Foundation v. Apple Inc.

WISCONSIN ALUMNI RESEARCH FOUNDATION, Plaintiff, v. APPLE INC., Defendant.

14-cv-062-wmc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

December 17, 2014

OPINION & ORDER

In this patent lawsuit, plaintiff Wisconsin Alumni Research Foundation ("WARF") alleges that defendant Apple Inc. infringes U.S. Patent No. 5,781,752 ("the '752 patent"), titled "Table Based Data Speculation Circuit for Parallel Processing Computer." Currently pending before the court is WARF's motion to dismiss Apple's affirmative defense and counterclaim for inequitable conduct. (Dkt. #44.) Having reviewed the briefs and the relevant case law, the court will grant WARF's motion. Because WARF has not shown that amendment would be futile, however, the court will dismiss the counterclaim without prejudice.

BACKGROUND

On January 31, 2014, WARF filed its complaint alleging infringement of the '752 patent. That patent discloses a "predictor circuit [that] permits advanced execution of instructions depending for their data on previous instructions by predicting such dependencies based on previous mis-speculations detected at the final stages ofprocessing." ('752 patent (dkt. #1-1) Abstract.) By way of illustration, Claim 1 provides:

In a processor capable of executing program instructions in an execution order differing from their program order, the processor further having a data speculation circuit for detecting data dependence between instructions and detecting a mis-speculation where a data consuming instruction dependent for its data on a data producing instruction of earlier program order, is in fact executed before the data producing instruction, a data speculation decision circuit comprising:

a) a predictor receiving a mis-speculation indication from the data speculation circuit to produce a prediction associated with the particular data consuming instruction and based on the mis-speculation indication; and

b) a prediction threshold detector preventing data speculation for instructions having a prediction within a predetermined range.

('752 patent, at 14:36-53 (emphasis added).)¹

WARF alleges that a certain number of Apple's processors (including but not limited to the A7 processor) and products that include such processors (e.g., the iPhone 5S, iPad Air, and iPad Mini with Retina Display) infringe the '752 patent. (See Compl. (dkt. #1) ¶¶ 4-5, 21.) In its Amended Answer, Apple disputes infringement and affirmatively alleges that the '752 patent is unenforceable due to inequitable conduct. (1st Am. Answer & Counterclaims (dkt. #40) ¶¶ 21-54 [hereinafter "Counterclaims"].)² Specifically, Apple alleges that Drs. Sohi and Moshovos committed inequitable conduct by failing to disclose two references to the PTO during the prosecution of the '752 patent: (1) U.S. Patent No. 5,619,662 ("the Steely Patent"); and (2) an article by JamesE. Smith, entitled "A Study of Branch Prediction Strategies" (the "Smith Article"). (Id. at ¶¶ 24-33, 39-47, 50-52.) Apple alleges that Professors Sohi and Moshovos "made affirmative statements" that were "false in light of" the omitted references, and that an intent to deceive the PTO can be inferred from their financial interest in the patent. (Id. at ¶¶ 34-40, 48-51.)

OPINION

A motion to dismiss does not test the merits of a pleading, but rather the sufficiency of its allegations as pled. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). Dismissal of a claim under Federal Rule of Civil Procedure 12(b)(6) is warranted when the pleading "fails to allege enough facts to raise a reasonable expectation that discovery will reveal evidence supporting [those] allegations." Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 749 F. Supp. 2d 892, 901 (W.D. Wis. 2010). Where, as here, a party makes an allegation of fraud on the PTO, Rule 9(b) of the Federal Rules of Civil Procedure also requires dismissal if the claim is not pled with sufficient factual particularity. Id.; see also Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1318 (Fed. Cir. 2009) (addressing inequitable conduct in the Rule 12(b)(6) context).

To establish that a patent is unenforceable because of inequitable conduct, the challenger must prove "by clear and convincing evidence" that an individual associated with the filing and prosecution of the application: (1) made an affirmative representation of material fact, failed to disclose material information or submitted falsematerial information; and (2) intended to deceive the Patent and Trademark Office. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008). Thus, to state a claim for inequitable conduct, a pleading must contain "sufficient allegations of underlying facts from which a court may reasonably infer that an individual (1) knew of the withheld material information or the falsity of the information, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO." Exergen, 575 F.3d at 1328-29; see also Semiconductor Energy, 749 F. Supp. 2d at 902. To plead these underlying facts with sufficient particularity, a party must identify "the specific who, what, when, where, and how of the material misrepresentation or omission." Exergen, 575 F.3d at 1327 (citing DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)).

I. Materiality

A. General "But-For" Pleading

Apple's pleading of materiality falls short both generally and with respect to the specific prior art references.

To begin, a party alleging inequitable conduct must first identify specific facts from which the court could infer that at least one claim of the patent would not have issued if the Examiner had been aware of the references allegedly withheld. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011) ("[T]he materiality required to establish inequitable conduct is but-for materiality . . . . [P]rior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art."). More specifically, the Federal Circuit has held that in pleading inequitable conduct, a party must "identify the particular claim limitations, orcombination of claim limitations, that are supposedly absent from the information of record" in sufficient detail to "explain both 'why' the withheld information is material and not cumulative, and 'how' an examiner would have used this information in assessing the patentability of the claims." Exergen, 575 F.3d at 1329-30 (citing Larson Mfg. Co. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1333 (Fed. Cir. 2009)).

From the outset, there are problems with Apple's allegations of materiality. As WARF points out, Apple merely alleges that the Examiner would "likely" not have allowed the claims to issue had Drs. Sohi and Moshovos disclosed the two references. (Counterclaims (dkt. #40) ¶¶ 28, 39, 50.)

Perhaps this is all Apple's counsel could allege in good faith at the outset of the suit, but the choice of the word "likely" is not entirely in line with the but-for materiality that a claim of inequitable conduct requires. Either the PTO would have disallowed the claim upon disclosure of the prior art references or it would not. Anything in between, as inferred from Apple's use of the word "likely," fails to meet the threshold required by Rule 9(b).³

B. The Steely Patent

Apple's inequitable conduct defense is primarily founded on the Steely Patent. With respect to that reference, the counterclaim alleges the following:

29. The Steely Patent describes a processor architecture that allows load instructions to speculatively execute ahead of store instructions. This is the same subject matter as the '752 patent. Like the '752 patent application, the Steely Patent discloses a mechanism for predicting when a particular instruction is likely to mis-speculate and, if a mis-speculation is predicted, prevents speculation for that instruction.

30. The Steely Patent is material to the patentability of the '752 patent because (1) by itself or in combination with other prior art, it invalidates claims of the '752 patent, including at least the independent claims, and (2) it is inconsistent with positions taken by the Applicants during the prosecution of the '752 patent.

(Counterclaims (dkt. #40) ¶¶ 29-30 (emphasis added).)

As previously noted, the Federal Circuit explicitly addressed the pleading standards applicable to a claim of inequitable conduct in Exergen. To satisfy the heightened pleading requirements of Rule 9(b), "the pleading must identify which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found." Exergen, 575 F.3d at 1329; see also, e.g., Milwaukee Elec. Tool Corp. v. Hitachi Koki Co., 2012 WL 1952977, at *7 (E.D. Wis. May 29, 2012) (emphasis added) (dismissing inequitable conduct allegations where the "Invalidity Contentions" for the patents-in-suit did "not sufficiently explain where in each item of prior art the elements of the claims . . . are found") (quoting Exergen). Furthermore, the pleading must go beyond stating generally that withheld references are material and not cumulative; it must "identify the particular claim limitations, or combination of claim limitations, that are supposedly absent from the information of record" in order to "explain both 'why' the withheld information is material and not cumulative, and 'how' an examiner would have used this information in assessing the patentability of the claims." 575 F.3d at 1329-30 (citing Larson, 559 F.3d at 1333).

Apple's current allegations entirely fail to meet this standard for at least two reasons. First, merely alleging that the Steely reference discloses the same "subject matter" as the '752 patent falls woefully short of the correct level of particularity to plead inequitable conduct premised on anticipation, since Apple makes no attempt to identify (1) the particular claim limitations, or...