Opinion
Civil Action No. 3:02-CV-0032-D
September 20, 2002
MEMORANDUM OPINION AND ORDER
In response to the patent infringement action of plaintiffs-counterdefendants Nortel Networks Limited and Nortel Networks Inc. (collectively, "Nortel"), defendant-counterplaintiff Kyocera Wireless Corp. ("Kyocera") has raised inter alia an affirmative defense and counterclaim for inequitable conduct and a counterclaim for statutory unfair competition under Cal. Bus. Prof. Code § 17200 (West 1997). Nortel moves under Fed.R.Civ.P. 9(b) and 12(c) for partial judgment on the pleadings and to dismiss. The court agrees that Kyocera has not pleaded inequitable conduct in conformity with Rule 9(b) but disagrees that Nortel is entitled to judgment on the pleadings as to the statutory unfair competition counterclaim. It therefore grants the motion in part and denies it in part and directs Kyocera to replead inequitable conduct in conformity with Rule 9(b).
I
Nortel sues Kyocera for patent infringement, alleging that it is liable for infringing four patents: U.S. Patent No. 5,896,411 ("the `411 patent"), entitled "Enhanced Reverse Link Power Control In a Wireless Communication System;" U.S. Patent No. 6,088,578 ("the `578 patent"), entitled "Burst Request Method and Apparatus for CDMA High Speed Data;" U.S. Patent No. 6,195,546 B1 ("the `546 patent"), entitled "Method and Apparatus for Network Initiated Parameter Updating;" and U.S. Patent No. 6,223,028 B1 ("the `028 patent"), entitled "Enhanced Method and System for Programming a Mobile Telephone Over the Air Within a Mobile Telephone Communication Network." Kyocera asserts inter alia an affirmative defense and counterclaim for inequitable conduct and a counterclaim for statutory unfair competition under California law. Nortel moves for partial judgment on the pleadings and to dismiss, contending that Kyocera has failed to plead inequitable conduct with the particularity required by Rule 9(b) and that it is entitled to judgment under Rule 12(c). Nortel moves under Rule 12(c) for partial judgment on the pleadings and to dismiss the statutory unfair competition counterclaim.
II
Because Kyocera's affirmative defense and counterclaim for inequitable conduct are based on the same factual allegations, the court will consider them together.
A
Nortel moves for relief under Rule 12(c) and Rule 9(b). The Rule 12(c) component of this aspect of its motion, however, is essentially derivative of the contention that Kyocera has not satisfied the particularity requirements of Rule 9(b). Accordingly, the court will analyze this ground of Nortel's motion under the Rule 9(b) standards.
Kyocera contends that Nortel's Rule 12(c) motion is premature because the pleadings are not closed. See D. Br. at 3 n. 2. The court disagrees. "Rule 7(a) provides that the pleadings are closed upon the filing of a complaint and answer, unless a counterclaim, cross-claim, or third-party claim is interposed, in which event the filing of a reply, cross-claim answer, or third-party answer normally will mark the close of the pleadings." 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1367, at 5012-13 (1990) (footnotes omitted). Nortel filed a reply to Kyocera's answer and counterclaim on May 28, 2002. It filed the present motion on May 29, 2002. On the date it filed its motion, the pleadings were closed within the meaning of Rule 12(c). The fact that under the court's scheduling order there is still time for a party to move for leave to amend does not affect this reasoning.
Absent intervening Federal Circuit precedent, the court adheres to its earlier decision in Communications Technology Corp. v. Micro Computer Systems, Inc., Civil Action No. 3:95-CV-1990-D (N.D. Tex. June 18, 1996) (Fitzwater, J.), in which it "[f]ollow[ed] the great weight of authority" and held that Rule 9(b) applies "to the inequitable conduct defense." Id., slip op. at 5 (citing, e.g., Chiron Corp. v. Abbott Labs., 156 F.R.D. 219, 220 (N.D. Cal. 1994)). Rule 9(b) provides: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." The Rule has been characterized as having four purposes: "to ensure that the defendant has sufficient information to formulate a defense by having notice of the conduct complained of to protect defendants against frivolous suits; to eliminate fraud actions in which all the facts are learned after discovery; and to protect defendants from undeserved harm to their goodwill and reputation." United States ex rel. Wilkins v. N. Am. Constr. Corp., 173 F. Supp.2d 601, 614 (S.D. Tex. 2001) (Rosenthal, J.) (False Claim Act case) (citing Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999)). "Rule 9(b) must be interpreted and applied in light of these purposes." Id.
Kyocera does not contest that Rule 9(b) applies to its inequitable conduct affirmative defense and counterclaim.
"Inequitable conduct requires that [Kyocera] establish: "(1) failure to disclose material information to the patent examiner; (2) knowledge of material information; and (3) intent to deceive." Communications Tech., Civil Action No. 3 :95-CV-1990-D, slip op. at 5 (citing Buchler AG v. Ocrim S.p.A., 836 F. Supp. 1305, 1324 (N.D. Tex. 1993) (Sanders, C.J.)). In the context of an inequitable conduct allegation, the requirements of Rule 9(b) have been characterized as follows:
To satisfy the particularity requirement of Rule 9 (b), IBM, as the alleged patent infringer, must state the time, place and nature of the alleged fraudulent activity; mere conclusory allegations of fraud are insufficient. Allegations of inequitable conduct must give Papst, the patent holder, notice of the particular misconduct alleged so that it can defend against the charge. IBM must offer specific facts that Papst can either deny or controvert. However, although IBM must plead specific facts, it need not plead evidence to satisfy Rule 9(b).In re Papst Licensing, GMBH Patent Litig., 174 F. Supp.2d 447, 448 (E.D. La. 2001) (citations omitted).
B
Nortel contends on four grounds that Kyocera has failed to satisfy Rule 9(b): first, Kyocera has not specifically identified the particular prior art it alleges should have been disclosed to the United States Patent and Trademark Office ("PTO"), Ps. Br. at 2, 8; second, it has not set forth why the art was material to patentability, id. at 2, 7; third, it has not pleaded a particular or specific affirmative material misrepresentation of fact or identified specific false material information submitted to the PTO during prosecution of the patents-in-suit, id. at 7; and fourth, it has not adequately pleaded intent to deceive beyond conclusory allegations of such intent, and Kyocera improperly relies on Nortel's mere access to information and of what Nortel should have known, which is not tantamount to specific intent not to disclose information, id. at 7-8.
Kyocera responds that it has complied with the pleading requirements of Rules 8 and 9(b) because it has pleaded the time, place, and nature of Nortel's fraudulent behavior and its relationship to such conduct. It contends the requirements of Rule 9(b) are relaxed when information is within the knowledge of the opposing party and, in such instances, allegations of fraud are sufficient if the party states the facts on which the belief is based. Kyocera maintains that its answer and counterclaim advise Nortel of the time, place, and contents of the alleged misrepresentations made to the PTO and give it notice of the precise misconduct alleged. Kyocera argues that it has sufficiently specified that Nortel and its agents had access to IS-683, IS-95B, IS-707-A.9, and IS-2000 standards submissions and proposals pertaining to the patents-in-suit and to other information derived from the standards-setting process that pertained to the patents, such as presentations and arguments and responses of others. Kyocera posits that Nortel failed to disclose to the PTO any of the actual Telecommunications Industry Association ("TIA") standards, proposals, or presentations, any of Nortel's and others' arguments and responses concerning them, or other standards documentation or information concerning the subject matter of the pending patent applications. Kyocera maintains that the information was within Nortel's knowledge and control and that it knew it was material. It asserts that the authorities on which Nortel relies in support of its motion are distinguishable on various grounds.
C
Kyocera's affirmative defense adopts the allegations of its counterclaim. See D. Ans. ¶ 29; D. Br. at 4. The court therefore assesses ¶¶ 46 through 54 to decide whether Kyocera's pleading is sufficient.
Kyocera alleges in its affirmative defense:
As alleged with more particularity in the Counterclaim in paragraphs 16 to 24 thereof, . . . [Nortel], by [itself], and through one or more of the named inventors of the `411, `578, `546 and `028 Patents, and/or their attorneys, employees and agents, with intent to deceive, failed to disclose material information, made affirmative material misrepresentations of fact, or submitted false material information to the United States Patent and Trademark Office ("USPTO") during the prosecution of the applications for one or more of the `411, `578, `546 and `028 Patents that result in those patents being invalid, void and/or unenforceable.
D. Ans. ¶ 29.
Paragraphs 46 through 54 of Kyocera's counterclaim allege the following:
Although Kyocera's affirmative defense refers to ¶¶ 16 to 24, see D. Ans. ¶ 29, the allegations of ¶¶ 46 through 54 contain the relevant inequitable conduct assertions. See D. Br. at 4 ("Paragraphs 46-54 of KYOCERA's Counterclaims state the allegations pertaining to its `Inequitable Conduct' claim as well as provide support for its similarly titled affirmative defense.").
46. [Kyocera] incorporates by reference Paragraphs 1 through 15 of this Counterclaim as though set forth fully and completely herein.
47. As set forth in more particular detail below, [Kyocera] is informed and believes, and based thereon alleges, that Counterclaim Defendants, by themselves, and through one or more of the inventors of the `411, `578, `546 and `028 Patents, and/or their attorneys, employees or agents, with intent to deceive, failed to disclose material information, made affirmative material misrepresentations of fact, or submitted false material information to the USPTO during the prosecution of the applications for the `411, `578, `546 and `028 Patents that result in one or more of the `411, `578, `546 and `028 Patents being invalid, void and/or unenforceable.
48. [Kyocera] is informed and believes, and based thereon alleges, that prior to filing the applications from which the Patents claim priority, Counterclaim Defendants and/or their predecessors were members of the Telecommunications Industry Association ("TIA"), and, along with the inventors of the Patents and others either employed by, controlled by or working in cooperation with Counterclaim Defendants, were engaged with TIA and others in the industry in promulgating standards pertaining to the subject matter of the Patents. [Kyocera] is further informed and believes, and based thereon alleges, that TIA is an association responsible for overseeing and organizing the setting of industry standards concerning wireless cellular telecommunications, including standards known as IS-683, IS-95B, IS-707-A.9 and IS-2000, including derivatives thereof (collectively referred to herein as "Standards"). [Kyocera] is further informed and believes, and based thereon alleges, that through their participation in and knowledge of the TIA standards setting process, Counterclaim Defendants and named inventors of the Patents had access to, knew of or should have known of the information available concerning the development and setting of the Standards that was material to the patentability of the Patents.
49. The provisional application to the `578 Patent is U.S. Provisional Application No. 60/079,512 filed on March 26, 1998, and the application from which the `578 Patent issued is U.S. Patent Application No. 09/218, 969 filed on December 22, 1998. The "Background" section of the `969 application issuing as the `578 Patent includes the following statement: "Standards for such systems have been set forth in standards documents ETA/TIA-95-B and IS-707-A which, at the time of preparing this patent application, is still undergoing approval finalization for wireless system manufacturers and users. Each of these standards are incorporated herein by reference." However, [Kyocera] is informed and believes, and based thereon alleges, that no standards or documentation thereof, such as drafts, committee submissions, or other technical literature relating to the standards development process, were cited to the USPTO during prosecution of the application issuing as the `578 Patent, nor were any such documents or literature submitted to the USPTO in the form of an Information Disclosure Statement ("IDS").
50. The `411 Patent names as inventors both of the named inventors of the `578 Patent. The application for the `411 Patent was filed prior to the application for the `578 patent. The provisional application to the `411 Patent is U.S. Provisional application No. 60/045,564 filed on May 5, 1997, and the application from which the `411 Patent issued is U.S. Patent Application No. 08/998,542 filed on December 26, 1997. The `564 provisional application states that: "Recently, phase 1C high speed data (HSD) solutions have been proposed as part of the TR 45.5 standardization process for the IS-95-B. Phase lC includes reverse link HSD which is facilitated with multiple Walsh channels on the [reverse link HSD] . . . Phase IC reverse link data proposals, employ multiple Walsh channels, up to 5 supplemental and 1 fundamental channels for a total of 6, on the reverse link." In the Notice of Allowability in the file history of the `578 Patent, the USPTO stated: "The prior art of record provided numerous teaching of transmitting data by a mobile station in a data burst. However, the prior art of record failed to specifically disclose a communication system having a mobile station transmitting over a plurality of channels in a data burst." [Kyocera] is informed and believes, and based thereon alleges, that although standards proposals relating to channel aggregation were partially described within the `564 provisional application pertaining to the `411 Patent, no standards proposals or other documents reflecting the development of IS-95-B were submitted in the form of an IDS or otherwise during prosecution of the subsequently-filed application issuing as the `578 Patent.
51. [Kyocera] is informed and believes, and based thereon alleges, that the IS-683 A standard is directed to over-the-air service provisioning of mobile stations in wideband spread spectrum systems pertaining to the subject matter of the `546 and `028 Patents. [Kyocera] is further informed and believes, and based thereon alleges, that Counterclaim Defendants have contended to [Kyocera] and others that the `546 and `028 Patents are essential to the IS-683A standard. [Kyocera] is further informed and believes, and based thereon alleges, that Counterclaim Defendants and the inventors of the `546 and `028 Patents participated in the IS-683A standard development and setting process, both prior to and during the prosecution of the `546 and `028 patents. [Kyocera] is further informed and believes, and based thereon alleges, that the provisional applications to the `546 and `028 Patents both derive from or constitute submissions by Counterclaim Defendants to the relevant TIA subcommittee for proposed procedures for over-the-air parameter administration and OTASP enhancements for dual band CDMA, at least one of which replaces prior submissions to the subcommittee by Counterclaim Defendants. However, [Kyocera] is informed and believes, and based thereon alleges, that no TIA standards documents or proposals, other than the provisional applications themselves, were cited to the USPTO during prosecution of the applications issuing as the `546 and `028 Patents, nor were any such documents or literature submitted to the USPTO in the form of an IDS.
52. [Kyocera] is informed and believes, and based thereon alleges, that although the above referenced Standards documents, Standards proposals, technical literature and arguments were material to the patentability of the subject matter of the `578, `546 and `028 Patents, at no time during the prosecution of the Patents did the inventors or any other individual or entity associated with the filing and prosecution of these patents disclose such information to the USPTO.
53. [Kyocera] is informed and believes, and based thereon alleges, that the Counterclaim Defendants, the inventors and/or their agents associated with the filing and prosecution of the applications for the Patents intentionally withheld such documents and information from the USPTO that was relevant and material to the patentability of the foregoing patents and/or misrepresented the prior art. In so doing, they breached the duty of candor and good faith owed to the USPTO.
54. The foregoing breach of the applicants' duty of candor and good faith in the prosecution of the `578, `546 and `028 patents bar the enforcement of the `578, `546 and `028 patents.Id. ¶¶ 46-54 (paragraph headings and footnote in ¶ 48 omitted).
D
The court agrees with Nortel that Kyocera has not specifically identified the particular prior art it contends should have been disclosed to the PTO.
Kyocera alleges that Nortel, its attorneys, employees, and agents, and the inventors were aware of industry standards concerning wireless cellular telecommunications, including standards known as IS-683, IS-95B (also referred to as ETA/TIA-95-B), IS-707-A.9, and IS-2000, and their derivatives. D. Ans. ¶ 48. Kyocera avers that the December 22, 1998 application from which the `578 patent issued stated that standards had been set forth in standards documents and IS-707-A which, at the time of preparing the patent application, was still undergoing approval finalization for wireless system manufacturers and users, and that each standard was incorporated by reference. Id. ¶ 49. It asserts that no standards or documentation thereof, such as drafts, committee submissions, or other technical literature relating to the standards development process were cited to the PTO during prosecution of the application, nor were any such documents or literature submitted to the PTO in the form of an information disclosure statement. Id. Kyocera has not, however, specifically identified all the standards, documentation, drafts, committee submissions, or technical literature that it maintains were not disclosed.
Kyocera also alleges that in the provisional application to the `411 patent, filed on May 5, 1997, although standards proposals relating to channel aggregation were partially described, no standards proposals or other documents reflecting the development of IS-95-B were submitted in the form of an information disclosure statement or otherwise during prosecution of the subsequently-filed application issuing as the `578 patent. Id. ¶ 50. Kyocera has not specifically identified the omitted standards proposals or other documents.
Kyocera asserts that, although Nortel has contended that the `546 and `028 patents are essential to the IS-683A standard, Nortel and the patent inventors participated in the IS-683A standard development and setting process, and the provisional applications to the `546 and `028 patents both derive from or constitute submissions by Nortel to the relevant TIA subcommittee, no TIA standards documents or proposals, other than the provisional applications themselves, were cited to the PTO during prosecution of the applications issuing as the `546 and `028 patents, nor were any such documents or literature submitted to the PTO in the form of an information disclosure statement. Id. ¶ 51. Kyocera has not specifically identified the TIA omitted standards documents or proposals that should have been, but were not, cited or submitted.
In ¶ 52 Kyocera alleges that although the standards documents, standards proposals, technical literature, and arguments referenced earlier in its counterclaims were material to the patentability of the subject matter of the `578, `546, and `028 patents, neither the inventors nor any other individual or entity associated with the filing and prosecution of the patents disclosed such information to the PTO at any time during the prosecution of the patents. The counterclaim does not identify with the requisite specificity the standards documents, standards proposals, technical literature, or arguments that Kyocera maintains should have been disclosed to the PTO.
E
Nortel contends that Kyocera has not pleaded with particularity how any information that Nortel failed to disclose was material to patentability.
Although Kyocera does not address this contention directly, it does so indirectly as part of a more general argument about how its inequitable conduct affirmative defense and counterclaim are sufficient under Rule 9(b). According to Kyocera, under its inequitable conduct theory, Nortel and its agents had access to IS-683, IS-95B, IS-707-A.9, and IS-2000 standards submissions and proposals pertaining to the patents-in-suit, and to other information derived from the standards setting process pertaining to the patents. Nortel was engaged with TIA and others in the industry in the standards-setting process before and during the prosecution of the `578, `546, and `028 patents. Nortel used selected versions of the TIA standards subcommittee submissions for its provisional patent applications, referred to the standards in its applications and in prosecuting the patents, and attempted to incorporate the standards by reference in certain patent applications. Kyocera maintains that, although Nortel now contends the resulting patents cover these standards, it did not disclose, other than the applications themselves, any of the actual standards, any standard submissions, proposals, or presentations, or any of Nortel's and others' arguments and responses concerning them, or other documentation or information in its possession, concerning the subject matter of the pending patent applications. Nortel knew this information was material, and the information was within its knowledge and control.
The explanation contained in Kyocera's brief can be set to one side. It does not constitute part of Kyocera's answer and is not properly considered. Coates v. Heartland Wireless Communications, Inc., 55 F. Supp.2d 628, 644 n. 26 (N.D. Tex. 1999) (Fitzwater, J.) (holding in context of Rule 9(b) ruling that, because allegation was not contained in amended complaint, plaintiffs could not rely on it in opposing motion). Based on the content of the answer and counterclaim, which are the only allegations to be assessed, the court agrees with Nortel that Kyocera's materiality allegations are conclusory. See D. Ans. ¶¶ 29, 47, 48, 52, 53.
Moreover, Kyocera's failure to identify specifically the particular prior art it contends should have been disclosed to the PTO also leads to the conclusion that it has failed adequately to plead with particularity how any information that Nortel failed to disclose was material to patentability. Because inequitable conduct consists of a failure to disclose material information to the patent examiner, knowledge of the material information, and intent to deceive, Nortel cannot have fair notice of the basis for this theory unless Kyocera identifies specifically the prior art references it contends Nortel did not disclose.
Finally, to the extent Kyocera has attempted to plead materiality inferentially, it has also fallen short. In ¶ 50 Kyocera seems to assert that, by intentionally withholding prior art concerning standards proposals or other documents reflecting the development of IS-95-B during prosecution of the application that resulted in the `578 patent, Nortel induced the PTO to find that the relevant prior art of record failed to disclose specifically a communication system having a mobile station transmitting over a plurality of channels in a data burst. Kyocera has not alleged how these unspecified "standards proposals or other documents" would have been material to the PTO's notice of allowability.
Although "Standards" is a defined term in Kyocera's answer, see D. Ans. ¶ 48, the phrase "standards proposals or other documents" is not.
It would seem to be a relatively straight forward matter — if Kyocera has grounds to advance such a claim — for Kyocera to comply with Rule 9(b) by asserting explicitly that Nortel intentionally failed to disclose a particular prior art reference so that the PTO would not disallow a claim because, for example, it was anticipated or made obvious by that art. Kyocera has not yet done so, and it must replead to comply with Rule 9(b).
F
Nortel posits that Kyocera has not pleaded a particular or specific affirmative misrepresentation of fact or identified specific false material information submitted to the PTO during prosecution of the patents-in-suit. The court agrees. Although Kyocera alleges in ¶ 47 that Nortel "made affirmative material misrepresentations of fact, or submitted false material information to the USPTO during the prosecution of the applications for the `411, `578, `546 and `028 Patents that result in one or more of the `411, `578, `546 and `028 Patents being invalid, void and/or unenforceable," elsewhere in the counterclaim it fails to specify the content of a single affirmative misrepresentation of fact or specific false material information submitted to the PTO. At present, the inequitable conduct defense and counterclaim appear to be concealment-based rather than predicated on affirmative misrepresentations. The court concludes that they are deficient under Rule 9(b) in this respect.
A possible exception to this conclusion may be found in ¶ 49, but the court holds that, as presently framed, it does not plead a particular or specific affirmative misrepresentation of fact or identify specific false material information submitted to the PTO.
Kyocera alleges in ¶ 49 that the background section of the December 22, 1998 application for the `578 patent states: "Standards for such systems have been set forth in standards documents ETA/TIA-95-B and IS-707-A which, at the time of preparing this patent application, is still undergoing approval finalization for wireless system manufacturers and users. Each of these standards are incorporated herein by reference." Id. (emphasis added). Kyocera alleges that, contrary to the statement, no standards or documentation thereof, such as drafts, committee submissions, or other technical literature relating to the standards development process, were cited to the PTO during prosecution of the application, nor were any such documents or literature submitted to the PTO in the form of an information disclosure statement. It does not specifically assert, however, that the materials were not incorporated by reference, which is what Kyocera appears to maintain is the affirmative misrepresentation of fact.
G
Nortel contends that Kyocera has not pleaded intent to deceive beyond advancing a conclusory allegation of such intent. It also maintains that Kyocera has improperly relied on Nortel's mere access to information and of what it should have known.
To the extent this aspect of Nortel's motion is a request for Rule 12(c) relief that is not derivative of its Rule 9(b) arguments, the court concludes, under the Rule 12(c) standards set out infra at § IV(B), that Nortel has failed to show that Kyocera would not be entitled to relief under any set of facts or any possible theory that it could prove consistent with the allegations in its affirmative defense and counterclaim.
Kyocera alleges in its affirmative defense and counterclaim that Nortel and others engaged in certain acts or omissions and that they did so "with intent to deceive." See D. Ans. ¶¶ 29, 47. "Federal Rule of Civil Procedure 9(b), pertaining to pleading special matters, provides, in pertinent part, that `[m]alice, intent, knowledge, and other condition of mind of a person may be averred generally.'" Heimann v. Nat'l Elevator Indus. Pension Fund, 187 F.3d 493 509 (5th Cir. 1999) (citing cases); see Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1138-39 (5th Cir. 1992) (addressing civil RICO claim). "The rule recognizes the unworkability and undesirability of requiring specificity in pleading a condition of mind; describing a state of mind with exactitude is inherently difficult and would lead to complexity and prolixity in pleadings." Id. (citing 5 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1301, at 674 (2d ed. 1990)). The Fifth Circuit has approved alleging conditions of the mind of a person at a general level. See, e.g., Belli v. Orlando Daily Newspapers, Inc., 389 F.2d 579, 589 (5th Cir. 1967) (addressing malice component of Rule 9(b)).
Because the Federal Circuit has not addressed the applicability of Rule 9(b) in the context of an assertion of inequitable conduct, the court will apply Fifth Circuit precedent in accordance with the Federal Circuit's courtesy rule.
The court recognizes that at least one Fifth Circuit decision holds that Rule 9(b) requires more "than a simple allegation that [the opposing party] had fraudulent intent." Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994). Tuchman states that the pleading must set out facts that support an inference of fraud, that is, "specific facts that make it reasonable to believe that [the party] knew that a statement was materially false or misleading." Id. (quoting Greenstone v. Cambex Corp., 975 F.2d 22, 25 (1st Cir. 1982) (internal quotation mark omitted)). Tuchman in particular, and decisions of this court in general, that have required specificity in pleading fraudulent intent are securities fraud cases. In this type of case courts have insisted that the plaintiff plead scienter with particularity. The court is not confident that these authorities can be applied outside the realm of securities actions that require proof of scienter.
Accordingly, the court denies Nortel's motion in this respect.
H
The court grants in part Nortel's motion to dismiss and directs that, within 30 days of the date this memorandum opinion and order is filed, Kyocera file an amended answer and counterclaim that pleads an affirmative defense and counterclaim for inequitable conduct that conforms to Rule 9(b).
IV A
Nortel moves under Rule 12(c) to dismiss Kyocera's counterclaim for unfair competition under § 17200. It contends that Kyocera has not alleged that a reasonable consumer is likely to be deceived by Nortel's acts, that Nortel's acts threaten an incipient violation of an antitrust law, that the acts have effects comparable to or the same as a violation of the law, or otherwise significantly threaten or harm competition, or that they have had any deleterious effect on anyone other than Kyocera. Nortel also posits that Kyocera has not advanced a non-conclusory allegation that Nortel's acts were forbidden by law.
Kyocera responds that the broadly written § 17200 prohibits any unlawful, unfair, or fraudulent business act or practice. It contends that an unlawful business practice includes violations of other laws, and that any unfair practice is covered even if not specifically proscribed by another law. Kyocera maintains that, although the California Supreme Court has addressed what is an unfair act or practice when a direct competitor claims to have suffered an injury that is remediable under § 17200, it has not attempted to formulate a definition of unfair for other cases or to abrogate the existing test.
B
Rule 12(c) provides that "[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." "A motion brought pursuant to Fed.R.Civ.P. 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (per curiam) (citing 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1367, at 509-10 (1990)). "[T]he central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Hughes v. Tobacco Inst., Inc., 278 F.3d 417, 420 (5th Cir. 2001) (quoting St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n. 8 (5th Cir. 2000)).
"Pleadings should be construed liberally, and judgment on the pleadings is appropriate only if there are no disputed issues of fact and only questions of law remain." Id. (citing Voest-Alpine Trading USA Corp. v. Bank of China, 142 F.3d 887, 891 (5th Cir. 1998)). "The [district] court may dismiss a claim when it is clear that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam) (citing Fee v. Herndon, 900 F.2d 804, 807 (5th Cir. 1990)). "In analyzing the complaint, we will accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff" Id. (citing Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996)). "The issue is not whether the plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claim. Thus, the court should not dismiss the claim unless the plaintiff would not be entitled to relief under any set of facts or any possible theory that he could prove consistent with the allegations in the complaint." Id. (citing Doe, 81 F.3d at 1401; Vander Zee v. Reno, 73 F.3d 1365, 1368 (5th Cir. 1996)). of course, these principles apply equally when the court assesses the sufficiency of a counterclaim that is challenged by Rule 12(c) motion.
C
Kyocera's unfair competition allegations include (1) breach of contract; (2) Nortel's refusal to license the patents-in-suit to Kyocera on fair and reasonable terms after representing that it would do so; (3) misrepresenting the availability of licenses, the scope of the patents, and the relationship between the patents and certain industry standards; (5) withholding information from the PTO in order to mislead Kyocera; and (6) attempting to enforce the patents in bad faith. See D. Ans. ¶ 67. Under the highly deferential Rule 12(c) standard, the court cannot say, based on the pleadings alone, that Kyocera would not be entitled to relief under any set of facts or any possible theory that it could prove consistent with the allegations in the unfair competition counterclaim. The court therefore denies the motion.
* * *
The court grants in part and denies in part Nortel's May 29, 2002 motion for partial judgment on the pleadings and to dismiss and directs that Kyocera file an amended answer and counterclaim that complies with Rule 9(b) within 30 days of the date this memorandum opinion and order is filed.
SO ORDERED.