12, 2013, the Plaintiff, Unverferth Manufacturing Company, Inc. ("Unverferth"), filed this action against the Defendant, Par-Kan Co. ("Par-Kan"), alleging infringement of United States Patent No. 8, 211, 047 (the "047 patent"). Par-Kan filed an Amended Counterclaim [ECF No. 31] and an Amended Answer and Defenses to Complaint [ECF No. 32] on May 28, 2013. This matter is before the Court on Unferverth's Motion to Dismiss Par-Kan's Amended Inequitable Conduct Counterclaim and to Strike Par-Kan's Amended Inequitable Conduct Affirmative Defense [ECF No. 35] filed on June 14, 2013. Unferverth filed its Memorandum in Support [ECF No. 36] on the same day, Par-Kan filed its Response [ECF No. 39] on July 3, 2013, and Unferverth filed a Reply [ECF No. 41] on July 15, 2013. For the following reasons, the Court grants Unferverth's Motion to Dismiss and strikes Par-Kan's affirmative defense of inequitable conduct.


On February 15, 2008, Unverferth filed a patent application for a seed carrier with a pivoting conveyor, which eventually became the 047 patent. To overcome rejections by the United States Patent and Trademark Office ("the PTO"), Unverferth, through its Vice President of Sales and Marketing, submitted two declarations ("the Fanger Declaration" and "the Supplemental Fanger Declaration") under 37 C.F.R. §1.132. The two declarations attributed commercial success of Unverferth's seed runners solely to the patented features. The declarations, however, did not mention that the seeding industry allegedly underwent a transformative change in the meantime, which expanded the demand for seed tender products. Par-Kan alleges that "[w]hen Unverferth submitted the Supplemental Fanger Declaration, the declarant (Fanger) and the [ sic ] Unverferth knew the seed industry had earlier undergone a transformative change in the manner by which seed was sold and delivered to farmers for planting, " and that this change, rather than the claimed features, created and/or greatly expanded the market for seed tender products like Unverferth's. (Am. Countercl. ¶ 24, ECF No. 31; Am. Answer. ¶ 22, ECF No. 32.) More specifically, the declarations included statements such as "I am unaware of any other factors contributing to the success of the product, " and "[i]n my opinion, Unverferth's increased sales are not due to an increase in the market size." (Def.'s Resp. 6, ECF No. 39.) Following the submission of the Supplemental Fanger Declaration, the PTO issued a final Office Action on September 30, 2011, stating that "[t]he supplemental declaration filed under 37 CFR 1.132 filed 07/05/2011 is insufficient to overcome the rejection of claims 1-5 and 9-11 based upon a rejection under 35 U.S.C §103 as set forth in the last Office Action." (Pl. Mem. Supp. Mot. Dismiss. Ex. 1, at UM-Pkan0000206-212.) The PTO also noted that Mr. Fanger's declarations were based in opinion, not fact. ( Id. ) The 047 patent only issued later after claims 1-5 and 9-11 were cancelled and new claims were submitted. ( See id. at UM-Pkan0000220-221.) The patent issued on the new claims unrelated to the affidavits at issue here and without any relation to commercial success arguments. ( Id. )

Par-Kan asserted inequitable conduct as a counterclaim and as an affirmative defense to the Complaint. Both filings claimed that Unverferth made false representations in the two Fanger Declarations. Unverferth then moved the Court to strike Par-Kan's inequitable conduct defense and dismiss the inequitable conduct counterclaim pursuant to Federal Rules of Civil Procedure 12(f) and 12(b)(6) for failure to state a claim upon which relief can be granted.


A. Standard of Review

1. Motion to Dismiss under Rule 12(b)(6)

The purpose of a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim is to test the sufficiency of the pleading, not to decide the merits of the case. See Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Federal Rule of Civil Procedure Rule 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." However, "recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 661, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007))[1]. As the Supreme Court has stated, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. Rather, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). A complaint is facially plausible if a court can reasonably infer from factual content in the pleading that the defendant is liable for the alleged wrongdoing. Id. (citing Twombly, 550 U.S. at 570). The Seventh Circuit has synthesized the standard into three requirements. See Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). "First, a plaintiff must provide notice to defendants of her claims. Second, courts must accept a plaintiff's factual allegations as true, but some factual allegations will be so sketchy or implausible that they fail to provide sufficient notice to defendants of the plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements." Id.

2. Motion to Strike under Rule 12(f)

Rule 12(f) provides that the Court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. Fed.R.Civ.P. 12(f). The court "has considerable discretion in striking" such matters. Delta Consulting Grp., Inc. v. R. Randle Constr., Inc., 554 F.3d 1133, 1141 (7th Cir.2009). Usually, motions to strike are disfavored, but such motions may be granted if they remove unnecessary clutter and expedite the case. Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989). While Rules 12(b)(6) and 12(f) relate to different challenges, they both test the legal sufficiency of a party's pleadings. Therefore, they are both subject to the pleading requirements of the Federal Rules of Civil Procedure. Id. As a result, the Court considers both the Plaintiff's motion to dismiss the inequitable conduct counterclaim and its motion to strike Par-Kan's inequitable conduct defense under the same pleading standard.

3. Inequitable Conduct and Heightened Pleading Standard under Rule 9(b)

To successfully plead claims of fraud, Rule 9(b) requires a party to "state with particularity the circumstances constituting fraud or mistake." This heightened standard applies to claims of inequitable conduct. Ferguson Beauregard/Logic Controls, Div. of Dover Res., Inc. v. Mega Syst., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003). Because inequitable conduct renders an entire patent (or even a patent family) unenforceable, as a general rule, this doctrine should only be applied in instances where the patentee's misconduct resulted in the unfair benefit of receiving an unwarranted claim. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed. Cir. 2011). After all, the patentee obtains no advantage from misconduct if the patent would have issued anyway. Id. Moreover, enforcement of an otherwise valid patent does not injure the public merely because misconduct, lurking somewhere in patent prosecution, was immaterial to the patent's issuance. Id.

Due to the severe penalty of inequitable conduct, the accused infringer must prove by clear and convincing evidence that the patent applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the PTO. Star ...

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