`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`EVERLIGHT ELECTRONICS CO., LTD.,
`and EMCORE CORPORATION,
`
`Civil Action No.12-cv-11758
`HONORABLE GERSHWIN A. DRAIN
`Plaintiffs and
`Counter-Defendants,
`
`v.
`
`NICHIA CORPORATION, and
`NICHIA AMERICA CORPORATION,
`
`Defendants and
`Counter-plaintiffs,
`
`v.
`
`EVERLIGHT AMERICAS, INC.,
`
`Defendants.
`_________________________________/
`
`OPINION AND ORDER GRANTING NICHIA CORPORATION’S MOTION TO DISMISS
`EVERLIGHT’S CLAIMS FOR DECLARATORY JUDGMENT OF
`UNENFORCEABILITY OF NICHIA’S PATENTS [#24]
`
`I.
`
`Introduction
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`Plaintiff, Everlight Electronics Co., Ltd. (“Everlight”), filed the instant action seeking
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`a declaratory judgment of non-infringement, invalidity, and unenforceability of Defendant
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`Nichia Corporation’s (“Nichia”) United States Patent Nos. 5,998,925 (the “‘925 Patent”) and
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`7,531,960 (the “‘960 Patent”) pursuant to the Declaratory Judgment Act, 28 U.S.C. § §
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`2201 and 2202, and the patent laws of the United States, 35 U.S.C. § 1 et seq. Everlight
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`and Plaintiff Emcore Corporation (“Emcore”) also seek a judgment of infringement against
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`Nichia and its subsidiary, Defendant Nichia America Corporation (“Nichia America”),1 of
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`United States Patent No. 6,653,215 (the “‘215" Patent”) pursuant to 35 U.S.C. §§ 271 and
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`281, and damages resulting therefrom.
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`Presently before the court is Nichia’s motion to dismiss Everlight’s claims for
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`declaratory judgment of unenforceability of Nichia’s ‘925 and ‘960 Patents (the “patents-in-
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`suit”), counts III and VI of the Amended Complaint.2 Nichia argues that Everlight is unable
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`to raise any meritorious defenses to its infringement of Nichia’s patents-in-suit –two patents
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`in Nichia’s patent portfolio encompassing the field of high brightness LED technology.
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`Therefore, Everlight resorts to the “common litigation tactic” of alleging inequitable conduct
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`during procurement of Nichia’s patents-in-suit to support its contention that the patents are
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`unenforceable. Due to the abusive use of this defense, the Federal Circuit recently
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`tightened the pleading standards for alleging inequitable conduct in Exergen Corp. v. Wal-
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`Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) and Therasense, Inc. v. Becton,
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`Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011).
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`Nichia contends that Everlight’s inequitable conduct allegations are the type of
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`overplayed and overblown allegations that Therasense and Exergen sought to curb by
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`tightening the standard for alleging inequitable conduct. Thus, dismissal of these claims
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`is warranted out of fairness to Nichia so that this matter can proceed without the additional
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`1 On July 23, 2012, counts I-VI against Nichia America were dismissed by
`stipulated order. See Dkt. No. 27.
`
`2 On June 18, 2012, a stipulated order regarding the filing of amended complaint
`and response thereto was entered by the court. See Dkt. No. 21. The order states that
`counsel for the parties discussed Defendants’ contemplated motion to dismiss and the
`counts in Everlight’s Complaint and to avoid motion practice, Nichia agreed to accept
`service of process, waive any defense based on insufficient service and Plaintiffs
`agreed to file an Amended Complaint. Id. at 1.
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`cost and distraction of Everlight’s malicious allegations. Pursuant to this court’s local rules,
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`it is hereby ordered that the motions be resolved on the briefs submitted. See E.D. Mich.
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`L.R. 7.1(f)(2)
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`II.
`
`Factual Background
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`Everlight is a corporation organized and existing under the laws of Taiwan and it is
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`a leading manufacturer of light-emitting diode (“LED”) products with customers around the
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`world. See Am. Comp., ¶¶ 1, 12. Nichia, a Japanese corporation, is also in the business
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`of manufacturing and supplying LED products. Id., ¶¶ 3, 13.
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`The ‘925 Patent was issued on December 7, 1999 to assignee Nichia and is entitled
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`“Light Emitting Device Having a Nitride Compound Semiconductor and a Phosphor
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`Containing a Garnet Fluorescent Material,” listing Yoshinori Shimizu, Kensho Sakano,
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`Yasunobu Noguchi, and Toshio Moriguchi as the inventors of the patent. Id., ¶ 9. The ‘960
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`Patent was issued on May 12, 2009 to assignee Nichia and is entitled “Light Emitting
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`Device with Blue Light LED and Phosphor Components,” and names Yoshinori Shimzu,
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`Kensho Sakano, Yasunobu Noguchi, and Toshio Moriguchi as the inventors of the patent.
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`Id., ¶ 10. The ‘925 Patent is the parent of the ‘960 Patent, and the ‘960 Patent is a division
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`of the application that resulted in the ‘925 Patent. Id., ¶ 18. Plaintiff Emcore is the owner
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`by assignment, and Everlight is the exclusive licensee, of the ‘215 Patent, issued on
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`November 25, 2003, entitled “Contact to N-GaN with Au Termination.”3 Id., ¶ 11.
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`Plaintiffs allege that in 2005, Nichia began systematically and aggressively pursuing
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`Everlight and its customers through litigation in various forums, including courts in the
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`3 Plaintiffs allege infringement of the ‘215 Patent, however this claim is
`irrelevant to the disposition of the present motion.
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`United States, as well as in Japan, Germany, and Taiwan alleging infringement of Nichia’s
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`Japanese Patent No. 4530094, a Japanese counterpart of the ‘960 Patent, and
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`infringement of Nichia’s European Patent No. EP 0 936 682, a European counterpart of the
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`‘925 Patent. Id., ¶¶ 14-16, 22, 27-29. Nichia has also filed patent infringement actions
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`concerning Nichia’s patents-in-suit against manufacturers, users, and/or distributors of
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`competitive LED products in the United States. Id., ¶ 22. Additionally, Everlight has
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`initiated over 20 patent reexamination proceedings concerning Nichia’s patents-in-suit,
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`which are currently pending in several different countries. Id., ¶ 21. According to Everlight,
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`Nichia’s systematic and aggressive pursuit of Everlight, its customers and other third
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`parties in the LED industry through litigation has created a substantial and immediate
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`dispute between Everlight and Nichia’s patents-in-suit.
`
`III.
`
`A.
`
`Law & Analysis
`
`Standard of Review
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`Federal Rule of Civil Procedure12(b)(6) allows the court to make an assessment as
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`to whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R.
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`Civ. P. 12(b)(6). “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain
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`statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the
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`defendant fair notice of what the ... claim is and the grounds upon which it rests.’” Bell
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`Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41,
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`47 (1957). Even though the complaint need not contain “detailed” factual allegations, its
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`“factual allegations must be enough to raise a right to relief above the speculative level on
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`the assumption that all of the allegations in the complaint are true.” Ass’n of Cleveland Fire
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`Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atlantic, 550
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`U.S. at 555).
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`The court must construe the complaint in favor of the plaintiff, accept the allegations
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`of the complaint as true, and determine whether plaintiff’s factual allegations present
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`plausible claims. To survive a Rule 12(b)(6) motion to dismiss, plaintiff’s pleading for relief
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`must provide “more than labels and conclusions, and a formulaic recitation of the elements
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`of a cause of action will not do.” Id. (citations and quotations omitted). “[T]he tenet that
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`a court must accept as true all of the allegations contained in a complaint is inapplicable
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`to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “Nor does a complaint
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`suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. at 678.
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` “[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
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`relief that is plausible on its face.’” Id. The plausibility standard requires “more than a sheer
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`possibility that a defendant has acted unlawfully.” Id. “[W]here the well-pleaded facts do
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`not permit the court to infer more than the mere possibility of misconduct, the complaint has
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`alleged–but it has not ‘show[n]’– ‘that the pleader is entitled to relief.’” Id. at 679.
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`B.
`
` i.
`
`Inequitable Conduct
`
`Introduction
`
`Nichia moves to dismiss counts III and VI which seek a declaratory judgment that
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`Nichia’s patents-in-suit are “unenforceable due to Nichia’s fraud and inequitable conduct
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`before the United States PTO [Patent and Trademark Office].” The crux of Nichia’s
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`argument is that Everlight fails to meet the pleading standard for inequitable conduct in
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`light of the Federal Circuit’s decisions in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d
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`1312 (Fed. Cir. 2009) and Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276
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`(Fed. Cir. 2011).
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`Nichia raises three arguments in support of its contention that Everlight has failed
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`to meet the rigorous pleading standards for alleging inequitable conduct, a defense that the
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`Federal Circuit has found to be “overplayed, []appearing in nearly every patent suit” which
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`“plague[s] not only the courts but also the entire patent system.” Therasense, 649 F.3d at
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`1289. First, Everlight fails to identify who committed the inequitable conduct before the
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`PTO. Further, Everlight fails to identify why the alleged misrepresentations are material
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`and how the patent examiner would have used this information to assess the patentability
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`of the subject patents. Lastly, Everlight does not allege sufficient facts to support an
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`inference of specific intent to deceive during the prosecution of Nichia’s patents-in-suit.
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` ii.
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`Applicable Law
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`“To prevail on the defense of inequitable conduct, the accused infringer must prove
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`that the applicant misrepresented or omitted material information with the specific intent to
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`deceive the PTO.” Therasense, 649 F.3d at 1287. Both elements-intent and materiality-
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`must be established by clear and convincing evidence. Id. The Exergen court held that
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`“in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the
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`specific who, what, when, where, and how of the material misrepresentation or omission
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`committed before the PTO.” Exergen, 575 F.3d at 1327.
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`While “knowledge” and “intent” may be alleged generally, “a pleading of inequitable
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`conduct under Rule 9(b) must include sufficient allegations of underlying facts from which
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`a court may reasonably infer that a specific individual (1) knew of the withheld material
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`information or of the falsity of the material misrepresentation, and (2) withheld or
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`misrepresented this information with a specific intent to deceive the PTO.” Id. at 1328-29.
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`To adequately plead materiality, the allegations must “explain both ‘why’ the withheld
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`information is material and not cumulative, and ‘how’ an examiner would have used this
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`information in assessing the patentability of the claims.” Id. at 1329-30. “[A]ffirmative
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`representations by the patentee, in contrast to misleading omissions, are more likely to be
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`regarded as material.” Hoffmann-La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 1367
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`(Fed. Cir. 2003).
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` iii.
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`Claims III and VI
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`Everlight’s pleading identifies alleged falsehoods contained in Nichia’s patents-in-
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`suit, specifically “purported phosphor compositions that Nichia claims to have made and
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`reduced to practice” before filing its application that led to the ‘925 Patent. Am. Compl., ¶
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`41.
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`In particular, Nichia claims to have made and reduced to practice
`working LEDs from the purported phosphors “Y3In5O12:Ce” and
`“Gd3(Al0.5 Ga0.5)5O12:Ce.” See ‘925 Patent, Exs. 8 and 12 respectively.
`Upon information and belief, Nichia never could have made such
`phosphors because they are chemically unstable using the type of
`fabrication methods Nichia described in the ‘925 Patent.
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`Id. Both patents-in-suit disclose the alleged invention of light-emitting diodes using
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`phosphors containing indium and gadolinium, where indium is used as a full substitute for
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`aluminum and gadolinium is used as a full substitute for yttrium in the paradigm yttrium-
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`aluminum-garnet phosphor structure. See ‘925 Patent, 10:17-35, 26:40-50, 30:45-54,
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`Claims 1, 14, 23; ‘960 Patent, 26:65-27:7, 31:7-15. In example 12 of the ‘925 Patent, the
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`inventors represent that they made 100 pieces of LEDs “using phosphor represented by
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`general formula “Y3In5O12:Ce and, similarly in example 8, they claim to have made 100
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`pieces of LEDS “using phosphor represented by general formula Gd3(Al0.5 Ga0.5)5O12:Ce.”
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`See Am. Compl., ¶¶ 41, 55, 70, 128, 130. Nichia’s patents-in-suit discuss the results of
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`“life” testing of these actual pieces purportedly made by the inventors and compare their
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`levels of luminance and weatherability with LEDs made in accordance with the paradigm
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`yttrium-aluminum-garnet phosphor structure. Id. The independent claims of the ‘925
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`Patent expressly cover within their scope LEDs using a phosphor where indium is fully
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`substituted for aluminum and/or where gadolinium is fully substituted for yttrium. Id., ¶¶ 83-
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`6, 89.
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`Further, Everlight alleges that persons working for Nichia have a pattern and practice
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`of submitting falsehoods to the PTO in order to obtain patent protection beyond that which
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`Nichia had a lawful right to obtain. Specifically, the Amended Complaint states:
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`Upon information and belief, the fictitious experimental results and claims
`were included not only in the two Nichia patents-in-suit . . . but over twenty
`(20) other Nichia patents and pending applications claiming priority to the
`‘925 Patent and relating to phosphor technology (the “Phosphor Patent
`Family”). In addition, upon information and belief, Nichia’s intent to deceive
`the United States Patent & Trademark Office (“PTO”) and obtain patent
`protection beyond that which it had a lawful right to obtain is evidenced by
`Nichia’s pattern and practice of including such fictitious experimental results
`and claims in other United States patents outside the Phosphor Patent
`Family but still relating to compound semi-conductor-based LED technology.
`These other patents include at least Nichia’s U.S. Patent Nos. 5,306,662;
`U.S. 5,747,832, U.S. 5,767,581.
`
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`Am. Compl., ¶ 41.
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` iv.
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`Identity of the Actor Engaged in Misconduct before the PTO
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`Nichia first argues that Everlight’s inequitable conduct allegations are deficient
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`because the pleading identifies the “who” only as “Yoshinori Shimzu, Kensho Sakano,
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`Yasunobu Noguchi, Toshio Moriguchi, and/or other persons who were substantially
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`involved in the preparation or prosecution of the application that led to the ‘925 Patent . .
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`. .” Am. Compl., ¶ 43. According to Nichia, this all-encompassing identification of the entire
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`universe of actors is precisely the type of overbroad allegation that the Exergen court ruled
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`insufficient as a matter of law. In Exergen, the court concluded that the district court
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`correctly denied the defendant’s motion to amend its answer to allege that the patents-in-
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`suit are unenforceable due to inequitable conduct. Exergen, 575 F.3d at 1316. The
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`Exergen court relied on the fact that the proposed pleading referred “generally to ‘Exergen,
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`its agents and/or attorneys’ . . . but fails to name the specific individual associated with the
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`filing or prosecution of the application . . . who both knew of the material information and
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`deliberately withheld or misrepresented it.” Id. at 1329.
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`Everlight argues that the Amended Complaint clearly identifies the actors who
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`participated in the alleged misconduct during the prosecution of the ‘925 Patent,
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`specifically, the inventors and the patent prosecutors. Everlight relies on the fact that
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`during the prosecution of both of Nichia’s patents-in-suit, each of the inventors signed a
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`declaration confirming that he or she understood the contents of the specification and
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`represented that all of the statements in the specification were true. The relevant portion
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`of the declaration states:
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`I hereby declare that all statements made herein of my own knowledge are
`true and that all statements made on information and belief are believed to
`be true; and further that these statements were made with the knowledge
`that willful false statements and the like so made are punishable by fine or
`imprisonment, or both, under Section 1001 of Title 18 of the United States
`Code and that such willful false statements may jeopardize the validity of the
`application or any patent issued thereon.
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`Plfs.’ Br. in Opp., Ex. H. Therefore, because the falsehoods regarding the production and
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`testing of the LEDs using fictitious phosphors are unmistakable on the face of Nichia’s
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`patents-in-suit, each of the inventors engaged in affirmative deception by signing such a
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`declaration. Everlight also relies on the allegations concerning Nichia’s similar misconduct
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`related to the prosecution and preparation of other patents related to phosphor technology.
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`Everlight theorizes that they have sufficient justification for including Nichia’s patent
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`prosecutors as an additional group of actors responsible for the misconduct before the
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`PTO.
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`The Court is not persuaded that Everlight has identified the “who” of the material
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`misrepresentations because they have not identified “the specific individual associated with
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`the filing or prosecution of [Nichia’s patents-in-suit] who both knew of the material
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`information and deliberately withheld or misrepresented it.” Exergen, 575 F.3d at 1329.
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`Everlight’s reliance on the inventors’ declaration does not provide sufficient facts for this
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`Court to infer that a specific inventor had the requisite knowledge of the alleged falsity set
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`forth in examples 8 and 12 of the ‘925 Patent. The inventors do not declare that they have
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`knowledge of all the information set forth in the ‘925 Patent specification, rather they attest
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`“that all statements made herein of my own knowledge are true and that all statements
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`made on information and belief are believed to be true . . . .” Plfs.’ Br. in Opp., Ex. H
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`(emphasis added). Allegations similar to Everlight’s allegations were found to be
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`insufficient under Exergen in Mitsubishi Heavy Indus., Ltd. v. GE, No. 10-cv-812, 2012 U.S.
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`Dist. LEXIS 32314, *4-7 (M.D. Fla. Mar. 12, 2012).
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`In Mitsubishi Heavy, the court concluded that naming the inventors and/or the
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`attorneys and agents involved in the preparation or prosecution of the subject patent was
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`insufficient because the court could not determine who was involved in the deceptive
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`conduct. Mitsubishi Heavy, 2012 U.S. Dist. LEXIS 32314, at *4-6. The Court finds the
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`analysis in Mitsubishi Heavy to be relevant to the issue herein:
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`The double ‘and/or’ conjunction is too often used by lawyers trying to cover
`all bases. Its use often has unintended consequences. Through the “and”
`part of the conjunction, GE has managed to lump the named inventors,
`attorneys, and agents together under the title ‘Applicants,’ and through the
`‘or’ portion GE has disjoined them; the result is that GE has failed to
`specifically identify who is guilty of misconduct.
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`*
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`*
`
`*
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`The Eighth Defense does not attribute a particular act or statement to a
`specific individual but instead refers to ‘Applicants.’ Moreover, a strict
`application of the ‘or’ alternative of the double conjunction in this case results
`in an allegation that either the named inventors or some other individual or
`individuals engaged in deceptive conduct. The other individual or individuals,
`who remain unnamed, are perhaps the only ones to have engaged in the
`suspect behavior. Under this construction, GE certainly cannot be said to
`have made an allegation against a particular person.
`
`*
`
`*
`
`*
`
`GE’s allegations as to who committed the acts of misrepresentation and
`omission in the Amended Counterclaim and Eighth Defense claiming
`inequitable conduct are impermissibly vague. By broadly referring to all
`those involved in the preparation and prosecution of the ‘185 patent, GE has
`not met its obligation to specifically identify those who both knew of the
`material information and deliberately withheld or misrepresented it.
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`Mitsubishi Heavy, 2012 U.S. Dist. LEXIS 32314, at *5-7. Everlight does not indicate how
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`Mitsubishi Heavy is distinguishable from the present matter. Thus, Everlight has failed to
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`set forth the requisite factual allegations as to “who” had actual knowledge of the false
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`testing and misrepresented this to the PTO, a requirement for pleading inequitable conduct
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`under Exergen.
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` v. Materiality and Specific Intent to Deceive
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`Nichia next argues that Everlight’s inequitable conduct allegations fail to allege “but-
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`for” materiality, as well as fail to allege specific intent to deceive the PTO. The central
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`feature of Everlight’s inequitable conduct allegations is that two of the twelve specific
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`examples set forth in the ‘925 Patent were not actually produced because they are
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`“chemically unstable using the type of fabrication methods described in the ‘925 Patent.”
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`Am. Compl., ¶ 41. Everlight provides no facts to support the assertion that these two
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`examples are chemically unstable. Also problematic is the fact that Everlight does not
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`allege that the patent examiner was misled by the two examples. Everlight provides only
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`conclusory statements that, “[u]pon information and belief, at least claims 1, 14 and 23 of
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`the ‘925 Patent would not have issued but for the misrepresentation and omissions of the
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`Individuals With a Duty to Disclose.” Id., ¶ 94. The Amended Complaint states that “[t]he
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`phosphor described in Example 12 falls within the scope of at least claims 1, 14 and 23 of
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`the ‘925 Patent” and “[t]he phosphor described in Example 8 falls within the scope of at
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`least claims1, 14 and 23 of the ‘925 Patent.” Am. Compl., ¶¶ 83, 89. Thus, according to
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`Everlight, “the Individuals With a Duty to Disclose failed to disclose to the PTO that the full
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`scope of the claims, including claims 1, 14 and 23, was not enabled.” Id., ¶ 92.
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`Nichia argues that these allegations ignore the law of enablement under 35 U.S.C.
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`§ 112, ¶ 1. Disclosure of working examples is not required to satisfy the enablement
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`requirement. See In re Borkowski, 422 F.2d 904, 908 (C.C.P.A. 1970) (“[A] specification
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`need not contain a working example if the invention is otherwise disclosed in such a
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`manner that one skilled in the art will be able to practice without an undue amount of
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`experimentation.”). Further, Everlight’s allegation that examples 8 and 12 are ‘fictitious’ is
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`without merit. The Manual of Patent Examining Procedure acknowledges that examples
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`described in a specification may either be “working” or “prophetic,” i.e., “based on predicted
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`results rather than work actually conducted or results actually achieved.” See MPEP §
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`2164.02 (Sixth Ed., Rev. 3, July 1997).
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`According to Nichia, at most the inventors can be criticized for not making clear that
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`the two examples were expected to achieve the described results. Everlight’s pleading fails
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`the “but-for” materiality test because it does not indicate how a patent examiner would have
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`used these two examples in assessing the patentability of the claims. Exergen, 575 F.3d
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`at 1329-30. Everlight does not allege that the patent examiner relied on either of these
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`examples to support enablement or any other requirement for patentability.
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`Everlight counters that the claims of unenforceability are focused on one pattern of
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`misconduct, the claims were diligently investigated and are precisely the type of claims
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`Exergen and Therasense were meant to protect, not eradicate.
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`Everlight maintains that they have alleged “but-for” materiality. Gadolinium and
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`indium are members of “Markush” groups in each of the independent claims of the ‘925
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`Patent. See, e.g., ‘925 Patent, Claim 1 (“What is claimed is: 1. A light emitting device,
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`comprising a light emitting component and a phosphor capable of absorbing a part of light
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`emitted by the light emitting component and emitting light of wavelength different from that
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`of the absorbed light; wherein said light emitting component comprises a nitride compound
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`semiconductor . . . and said phosphor contains a garnet fluorescent material comprising
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`1) at least one element selected from the group consisting of Y, Lu, Se, La, Gd, and Sm,
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`and 2) at least one element selected from the group consisting of Al, Ga and In . . . .”)
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`(emphasis added).
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`“A Markush group is a listing of specified alternatives of a group in a patent claim.”
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`Abbott Labs. v. Baxter Pharm. Prods., 334 F.3d 1274, 1280 (Fed. Cir. 2003). Claims
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`containing Markush groups require enablement support for each member of the Markush
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`group. In re Fouche, 439 F.2d 1237, 1242 (C.C.P.A. 1971). Here, each independent claim
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`of the ‘925 Patent expressly claims LEDs that use a phosphor consisting of only gadolinium
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`from the first Markush group and/or indium from the second Markush group. The fictitious
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`phosphors disclosed in Examples 8 and 12 are the only support in the ‘925 Patent for such
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`claimed LEDs. None of the other examples in the specification addresses such LEDs.
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`Everlight argues that the claims of the ‘925 Patent are not enabled because a person of
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`ordinary skill in the art would not be able to make the fictitious phosphors. See Am.
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`Compl., ¶¶ 49, 87-88, 90-91. According to Everlight, it is clear that but for the falsehoods
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`endorsed in the inventors’ declarations, the claims encompassing LEDs using the fictitious
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`phosphors would not have issued. See Am. Compl., ¶ 48 (“Upon information and belief, the
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`PTO would not have allowed the ‘925 Patent to issue but for the misrepresentations and
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`omissions regarding the fictitious experiments.”); see also Am. Compl., ¶ 94 (“Upon
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`information and belief, at least claims 1, 14 and 23 of the ‘925 Patent would not have
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`issued but for the misrepresentations and omissions of the Individuals with a Duty to
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`Disclose.”).
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`Moreover, Nichia omits from its argument that an exception to the requirement of
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`“but-for materiality” was carved out by the Therasense court. Specifically, the court held
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`that:
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`Although but-for materiality generally must be proved to satisfy the materiality
`prong of inequitable conduct, this court recognizes an exception in cases of
`affirmative egregious misconduct. This exception to the general rule
`requiring but-for proof incorporates elements of the early unclean hands
`cases before the Supreme Court, which dealt with deliberately planned and
`carefully executed schemes to defraud the PTO and the courts. When the
`patentee has engaged in affirmative acts of egregious misconduct, such as
`filing of an unmistakably false affidavit, the misconduct is material. After all,
`a patentee is unlikely to go to great lengths to deceive the PTO with a
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`4:12-cv-11758-GAD-MKM Doc # 50 Filed 11/02/12 Pg 15 of 20 Pg ID 914
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`falsehood unless it believes that falsehood will affect issuance of the patent.
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`*
`*
`*
`By creating an exception to punish affirmative egregious acts without
`penalizing the failure to disclose information that would not have changed the
`issuance decision, this court strikes a necessary balance between
`encouraging honesty before the PTO and preventing unfounded accusations
`of inequitable conduct.
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`Id. at 1292-93 (internal citations omitted). Everlight’s inequitable conduct claims are based
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`on allegations that the inventors of Nichia’s patents-in-suit affirmatively represented
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`falsehoods about production and testing of at least a total of 200 LEDs using fictitious
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`phosphors in order to use these fictitious phosphors within the scope of every claim of the
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`‘925 Patent, and swearing to the truthfulness of this information in affidavits submitted to
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`the PTO. Am. Compl., ¶¶ 41, 43, 47-94.
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`Nichia refutes Everlight’s argument that the examples that were not actually
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`produced fit within the narrow exception to “but-for” materiality carved out in Therasense.
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`Everlight cannot credibly argue that describing predicted results in the past tense is akin
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`to the “filing of an unmistakably false affidavit,” the example provided by the Therasense
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`court. Because the exception does not apply, and Everlight has not shown ‘but-for’
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`materiality without alleging that the patent examiners relied upon the examples in
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`determining patentability, Everlight has not pled the “how” and “why” of its inequitable
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`conduct allegation.
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`The court disagrees that Everlight has not established “but-for” materiality. Nichia
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`relies on the case of SAP Am., Inc. v. Purple Leaf, Inc., No. 11-4601, 2012 U.S. Dist.
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`LEXIS 83531, at *16 (N.D. Cal. June 15, 2012) in support of its argument that, because
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`Everlight fails to allege that the patent examiners relied on the alleged fictitious phosphors
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`4:12-cv-11758-GAD-MKM Doc # 50 Filed 11/02/12 Pg 16 of 20 Pg ID 915
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`in determining patentability of the ‘925 Patent, they fail to meet the materiality requirement
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`for pleading inequitable conduct. However, Purple Leaf appears to support Everlight’s
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`contention that they have alleged “but-for” materiality. In Purple Leaf, the court concluded
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`that the plaintiff had not alleged “but-for” materiality because “it has not alleged that the
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`PTO would have acted differently if Yadav-Ranjan had not made the misrepresentations
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`she made about ownership and/or assignment of the patent. There are no facts pled
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`showing that ‘the patentee’s misconduct resulted in the unfair benefit of receiving an
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`unwarranted claim.’” Purple Leaf, 2012 U.S. Dist. LEXIS 83531, at *16. Here, Everlight
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`alleges that had the PTO known of the fictitious phosphors, at least independent claims 1,
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`14 and 23 of the ‘925 would not have issued. Am. Compl., ¶¶ 41, 94.
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`Nichia also maintains that Everlight has not alleged facts to support an inference of
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`specific intent to deceive. The Therasense court made clear that intent to deceive must be
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`considered independent of materiality, and cannot be inferred solely based on materiality.
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`See Therasense, 649 F.3d at 1290. Nichia also argues that the decision in Therasense
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`changed the pleading standard for specific intent to require allegations that the specific
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`intent to deceive must be the single most reasonable inference to be drawn from the facts
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`pled in the complaint. See Mot. to Dismiss at 9.
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`The Court rejects this argument. Therasense involved an appeal of a judgment
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`concluding that one of the patents in the suit was unenforceable, thus Therasense clarified
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`the proof, and not the pleading, required for establishing inequitable conduct – in particular
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`the elements of intent and materiality. Therasense, 649 F.3d at 1285, 1290 (“[T]o meet the
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`clear and convincing evidence standard, the specific intent to deceive must be the
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`‘single most reasonable inference able to be drawn from the evidence.’”); see also, Human
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`Genome Scis., Inc. v. Genentech, Inc., No. 11-6519, 2011 U.S. Dist. LEXIS 153834, at *9
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`(C.D. Cal. Dec. 9, 2011) (“Exergen requires the facts in support of an inequitable conduct
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`claim be pled with particularity, [while] Therasense dictates what those facts must be.”).
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`In Human Genome, the court concluded that “the accused infringer must allege facts
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`from which it is plausible that the applicant had an intent to deceive. The i