Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 1 of 10 Page ID #:2556
`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 1 of 10 Page ID #:2556
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`EXHIBIT 1
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`ITC RULING
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`EXHIBIT 1
`ITC RULING
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 2 of 10 Page ID #:2557
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`UNITED STATES INTERNATIONAL TRADE COMMISSION
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`Washington, D.C.
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`In the Matter of
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`CERTAIN WEARABLE MONITORING
`DEVICES, SYSTEMS, AND COMPONENTS
`THEREOF
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` Inv. No. 337-TA-1190
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`ORDER NO. 11: GRANTING COMPLAINANTS’ MOTION TO STRIKE;
`DENYING RESPONDENTS’ MOTION TO AMEND
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`I. Background
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`(May 6, 2020)
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`On March 25, 2020, Complainants Philips North America, LLC and Koninklijke Philips
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`N.V. (collectively, “Complainants” or “Philips”) filed a Motion to Strike Respondents’
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`Affirmative Defense of Inequitable Conduct. Motion Docket No. 1190-002 (the “Motion to
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`Strike”).1 On April 7, 2020, Respondents Fitbit, Inc., Ingram Micro Inc., Maintek Computer
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`(Suzhou) Co., Ltd., Inventec Appliances (Pudong) (collectively, the “Fitbit Respondents”)
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`Respondents Garmin International, Inc., Garmin USA, Inc., and Garmin Ltd (collectively, the
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`“Garmin Respondents”), filed a Motion for Leave to File Amended Responses to the Complaint.
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`Motion Docket No. 1190-004 (the “Motion to Amend”). 2,3 On April 13, 2020, Commission
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`1 The Motion seeks to strike the eighth affirmative defense of Fitbit, Inc., Maintek Computer
`(Suzhou) Co., Ltd., Ingram Micro, Inc., and Inventec Appliances , and the second affirmative
`defense of Garmin International, Inc., Garmin USA, Inc., and Garmin Ltd.
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` 2
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` See Order No. 6 (Apr. 3, 2020) (granting Respondents’ motion for extension of time to file
`response).
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` 3
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` The Fitbit Respondents also seek leave to withdraw their affirmative defense that relief is not in
`the public interest (“without prejudice to presenting that position to the Commission under the
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`1
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 3 of 10 Page ID #:2558
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`Staff filed a Combined Response to the Motion to Strike and the Motion to Amend. On April 27,
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`2020, Philips filed a Combined Memorandum in Opposition to Respondents’ Motion for Leave
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`to Amend (“Opp.”).4 On May 4, 2020, Respondents filed a reply.5
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`Philips alleges that Respondents’ inequitable conduct defense fails to meet the
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`requirements of Ground Rule 2.2.2, which states that an affirmative defense of inequitable
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`conduct must satisfy Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1331 (Fed. Cir.
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`2009). Philips claims that Respondents’ inequitable conduct allegations fail to specify that (1)
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`“any named individual even knew of what references were cited in the European and Japanese
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`foreign prosecutions; (2) any named individual knew the references were material; or (3) any
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`named individual withheld either reference with the specific intent to deceive the PTO.” Motion
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`to Strike at 2. Philips seeks a dismissal of the inequitable conduct contentions with prejudice
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`because it contends that any amendment would be futile under the pertinent legal standards.
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`Respondents maintain that their original responses to the complaint were sufficiently
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`specific to satisfy the Exergen standard but seek to amend their responses to provide additional
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`details regarding the alleged inequitable conduct. Citing Rule 210.14(b)(2), Respondents
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`contend there is good cause for amending their responses because, after the Motion to Strike was
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`filed, they obtained new information in discovery that adds details to their inequitable conduct
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`defense.
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`applicable Rules”). Motion to Amend at 1. This request is not opposed and is hereby
`GRANTED.
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` 4
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` See Order No. 7 (Apr. 16, 2020) (granting Complainants’ motion for extension of time to file
`opposition).
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` 5
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` See Order No. 10 (Apr. 28, 2020) (granting Respondents’ motion for extension of time to file
`reply).
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`2
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 4 of 10 Page ID #:2559
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`Respondents’ defense of inequitable conduct alleges that Philips’s in-house prosecution
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`counsel, Frank Keegan, obtained the ’228 patent by relying on a particular limitation of the
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`claims, i.e., that the claimed processor can monitor sensor signals “in turn.” Motion to Amend,
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`Mem. at 3-4. According to Respondents, Mr. Keegan told the USPTO examiner that the “in
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`turn” limitation was not in the prior art, but he withheld information indicating the opposite. Id.
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`Respondents allege that Mr. Keegan did not disclose two items of prior art: U.S. Patent No.
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`6,077,236 (“Cunningham”) and European Patent EP0727242 (“Pacesetter”) in connection with
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`prosecution of the ’228 patent, but did submit copies of these references in connection with an
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`application for a different patent, “regarding near-identical subject matter with nearly identical
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`claims,” during the same time period. Motion to Amend at 3.
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`Respondents assert, moreover, that the European Patent Office (the “EPO”) and the
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`Japanese Patent Office (“JPO”) had rejected Philips’s arguments regarding the “in turn”
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`limitation based on Pacesetter and Cunningham. “Both the EPO and the JPO rejected Philips’
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`counterpart patent applications over these very same two prior art references, and the office
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`actions described exactly where Pacesetter and Cunningham disclose the ‘in turn’ limitation.”
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`Motion to Amend, Mem. at 4. Respondents claim that withholding the information was material
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`because the asserted claims of the ’228 patent would not have issued if the USPTO had known
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`about Pacesetter and Cunningham.
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`Respondents allege further that, in the course of discovery, they learned that Mr. Keegan
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`knew of Pacesetter and Cunningham at the time he was prosecuting the ’228 patent.
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`Respondents state that at the same time Mr. Keegan was counsel of record in the prosecution of
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`the ’228 patent, “he was also prosecuting a different patent application for Philips—U.S. Patent
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`Application No. 10/537,888 (the “’888 application”).” Id. at 6. In connection with the ’888
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`3
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 5 of 10 Page ID #:2560
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`application, Respondents allege, Mr. Keegan submitted an international search report to the
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`USPTO “listing Pacesetter and Cunningham as prior art references.” Id. at 6-7. According to
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`Respondents, this demonstrates “his awareness of those references even before the EPO and JPO
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`rejections—despite never submitting Pacesetter or Cunningham in connection with prosecution
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`of the ’228 patent.” Id. at 7. Respondents claim that this additional information, incorporated
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`into their proposed amended pleadings, shows that Mr. Keegan was aware of the prior art
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`references and their materiality and, inferentially, that he intended to deceive the patent examiner
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`by withholding those references in connection with the prosecution of the ’228 patent.
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`Respondents and Staff maintain that the amended pleadings satisfy the who, what, when,
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`where, and how of the material misrepresentation required under the Exergen standard.
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`“On information and belief, Mr. Keegan withheld the material Pacesetter reference and EPO
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`rejection from the USPTO with intent to deceive the examiner and the BPAI,” they assert.
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`Motion to Amend Ex. 1 (Fitbit’s Amended Response to the Complaint and Notice of
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`Investigation) (“proposed amendment”) at ¶ 49.6
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`II. Discussion
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`The Federal Circuit requires that inequitable conduct be pled with particularity, in
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`accordance with Fed. R. Civ. P. 9(b). Exergen, 575 F.3d at 1327–31 (Fed. Cir. 2009); see also
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`Ground Rule 2.2.2. (“Affirmative defenses that require heightened pleading in accordance with
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`Fed. Rule Civ. P. 9(b), such as inequitable conduct, must be pled with specificity, in accordance
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`with Exergen….”). To plead inequitable conduct, the inventors’ or attorneys’ knowledge of the
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`patent and their intent “may be averred generally.” Exergen, 575 F.3d at 1328–29. But a
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`defendant “must include sufficient allegations of underlying facts from which a court may
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`6 Fitbit’s proposed amendment is representative of the amended responses proposed by the other
`Respondents.
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`4
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 6 of 10 Page ID #:2561
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`reasonably infer that a specific individual (1) knew of the withheld material information or of the
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`falsity of the material misrepresentation, and (2) withheld or misrepresented this information
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`with a specific intent to deceive the PTO.” Id. “Because direct evidence of deceptive intent is
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`rare, [one] may infer intent from indirect and circumstantial evidence.” Therasense, Inc. v.
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`Becton, Dickinson and Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011).
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`As set forth by the Federal Circuit in Exergen, “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. Rule 9(b) thus assures “that only
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`viable claims alleging fraud or mistake are allowed to proceed to discovery.” In re BP
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`Lubricants USA Inc., 637 F.3d 1307, 1310 (Fed. Cir. 2011). Staff and Respondents maintain that
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`Respondents’ proposed amended pleadings satisfy the requirements of Exergen. I am
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`unpersuaded.
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`Under Exergen, the allegation of deceptive intent requires facts that permit an inference
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`that the individual made a “‘deliberate decision to withhold a known material reference’ or to
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`make a knowingly false misrepresentation.’” Exergen, 575 F.3d at 1331 (quoting Molins PLC v.
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`Textron, Inc., 48 F.3d 1172, 1181 (1995)). The Respondents’ proposed amended complaint is
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`devoid of such facts. Although the Respondents’ proposed amendment contains details not
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`present in the pleading held to be deficient in Exergen, Respondents’ key allegation of scienter is
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`made, as in Exergen, on information and belief. Motion for Leave, Ex. 1 at ¶49. As in Exergen,
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`the facts plead, “even if true, do not plausibly suggest any ‘deliberate decision to withhold a
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`known material reference’ or to make a knowingly false misrepresentation—a necessary
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`predicate for inferring deceptive intent.” 575 F.3d at 1330-31 (quoting Molins, 48 F.3d at 1181.)
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`5
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 7 of 10 Page ID #:2562
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`Respondents contend that on the same day he filed the application for the’228 patent, Mr.
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`Keegan also filed the ’888 application, with a copy of an international search report listing
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`Pacesetter and Cunningham. Further, Respondents allege, Mr. Keegan shortly thereafter listed
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`both Pacesetter and Cunningham on an Information Disclosure Statement (“IDS”) that he
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`submitted to the USPTO in connection with the ’888 application. While these facts may support
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`Respondents’ claims with respect to knowledge and materiality, they tend to negate the inference
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`that Mr. Keegan deliberately withheld the same information from the USPTO in the application
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`for the ’228 patent. It appears just as likely, if not more so, that the omission was negligent.
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`Respondents maintain that the court must resolve all reasonable inferences in their favor.
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`That is the standard that would apply if a simple motion to dismiss, pursuant to Rule 12(b), were
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`before me. The same standard does not apply in this context, where the Federal Circuit has
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`imposed the requirements of Rule 9(b) on a party pleading the defense of inequitable
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`misconduct. In re BP, supra, explores the application of the Exergen requirements in some
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`depth, albeit in a different setting. As discussed in In re BP, the decision whether the defense of
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`inequitable conduct is sufficiently plead depends on a number of factors—including the nature of
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`the cause of action and of the alleged misconduct. The Federal Circuit recognizes that,
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`depending on the setting and the specific factual allegations, there are times when a court may
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`conclude that the requirement of pleading deliberate misconduct has been met, but in other
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`situations, “the relationship between factual falsity and state of mind” is not always apparent.
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`637 F.3d at 1312.
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`I conclude that the facts alleged regarding Mr. Keegan’s conduct in failing to bring
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`certain references to the attention of the patent examiner are not sufficiently related to his state of
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`mind to make it appear that he acted with deliberate intent to deceive. Without sufficient factual
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 8 of 10 Page ID #:2563
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`support, a court is “correct not to draw any permissive inference of deceptive intent.” Exergen,
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`575 F.3d at 1331. Otherwise, the result would be to subject “‘every patentee’” to wasteful
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`litigation “based on the detection of a few negligently made errors.’” Id. (quoting Burlington
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`Coat Factory SEC Litig., 114 F.3d 1410, 1418 (3d Cir. 1997) (Alito, J.)
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`As a matter of law, “the mere fact that an applicant disclosed a reference during
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`prosecution of one application but did not disclose it during prosecution of a related application,
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`is insufficient to allege the required deceptive intent.” Exergen, 575 F.3d at 1331. Respondents’
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`amended allegations of inequitable conduct present more than the “mere fact” of nondisclosure,
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`but they contain insufficient factual allegations on which to base even an inference of intent to
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`deceive. Since the key element of scienter must be considered on its own merits, not in relation
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`to the other elements of inequitable misconduct, the Respondents’ amended pleading is fatally
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`deficient. See Therasense, 649 F.3d at 1290 (“a court must weigh the evidence of intent to
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`deceive independent of its analysis of materiality”).
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`Commission Rule 210.14(b)(2) provides that “the presiding administrative law judge may
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`allow appropriate amendments to pleadings other than complaints upon such conditions as are
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`necessary to avoid prejudicing the public interest and the rights of the parties to the
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`investigation,” if permitting amendment will facilitate disposition on the merits “or for other
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`good cause shown.” 19 C.F.R. § 210.14(b)(2). Permitting Respondents’ amended affirmative
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`defense of inequitable conduct would be futile because the amended pleading falls short of the
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`required standards.
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 9 of 10 Page ID #:2564
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`Accordingly, Motion Docket No. 1190-004 is hereby DENIED, and Motion Docket No.
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`1190-002 is hereby GRANTED.
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`SO ORDERED.
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`Dee Lord
`Administrative Law Judge
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`Case 2:19-cv-06301-AB-KS Document 87-2 Filed 07/31/20 Page 10 of 10 Page ID #:2565
`CERTAIN WEARABLE MONITORING DEVICES,
`Inv. No. 337-TA-1190
`SYSTEMS, AND COMPONENTS THEREOF
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`PUBLIC CERTIFICATE OF SERVICE
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`I, Lisa R. Barton, hereby certify that the attached ORDER has been served via EDIS
`upon the Commission Investigative Attorney, John Shin, Esq., and the following parties as
`indicated, on 5/62020.
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`Lisa R. Barton, Secretary
`U.S. International Trade Commission
`500 E Street, SW, Room 112
`Washington, DC 20436
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`On Behalf of Complainants Philips North America, LLC
`and Koninklijke Philips N.V.:
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`David Hickerson, Esq.
`FOLEY LARDNER LLP
`321 N. Clark Street, Suite 2800
`Chicago, IL 60654-5313
`Email: dhickerson@foley.com
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`On Behalf of Respondents Fitbit, Inc., Ingram Micro
`Inc., Maintek Computer (Suzhou) Co., Ltd.,
`and Inventec Appliances (Pudong):
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`Josh A. Krevitt, Esq.
`GIBSON, DUNN & CRUTCHER LLP
`200 Park Avenue, 47th Floor
`New York, New York 10166
`Email: jkrevitt@gibsondunn.com
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`On Behalf of Respondents Garmin International, Inc.,
`Garmin USA, Inc., and Garmin Ltd.:
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`M. Scott Stevens, Esq.
`ALSTON & BIRD LLP
`950 F Street NW
`Washington, DC 20004
`Email: scott.stevens@alston.com
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