NI-Q, LLC v. Prolacta Bioscience, Inc.

NI-Q, LLC, Plaintiff, v. PROLACTA BIOSCIENCE, INC., Defendant.

No. 3:17-cv-934-SI

United States District Court, D. Oregon

July 26, 2021

Brenna K. Legaard, K & L GATES LLP, One SW Columbia Street Suite Of Attorneys for Plaintiff.

Kristin L. Cleveland, KLARKQUIST SPARKMAN LLP, Orion Armon COOLEY LLP, Alexandra Mayhugh, COOLEY LLP, David Burns and M Howard Morse, COOLEY LLP, Of Attorneys for Defendant.

OPINION AND ORDER

Michael H. Simon United States District Judge.

In this action brought by Plaintiff Ni-Q, LLC (Ni-Q) against Defendant Prolacta Bioscience, Inc. (Prolacta), Ni-Q sought a declaratory judgment of non-infringement and invalidity of U.S. Patent No. 8, 628, 921 (the '921 Patent). Prolacta asserted a counterclaim for infringement of that patent. The Court granted Ni-Q's first motion for partial summary judgment, finding that certain claims of the '921 Patent were invalid under 35 U.S.C. § 101 and that even if they were valid, Ni-Q did not infringe the '921 Patent as a matter of law. The Court also granted Ni-Q's second motion for partial summary judgment, finding that certain claims of the '921 Patent were invalid as anticipated under 35 U.S.C. § 102(b) (pre-America Invents Act).

Upon the stipulated request of the parties, the Court dismissed Ni-Q's claims requesting a declaratory judgment of non-infringement and invalidity as moot, after Prolacta surrendered the '921 Patent during reissue, when the U.S. Patent and Trademark Officer (USPTO) issued the RE48, 240 patent. The Court also dismissed Prolacta's counterclaim for infringement of the '921 Patent.

In its Third Amended Complaint, Ni-Q added claims asserting that Prolacta violated Oregon's Unlawful Trade Practices Act (UTPA) and Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging a Walker Process claim of enforcement of a fraudulently obtained patent.^[1] Ni-Q, however, has stated that it will voluntarily dismiss its UTPA claim, leaving only its antitrust claim. In response to Prolacta's counterclaim, Ni-Q also asserted an affirmative defense of inequitable conduct, alleging that Prolacta engaged in fraud on the USPTO in obtaining the '921 Patent, among other patents.

Now before the Court is Ni-Q's third motion for summary judgment, arguing that the '921 Patent is unenforceable because of Prolacta's inequitable conduct, Ni-Q's fourth motion for summary judgment, on its antitrust claim, and Ni-Q's motion for leave to file a supplemental complaint adding a claim for a declaratory judgment that the '921 Patent is unenforceable because of inequitable conduct and that Prolacta engaged in fraud on the PTO during the reissue of the '921 Patent. For the following reasons, Ni-Q's motion for leave to file a supplemental complaint is denied, Ni-Q's third motion for summary judgment is denied as moot, and Ni-Q's fourth motion for summary judgment is denied.

STANDARDS

A. Summary Judgment

A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment, ” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient ....” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

B. Supplemental Pleading

Rule 15(d) of the Federal Rules of Civil Procedure provides that a court may “permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” This rule also “permits a supplemental pleading to correct a defective complaint and circumvents ‘the needless formality and expense of instituting a new action when events occurring after the original filing indicated a right to relief'” Northstar Fin. Advisors Inc. v. Schwab Invs., 779 F.3d 1036, 1044 (9th Cir. 2015) (quoting 6A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Fed. Prac. & Proc. § 1505 (3d ed. 2015) (Wright & Miller)). “The purpose of Rule 15(d) is to promote as complete an adjudication of the dispute between the parties as is possible.” LaSalvia v. United Dairymen of Arizona, 804 F.2d 1113, 1119 (9th Cir. 1986) (simplified).

Amended pleadings under Rule 15(a) differ from supplemental pleadings under Rule 15(d). “The former relate to matters that occurred prior to the filing of the original pleading and entirely replace the earlier pleading; the latter deal with events subsequent to the pleading to be altered and represent additions to or continuations of the earlier pleadings.” Wright & Miller, § 1504.

DISCUSSION

A. Motion to File Supplemental Complaint

Ni-Q moves for leave to file a supplemental complaint alleging a claim for inequitable conduct. Much of the conduct alleged in the proposed supplemental claim, however, is conduct that occurred before the date that the Third Amended Complaint was filed.^[2] A supplemental pleading is the mechanism used for events, transactions, and occurrences that happened after the date of the pleading to be supplemented. Id.; see also LaSalvia, 804 F.2d at 1119 (“Federal Rule of Civil Procedure 15(d) allows the addition of post-complaint allegations.” (emphasis added)). Indeed, Rule 15(d) is “somewhat narrower in scope” than the rule it replaced, “because it does not expressly apply to pre-action matters of which a party was ignorant at the time the original pleading was filed (these matters may be raised under Rule 15(a)) but embraces only events that have happened ‘after the date of the pleading to be supplemented.'” Wright & Miller § 1504. That the alleged conduct is not post-complaint conduct is apparent by the fact that Ni-Q asserts nearly identical allegations in its affirmative defense of inequitable conduct to Prolacta's counterclaim. Thus, the proper mechanism was for Ni-Q to move for leave to file a Fourth Amended Complaint.

Additionally, even considering Ni-Q's request on the merits, or construing Ni-Q's request as one under Rule 15(a) of the Federal Rules of Civil Procedure instead of under Rule 15(d), the Court would deny the request as moot, untimely, and unduly prejudicial. The sole basis on which Ni-Q asserts that it should be able to add a new claim four years into this litigation is an anticipated motion for attorney's fees under 35 U.S.C. § 285. The Court, however, will consider Ni-Q's arguments and evidence relating to inequitable conduct when such a motion is filed. See Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 1383 (Fed. Cir. 2007) (“We agree with the district court that the inequitable conduct counterclaim is moot....The only other additional relief that may be available to Medrad by an inequitable conduct determination is attorney fees under 35 U.S.C. § 285. Medrad admitted during oral arguments that, although it plans to predicate an attorney fee application on inequitable conduct, it has not filed that application yet. We therefore affirm the decision that the inequitable conduct counterclaim is presently moot.”).

B. Motions for Summary Judgment

1. Inequitable Conduct

Ni-Q filed its motion for summary judgment on its affirmative defense of inequitable conduct before the parties stipulated that the Court should dismiss Ni-Q's declaratory judgment claims on infringement and invalidity and Prolacta's counterclaim. Ni-Q argued in its motion that the '921 Patent was unenforceable because of Prolacta's inequitable conduct. The Court requested supplemental briefing on the legal effect, if any, of the Court ruling on Ni-Q's summary judgment motion after the Court dismissed Ni-Q's claims relating to infringement and invalidity and Prolacta's counterclaim. Ni-Q cites Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229 (Fed. Cir. 2008), in support of the proposition that the Court should resolve this motion and find the '921 Patent unenforceable.

Monsanto does not support Ni-Q's assertion that a court can, independent of a motion for attorney's fees under § 285, find a patent that is not in suit unenforceable for inequitable conduct. As the Federal Circuit explained in Monsanto:

The question facing this court is, thus, whether a district court's jurisdiction under § 285 to determine whether there was inequitable conduct in the prosecution of patents that are otherwise no longer in suit confers on that court the jurisdiction to hold such patents unenforceable for inequitable conduct. We hold that it does.

Id. at 1243. The prerequisite in Monsanto for the court having jurisdiction to hold the patent that was no longer in suit unenforceable was the existence of a pending motion under § 285. Here, Ni-Q has not yet filed a motion under § 285.^[3]

Ni-Q's affirmative defense of inequitable conduct to claimed infringement by Prolacata is moot because the '921 Patent is no longer in suit, Ni-Q's declaratory judgment claims have been dismissed, and Prolacata's infringement counterclaim has been dismissed. Thus, Ni-Q's ...