Miller Indus. Towing Equip. Inc. v. NRC Indus.

659 F.Supp.3d 451

MILLER INDUSTRIES TOWING EQUIPMENT INC., Plaintiff, v. NRC INDUSTRIES, Defendant.

Civ. No. 1:21-cv-08158-NLH-AMD

United States District Court, D. New Jersey

Signed March 2, 2023

KATELYN O'REILLY, ESQ., LIZA M. WALSH, ESQ., WILLIAM T. WALSH, JR., ESQ., WALSH PIZZI O'REILLY FALANGA LLP, THREE GATEWAY CENTER, 100 MULBERRY STREET, 15TH FLOOR, NEWARK, NJ 07102, On behalf of Plaintiff.

GREGORY D. MILLER, ESQ., GENE Y. KANG, ESQ., RIVKIN RADLER LLP, 25 MAIN STREET, SUITE 501, COURT PLAZA NORTH, HACKENSACK, NJ 07601, On behalf of Defendant.

OPINION

HILLMAN, District Judge

This matter comes before the Court pursuant to Plaintiff's Motion to Dismiss Defendant's Third Counterclaim (ECF No. 50). Plaintiff, Miller Industries Towing Equipment Inc., asserts that Defendant, NRC Industries, did not plead adequate facts in its third counterclaim alleging that the case at bar constitutes an antitrust violation. (ECF No. 50 at 7). Defendant has filed in opposition to Plaintiff's motion to dismiss, furthering its argument that Plaintiff is filing baseless lawsuits against Defendant in order to achieve an unfair advantage in the market for rotating wreckers by using the litigation process to gain access to nonpublic information, and asserting that Plaintiff's motion to dismiss inappropriately focuses on factual disputes in an attempt to dismiss Defendant's counterclaim. (ECF No. 57). Plaintiff has filed its reply brief. (ECF No. 61). For the reasons stated below, Plaintiff's Motion to Dismiss (ECF No. 50) will be denied in part and granted in part.

BACKGROUND

Plaintiff filed its Complaint on April 5, 2021 against Defendant, arguing that Defendant was infringing on its patent, U.S. Patent NO. 9,440,577 ("'577 Patent"). Plaintiff is a publicly traded, Tennessee based tow truck and towing equipment company founded in 1987, selling a variety of light to heavy-duty wreckers, car carriers, and rotating wreckers under several different brand names and is considered the largest manufacturer of towing and recovery equipment in the world. (ECF No. 1 at 3). The Patent at issue relates to "rotating wrecker" machines, specifically inventing the extendable and retractable rotating wrecker controls. (Id. at 4).

Plaintiff alleges that Defendant began to infringe on this patent in the fall of 2018, selling its own rotating wreckers with extendable and retractable controls. (Id. at 4-5). Defendant allegedly showed the infringing product at various trade shows, in industry publications, and ultimately sold two wreckers in New Jersey in 2020. (Id. at 5). Plaintiff alleges that Defendant has known of the '577 Patent since September of 2017 because NRC received its own patent after noting the '577 Patent was its "principal" reference. (Id. at 9). Plaintiff filed an infringement case against Defendant in 2019 in Tennessee, which was dismissed due to lack of personal jurisdiction over Defendant, who acknowledged that it would be subject to personal jurisdiction in New Jersey. (Id. at 3). Thereafter, on April 5, 2021, Plaintiff filed the instant case. (Id.).

On June 9, 2021, Defendant filed a Motion to Dismiss the Complaint, arguing that Plaintiff failed to plausibly allege that Defendant's accused product practices the limitations as outlined in the '577 Patent. (ECF No. 15). After briefing opposition (ECF No. 16) and reply (ECF No. 23), the Court denied Defendant's Motion to Dismiss on several grounds. (ECF No. 39).¹ The Court held that Plaintiff had adequately stated a claim for patent infringement, meeting the three elements required to state a claim that: 1) the Complaint clearly named the accused product, 2) there was a sufficient description of the infringing conduct, (where since 2018 Defendant had been selling rotating wreckers that utilize extendable and retractable controls as claimed by the '577 Patent), and 3) there were two instances where these allegedly infringing products were sold in New Jersey. (ECF No. 39 at 8-9).

Additionally, the Court held that the Complaint sufficiently outlined how the accused product infringed on every element for eight different claims, whereas caselaw only requires infringement on each element of at least one claim in the patent at issue. (Id. at 10-11). The Court noted that Defendant's arguments would have required the Court to engage in claim construction, which is not appropriate at the motion to dismiss stage. (Id. at 12).

Defendant subsequently answered the complaint on February 4, 2022. (ECF No. 42).² In its Answer, Defendant raised several counterclaims. Plaintiff is moving to dismiss the third counterclaim which alleges a violation of Section 2 of the Sherman Act regarding monopolization or attempted monopolization. (Id. at 23). Defendant describes Plaintiff as having about 75%-80% of the market for rotating wrecker products and utilizing the courts as a means to discourage competition. (Id.). Defendants state that the cost of litigation exceeds any potential recovery, and the litigation process itself is being used to obtain sensitive commercial and financial information and coerce Defendant into paying a royalty that "dwarfs any reasonable value of the alleged invention." (Id. at 18-19, 24).

Plaintiff's motion to dismiss notes that a claim that "a lawsuit is, by its very existence, anticompetitive and unlawful faces an uphill battle. It is well-established that the First Amendment protects the right to petition the government and to have access to the courts." (Id. at 6) (citing In re Wellbutrin XL Antitrust Litigation Indirect Purchaser Class, 868 F.3d 132, 147 (3d Cir. 2017)). Plaintiff points to this Court's January 27, 2022 Opinion, which held that Plaintiff had sufficiently plead a patent infringement claim to survive a motion to dismiss, to demonstrate that this matter was brought on a good faith basis. (Id. at 7). Plaintiff also asserts that it has taken the procedural processes necessary to protect its invention by taking appropriate legal action³ and to avoid any anticompetitive behavior, such as proposing a two-tier confidentiality order that requires attorneys'-eyes-only designations to protect Defendant's confidential business material. (Id. at 9). Further, Plaintiff argues that Defendant has not alleged any antitrust injury. (Id. at 10).

In its response Defendant argues that the '577 Patent discloses only two types of control panel configurations and that any other possible embodiments were disclaimed in the prosecution of the patent and on that basis insists that the filing of the second lawsuit in this Court qualifies this matter as a "serial, objectively baseless" suit in accordance with the elements required of a sham litigation. (Id. at 1-3; 4-5; 11-12). Defendant notes that at this stage, it need only to adequately suggest that the lawsuit is an attempt to interfere directly with the business relationship of a competitor, and that factual disputes cannot be resolved at a motion to dismiss stage, rather such inferences should be in favor of the nonmovant. (Id. at 8-9; 12-13). Moreover, Defendant suggests that Plaintiff misunderstands the monopolization claim, arguing that a violation can occur when a party seeks to maintain monopoly power through anticompetitive practices, not just gain market share. (Id. at 14) (citing Verizon Communs., Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004)).

Plaintiff's reply argues that, at bottom, if Plaintiff can show that its infringement position is "not so baseless that no reasonable litigant could realistically expect to secure favorable relief," then Defendant's sham litigation claim must fail as a matter of law. (Id. at 1) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). Because much of Defendant's argument rests on claim construction, Plaintiff described in detail the claim construction positions between the two parties, arguing that Plaintiff's construction follows the doctrine of claim differentiation and that preferred embodiments are not limitations to claim interpretation, whereas Defendant's position is that the '577 Patent is limited by the figures in the patent where the "control panel" "closes off" the compartment. (Id. at 4-5).

Plaintiff also argues that Defendant's monopolization claims are defective because they simply recite the elements required, rather than providing any factual basis. For example, while Defendant has stated that Plaintiff has attempted to unfairly gain access to Defendant's confidential business information, Plaintiff notes that Defendant has not articulated any specific incidents and that Plaintiff and Defendant have agreed to a thorough Discovery Confidentiality Order. (Id. at 9); see also (ECF No. 60).

Defendant alleges that Plaintiff seeks to coerce Defendant into paying an unreasonably high royalty for the Patent's use, and Plaintiff counters that the royalty suggestion was part of a settlement negotiation that was "very reasonable per-unit" in relation to the "$1 million or more" that the rotating wreckers sell for. (Id. at 9-10) (citing Ex. 2).

Following Plaintiff's reply brief the Parties submitted a Joint Motion to Seal Exhibit 2 of Plaintiff's reply brief. (ECF No. 69). The Motion to Seal will be addressed, as well as Plaintiff's Motion to Dismiss, below.

DISCUSSION

I. Subject Matter Jurisdiction

Because this is a claim of patent infringement arising under the Acts of Congress relating to patents, 35 U.S.C. §§ 271, 281-285, this Court has subject matter jurisdiction over Plaintiffs' patent infringement claim pursuant to 28 U.S.C. §§ 1331 and 1338(a). This Court may exercise subject matter jurisdiction over Defendants' counterclaims pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and 28 U.S.C. §§ 1331, 1337, 1338, and 1367.

II. Standard for Motion Pursuant to Rule 12(b)(6)

When deciding a motion to dismiss a crossclaim or counterclaim under Federal Rule of Civil Procedure 12(...