1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SCIENTIFIC APPLICATIONS & Case No. 22-cv-04480-JSC RESEARCH ASSOCIATES (SARA), INC., 8 Plaintiff, ORDER RE: DEFENDANT’S MOTION 9 FOR JUDGMENT ON THE v. PLEADINGS AND PLAINTIFF’S 10 MOTION TO DISMISS ZIPLINE INTERNATIONAL, INC., 11 Re: Dkt. Nos. 92, 95 Defendant.
12 13 Plaintiff sues Zipline for alleged infringement of U.S. Patent No. 7,606,115 (the ’115 14 patent) and trade secret misappropriation. (Dkt. No. 86.)1 Before the Court is Defendant’s motion 15 for judgment on the pleadings and Plaintiff’s motion to dismiss and strike. (Dkt. Nos. 92, 95.) 16 Having carefully considered the briefing, and with the benefit of oral argument on May 29, 2024, 17 the Court (1) DENIES Defendant’s motion for judgment on the pleadings because the ’115 patent 18 survives Alice Step 2 and (2) DENIES Plaintiff’s motion to dismiss and strike because Zipline 19 adequately pleads the alleged references’ materiality and Plaintiff’s specific deceptive intent. 20 BACKGROUND 21 Plaintiff owns the ’115 patent, which is entitled “Acoustic Airspace Collision Detection 22 System.” (Dkt. No. 86 ¶¶ 7, 30.) Its abstract describes:
23 An acoustic collision detection system that enables an aircraft to detect an approaching target, recognize the potential for collision and 24 change course to maintain a safe separation distance, with or without operator invention. The acoustic collision detection system consists 25 of an array of acoustic probes and a digital signal processor which receives acoustic data from the approaching target. The digital signal 26 processor is configured to receive acoustic data from the array of 27 acoustic probes; filter out noise and its own acoustic signals; extract 1 the acoustic signals emanating from the approaching target; calculate the intensity, the bearing and the bearing angle rate of change of the 2 approaching target, and determine whether the aircraft and the approaching target are on a potential collision course. 3 4 ’115 patent, abstract. 5 The invention claims a system for piloted and unmanned aircraft that uses sound emitted 6 from approaching aircraft to detect approaching aircraft, assess the risk of collision, and avoid 7 collision. ’115 patent, col. 1 ll. 16-22. “The ’115 patent contains one independent claim (Claim 8 1) and 10 dependent claims (Claims 2-11).” (Dkt. No. 86 ¶ 86.) Claim 1 of the ’115 patent states:
9 An acoustic collision detection system for avoiding a potential collision between an aircraft and an approaching target comprising: 10 an array of acoustic probes; 11 a digital signal processor configured to receive acoustic data from the 12 array of acoustic probes, wherein said digital signal processor filters out noise and its own acoustic signals; extracts the acoustic signals 13 emanating from the approaching target, calculates the intensity, the bearing and the bearing angle rate of change of the approaching target, 14 and determines whether the aircraft and the approaching target are on a potential collision course. 15 16 ’115 patent, col. 5 ll. 47 – col. 6 ll. 10. 17 Plaintiff accuses Zipline of infringing “at least claim 1 of the ’115 patent by making, using, 18 selling, and/or offering to sell [unmanned aerial vehicles] incorporating acoustic [detect and avoid] 19 technology” and using Plaintiff’s “trade secret information regarding Acoustic [Detect and Avoid] 20 technology in development and testing of Zipline’s own products.” (Dkt. No. 86 ¶¶ 52, 93.) 21 Zipline moves for judgment on the pleadings on the grounds the asserted claims of the ’115 patent 22 are invalid because they recite patent-ineligible subject matter under 35 U.S.C. § 101.” (Dkt. No. 23 92 at 6.) Plaintiff moves to dismiss Zipline’s counterclaims and strike Zipline’s affirmative 24 defense of unenforceability due to inequitable conduct. (Dkt. No. 95.) 25 DISCUSSION 26 A. Motion for Judgment on the Pleadings 27 Under Federal Rule of Procedure 12(c), “[a]fter the pleadings are closed--but early enough 1 The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6) motion to dismiss. The court accepts all well-pleaded facts 2 as true, viewing them in the light most favorable to the plaintiff, which must plead enough facts to state a claim to relief that is plausible on 3 its face. 4 SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166 (Fed. Cir. 2018) (cleaned up). Dismissal 5 “may be based on either a lack of a cognizable legal theory or the absence of sufficient facts 6 alleged under a cognizable legal theory.” Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 7 1121 (9th Cir. 2008) (cleaned up). Though the Court must accept the complaint’s factual 8 allegations as true, conclusory assertions are insufficient to state a claim. Ashcroft v. Iqbal, 556 9 U.S. 662, 678 (2009). A claim is facially plausible when the plaintiff pleads enough factual 10 content to justify the reasonable inference the defendant is liable for the misconduct alleged. Id. 11 “Judgment on the pleadings is properly granted when, accepting all factual allegations in the 12 complaint as true, there is no issue of material fact in dispute, and the moving party is entitled to 13 judgment as a matter of law.” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) 14 (cleaned up). In deciding a motion for judgment on the pleadings, the Court may consider the 15 pleadings, documents attached to the pleadings, and facts “contained in materials of which the 16 court may take judicial notice.” Threshold Enterprises Ltd. v. Pressed Juicery, Inc., 445 F. Supp. 17 3d 139, 145 (N.D. Cal. 2020). 18 A patent is presumed valid. 35 U.S.C. § 282; see Microsoft Corp. v. I4I Ltd. P’ship, 564 19 U.S. 91, 100 (2011) (“[B]y its express terms, § 282 establishes a presumption of patent validity, 20 and it provides that a challenger must overcome that presumption to prevail on an invalidity 21 defense.”). “This presumption reflects the fact that the Patent and Trademark Office has already 22 examined whether the patent satisfies ‘the prerequisites for issuance of a patent,’ including § 101.” 23 Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1319 (Fed. Cir. 2019). Any fact “pertinent to the 24 invalidity conclusion must be proven by clear and convincing evidence.” Berkheimer v. HP Inc., 25 881 F.3d 1360, 1368 (Fed. Cir. 2018). 26 “A patent may be obtained for ‘any new and useful process, machine, manufacture, or 27 composition of matter, or any new and useful improvement thereof.’” Bascom Glob. Internet 1 Supreme Court has ‘long held that this provision contains an important implicit exception: Laws 2 of nature, natural phenomena, and abstract ideas are not patentable.’” Id. (quoting Ass’n for 3 Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)). The concern driving 4 this exclusionary principle is “one of pre-emption,” as monopolization of “the basic tools of 5 scientific and technological work . . . might tend to impede innovation more than it would tend to 6 promote it, thereby thwarting the primary object of the patent laws.” Alice Corp. Pty. v. CLS Bank 7 Int’l, 573 U.S. 208, 216 (2014) (cleaned up). 8 “Eligibility under 35 U.S.C. § 101 is a question of law, based on underlying facts.” SAP 9 Am., Inc., 898 F.3d at 1166. In Alice, the Supreme Court set forth a two-step analytical framework 10 to determine whether a patent is ineligible under § 101. 573 U.S. at 217.
11 A claim falls outside § 101 where (1) it is “directed to” a patent- ineligible concept, i.e., a law of nature, natural phenomenon, or 12 abstract idea, and (2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do 13 not add enough to “‘transform the nature of the claim’ into a patent- eligible application.” 14 15 SAP Am., Inc., 898 F.3d at 1166-67 (quoting Alice, 573 U.S. at 217). The first step of the Alice 16 analysis considers the character of the claims as a whole, and the second step “(where reached) 17 looks more precisely at what the claim elements add—specifically, whether, in the Supreme 18 Court’s terms, they identify an ‘inventive concept’ in the application of the ineligible matter to 19 which (by assumption at stage two) the claim is directed.” Id. at 1167. 20 For the purposes of the Alice analysis, the ’115 patent’s only independent claim, Claim 1, 21 is representative of all other claims because Plaintiff does not argue for the “distinctive 22 significance of any claim limitations not found in the representative claim.” Berkheimer v. HP 23 Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). 24 1. Alice Step 1 25 Whether a patent is directed to a patent-ineligible concept depends on whether the claims 26 “focus on a specific means or method that improves the relevant technology or are instead directed 27 to a result or effect that itself is the abstract idea and merely invoke generic processes and 1 2016); see also Yu v. Apple Inc., 1 F.4th 1040, 1043 (Fed. Cir. 2021) (“We have approached the 2 Step 1 directed to inquiry by asking what the patent asserts to be the focus of the claimed advance 3 over the prior art. In conducting that inquiry, we must focus on the language of the asserted 4 claims themselves, considered in light of the specification.” (cleaned up).) The Court must 5 “articulate what the claims are directed to with enough specificity to ensure the step one inquiry is 6 meaningful.” Thales Visionix Inc. v. United States, 850 F.3d 1343, 1347 (Fed. Cir. 2017); see also 7 Alice, 573 U.S. at 217 (“[W]e tread carefully in construing this exclusionary principle lest it 8 swallow all of patent law.”). To determine whether a patent impermissibly claims an abstract idea 9 at Alice Step 1, both the Federal Circuit and “Supreme Court have found it sufficient to compare 10 claims at issue to those claims already found to be directed to an abstract idea in previous cases.” 11 Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016). 12 The ’115 patent’s claimed advance over prior art is a collision detection system enabling 13 comparatively small unmanned aerial vehicles equipped with the system to be flown with “the 14 equivalent level of safety comparable to the see-and-avoid requirements for manned aircraft,” 15 which allows those vehicles to operate beyond predetermined flight corridors and restricted access 16 zones. ’115 patent, col. 1 ll. 34 – col. 2 ll. 12. Prior art collision detection systems, “including 17 optical and radar,” had not “been readily successful on smaller [unmanned aerial vehicles], such as 18 Class I or Class II [unmanned aerial vehicles], because of the power requirements, weight, and 19 costs of the systems.” ’115 patent, col. 2 ll. 7-12. But the claimed invention
20 is not limited to operation within predetermined flight corridors and restricted access zones because it can accurately detect a target within 21 a spherical instantaneous coverage volume. Targets approaching from any angle can be easily detected, in contrast with narrow field- 22 of-view sensors, such as optically-based collision detection systems, which must limit their operation to frontal sectors. 23 24 ’115 patent, col. 2 ll. 51-57. Because the system is “economical and compact,” “weigh[ing] 25 approximately two hundred and fifty grams and consum[ing] approximately seven watts of six 26 volt DC power,” it “can be incorporated into a Class I, II or III [unmanned aerial vehicle], in 27 addition to manned aircraft.” ’115 patent, col. 2 ll. 39-50. 1 patent overcame the geographic limitations placed on the operation of small unmanned aerial 2 vehicles by providing a collision detection system suitable for such vehicles capable of ensuring a 3 level-of-safety comparable to that of manned aircraft. See Visual Memory LLC v. NVIDIA Corp., 4 867 F.3d 1253, 1261 (Fed. Cir. 2017) (holding on a 12(b)(6) Alice motion “all factual inferences 5 drawn from the specification must be in favor” of the non-moving party). Specifically, the ’115 6 patent discloses an apparatus through which aircraft can accurately detect targets “within a 7 spherical instantaneous coverage volume . . . from any angle . . . at any time of day or night and in 8 all weather conditions, including clouds or fog.” ’115 patent, col. 2 ll. 51-60. As recited in Claim 9 1, the ’115 patent’s contribution is a system “for avoiding a potential collision between an aircraft 10 and approaching target” comprised of “an array of acoustic probes” and “a digital signal processor 11 configured to receive acoustic data from the array of acoustic probes, wherein” the processor (1) 12 filters out noise and its own acoustic signals; (2) extracts the acoustic signals emanating from the 13 approaching target; (3) calculates the intensity, the bearing, and the bearing angle rate of change of 14 the approaching target; and (4) determines whether the aircraft and the approaching target are on a 15 potential collision course. ’115 patent, col. 5 ll. 47 – col. 6 ll. 10. 16 “When read as a whole, and in light of the written description,” representative Claim 1 is 17 directed to the use of acoustic signals to detect potential mid-air collisions between aircrafts and 18 approaching targets. CardioNet, LLC v. InfoBionic, Inc, 955 F.3d 1358, 1368 (Fed. Cir. 2020). 19 Whereas prior art optical and radar collision detection systems collect and analyze light and 20 electromagnetic waves respectively, the ’115 patent’s claimed system collects and analyzes 21 acoustic information to achieve the same goal. The core of the ’115 patent’s advance over prior 22 art, as recited in Claim 1, is the use of sound information in airspace collision detection. 23 The collection, filtration, and extraction of sound information to detect potential collisions 24 in airspace through calculations performed on that extracted information is an abstract concept. 25 Collecting, filtering, and analyzing information is abstract. See Elec. Power Grp., LLC v. Alstom 26 S.A., 830 F.3d 1350, 1356 (Fed. Cir. 2016) (“[M]erely presenting the results of abstract processes 27 of collecting and analyzing information, without more (such as identifying a particular tool for 1 Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016) 2 (“[F]iltering content is an abstract idea because it is a longstanding, well-known method of 3 organizing human behavior, similar to concepts previously found to be abstract.”); Content 4 Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 5 2014) (“The concept of data collection, recognition, and storage is undisputedly well-known. 6 Indeed, humans have always performed these functions.”). Performing mathematical calculations 7 on an existing dataset to generate additional information is also abstract. See Digitech Image 8 Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014) (“Without additional 9 limitations, a process that employs mathematical algorithms to manipulate existing information to 10 generate additional information is not patent eligible.”). So, the ’115 patent is directed to a patent- 11 ineligible concept. 12 Relying on McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016), 13 Plaintiff insists Claim 1 focuses “on a specific means of receiving and processing acoustic signals 14 to determine whether the host aircraft and the approaching target are on a potential collision 15 course.” (Dkt. No. 98 at 11.) McRO involved a patent “focused on a specific asserted 16 improvement in computer animation, i.e., the automatic use of rules of a particular type.” 837 17 F.3d at 1314. The patent’s “claimed process uses a combined order of specific rules that renders 18 information into a specific format that is then used and applied to create desired results: a 19 sequence of synchronized, animated characters.” Id. at 1315. The Federal Circuit ruled the patent 20 was not directed to ineligible subject matter because the patent’s incorporation of the claimed rules 21 “improved the existing technological process by allowing the automation of further tasks.” Id. at 22 1314 (cleaned up). But unlike in McRO, the ’115 patent is not directed to an improvement in an 23 existing technological process. Nor is the ’115 patent directed to a “specific improvement to the 24 way computers operate.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016). 25 Rather, the ’115 patent’s acoustic probes and digital signal processor “are invoked merely as [] 26 tool[s].” Id. The ’115 patent is directed to a different way of detecting potential airspace 27 collisions (using acoustic instead of light or electromagnetic information), not an improvement to 1 Next, Plaintiff analogizes the ’115 patent to patents found to be patent-eligible in Thales 2 Visionix Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 2017) and Google LLC v. EcoFactor, Inc., 3 602 F. Supp. 3d 1265 (N.D. Cal. 2022). In Thales Visionix Inc., the Federal Circuit found a patent 4 that specified “a particular configuration of inertial sensors and a particular method of using the 5 raw data from the sensors in order to more accurately calculate the position and orientation of an 6 object on a moving platform” to be directed to patent-eligible subject matter. 850 F.3d at 1349. 7 The patent’s claims survived Alice Step 1 because they sought “to protect only the application of 8 physics to the unconventional configuration of sensors as disclosed.” Id. The configuration of the 9 disclosed inertial sensors “d[id] not use the conventional approach of measuring inertial changes 10 with respect to the earth” and instead “directly measure[d] the gravitational field in the platform 11 frame.” Id. at 1345. So, the district court had erred in finding the claims were “directed to the 12 abstract idea of using ‘mathematical equations for determining the relative position of a moving 13 object to a moving reference frame.’” Id. at 1348. “Rather, the claims are directed to systems and 14 methods that use inertial sensors in a non-conventional manner to reduce errors in measuring the 15 relative position and orientation of a moving object on a moving reference frame.” Id. at 1348-49. 16 But here, unlike in Thales Visionix Inc., nothing in the ’115 patent indicates the acoustic probes 17 are used or arranged in a nonconventional manner or receive sound data unconventionally. See 18 Automated Tracking Sols., LLC v. Coca-Cola Co., 723 F. App’x 989, 994 (Fed. Cir. 2018) 19 (rejecting analogy to Thales Visionix Inc. because “[t]he representative claims simply do not 20 require a particular configuration or arrangement of RFID system components.”). 21 In Google LLC v. EcoFactor, Inc., the district court considered a patent claiming “a device 22 that receives and stores inside temperature measurements, calculates a predicted rate of change 23 based on the stored temperature, status of the HVAC system, and outside temperature, then 24 determines whether to direct the HVAC to pre-cool the structure before the HVAC reduces 25 electricity.” 602 F. Supp. 3d 1265, 1271 (N.D. Cal. 2022) (cleaned up). The court found the 26 patent was not directed to an abstract result that merely invoked generic processes or machinery, 27 but “the non-abstract improvement of using thermal mass calculations and predicted rate of 1 requiring the determination of whether to direct the HVAC control system to pre-cool the structure 2 based on thermal mass calculation, [the representative claim] recites a specific implementation of 3 pre-cooling that improves the operation of the technological HVAC system process.” Id. But 4 here, unlike in Google LLC v. EcoFactor, Inc., the ’115 patent is not directed to a “specific 5 implementation of improved devices and systems.” 6 For the same reason, Plaintiff’s references to SEMICAPS Pte Ltd. v. Hamamatsu Corp., 7 393 F. Supp. 3d 802, 815 (N.D. Cal. 2019) and CardioNet, LLC v. InfoBionic, Inc, 955 F.3d 1358 8 (Fed. Cir. 2020) are unpersuasive. The nonconventional advance the ’115 patent claims over the 9 prior art is abstract: the use of sound information—instead of visual or electromagnetic 10 information—to detect potential collisions. 11 2. Alice Step 2 12 At Alice Step 2, the elements of claims directed to a patent-ineligible concept are 13 considered “both individually and as an ordered combination to determine whether the additional 14 elements transform the nature of the claim into a patent-eligible application.” BSG Tech LLC v. 15 Buyseasons, Inc., 899 F.3d 1281, 1289 (Fed. Cir. 2018) (cleaned up). “The ‘inventive concept’ 16 may arise in one or more of the individual claim limitations or in the ordered combination of the 17 limitations.” Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349 18 (Fed. Cir. 2016). The “transformative elements must supply an inventive concept that ensures the 19 patent amounts to significantly more than a patent upon the [ineligible concept] itself.” BSG Tech 20 LLC, 899 F.3d at 1289-90 (cleaned up). Claim limitations reciting “conventional, routine and well 21 understood applications in the art are insufficient to supply an inventive concept.” Id. at 1290. 22 The inventive concept described and claimed in the ’115 patent is a specific 23 implementation of acoustic collision detection in airspace. Claim 1 does not merely recite the 24 abstract idea of collision detection through use of acoustic data, it discloses “a specific, discrete 25 implementation of the abstract idea” through an ordered combination of elements performed by 26 computer components. Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 27 1350 (Fed. Cir. 2016). Claim 1 does not preempt all manner of acoustic collision detection, only 1 Zipline insists the ’115 patent fails to supply an inventive concept because “the recited 2 steps invoke conventional components of an acoustic probe array and a standard [digital signal 3 processor] to achieve the intended result with conventional means.” (Dkt. No. 101 at 16.) “If a 4 claim’s only inventive concept is the application of an abstract idea using conventional and well- 5 understood techniques, the claim has not been transformed into a patent-eligible application of an 6 abstract idea.” BSG Tech LLC, 899 F.3d 1281, 1290-91. But Zipline fails to persuade the ’115 7 patent’s application of the abstract idea of acoustic airspace collision detection is conventional or 8 employs well-understood techniques. Specifically, neither the pleadings nor the ’115 patent itself 9 indicate Claim 1’s ordered elements “were in context obvious, already in use, or purely 10 conventional.” Mayo Collaborative Servs. v. Prometheus Lab’ys, Inc., 566 U.S. 66, 81 (2012). 11 Zipline does not argue Claim 1’s acoustic means of detecting potential collisions was a “well- 12 understood, routine, conventional activity previously engaged in by scientists who work in the 13 field.” Mayo Collaborative Servs., 566 U.S. at 79. Indeed, Zipline’s own founder and Chief 14 Technology Officer explained, “there is one fundamental technical challenge that has never been 15 solved before. . . . a solution to efficiently and reliably enable drones to detect and avoid other 16 aircraft in the air.” (Dkt. No. 98-4 at 3.)2 He continued, “[w]e kept coming back to a crazy idea. . 17 . . using microphones to listen for surrounding aircraft.” (Id. at 9-10.) 18 Zipline argues the ’115 patent lacks an inventive concept because it fails to specify how 19 the result of collision detection is accomplished. But Claim 1 explains collision detection is 20 accomplished by receiving acoustic data, filtering out noise from that acoustic data, extracting the 21 acoustic signals emanating from the approaching target, and calculating the intensity, the bearing, 22 and the bearing angle rate of change of the approaching target. ’115 patent, col. 6 ll. 2-10. This is 23 a “specific, discrete implementation of the abstract idea of” acoustic airspace collision detection. 24 Bascom Glob. Internet Servs., Inc., 827 F.3d at 1350. Even if Claim 1’s structural components are 25 generic, “an inventive concept can be found in the non-conventional and non-generic arrangement 26
27 2 The Court takes judicial notice of Zipline’s publicly available press releases. See Glenbrook 1 of known, conventional pieces.” Id. Zipline fails to identify any support within the ’115 patent or 2 the pleadings to establish, as a matter of law, the ordered steps are not inventive in combination. 3 Here, unlike in Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, nothing suggests Claim 1 4 “uses a conventional ordering of steps.” 874 F.3d 1329, 1339 (Fed. Cir. 2017). So, as an ordered 5 combination, Claim 1’s “elements transform the nature of the claim into a patent-eligible 6 application.” BSG Tech LLC, 899 F.3d at 1289 (cleaned up). At this stage, the ’115 patent 7 survives Alice Step 2. 8 * * * 9 Because the ’115 patent survives Alice Step 2, Zipline’s motion for judgment on the 10 pleadings is DENIED. 11 B. Motion to Dismiss and Strike 12 Zipline brings six counterclaims and an affirmative defense against Plaintiff seeking to 13 render the ’115 patent unenforceable due to inequitable conduct for failure to disclose six prior art 14 references: (1) Cline I, (2) Cline II, (3) Muller, (4) Milkie, (5) Wes, and (6) Cline III. (Dkt. No. 90 15 at 28 ¶ 153, 113-19 ¶¶ 104-56.) Plaintiff moves to dismiss Zipline’s counterclaims and strike 16 Zipline’s affirmative defense of unenforceability due to inequitable conduct. (Dkt. No. 95.) 17 Dismissal under Rule 12(b)(6) “may be based on either a lack of a cognizable legal theory 18 or the absence of sufficient facts alleged under a cognizable legal theory.” Johnson, 534 F.3d at 19 1121 (cleaned up). For Zipline’s challenged claims to survive, the complaint’s factual allegations 20 must raise a plausible right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-56 (2007). 21 Though the Court must accept the complaint’s factual allegations as true, conclusory assertions are 22 insufficient to state a claim. Iqbal, 556 U.S. at 678. A claim is facially plausible when the 23 counterclaimant pleads enough factual content to justify the reasonable inference the 24 counterdefendant is liable for the misconduct alleged. Id. “Within this district, there is 25 widespread agreement” the Iqbal/Twombly standard applies to affirmative defenses. Finjan, Inc. 26 v. Juniper Network, Inc., No. C 17-05659 WHA, 2018 WL 4181905, at *1 (N.D. Cal. Aug. 31, 27 2018). 1 redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “The function of 2 a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from 3 litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. 4 Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). For the purposes of Rule 12(f), an 5 affirmative defense is insufficiently pled if it fails to give the plaintiff fair notice of the defense. 6 See Wyshak v. City Nat. Bank, 607 F.2d 824, 827 (9th Cir. 1979) (“The key to determining the 7 sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the 8 defense.”). 9 “Each individual associated with the filing and prosecution of a patent application has a 10 duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the 11 Office all information known to that individual to be material to patentability.” 37 C.F.R. § 1.56. 12 A breach of the duty of candor may lead to a finding of inequitable conduct rendering the entire 13 patent unenforceable. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1288 14 (Fed. Cir. 2011).
15 The substantive elements of inequitable conduct are: (1) an individual associated with the filing and prosecution of a patent application made 16 an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) 17 the individual did so with a specific intent to deceive the PTO. 18 Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 n.3 (Fed. Cir. 2009). 19 Inequitable conduct must be pled with particularity under Rule 9(b). Id. at 1326. “A 20 pleading that simply avers the substantive elements of inequitable conduct, without setting forth 21 the particularized factual bases for the allegation, does not satisfy Rule 9(b).” Id. at 1326-27. So, 22 Zipline’s counterclaims must set forth the particularized factual bases for the allegations, and 23 “must identify the specific who, what, when, where, and how of the material misrepresentation of 24 omission committed before the [Patent and Trademark Office].” Id. at 1327-28.
25 Moreover, although “knowledge” and “intent” may be averred generally, a pleading of inequitable conduct under Rule 9(b) must 26 include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the 27 withheld material information or of the falsity of the material Trademark Office]. 1 2 Id. at 1328-29; see also Delano Farms Co. v. California Table Grape Comm’n, 655 F.3d 1337, 3 1350 (Fed. Cir. 2011) (same). “A reasonable inference is one that is plausible and that flows 4 logically from the facts alleged, including any objective indications of candor and good faith.” 5 Exergen Corp., 575 F.3d at 1329 n.5. “Intent and materiality are separate requirements.” 6 Therasense, Inc., 649 F.3d at 1290. Intent may not be inferred “solely from materiality.” Id. 7 Plaintiff attacks the sufficiency of Zipline’s allegations as to materiality but argues “the 8 central deficiency of Zipline’s pleadings” is the lack of “specific facts supporting the alleged 9 specific intent to deceive.” (Dkt. No. 100 at 8.) 10 1. Specific Intent 11 Zipline alleges named inventors Duane M. Cline and Thomas T. Milkie and Plaintiff’s 12 Chief Executive Officer Parviz Parhami intentionally withheld material prior art references from 13 the Patent and Trademark Office during the prosecution of the ’115 patent. (Dkt. No. 90 at 36-37 14 ¶¶ 31-32, 40-41 ¶ 46, 111-13 ¶¶ 92-103.) Zipline alleges specific intent on the grounds (1) the 15 named inventors and Dr. Parhami knew the references “had been presented, published, and 16 distributed before the filing date” of the ’115 patent’s application, (Id. at 111 ¶ 92), (2) the 17 disclosure of the six references “would have undermined their goals of obtaining, publicizing, and 18 asserting patent rights relating to the ’115 patent,” (Id. ¶¶ 93-95), (3) the six references “were 19 material to the patentability of the ’115 patent,” (Id. at 112 ¶ 99), and (4) “the ’115 patent would 20 not have issued but for the fact [Plaintiff] failed to make the Examiner aware” of the six 21 references.” (Id. at 112-13 ¶ 100.) Zipline argues its allegations are sufficient to support the 22 inference the named inventors and Dr. Parhami “had knowledge of the withheld references, as 23 well as their materiality.” (Dkt. No. 99 at 23-24.) Zipline also argues Plaintiff’s alleged discovery 24 conduct supports an inference of specific intent because Plaintiff “only produced Cline II with 25 improper confidentiality designations and without dates, and only produced the other five 26 references after Zipline’s document requests had been pending for over a year.” (Dkt. No. 99 at 27 26; see Dkt. No. 90 at 32-36 ¶¶ 15-28.) 1 the reference[s], knew [they were] material, and made a deliberate decision to withhold [them].” 2 Therasense, 649 F.3d at 1290. Plaintiff does not contest Zipline’s allegations are sufficient to 3 show the named inventors and Dr. Parhami knew of the references; instead, Plaintiff disputes the 4 named inventors and Dr. Parhami knew of the references’ materiality when the ’115 patent was 5 prosecuted and withheld them from the Patent and Trademark Office with deceptive intent. (Dkt. 6 No. 95 at 14-15.) “A court can no longer infer intent to deceive from non-disclosure of a reference 7 solely because that reference was known and material.” 1st Media, LLC v. Elec. Arts, Inc., 694 8 F.3d 1367, 1372-73 (Fed. Cir. 2012). So, even assuming the references’ materiality, Zipline’s 9 counterclaims still must allege facts supporting the named inventors’ and Dr. Parhami’s 10 knowledge of the references’ materiality and deliberate decision to withhold them. “A court may 11 infer intent from indirect and circumstantial evidence because direct evidence of deceptive intent 12 is rare.” TransWeb, LLC v. 3M Innovative Properties Co., 812 F.3d 1295, 1304 (Fed. Cir. 2016) 13 (cleaned up). 14 Zipline’s allegations are sufficient to support the reasonable inference Plaintiff knew of the 15 references’ materiality. The named inventors of the ’115 patent, who were Plaintiff’s employees 16 when the application that became the ’115 patent was filed, are listed as authors of five of the six 17 alleged references. (Dkt. No. 90 at 30-31 ¶ 8, 36 ¶ 30, 37 ¶ 32, 42 ¶ 57, 54-55 ¶ 63, 70 ¶ 74, 79-80 18 ¶ 80, 98 ¶ 86.) Mr. Cline is listed as an author on the Cline I-III, Muller, and Milkie references; 19 Mr. Milkie is listed as an author on the Cline I-II, Muller, and Milkie references. (Id.) One of the 20 listed authors of the sixth reference, Jim Wes, is described in the reference as Plaintiff’s employee. 21 (Id. at 98 ¶ 86.) Dr. Parhami verified Cline II’s relevance to the ’115 patent’s conception and 22 reduction to practice, described himself as “the primary decision-maker at SARA as to what 23 innovative technologies SARA will seek to patent,” claimed to be involved in “all matters 24 concerning the filing and prosecution of patent applications on behalf of SARA” since 2004, and 25 stated he received communications from patent counsel regarding the prosecution of the ’115 26 patent. (Dkt. Nos. 90 at 112 ¶ 98, 90-8 at 3-4.) Plaintiff’s employees having authored all six 27 references, invented the ’115 patent, and been involved in the prosecution of the ’115 patent raises 1 alleged references. Exergen Corp., 575 F.3d at 1329. 2 Zipline’s allegations are also sufficient to support the reasonable inference Plaintiff 3 withheld the alleged references from the Patent and Trademark Office with deceptive intent. In 4 May 2023, in response to Zipline’s interrogatory on the ’115 patent’s conception and reduction to 5 practice, Plaintiff identified a set of slides it had produced with the “Highly Confidential – 6 Attorneys’ Eyes Only” designation permitted only for non-public documents. (Dkt. No. 90 at 33 7 ¶¶ 16-18.) However, after some investigation, Zipline determined Plaintiff had publicly presented, 8 distributed, and published a presentation identical to the identified slide set at the August 2006 9 Association for Unmanned Vehicle Systems International North American Conference. (Id. at 34 10 ¶ 19.) That presentation is the alleged Cline II reference, the lead author of which “is the same 11 Duane M. Cline who is the first named inventor[] of the ’115 patent.” (Id.) Zipline then found 12 Plaintiff had publicly presented and published Cline I at the June 2005 Association for Unmanned 13 Vehicle Systems International North American Conference. (Id. ¶ 20.) Zipline alleges Plaintiff 14 improperly designated Cline II to mask the reference’s public disclosure and status as prior art, 15 and obscured Cline I’s public presentation for the same reason. (Id. at 34-35 ¶¶ 18-19, 21; 113 ¶ 16 103.) 17 Courts must consider the totality of the circumstances in evaluating deceptive intent. Luv 18 n’ Care, Ltd. v. Laurain, 98 F.4th 1081, 1097 (Fed. Cir. 2024). Construing the allegations in 19 Zipline’s favor, Plaintiff’s knowledge of the alleged references and improper designation of Cline 20 II as “Highly Confidential – Attorneys’ Eyes Only” are sufficient on this record to support the 21 reasonable inference Plaintiff withheld material information during the ’115 patent’s prosecution 22 with deceptive intent. Plaintiff’s attempt to hide the public nature of Cline II, a reference Plaintiff 23 admits is relevant to the ’115 patent’s conception and reduction to practice, raises doubt about 24 Plaintiff’s candor toward the Patent and Trademark Office and makes plausible the inference 25 Plaintiff also intentionally hid Cline II and the other alleged references during prosecution of the 26 ’115 patent. So, Zipline has adequately pled specific deceptive intent. 27 2. Materiality 1 which limitations in those claims, the withheld references are relevant to, and where in those 2 references the material information is found—i.e., the ‘what’ and ‘where’ of the material 3 omissions.” Exergen Corp., 575 F.3d at 1329. Zipline’s allegations must also “identify the 4 particular claim limitations, or combination of claim limitations, that are supposedly absent from 5 the information of record. . . . to explain both ‘why’ the withheld information is material and not 6 cumulative, and ‘how’ an examiner would have used this information in assessing the patentability 7 of the claims.” Id. at 1329-30. Plaintiff argues Zipline fails to (1) explain how an examiner would 8 have used the purportedly material documents to formulate obviousness rejections and (2) 9 demonstrate how the documents would enable a person skilled in the art to anticipate the ’115 10 patent. 11 For each of the six purported prior art references, Zipline provides charts linking the 12 elements of representative Claim 1 to information disclosed in the references. (Dkt. No. 90 at 43 ¶ 13 60; 55 ¶¶ 66, 67; 71 ¶ 77; 80 ¶ 83; 99 ¶¶ 90, 91.) So, Zipline’s allegations fulfill the “what” and 14 “where” requirements of Rule 9(b) by identifying “which claims, and which limitations in those 15 claims, the withheld references are relevant to, and where in those references the material 16 information is found.” Exergen Corp., 575 F.3d at 1329; see, e.g., Avocent Huntsville, LLC v. 17 ZPE Sys., Inc., No. 3:17-CV-04319-WHO, 2018 WL 4859527, at *9 (N.D. Cal. July 23, 2018) 18 (finding “claim charts detailing an element by element comparison against a prior art reference” 19 sufficient to allege materiality); iLife Techs. Inc v. AliphCom, No. 14-CV-03345-WHO, 2015 WL 20 890347, at *5 (N.D. Cal. Feb. 19, 2015) (finding claim charts “provid[ing] a detailed comparison 21 of the relevant prior art limitations . . . and the corresponding claims in the Asserted Patents” to 22 sufficiently allege “the ‘what’ and ‘where’ of an inequitable conduct claim under Exergen.”). 23 Zipline alleges the examiner who considered the ’115 patent allowed the claims because
24 the prior art d[id] not disclose a digital signal processor configured to receive acoustic data from the array of acoustic probes, wherein said 25 digital signal processor filters out noise and its own acoustic signals; extracts the acoustic signals emanating from the approaching target; 26 calculates the intensity, the bearing, and the bearing angle rate of change of the approaching target, and determines whether the aircraft 27 and the approaching target are on a potential collision course as 1 (Dkt. Nos. 90 at 42-43 ¶ 58, 90-7 at 6.) Zipline’s charts allege “how” the references disclose a 2 digital signal processor configured to do exactly what the examiner concluded the prior art did not 3 disclose. (Dkt. No. 90 at 42-54 ¶¶ 58-61 (Cline I), 55-69 ¶¶ 64-68 (Cline II), 70-79 ¶¶ 75-78 4 (Muller), 80-98 ¶¶ 81-84 (Milkie), 98-111 ¶¶ 88-91 (Wes and Cline III).) These allegations 5 support the inference the references were material to patentability “by [themselves] or in 6 combination with other information.” 37 C.F.R. § 1.56(b)(1). So, Zipline’s allegations fulfill the 7 “how” requirement of Rule 9(b) by explaining how the examiner would have used the references 8 “in assessing the patentability of the claims.” Exergen Corp., 575 F.3d at 1330. 9 Plaintiff argues Zipline’s allegations fail to sufficiently detail how the examiner would 10 have used the six purported prior art references to formulate any obviousness or anticipation 11 rejections. (Dkt. No. 95 at 12.) But Zipline is not required to allege obviousness combinations or 12 “how these references serve to enable anyone to make the invention of the [’]115 patent without 13 undue experimentation” at this stage. (Id. at 13); see, e.g., AbCellera Biologics Inc. v. Bruker 14 Cellular Analysis, No. 20-CV-08624-JST, 2024 WL 37213, at *8 (N.D. Cal. Jan. 2, 2024) 15 (rejecting argument the “how” requirement mandates an inequitable conduct claimant plead how 16 the examiner would have found motivation to combine the alleged references with other art of 17 record with reasonable expectation of success because there was “no support for such a high 18 standard at this stage in the proceedings.”); Hangzhou Chic Intelligent Tech. Co., Ltd. Razor USA 19 LLC, No. 216CV06359RGKAJWX, 2016 WL 10518582, at *4 (C.D. Cal. Dec. 19, 2016) 20 (rejecting argument inequitable conduct claimant must allege enablement to adequately allege 21 materiality). 22 In sum, Zipline has adequately pled materiality. 23 * * * 24 Because Zipline’s allegations are sufficient to support an inference of Plaintiff’s deceptive 25 intent and the materiality of the alleged references, Plaintiff’s motion to dismiss Zipline’s 26 counterclaims and strike Zipline’s 21st affirmative defense is DENIED. 27 // 1 CONCLUSION 2 For the reasons stated above, Defendant’s motion for judgment on the pleadings is 3 DENIED and Plaintiffs motion to dismiss and strike is DENIED. 4 This Order disposes of Docket Nos. 92 and 95. 5 IT IS SO ORDERED. 6 Dated: June 4, 2024 7 g ne ACQUELINE SCOTT CORLE 9 United States District Judge 10 11 12
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