Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 1 of 8 PageID 621
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
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`B.E. TECHNOLOGY, L.L.C.,
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`Plaintiff/Counter-Defendant,
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`v.
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`MICROSOFT CORP.,
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`Defendant/Counterclaimant.
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`Case No. 2:12-cv-02829 JPM tmp
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`JURY DEMAND
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`PLAINTIFF B.E. TECHNOLOGY, L.L.C.’S REPLY IN SUPPORT OF ITS
`MOTION TO DISMISS UNDER FED. R. CIV. P. 12(b)(6)
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`Richard M. Carter (TN B.P.R. #7285)
`Adam C. Simpson (TN B.P.R. #24705)
`MARTIN, TATE, MORROW & MARSTON, P.C.
`6410 Poplar Avenue, Suite 1000
`Memphis, TN 38119-4839
`Telephone: (901) 522-9000
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`Robert E. Freitas (CA Bar No. 80948)
`Craig R. Kaufman (CA Bar No. 159458)
`Daniel J. Weinberg (CA Bar No. 227159)
`Qudus B. Olaniran (CA Bar No. 267838)
`FREITAS TSENG & KAUFMAN LLP
`100 Marine Parkway, Suite 200
`Redwood Shores, CA 94065
`Telephone: (650) 593-6300
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`Attorneys for Plaintiff
`B.E. Technology, L.L.C.
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`Dated: August 16, 2013
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 2 of 8 PageID 622
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`Defendant Microsoft Corporation (“Microsoft”) presents no legally sufficient response to
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`the points and authorities presented in plaintiff B.E. Technology, L.L.C.’s (“B.E.”) motion to
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`dismiss Microsoft’s counterclaims.1 The sufficiency of Microsoft’s pleading is not measured
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`against Official Form 18 of the Appendix to the Federal Rules of Civil Procedure. The standard
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`against which Microsoft’s counterclaims must be measured is the Supreme Court’s Twombly and
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`Iqbal standard. The Court should grant B.E.’s motion to dismiss because Microsoft’s declaratory
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`judgment counterclaims do not meet that standard.
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`I.
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`MICROSOFT’S COUNTERCLAIMS FOR DECLARATORY JUDGMENT OF
`NON-INFRINGEMENT AND INVALIDITY SHOULD BE DISMISSED.
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`A.
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`The Twombly/Iqbal Standard Governs Microsoft’s Counterclaims.
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`As discussed in B.E.’s opening brief, declaratory judgment counterclaims must satisfy the
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`standard set forth by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl.
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`Corp. v. Twombly, 550 U.S. 544 (2007). Microsoft does not approach the requirements of that
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`standard and its counterclaims are devoid of factual allegations sufficient to permit an inference
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`that B.E.’s patents are not infringed or invalid. Compare D.E. 27 at 7-9 with Groupon, Inc. v.
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`MobGob LLC, 2011 WL 2111986, at *5 (N.D. Ill. May 25, 2011) (the counterclaim “provides
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`the Court with no basis for making a reasonable inference in [defendant’s] favor”); see also
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`Iqbal, 556 U.S. at 678 (“[W]e are not bound to accept as true a legal conclusion couched as a
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`factual allegation.”) (internal quotation marks omitted).
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`1 B.E. simultaneously moved to dismiss Microsoft’s counterclaims and strike certain affirmative
`defenses. See D.E. 34. A party moving for relief under Fed. R. Civ. P. 12(b) has a right to file a
`reply memorandum without leave of court, Civil L.R. 12.1(c), while no such right exists for a
`party seeking relief under Fed. R. Civ. P. 12(f). Civil L.R. 7.2(c). To avoid further burdening
`the Court’s already heavy docket, B.E. files only a reply in support of its Rule 12(b) motion and
`rests on its moving papers to support its Rule 12(f) motion.
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 3 of 8 PageID 623
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`Microsoft wrongly argues that its counterclaims are adequate because they meet the
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`requirements of Official Form 18 of the Federal Rules of Civil Procedure. D.E. 60 at 4
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`(“Microsoft’s counterclaims of non-infringement and invalidity follow the template of Form 18
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`and are sufficient to put B.E. on notice of Microsoft’s claims of non-infringement and
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`invalidity.”). A complaint for direct patent infringement is measured against Official Form 18.
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`In re Bill of Lading Transmission and Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed.
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`Cir. 2012). There is no Official Form for pleading declaratory judgment claims or
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`counterclaims. See Memory Control Enter., LLC v. Edmunds.com, Inc., 2012 WL 681765, at *3
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`(C.D. Cal. Feb. 8, 2012) (“[W]hile the Appendix of the Federal Rules of Civil Procedure
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`includes a form for patent infringement, it includes no such form for patent invalidity. Until such
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`a form is included, defendants must meet the pleading standard the Supreme Court announced in
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`Twombly and Iqbal.”).
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`Microsoft cites no authority establishing that Official Form 18 governs the pleading of
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`declaratory judgment claims, and the Federal Circuit has made clear that “Form 18 should be
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`strictly construed as measuring only the sufficiency of allegations of direct infringement.” In re
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`Bill of Lading, 681 F.3d at 1336. The Twombly/Iqbal standard, a standard based on Federal Rule
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`of Civil Procedure 8 that is generally applicable to cases filed in federal court, therefore governs
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`the pleading of a declaratory judgment claim. See Iqbal, 556 U.S. at 684 (“Our decision in
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`Twombly expounded the pleading standard for ‘all civil actions,’ and it applies to antitrust and
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`discrimination suits alike.”).
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 4 of 8 PageID 624
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`B.
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`Under the Governing Rules, Microsoft’s Burden to Allege Non-Infringement
`and Invalidity Is Different from B.E.’s Burden to Allege Direct Infringement.
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`Microsoft argues that the existence of different pleading standards for plaintiffs and
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`counterclaimants2 results in an incongruity. D.E. 60 at 1 (“B.E.’s attempt to hold Microsoft to a
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`higher pleading requirement than B.E.’s own Complaint is incongruous and improper.”). If there
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`is an incongruity, it is the direct result of Rule 8, Twombly and Iqbal, and the decisions that were
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`made in the adoption of the Official Forms. B.E. submits that the true “incongruity” would
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`result if the Court were to recognize an exception, benefiting patent infringement defendants, but
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`not other defendants, to the Twombly/Iqbal standard governing “all civil actions.”
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`Microsoft also argues that pleading standards for patent declaratory judgment
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`counterclaims can be lowered because of the existence of unique local rules governing patent
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`cases. D.E. 60 at 1 (“This District has adopted Local Patent Rules that require early disclosure . .
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`. . [a]s such, a purported lack of specificity in the parties’ respective pleadings is quickly cured
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`by this District’s disclosure requirements.”); id. at 4-5 (“[T]he Patent Local Rules fulfill the
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`function of Twombly and Iqbal, namely, mandating early notice of the factual predicate for the
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`suit so that the court may weed out unmeritorious claims and relieve the defendant from the
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`burden of unnecessary discovery.”) (quoting Palmetto Pharms. LLC v. AstraZeneca Pharms. LP,
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`2012 WL 6025756, at *6 (D.S.C. Nov. 6, 2012)). The adoption of local rules does not “alter a
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`defendant’s pleading obligations” and does not create an exception to a defendant’s pleading
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`obligations under Twombly and Iqbal. See Tyco Fire Prods. LP v. Victaulic Co., 777 F. Supp. 2d
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`893, 904 (E.D. Pa. 2011); see also GE Lighting Solutions, LLC v. Lights of Am., Inc., 2013 WL
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`2 The actual distinction in the law is between infringement claimants and counterclaimants on the
`one hand, and declaratory judgment claimants and counterclaimants, on the other. A
`counterclaimant alleging direct patent infringement may rely on Official Form 18. A plaintiff
`asserting a declaratory judgment claim must satisfy the Twombly/Iqbal standard because there is
`no official form for declaratory judgment claims and counterclaims.
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 5 of 8 PageID 625
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`1874855, at *2 (N.D. Ohio May 3, 2013) (“[I]t would undermine Rule 8 to permit a threadbare
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`assertion of a claim on the promise that discovery will unveil the claim’s factual basis.”).
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`Moreover, under Federal Rules of Civil Procedure 83(a)(1), a local rule cannot modify the
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`pleading requirements of Rule 8, as they have been determined by the Supreme Court. See Fed.
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`R. Civ. P. 83(a)(1) (“A local rule must be consistent with—but not duplicate—federal statutes
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`and rules adopted under 28 U.S.C. §§ 2072 and 2075, . . . .”).
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`In Tyco Fire, the district court explained that the difference in pleading standards cannot
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`be remedied by allowing a counterclaimant to evade the Supreme Court’s rulings. 777 F. Supp.
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`2d at 904 (“Two wrongs do not make a right.”). If there is a problem requiring a solution, the
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`appropriate remedy is to modify or eliminate the Rule 84 forms or to update the official forms to
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`comply with the otherwise existing requirements of current law. Id. at 905. Until then,
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`defendants asserting counterclaims must do so in the manner required by Twombly and Iqbal,
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`which requires more than what Microsoft has done here. See PPS Data, LLC v. Allscripts
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`Healthcare Solutions, Inc., 2012 WL 243346, at *4 (M.D. Fla. Jan. 25, 2012) (“A fleeting
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`reference to all (or most) of these [invalidity] defenses does not rise to the level of ‘a short and
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`plain statement of the claim showing that the pleader is entitled to relief.’”) (quoting Fed. R. Civ.
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`P. 8(a)(2)); Orientview Techs. LLC v. Seven For All Mankind, LLC, 2013 WL 4016302, at *7
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`(S.D.N.Y. Aug. 7, 2013) (“Measured against the heightened pleading standard, [defendant’s]
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`invalidity counterclaim falls well short.”); Gemcor II, LLC v. Electroimpact Inc., 2012 WL
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`628199, at *2 (D. Kan. Feb. 27, 2012) (granting motion to dismiss); Duramed Pharms, Inc. v.
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`Watson Labs, Inc., 2008 WL 5232908, at *4 (D. Nev. Dec. 12, 2008) (granting motion to dismiss
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`counterclaims); Sprint Commc’ns. Co. v. Theglobe.com, Inc., 233 F.R.D. 615, 619 (D. Kan.
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 6 of 8 PageID 626
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`2006) (striking counterclaim); PB Farradyne, Inc. v. Peterson, 2006 WL 132182, at *3 (N.D.
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`Cal. Jan 17, 2006) (dismissing counterclaim).
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`Finally, Microsoft argues that its threadbare allegations should be excused “given the
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`paucity of detail in B.E.’s own Complaint.” D.E. 60 at 4. B.E.’s complaint is sufficient under
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`Official Form 18, whereas Microsoft cannot point to a similar safe harbor applicable to its
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`declaratory judgment counterclaims. Similarly, Microsoft contends its non-specific allegations
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`may be excused because it did not obtain adequate “detail” from B.E. about its infringement
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`contentions before answering. Id. at 4. If Microsoft lacked sufficient factual information to
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`adequately allege its counterclaims for declaratory judgment of non-infringement and invalidity
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`at that the time its answer was due, then Microsoft was not obligated to file them. It is not
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`mandatory that accused infringers assert declaratory judgment counterclaims in every case. If
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`Microsoft “lack[ed] knowledge or information sufficient to form a belief about the truth of
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`[B.E.’s] allegation[s],” it should have denied them under the authority of Federal Rule of Civil
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`Procedure 8(b)(5). That would have been sufficient to place at issue the question of
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`infringement. See Fed. R. Civ. P. 8(b)(6) (allegations deemed admitted unless denied in a
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`responsive pleading).
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`II.
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`CONCLUSION
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`For the foregoing reasons, B.E. respectfully requests that the Court grant its motion to
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`dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).
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`Dated: August 16, 2013
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`Respectfully submitted,
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`s/Daniel J. Weinberg
`Robert E. Freitas (CA Bar No. 80948)
`Craig R. Kaufman (CA Bar No. 159458)
`Daniel J. Weinberg (CA Bar No. 227159)
`Qudus B. Olaniran (CA Bar No. 267838)
`FREITAS TSENG & KAUFMAN LLP
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 7 of 8 PageID 627
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`100 Marine Parkway, Suite 200
`Redwood Shores, CA 94065
`Telephone: (650) 593-6300
`Facsimile: (650) 593-6301
`rfreitas@ftklaw.com
`ckaufman@ftklaw.com
`dweinberg@ftklaw.com
`qolaniran@ftklaw.com
`
`
`Richard M. Carter (TN B.P.R. #7285)
`Adam C. Simpson (TN B.P.R. #24705)
`MARTIN, TATE, MORROW & MARSTON, P.C.
`6410 Poplar Avenue, Suite 1000
`Memphis, TN 38119-4839
`Telephone: (901) 522-9000
`Facsimile: (901) 527-3746
`rcarter@martintate.com
`asimpson@martintate.com
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`Attorneys for Plaintiff B.E. Technology, L.L.C.
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`Case 2:12-cv-02829-JPM-tmp Document 61 Filed 08/16/13 Page 8 of 8 PageID 628
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that on August 16, 2013 a true and correct copy of the
`foregoing was electronically filed with the United States District Court for the Western District
`of Tennessee and was served on counsel by the Court’s electronic filing notification.
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`s/Daniel J. Weinberg
` Daniel J. Weinberg
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