Case 3:06-cv-02213-G Document 40 Filed 07/05/07 Page 1 of 8 PageID 341
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
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`CIVIL ACTION NO.
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`3:06-CV-2213-G
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`ECF
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`MICROSOFT CORPORATION, a
`Washington corporation,
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`Plaintiff,
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`VS.
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`JOHN WORTH, Individually and d/b/a
`COMPUTER’S WORTH, INC. d/b/a
`COMPUTER’S, INC. d/b/a
`COMPUTERS WORTH 2006, ET AL.,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the court is the motion of the plaintiff Microsoft Corporation
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`(“Microsoft”) to strike the defendants’ fourth, twelfth, and thirteenth affirmative
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`defenses pursuant to FED. R. CIV. P. 12(f). For the reasons set forth below, the
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`motion is denied.
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`I. BACKGROUND
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`On December 4, 2006, Microsoft filed this action against John Worth and
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`Alicia Worth a/k/a Alicia Watson in both their individual capacities and in their
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`Case 3:06-cv-02213-G Document 40 Filed 07/05/07 Page 2 of 8 PageID 342
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`capacities as sole-proprietors of Computer’s Worth, Inc., Computer’s Worth, and
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`Computers Worth 2006 (collectively, “the defendants”). Complaint ¶¶ 2-3. This
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`case asserts, inter alia, copyright and trademark infringement by the defendants. Id.
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`¶¶ 24-43. Specifically, the complaint alleges three transactions involving Microsoft
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`and the defendants in which the defendants sold counterfeit Microsoft products to
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`undercover representatives of Microsoft. Id. ¶¶ 15-16, 18. Microsoft alleges that
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`between the second and third transaction, it notified the defendants that they had
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`distributed counterfeit software, which infringed on Microsoft’s intellectual property
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`rights, and ordered the defendants to cease and desist. Id. ¶ 17.
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`On February 21, 2007, the defendants filed their answer to the complaint
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`denying the alleged transactions and notification. Defendants John Worth’s and
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`Alice Worth’s Answer to the Complaint (“Defendants’ Answer”) at 6-7. Further, they
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`asserted fifteen affirmative defenses. Id. at 17-18. On March 13, 2007, Microsoft
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`filed the instant motion to strike three of the defendants’ affirmative defenses:
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` unclean hands, copyright and trademark misuse, and the first sale doctrine. Brief in
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`Support of Microsoft’s Motion to Strike Defendants’ Fourth, Twelfth, and Thirteenth
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`Affirmative Defenses (“Motion to Strike”) at 5.
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`II. ANALYSIS
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`Microsoft argues that the affirmative defenses are insufficient as a matter of
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`law because: (1) the affirmative defenses are not related, in any manner, to the
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`Case 3:06-cv-02213-G Document 40 Filed 07/05/07 Page 3 of 8 PageID 343
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`allegations in the complaint; (2) the affirmative defenses cannot serve to excuse the
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`defendants’ actions; and (3) the affirmative defenses were not sufficiently pled. Id. at
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`5-6.
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`A. Standard for Pleading under Rule 8
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`“An affirmative defense is subject to the same pleading requirements as is the
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`complaint.” Woodfield v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999). Thus, an
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`affirmative defense need only recite a short and plain statement of the claim showing
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`that the pleader is entitled to relief. FED. R. CIV. P. 8(a)(2). It must be pled with
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`enough specificity to give the plaintiff “fair notice” of the defense being advanced.
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`Woodfield, 193 F.3d at 362. In some instances the mere naming of the defense will
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`suffice. Id. The court finds that the three affirmative defenses in questions have been
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`pled with sufficiency to satisfy Rule 8(a). Accordingly, to the extent the plaintiff
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`moves to strike the defenses on this ground, the motion is denied.
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`B. Standard for Motion to Strike under Rule 12(f)
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`Rule 12(f) confers on the court the authority, upon motion by a party or sua
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`sponte, to order as stricken from any pleading any “redundant, immaterial,
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`impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). Motions under Rule 12(f)
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`are disfavored. Federal Deposit Insurance Corporation v. Cheng, 832 F. Supp. 181, 185
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`(N.D. Tex. 1993) (Sanders, C.J.). A court should not strike any portion of a pleading
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`as irrelevant unless: (1) there is no possible relation between the challenged portion
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`of the pleading and the underlying controversy; or (2) the challenged portion may
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`prejudice the moving party. See OKC Corporation v. Williams, 461 F. Supp. 540, 550
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`(N.D. Tex. 1978) (Higginbotham, J.). While the decision to grant a motion to strike
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`rests with the discretion of the trial court, a court must deny a motion to strike a
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`defense if there is any question of law or fact. Federal Deposit Insurance Corporation v.
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`Niblo, 821 F. Supp. 441, 449 (N.D. Tex. 1993) (Cummings, J.); See also Kaiser
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`Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th
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`Cir. 1982) (“[A] Rule 12(f) motion to dismiss a defense is proper when the defense is
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`insufficient as a matter of law.”), cert. denied, 459 U.S. 1105 (1983).
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`C. The Defendant’s Affirmative Defenses
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`1. Unclean Hands
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`A well-proven unclean hands defense “will bar enforcement of a valid copyright
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`when a plaintiff commits wrongdoing ‘of serious proportions.’” Saxon v. Blann, 968
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`F.2d 676, 680 (8th Cir. 1992). The defense is available only where the plaintiff’s
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`misconduct is directly related to the merits of the controversy between the parties.
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`Mitchell Brothers Film Group v. Cinema Adult Theater, 604 F.2d 852, 863 (5th Cir.
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`1979), cert. denied, 445 U.S. 917 (1980). Additionally, an unclean hands defense can
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`prevent the award of equitable relief. Alcatel USA, Inc. v. DGI Technologies, Inc., 166
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`F.3d 772, 794 (5th Cir. 1999).
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`As an affirmative defense, unclean hands can absolve the defendant of liability
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`from both the legal claims of copyright and trademark infringement and the equitable
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`claims for injunctive relief. On the information before it, the court cannot say that
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`the affirmative defense is so unrelated to the controversy as to warrant striking the
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`defense.
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`2. Copyright Misuse
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`The misuse doctrine bars a plaintiff’s recovery for copyright infringement if
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`that copyright is used unlawfully. Alcatel USA, Inc., 166 F.3d at 792. The doctrine
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`forbids using a copyright to secure an exclusive right or limited monopoly not granted
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`by the Copyright Office and in a manner inconsistent with public policy. Id. In the
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`Fifth Circuit, copyright misuse is a valid defense against infringement claims. See
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`DSC Communications Corporation v. DGI Technologies, Inc., 81 F.3d 597, 601 (5th Cir.
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`1996). Microsoft questions the legal sufficiency of the copyright misuse defense
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`based on the facts alleged in its complaint and contends there is no connection
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`between Microsoft’s alleged misconduct and the defendant’s copyright infringement.
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`Motion to Strike at 10-11.
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`Striking copyright misuse as a defense in the instant case is inappropriate. The
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`Rule 12(f) standard calls for a connection between the claims and the defense, not an
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`absolute determination of the efficacy of the defense on the merits. The majority of
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`the cases cited by Microsoft in support of the motion to strike involved motions for
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`summary judgment in which the court determined, after discovery, that the defense
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`was insufficient as a matter of law.*
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`The Fifth Circuit recognizes the defense as a legitimate bar to an infringement
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`claim. Alcatel USA, Inc., 166 F.3d at 792-93. Consequently, the affirmative defense,
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`if proven, may be legally sufficient to shield the defendants from liability in a
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`copyright infringement action.
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`3. Trademark Misuse
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`Microsoft contends that, as a matter of law, trademark misuse is insufficient to
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`constitute a defense. “Although the courts are unsettled about whether the defense of
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`‘trademark misuse’ even exists, it has been applied where a defendant can show that a
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`The exceptions are Microsoft Corporation v. Jesse’s Computers & Repair, Inc.,
`211 F.R.D. 681 (M.D. Fla. 2002), and Microsoft Computer Support Services of Carolina,
`Inc., 123 F. Supp. 2d 945 (W.D.N.C. 2000). Though Jesse’s Computers & Repair is
`factually similar to the instant case, the court there granted Microsoft’s Rule 12(f)
`motion to strike copyright misuse as a defense because that particular defense is not
`recognized in the Eleventh Circuit. 211 F.R.D. at 684-85. The same is not true in
`the Fifth Circuit. See DSC Communications Corporation, 81 F.3d at 601.
`The other exception is Computer Support Services of Carolina, Inc., which
`struck the copyright misuse affirmative defense on a Rule 12(f) motion because the
`court required the defendant to show “a nexus between the plaintiff’s purported
`misconduct and the defendant’s infringing acts.” 123 F. Supp. 2d at 955. While this
`nexus standard has been adopted by some district courts, it has been rejected by
`others. See International Motor Contest Association, Inc. v. Staley, 434 F. Supp. 2d 650,
`668-69 (N.D. Iowa 2006); Microsoft Corporation v. Fredenburg, Civ. A. No. 05-1710,
`2006 WL 752985, at *1 (W.D Pa. Mar. 22, 2006). For its part the Fifth Circuit has
`not articulated a standard requiring the defendant to make this nexus showing.
`Furthermore, the only court of appeals to address the existence of a nexus
`requirement -- the Third Circuit -- rejected the requirement. See International Motor
`Contest Association, Inc., 434 F. Supp. 2d at 669 (quoting Video Pipeline, Inc. v. Buena
`Vista Home Entertainment, Inc., 342 F.3d 191, 204 (3rd Cir. 2003)).
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`plaintiff has used its marks in violation of the antitrust laws or has made
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`misrepresentations to the public in an attempt to increase the scope of its marks.”
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`Deere & Co. v. MTD Holdings, Inc., No. 00-CV-05936, 2004 WL 1794507, at *3
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`(S.D.N.Y. Aug. 11, 2004). For the same reasons articulated above in the analysis of
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`the copyright misuse affirmative defense, the court finds the trademark misuse
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`defense to be legally sufficient. Only future discovery on the issue will reveal whether
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`the affirmative defense is related to the allegations in the complaint.
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`4. First Sale Doctrine
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`Under the first sale doctrine, a copyright holder has the exclusive right to vend
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`its product and may place restrictions on the product’s use. American International
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`Pictures, Inc. v. Foreman, 576 F.2d 661, 663-64 (5th Cir. 1978). However, after the
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`first sale, a copyright holder has no control over the occurrence or conditions of
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`future sales. Id. Thus, copyright holders lose the ability to control their product after
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`the “first sale.” Id. The first sale doctrine does not, however, cover the sale of
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`counterfeit or illegally-reproduced copies. Microsoft Corporation v. Software Wholesale
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`Club, Inc., 129 F. Supp. 2d 995, 1006 n.8 (S.D. Tex. 2000).
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`The crux of Microsoft’s argument regarding the need to strike this defense is
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`that the defense is legally insufficient because the defendants sold unlawfully-made or
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`counterfeit software. Motion to Strike at 12-14. The defendants deny the accusation
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`that the products they sold were counterfeit. Defendants’ Answer ¶¶ 14-20. Thus,
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`whether the first sale doctrine is available as an affirmative defense rests on disputed
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`factual issues. The outcome of that factual dispute may relieve the defendants of
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`liability from the plaintiff’s claims. Therefore, the court will not strike this defense.
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`III. CONCLUSION
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`For the reasons stated above, the plaintiff’s motion to strike is DENIED.
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`SO ORDERED.
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`July 5, 2007.
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