Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 1 of 10 Page ID #:3380
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`LAMKIN IP DEFENSE
`RDL@LamkinIPDefense.com
`Rachael D. Lamkin (246066)
`One Harbor Drive, Suite 304
`Sausalito, CA 94965
`(916) 747-6091 Telephone
`Michelle L. Marriott (pro hac vice)
`michelle.marriott@eriseip.com
`Erise IP, P.A.
`7015 College Blvd.
`Suite 700
`Overland Park, KS 66211
`(913) 777-5600 Telephone
`(913) 777-5601 Facsimile
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`Attorneys for Defendants Garmin
`International, Inc. and Garmin Ltd.
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE CENTRAL DISTRICT OF CALIFORNIA
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`PHILIPS NORTH AMERICA LLC,
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`GARMIN INTERNATIONAL, INC.
`AND GARMIN LTD.,
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`v.
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`Plaintiff,
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`Defendants.
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`Case No. 2:19-cv-06301-AB-KS
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`GARMIN’S REPLY IN SUPPORT
`OF ITS MOTION TO AMEND;
`GARMIN’S RESPONSE TO
`PHILIPS’ MOTION TO DISMISS
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE TO
`PHILIPS’ MOTION TO DISMISS
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`LAMKIN IP DEFENSE
`RDL@LamkinIPDefense.com
`Rachael D. Lamkin (246066)
`One Harbor Drive, Suite 304
`Sausalito, CA 94965
`(916) 747-6091 Telephone
`Michelle L. Marriott (pro hac vice)
`michelle.marriott@eriseip.com
`Erise IP, P.A.
`7015 College Blvd.
`Suite 700
`Overland Park, KS 66211
`(913) 777-5600 Telephone
`(913) 777-5601 Facsimile
`
`Attorneys for Defendants Garmin
`International, Inc. and Garmin Ltd.
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE CENTRAL DISTRICT OF CALIFORNIA
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`PHILIPS NORTH AMERICA LLC,
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`GARMIN INTERNATIONAL, INC.
`AND GARMIN LTD.,
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`v.
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`
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`Plaintiff,
`
`Defendants.
`
`Case No. 2:19-cv-06301-AB-KS
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`
`
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`GARMIN’S REPLY IN SUPPORT
`OF ITS MOTION TO AMEND;
`GARMIN’S RESPONSE TO
`PHILIPS’ MOTION TO DISMISS
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE TO
`PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 2 of 10 Page ID #:3381
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`Courts “rarely deny a motion for leave to amend for reason of futility.” Hynix
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`Semiconductor Inc. v. Toshiba Corp., No. C-04-04708 VRW, 2006 WL 3093812, at
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`*2 (N.D. Cal. Oct. 31, 2006) (noting before discovery is complete, a proposed
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`amendment is futile “only if no set of facts can be proved under the amendment
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`which would constitute a valid claim or defense”). Yet in opposing Garmin’s Motion
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`to Amend seeking to add an affirmative defense and counterclaim for inequitable
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`conduct, Philips relies solely on the basis of futility.1 In doing so, Philips ignores
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`the appropriate standard, attempting instead to convert its opposition into one for
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`summary judgment, dedicating its entire brief to contesting the sufficiency of
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`Garmin’s “proof” in support of its allegations.
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`At this stage, Garmin is not required to conclusively prove its claims. Garmin
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`has plausibly pled a wealth of material facts alleging that Philips knew of the
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`Yamamoto reference, knew that Yamamoto was material to the patentability of the
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`claims of the ’192 Patent, and still withheld Yamamoto from the USPTO with a
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`specific intent to deceive. The Court must accept Garmin’s “allegations of material
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`fact as true and construed in the light most favorable” to Garmin. Advanced Micro
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`Devices, Inc. v. Samsung Elec. Co., Ltd., No. C 08-986 SI, 2009 WL 1396256, at *3
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`1 Philips additionally moves to dismiss on the same grounds, and thus Garmin’s
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`discussion herein applies equally to Philips request for dismissal.
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 3 of 10 Page ID #:3382
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`(N.D. Cal. May 18, 2009). Philips will have ample opportunity to defend the claim
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`on the merits, but the inquiry into whether Garmin will succeed on the merits
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`requires a factual inquiry properly reserved after the completion of discovery.
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`I.
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`ARGUMENT
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`A. Philips Conflates Pleading With Proof
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`While Philips casts aspersions on the “plausibility” of Garmin’s allegations,
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`Philips never states (let alone tries to prove) that the allegations are actually
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`implausible or wrong. Notably, Philips still has not produced a single document in
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`response to Garmin’s discovery requests pertaining to the US IP&S team’s access to
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`and knowledge of Yamamoto, and expressly declines to engage in the factual merits
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`in its briefing. Philips instead suggests that “[w]hile Philips could say a lot about the
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`actual functioning and operation of IP&S, Philips need not introduce anything
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`outside of the proposed pleadings to show that Garmin’s assumptions are
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`unwarranted.” Dkt. 87 at 5. If anything, Philips’ desire to avoid the merits confirms
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`that Garmin’s inequitable conduct claim is anything but “futile.”
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`As to Garmin’s allegations, Philips does not dispute the overwhelming majority
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`of them. As alleged in Garmin’s proposed pleading, Philips does not dispute that its
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`employees responsible for the European prosecution of the ’192 Patent knew of
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`Yamamoto and knew that the EPO application was rejected over Yamamoto. Nor is
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`Philips disputing that its employees responsible for the U.S. prosecution (e.g., Yan
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 4 of 10 Page ID #:3383
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`Glickberg, Kathleen Asher, Patricia Heim, Edward Goodman, and Jeanne Rusciano)
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`had access to those EPO files, that the U.S. prosecution proceedings were ongoing
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`at the time of the European rejection, or that they knew about and actually disclosed
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`other prior art from other foreign applications which Philips was able to successfully
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`overcome. To be sure, the ’192 Patent directly claims priority to the EP Application.
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`Philips also never disputes that its own internal docketing number for the U.S.
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`application is linked to its internal docketing number for the EP Application. And
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`importantly, Philips does not dispute that Yamamoto was material, that Philips never
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`submitted Yamamoto to the USPTO, or that Garmin adequately pled with supporting
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`factual allegations the “who” “what” “where” “when” “why” and “how” required by
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`Exergen. At bottom, Philips simply disputes that it is liable for inequitable conduct,
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`but fails to challenge the plausibility of Garmin’s particularized factual allegations
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`supporting its affirmative defense/counterclaim. These allegations, which the Court
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`must assume are true, are plainly sufficient to raise a right to relief above the
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`speculative level.
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`Much of Philips’ briefing focuses on matters that do not have any bearing on
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`whether Garmin’s factual allegations are adequately pleaded, such as the size of
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`Philips’ intellectual property department or the purported lack of overlap between
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`EPO and US prosecuting attorneys. Garmin’s factual allegations have nothing to do
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`with the size of Philips IP&S or overlap of attorneys, but instead allege that the files
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 5 of 10 Page ID #:3384
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`from Philips’ foreign prosecution (including the EP Application) were internally
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`linked to the US Application prosecution, such that Philips IP&S employees
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`handling the US Application knew of the prior art at issue in the foreign proceedings
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`and selectively disclosed some of that prior art (that Philips successfully overcame)
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`but not Yamamoto (which Philips could not overcome). Philips additionally cites to
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`an ITC decision involving denial of an inequitable conduct claim involving an
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`entirely unrelated patent and different factual allegations in an administrative forum.
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`Dkt. 87 at 13-14. It has no bearing on Garmin’s factual allegations in this case, and
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`if anything, merely evidences a pattern by Philips of withholding material prior art
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`from the USPTO.
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`B. Philips Strategically Omits Essential Facts
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`In its opposition, Philips proffers a timeline graphic attempting to illustrate
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`the events occurring during the co-pending EU and US prosecutions. Dkt. 87 at 10.
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`This timeline, too, selectively discloses the facts. As depicted below, Garmin has
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`added, in red, key events that Philips omitted from Garmin’s pleading, all of which
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`evidence Philips selective disclosure and non-disclosure of prior art relevant to
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`Garmin’s inequitable conduct allegations:
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 6 of 10 Page ID #:3385
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`See, e.g., Ex. D (Japanese Prosecution docket). As shown above, Philips overcame
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`JP2003-102692 in the Japanese prosecution (final decision November 2014) and
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`could not overcome Yamamoto in the European prosecution (final decision March
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`2015), and two months later in May 2015 disclosed JP2003-102692 but not
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`Yamamoto to the USPTO. These facts, when presented in full, provide a clear path
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`by which the Court may plausibly infer that Philips withheld Yamamoto with a
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`specific intent to deceive the USPTO.
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`C. Taken as true, Garmin’s factual allegations plausibly plead
`inequitable conduct.
`There can be no dispute that, under the facts alleged by Garmin, Philips had a
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`duty to disclose Yamamoto to the USPTO, and did not. Inequitable conduct is
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`“rooted in an individual’s duties of candor and good faith with respect to the
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 7 of 10 Page ID #:3386
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`USPTO.” Am. GNC Corp. v. LG Elec.’s, Inc., No. 17-cv-01090-BAS-BLM, 2018
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`WL 400346, at *3-4 (S.D. Cal. Jan. 12, 2018) (granting motion to amend to add
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`claim of inequitable conduct and citing Therasense for the notion that a “breach of
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`duty may lead to a finding of inequitable conduct”); Bradley v. Applied Marine Sys.’s
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`LLC, No. 13-cv-03941-JSC, 2014 WL 1648726, at *3 (N.D. Cal. Apr. 23, 2014)
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`(citing the same). As set forth in the federal regulations and the advisory guidelines
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`in the Manual of Patent Examining Procedure (“MPEP”):
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`Applicants and other individuals, as set forth in 37 C.F.R. § 1.56, have
`a duty to bring to the attention of the Office any material prior art or
`other information cited or brought to their attention in any related
`foreign application. The inference that such prior art or other
`information is material is especially strong where it is the only prior art
`cited or where it has been used in rejecting the same or similar claims
`in the foreign application.
`MPEP § 2001.06(a) (6th Ed., Rev. 2, Jul. 1996); see also 37 C.F.R. § 1.56 (“The
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`Office encourages applicants to carefully examine: prior art cited in search reports
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`of a foreign patent office in a counterpart application”).
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`As the Federal Circuit recognizes, “[p]artial disclosure of material
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`information about the prior art to the PTO cannot absolve a patentee of intent if the
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`disclosure is intentionally selective.” Am. Calcar, Inc. v. Am. Honda Motor Co.,
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`Inc., 768 F.3d 1185, 1190 (Fed. Cir. 2014). Garmin has factually and plausibly pled
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`that specific individuals at Philips knew of prior art from at least three different
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`foreign prosecutions – including the references contained in the PCT International
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 8 of 10 Page ID #:3387
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`Search Report, the Yamamoto reference cited in the EP Application prosecution, and
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`the JP 2003-102692 reference cited in the Japanese Application prosecution.
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`Garmin has further factually pled that Philips selectively chose to disclose some
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`references (the International Search Report references as well as JP 2003-102692)
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`but not Yamamoto, with specific intent to deceive the USPTO. These factual
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`allegations must be taken as true. The truth or falsity of these allegations will be
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`proven during discovery, should Philips provide the information responsive to
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`Garmin’s requests.
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`D. With No Showing of Futility, Philips’ Motion to Dismiss Must be
`Denied
`The Court, in its discretion, may deny a proposed amendment as futile only if
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`the proposed amendment “would fail to state a claim under the standard applied on
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`a motion to dismiss pursuant to Fed. R. Civ. Pro. 12(b)(6),[ ] and any defect in the
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`pleading cannot ‘possibly be cured by the allegation of other facts.’” Aten Int.’l Co.,
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`Ltd. v. Emine Tech. Co., Ltd., No. SACV 09-0843 AG (MLGx), 2011 WL 13134915,
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`at *2-3 (C.D. Cal. Mar. 23, 2011) (quoting Lopez v. Smith, 203 F.3d 1122, 1127 (9th
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`Cir. 2000) (en banc)) (citation omitted). In this regard, a claim of inequitable conduct
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`will survive a motion to dismiss if the pleading “recites facts from which the court
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`may reasonably infer that a specific individual both knew of invalidating information
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`that was withheld from the PTO and withheld that information with a specific intent
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 9 of 10 Page ID #:3388
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`to deceive the PTO.” Delano Farms Co. v. California Table Grape Comm’n, 655
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`F.3d 1337, 1350 (Fed. Cir. 2011) (citing to Exergen).
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`Garmin’s amended pleading unquestionably identifies, under Exergen, the
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`specific “who, what, when, where, and how” of Philips’ inequitable conduct. Dkt.
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`83-1 at ¶¶ 78-133 (describing the specific US prosecutors who violated their duty of
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`candor by withholding from the USPTO during prosecution of the ’192 application
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`the Yamamoto reference, a reference which was fatal to the similar claims presented
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`in the EP application, while disclosing other art from foreign prosecutions). These
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`allegations allow the court to reasonably infer that Philips acted with the requisite
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`state of mind. iLife Technologies Inc. v. AliphCom, No. 14-cv-03345-WHO, 2015
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`WL 890347, at *9 (N.D. Cal. Feb. 19, 2015) (denying motion to dismiss inequitable
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`conduct counterclaim and finding allegations of a party withholding from the PTO
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`invalidating information learned from an EPO proceeding sufficient to infer a
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`plausible intent to deceive the PTO). As such, Philips assertion of futility must be
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`denied. Correspondingly, Philips Motion to Dismiss must similarly be denied.
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`In the event that the Court finds some aspect of Garmin’s proposed pleading
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`to be deficient, however, Garmin respectfully requests leave to amend its proposed
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`pleading to rectify such deficiency. Local Ventures & Investments, LLC v. Open
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`Foundation, No. 2019 WL 7877935, at *4 (N.D. Cal. Mar. 12, 2019) (granting leave
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`to amend amended counterclaims, including claim for inequitable conduct, and
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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`Case 2:19-cv-06301-AB-KS Document 88 Filed 08/07/20 Page 10 of 10 Page ID #:3389
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`noting that courts should allow leave to amend unless it would prejudice the
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`opposing party). Allowing Garmin additional leave to amend would not prejudice
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`Philips.
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`II. CONCLUSION
`For the reasons discussed above, Garmin respectfully requests that the Court
`grant Garmin’s Motion to Amend and deny Philips’ motion to dismiss.
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`DATED: August 7, 2020
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`ERISE IP, P.A.
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`By: /s/ Michelle L. Marriott
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`
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`Counsel for Defendants Garmin International,
`Inc. and Garmin Ltd.
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`GARMIN’S REPLY IN SUPPORT OF ITS MOTION TO AMEND; GARMIN’S RESPONSE
`TO PHILIPS’ MOTION TO DISMISS
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