Konami Digital Entertainment Co, Ltd. et al v. Harmonix Music Systems, Inc. et al, No. 6:08-cv-00286 (E.D. Tex. Dec. 14, 2009)

Before the Court is Plaintiffs’ Motion to Dismiss and/or Strike Allegations of Inequitable Conduct (Doc. No. 127) (“Motion”). Defendants Harmonix Music Systems Inc., MTV Networks, Viacom International Inc., and Viacom Inc. (collectively, “Viacom”) oppose the Motion to Strike and/or Dismiss with a Response (Doc. No. 146) (“Response”) and a Sur-reply (Doc. No. 162). Plaintiffs Konami Digital Entertainment Co., Ltd. and Konami Digital Entertainment, Inc. (collectively, “Konami”) filed a Reply (Doc. No. 154) in support of the Motion. Having considered the parties’ submissions and the arguments contained therein, the Court DENIES Konami’s Motion to Strike Allegations of Inequitable Conduct under Rules 9(b), 12(b)(6), and 12(f) of the Federal Rules of Civil Procedure.

Plaintiffs’ Motion largely focuses on the Federal Circuit’s recent holding in Exergen Corp. v. Wal-Mart Store, and argues that Viacom’s inequitable conduct allegations lack the specificity required to satisfy the strict pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure. MOTION at 1 (discussing Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009)).2 Konami emphasizes that the pleading requirement of Rule 9(b) warrants the identification of the “who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” Id. at 2; Exergen, 575 F.3d at 1327 (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)). According to Konami, the Viacom allegations are insufficient to satisfy this strict pleading requirement because (1) Viacom failed to tie its accusations to specific individuals by broadly accusing all agents and attorneys involved in prosecuting the disputed patents, and (2) the facts alleged do not establish that the accused prosecuting agents and attorneys withheld material prior art references or had the requisite intent to deceive the PTO. See generally MOTION at 4–8.

Viacom responds by emphasizing that the language contained in its pleadings provides sufficient detail under Exergen and Rule 9(b) to support a reasonable inference of inequitable conduct. See RESPONSE at 1–3; Exergen, 575 F.3d at 1329 (stating that “knowledge” and “intent” may be averred generally so long as the pleadings allege sufficient facts to reasonably infer the requisite state of mind). Viacom specifically references facts in its Amended Answer that it asserts not only provided Konami with information to identify the relevant individuals accused of knowing about the contested prior art references, but also established reasonable grounds to infer that Konami’s inventors and prosecuting attorneys understood that these references were material to the patents-in-suit. RESPONSE at 2 (maintaining that Viacom’s inequitable conduct defenses “detailed allegations of knowledge coupled with the detailed allegations of materiality support more than a reasonable inference that the individuals identified intended to withhold this invalidating prior art from the PTO”).

After reviewing the Amended Answer and accompanying exhibits that disclose Viacom’s inequitable defense pleadings, the Court finds that Viacom has sufficiently provided the factual3 details required by Exergen to plead inequitable conduct in a patent case. Exergen clearly articulated that Rule 9(b) warrants the identification of the “who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. The Federal Circuit teaches that these allegations need not be a “smoking gun,” but rather sufficient grounds to infer the requisite knowledge and intent. Applying this standard to Viacom’s pleadings, it is apparent that Viacom provides facts that establish a reasonable basis to allege that individuals employed by or retained by Konami had knowledge of the prior art references at issue, and that there was potentially intent to withhold these references from the PTO. (Doc. No. 97 at 8–36) (“Amended Answer”).

Reading the pleadings to identify the “who” in Viacom’s allegations, the Court finds that Viacom identifies specific individuals that it accuses of withholding material prior art and violating a duty of candor to the PTO. AMENDED ANSWER at 8, 19, 24. As required by Rule 9(b), Viacom names the patent prosecution attorneys and inventors against whom it intends to bring charges of inequitable conduct.¹ The Court is similarly persuaded that Viacom has met the “what” and “where” requirements with pleadings that identify charts of potentially invalidating Konami prior art games— on a claim-by-claim and limitation-by-limitation basis. AMENDED ANSWER, EXH. B–J. Additionally, Viacom pleads the “how” required under Exergen by compiling analysis that incorporates Examiner statements to support its theories. These statements suggest that the disclosed Konami prior art may not be cumulative of all of the information on record, and therefore, gives Viacom a reasonable basis on which to allege undisclosed prior art references. See, e.g., AMENDED ANSWER at 10 (¶ 39), 224 (¶ 82); see generally AMENDED ANSWER, EXH. B–J.

The Court additionally finds the facts presented here are distinguishable from the facts considered in Exergen. For example, in Exergen, the defendant did not identify a single specific individual accused of inequitable conduct, nor any facts to show that there was knowledge and intent to deceive during the prosecution process. Exergen, 575 F.3d at 1329. In the Defendants’ Amended Answer, however, Viacom provides a consistent set of allegations that disclose both its theory of inequitable conduct and the individuals it alleges have violated their duty of candor to the PTO. Similarly, in Exergen, the pleading failed to establish that the relevant claim limitations were present in the withheld prior art references. See id. at 1329. Viacom’s pleadings, by contrast, provide analysis of specific claim limitations in the patents-in-suit as they relate to the undisclosed references. See SURREPLY at 1 (citing AMENDED ANSWER, EXH. B (¶ 38), EXH. C (¶ 54), EXH. D (¶ 55), EXH. E ( ¶ 66), EXH. F ( ¶ 80), EXH. G (¶ 97), EXH. H (¶ 118), EXH. I (¶ 127), and EXH. J (¶ 136)). Furthermore, while the Exergen pleading generally avowed that the withheld references were “material,” Viacom’s Amended Answer more particularly points out why a reasonable examiner would have considered the withheld reference important to the patentability of a claim. SURREPLY at 1–2 (citing to relevant portions of the claim charts provided in the Amended Answer that detail the claim limitations present in the undisclosed references); see also Exergen, 575 F.3d at 1329 (quoting Regents of Univ. Of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1570 (Fed. Cir. 1997) (“Information is material if a reasonable examiner would have considered it important to the patentability of a claim.”)). In sum, based on a comparison between the “particularity” requirements in the Exergen allegations, and those in the instant case, the Court cannot conclude that Defendants’ allegations warrant exclusion under the Federal Rules.

5The Court finds that Viacom provides a consistent set of allegations that disclose both its theory of inequitable. conduct and the individuals it alleges have violated their duty of candor to the PTO. Accordingly, Konami’s Motion is DENIED.

So ORDERED and SIGNED this 14th day of December, 2009.

JOHN D. LOVE

UNITED STATES MAGISTRATE JUDGE