Sloan Valve Co. v. Zurn Indus., Inc., No. 10 C 204, Slip Op. (N.D. Ill. Apr. 1, 2012) (St. Eve, J.).
Judge St. Eve granted in part defendants’ (collectively “Zurn”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Sloan Valve’s (“Sloan”) inequitable conduct counterclaims and denied Zurn its request for attorneys’ fees and costs in this patent dispute involving valves. But to the extent the Court dismissed the counterclaims, it was without prejudice to replead using facts learned during discovery. Sloan was not prejudiced by the amendment because Sloan was on notice of the facts gleaned during the two year discovery period.
The Court acknowledged the inequitable conduct pleading requirements set forth in Exergen, and noted that they were not changed by the heightened proofs required by Therasense. The Court also held that at the pleading stage, Zurn need not show that its alleged “intent to deceive is the single most likely explanation for non-disclosure.” Zurn need only allege facts from which intent may be reasonably inferred.
With respect to Counterclaim III, Sloan waived its argument regarding identity and intent, by failing to challenge them in its first motion to dismiss Zurn’s original Counterclaim III, which was substantively the same as this amended counterclaim. But even if Sloan had not waived its arguments, Zurn could have met Rule 9(b) pleading standards by amending to add information learned during discovery.
And while the Court’s original pre-Therasense ruling on Zurn’s materiality pleading was based upon the “reasonable examiner” standard, Zurn’s pleadings also met Therasense’s “but for” materiality test. Zurn pled that but for Sloan’s counsel’s statements during prosecution regarding the size of a plunge and a bushing passage taught by the prior art, at least Claim 1 would not have been allowed.
While Counterclaim IV was not adequately pled, Zurn was given leave to replead. Zurn’s counterclaim did not identify who withheld the prior art, but Zurn had since identified the individuals during discovery. Zurn’s materiality pleading was also deficient, but Zurn was granted leave to replead with information learned during discovery. And Zurn was similarly granted leave to amend its intent allegations.