United States District Court, M.D. North Carolina
FUMA INTERNATIONAL LLC, an Ohio limited liability company, Plaintiff,
R.J. REYNOLDS VAPOR COMPANY, a North Carolina corporation, Defendant.
MEMORANDUM OPINION AND ORDER
CATHERINE C. EAGLES, DISTRICT JUDGE.
Fuma International LLC contends that defendant R.J. Reynolds
Vapor Company has infringed on its e-cigarette design patent.
RJR denies these claims and has filed a counterclaim against
Fuma contending, inter alia, that the patent is
unenforceable because of inequitable conduct by Fuma and its
co-founder, Greg Conley, during the patent application
process. Fuma moves to dismiss the counterclaim for failure
to state a claim upon which relief can be granted. Because
RJR has sufficiently pled inequitable conduct by Mr. Conley
for allegedly misrepresenting certain individuals as
inventors of Fuma's e-cigarette patents and by Mr. Conley
and Fuma's patent counsel for allegedly misrepresenting
prior patent applications and prior art to patent examiners,
the motion to dismiss the counterclaim is denied to the
extent it is based upon these grounds. As to any other
claimed inequitable conduct, the motion to dismiss is
conduct is an equitable defense to patent infringement that,
if proved, bars enforcement of a patent.”
Therasense, Inc. v. Becton, Dickinson & Co., 649
F.3d 1276, 1285 (Fed. Cir. 2011) (en banc) (summarizing
Supreme Court precedent establishing the inequitable conduct
defense). “To prevail on a claim of inequitable
conduct, the accused infringer must prove that the patentee
acted with the specific intent to deceive” the U.S.
Patent and Trademark Office. Id. at 1290.
Ultimately, the alleged infringer must provide “clear
and convincing evidence” that the intent to deceive is
“the single most reasonable inference able to be drawn
from the evidence” before a court may issue judgment
against a patentee based on inequitable conduct. Id.
at 1290-91 (internal quotation and citation omitted).
evidentiary standard does not apply here at the pleading
stage, where the Court must consider whether RJR's
allegations are sufficient to survive a motion to dismiss.
See Koch Agronomic Servs., L.L.C. v. Eco Agro Res.
L.L.C., No. 1:14CV679, 2015 WL 5712640, at *5 n.5 (M.D.
N.C. Sept. 29, 2015); CertusView Techs., L.L.C. v.
S&N Locating Servs., L.L.C., 107 F.Supp.3d 500, 506
n.2 (E.D. Va. 2015); Prowess, Inc. v. RaySearch Labs.,
AB, 953 F.Supp.2d 638, 649 n.26 (D. Md. 2013);
Cutsforth, Inc. v. LEMM Liquidating Co., No.
12-cv-1200, 2013 WL 2455979, at *4 (D. Minn. June 6, 2013).
But a party must plead inequitable conduct with particularity
under Rule 9(b) of the Federal Rules of Civil Procedure.
See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d
1312, 1326 (Fed. Cir. 2009).
state a claim for inequitable conduct, a party must
“identify the specific who, what, when, where, and how
of the material misrepresentation or omission.”
Id. at 1328. The party claiming inequitable conduct
must also state “sufficient allegations of underlying
facts from which a court may reasonably infer that a specific
individual (1) knew of the withheld material information or
of the falsity of the material misrepresentation, and (2)
withheld or misrepresented this information with a specific
intent to deceive the PTO.” Id. at 1328-29;
accord Delano Farms Co. v. Cal. Table Grape
Comm'n, 655 F.3d 1337, 1350 (Fed. Cir. 2011).
The Inventor Issues
to RJR's counterclaim,  in 2009 and 2010 Mr. Conley and
Daniel Hillenbrandt filed three patent applications for
various components of electronic cigarettes. Doc. 18 at pp.
63-64 ¶¶ 28-30. In all three applications, they
listed themselves as the inventors. Id. They allowed
two of the applications to expire and abandoned the third in
2014. See Id. at p. 73 ¶ 53; Doc. 18-7.
2011, Mr. Conley, his wife Rebecca Conley, Mr. Hillenbrandt,
Michael Mandela, and William Steiger filed a fourth
“provisional” patent application for an
electronic vaporizer, listing all five individuals as
inventors. Doc. 18 at p. 64 ¶ 31. In 2012, they filed a
fifth patent application, the “'813 application,
” to supersede this provisional application for the
same electronic vaporizer, and this application also listed
all five as inventors. Id. Mr. Conley asked Dr.
Tomsik, a Fuma contractor who worked on the subject matter
claimed in the '813 application, if he wanted to be named
as an inventor, but Dr. Tomsik declined. Id. at p.
76 ¶ 58. Eventually, in November 2014, the
“'628 patent” issued from the '813
application listing Mr. Conley, Mrs. Conley, Mr.
Hillenbrandt, Mr. Mandela, and Mr. Steiger as inventors.
Id. at p. 65 ¶ 32; Doc. 18-10.
October 2014, shortly before the '628 patent issued, Mr.
Conley, Mrs. Conley, Mr. Hillenbrandt, Mr. Mandela, and Mr.
Steiger filed another patent application, the “'955
application, ” that was a continuation of the '813
application and that again listed all five as inventors. Doc.
18 at p. 65 ¶ 33. The '955 application resulted in
the patent underlying Fuma's claims in this case, the
“'604 patent, ” which issued on January 3,
2017. Id. at p. 65 ¶ 34. All five patent
applications and the two patents, '604 and '628,
concern overlapping subject matter and are therefore part of
the same patent “family.” See Id. at p.
60 ¶ 17, p. 64 ¶ 31, p. 66 ¶ 35; Doc. 18-7
(diagram of the '604 patent family).
2014, before any patents had issued and several months before
filing the '955 application, a dispute arose over
ownership of the '628 patent rights. Doc. 18 at p. 66
¶ 37. Mr. Steiger sued Fuma and the other listed
inventors in Ohio state court seeking, inter alia, a
declaration that the '628 patent, and later the '955
application, were owned by the individual defendants in that
action instead of Fuma. Id. Fuma and Mr. Conley then
filed a declaratory judgment action in the U.S. District
Court for the Northern District of Ohio against Mr.
Hillenbrandt, Mr. Steiger, and Mr. Mandela seeking a
declaration that those individuals were not inventors or
owners of any Fuma intellectual property and that Mr. Conley
was the sole inventor. Id. at p. 67 ¶ 39.
the Ohio proceedings, Mr. Conley testified that none of the
other listed inventors had invented the subject matter
claimed in the patent applications. Id. at p. 70
¶ 46, p. 71 ¶ 49. Some of the other listed
inventors testified in ways that tended to indicate they were
not true inventors. See Id. at pp. 71-72 ¶ 50,
p. 73 ¶ 52. The cases eventually settled, with Mr.
Hillenbrandt and Mr. Steiger assigning any ownership rights
to Fuma in exchange for monetary payments. Id. at
pp. 77-78 ¶¶ 61-65. The state court also entered a
judgment against Mr. Mandela declaring that he had no rights
to Fuma's patents. Id. at p. 78 ¶ 64.
Fuma nor any of the purported inventors ever specifically
informed the Patent Office that there was a dispute about who
qualified as inventors of Fuma's patents and none
provided the Patent Office with any pleadings or depositions
from the Ohio proceedings. Id. at p. 79 ¶ 68.
In October 2016, after the Patent Office issued a Notice of
Allowance for the '955 application, Fuma did ask the
state court to mail a copy of the stipulated entry of
settlement to the Patent Office, id. at p. 79 ¶
67, and a transcript of the August 2016 state court hearing
where the bulk of the two Ohio cases were settled and the
stipulated entry of settlement signed by the state court
Judge and the parties were filed with the Patent Office.
Id. at 69 n.4; Doc. 18-16. Neither document includes
discussion about the inventorship dispute in detail; they
instead show only that the parties resolved the intellectual
property rights in and ownership of the patents. See
Doc. 18 at p. 79 ¶ 68; Doc. 18-16. Fuma and Mr. Conley
also filed unsigned ...