Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02516/USCOURTS-azd-2_11-cv-02516-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Verco Decking, Inc., 

Plaintiff/Counterclaim-Defendant, 

vs. 

Consolidated Systems, Inc., 

 Defendant/Counterclaim-Plaintiff. 

No. CV-11-2516-PHX-GMS

ORDER 

 Pending before the Court is Plaintiff’s Rule 12 Motion to Dismiss Counterclaims 

and Strike Affirmative Defenses. (Doc. 49.) For the following reasons, the Motion is 

granted in part and denied in part. 

BACKGROUND 

 On December 20, 2011, Verco Decking, Inc. (“Verco”) filed a Complaint for 

Patent Infringement against Consolidated Systems, Inc. (“CSI”). (Doc. 1.) Verco alleges 

that CSI infringed United States Patent No. 6,212,932 (“the ‘932 patent”) and 6,397,469 

(“the ‘469 patent”). (Id. at 2–6.) The ‘932 patent is a device patent covering a tool used to 

form structural louvers, and the ‘469 patent is a method patent covering, inter alia, the 

use of the ‘932 tool to secure workpieces together. (Id.) CSI filed an Answer (Doc. 7), 

which it later amended (Docs. 18, 19), asserting various counterclaims and affirmative 

defenses. Verco moved to dismiss and strike some of the counterclaims and affirmative 

defenses in both the original and amended answers. (Docs. 14, 16, 23.) 

 On June 7, 2012, the U.S. Patent and Trademark Office (“PTO”) granted CSI’s 

request for ex parte reexamination procedures of the ‘932 and ‘469 patents. (Doc. 28 at 

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2.) This Court granted a stay pending the outcome of the reexamination and denied 

without prejudice Verco’s motions to dismiss and strike. (Doc. 28.) As a result of the ex 

parte reexamination, the PTO rejected all of the claims in the ‘932 and ‘469 patents in 

March 2013. (Doc. 44-5.) 

 Although this was a final rejection of the patents, Verco submitted an after-final 

Request for Reconsideration. (Doc. 44-5.) As a result of the reconsideration, the PTO 

issued reexamination certificates for the ‘932 and ‘469 patents in May and June 2013. 

(Docs. 31, 32.) The reconsideration of the reexamination of the ‘932 device patent found 

it patentable but the language of Claim 1 was amended. (Doc. 32-1.) Claims 2–9 of the 

‘932 patent were not amended but are dependent on the amended claim. (Id.) The 

reconsideration of the reexamination of the ‘469 method patent resulted in confirmation 

of claims 1–15 without amendment. (Doc. 32-2.) After the PTO’s reconsideration of the 

reexaminations, this Court lifted the stay. (Doc. 33.) 

 Verco then filed an Amended Complaint, incorporating the outcome before the 

PTO. (Doc. 35.) CSI filed an Answer and Verco again moved to dismiss and strike some 

of the counterclaims and affirmative defenses. (Docs. 37, 43.) CSI filed an Amended 

Answer and the Court found the motion to dismiss and strike to be moot. (Docs. 44, 50.) 

Verco now brings this Motion to Dismiss Counterclaims and Strike Affirmative Defenses 

based on CSI’s Amended Answer. (Doc. 49.) 

DISCUSSION 

I. Motion to Dismiss 

 Verco moves for the Court to dismiss several of CSI’s counterclaims. Those 

requests are denied as to the claims of invalidity in Counts I and II, but granted as to the 

claim of intervening rights in Count VI.

 A. Legal Standard 

 Federal Rule of Civil Procedure 12(b)(6) is designed to “test the legal sufficiency 

of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To survive dismissal 

for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than 

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“labels and conclusions” or a “formulaic recitation of the elements of a cause of action”; 

it must contain factual allegations sufficient to “raise a right to relief above the 

speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While “a 

complaint need not contain detailed factual allegations . . . it must plead ‘enough facts to 

state a claim to relief that is plausible on its face.’” Clemens v. DaimlerChrysler Corp., 

534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). “A claim has 

facial plausibility when the plaintiff pleads factual content that allows the court to draw 

the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plausibility 

standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” 

Id. However, there is no 

probability requirement at the pleading stage; it simply calls 

for enough fact to raise a reasonable expectation that 

discovery will reveal evidence. And, of course, a wellpleaded complaint may proceed even if it strikes a savvy 

judge that actual proof of those facts is improbable, and “that 

a recovery is very remote and unlikely.” 

Twombly, 550 U.S. at 556. 

 When analyzing a complaint for the failure to state a claim under Rule 12(b)(6), 

“[a]ll allegations of material fact are taken as true and construed in the light most 

favorable to the nonmoving party.” Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). 

However, legal conclusions couched as factual allegations are not given a presumption of 

truthfulness, and “conclusory allegations of law and unwarranted inferences are not 

sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 

1998). Counterclaims are just claims made by a defendant and the rules and cases 

establishing pleading standards for claims in complaints apply equally to counterclaims 

in answers. See Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

 There is no special exception to these general pleading standards that applies to 

patent cases. While the Federal Circuit recently held that the sufficiency of a claim for 

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“direct infringement is to be measured by the specificity required by Form 18,” that 

holding is limited to claims for which there are sample pleadings in the Appendix of 

Forms. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 

1336 (Fed. Cir. 2012) (“The Forms are controlling only for causes of action for which 

there are sample pleadings.”). Because there are no sample pleadings in the Appendix of 

Forms for claims alleging invalidity or intervening rights, those counterclaims are not 

governed by any of the forms, including Form 18. The claims are governed instead by the 

general pleading requirements established in Twombly and Iqbal. See id. at 1337. 

 B. Invalidity 

 Verco asks the Court to dismiss Counts I and II, which seek a declaratory 

judgment that the ‘932 and ‘469 patents are invalid. Verco argues that CSI’s allegations 

of invalidity are not plausible because nine of the ten previous patents that CSI identified 

were already reviewed by the PTO and the final one was known to CSI before 

reexamination. Verco argues that because CSI presents no truly new evidence and faces a 

higher standard of proof in this Court than it did in front of the PTO, it is unlikely that 

CSI will succeed here after failing there. 

 The validity of a patent can be challenged through a reexamination proceeding at 

the PTO or through a suit in the district courts. These two forums “take different 

approaches,” “consider different evidence,” “have different standards of proof,” “and on 

the same evidence could quite correctly come to different conclusions.” Ethicon, Inc. v. 

Quigg, 849 F.2d 1422, 1428 (Fed. Cir. 1988). 

 Counts I and II allege invalidity and will not be dismissed for failure to state a 

claim. CSI identifies the statutory provisions which form the legal basis for its claims and 

provides references to previous patents which form the factual basis. This provides Verco 

with adequate notice and presents a claim that is plausible on its face and not speculative. 

 Verco’s motion, although utilizing the term plausibility, is actually an argument 

about probability. Verco argues that it is unlikely that CSI will succeed with no new 

evidence and a higher standard of review. But even if the Court accepted the argument 

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that a win in this Court is unlikely after the loss at the PTO, a motion to dismiss cannot be 

granted merely because the judge finds the claims improbable. Furthermore, this Court is 

free to reach a different conclusion than the PTO. In fact, the PTO has vacillated in its 

own conclusions; first granting the patents after prosecution, then invalidating them 

during reexamination, before finally confirming the patents again after reconsideration. 

 C. Intervening Rights 

 Verco also asks the Court to dismiss Count VI, which seeks a declaratory 

judgment that CSI has intervening rights in the ‘469 method patent. Verco argues that 

CSI’s claim fails because intervening rights are predicated upon the existence of a new or 

amended claim, and the claims in the ‘469 method patent are neither new nor amended. 

 The doctrine of intervening rights is codified in 35 U.S.C. § 252 and “originated as 

a defense against patents modified through reissue procedures.” Marine Polymer Techs., 

Inc. v. Hemcon, Inc., 672 F.3d 1350, 1362 (Fed. Cir. 2012). The doctrine has since been 

extended by statute to the context of reexaminations. Id. (citing 35 U.S.C. §§ 307(b), 

316(b)) “Intervening rights do not accrue, however, where the accused product or activity 

infringes a claim that existed in the original patent and remains ‘without substantive 

change’ after reissue.” Id. at 1362. The first question when assessing intervening rights 

under § 307(b), is “whether the asserted claim is ‘amended or new;’ if the answer is no, 

that ends the inquiry.” Id. at 1363. The second question is “whether those literal 

amendments to the claim language had effected substantive changes in claim scope.” Id.

 Here, Count VI alleging intervening rights is dismissed because the relevant facts 

are undisputed and the claim is not plausible on its face. The statute creating intervening 

rights after reexamination proceedings and the Marine Polymer case interpreting it 

clearly require that there must be a new or amended claim. There is no dispute that the 

claims in the ‘469 method patent are neither new nor amended. Because there are no 

amended or new claims, the Court does not even have to consider the second question 

about whether the amendments were substantial changes. 

 CSI’s other arguments do not resolve its failure to meet the threshold requirement 

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of a new or amended claim. CSI argues that the amended language in the first claim of 

the ‘932 device patent will affect the scope and construction of the claims in both patents. 

While this will likely be the case during claim construction, the court in Marine Polymer

made it clear that the issue was whether there was a new or amended claim and not 

whether other things that happened during the reexamination might affect the 

interpretation of a claim whose words remained unchanged. Id. at 1365. CSI further 

argues that the patents were initially filed as a single patent and that it would be 

impractical to grant intervening rights as to the device and not to the method. But 

intervening rights can only be granted on new or amended claims and not on the patent as 

a whole. Even if the ‘932 and ‘469 patents where still combined as a single patent, CSI 

would only be able to assert intervening rights as to the one claim that was amended. Id.

at 1362 (Noting that intervening rights are available “only with respect to ‘amended or 

new’ claims in the reexamined patent.”). 

II. Motion to Strike 

 Next, Verco moves for the Court to strike several of CSI’s affirmative defenses 

and also to strike the remaining references to inequitable conduct. Those requests are 

denied in part and granted in part. 

 A. The Affirmative Defenses 

 Federal Rule of Civil Procedure 12(f) provides that a “court may strike from a 

pleading an insufficient defense.” “Motions to strike are generally regarded with disfavor, 

but are proper when a defense is insufficient as a matter of law.” Torres v. Goddard, 

2007 WL 4287812, at *3–4 (D. Ariz. Dec. 3, 2007). “The key to determining the 

sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of 

the defense.” Wyshak v. City Na’l Bank, 607 F.2d 824, 827 (9th Cir. 1979). 

 Federal Rule of Civil Procedure 8 provides the general rules for all pleadings, but 

it is divided into separate subparts governing the pleading of claims, defenses, and 

affirmative defenses. The subpart governing affirmative defenses is Rule 8(c), which 

provides that “[i]n responding to a pleading, a party must affirmatively state any 

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avoidance or affirmative defense.” This Court has previously rejected arguments that 

affirmative defenses should be subjected to the heightened pleading standards of 

Twombly because Rule 8(c) lacks the language from Rule 8(a) requiring a “short and 

plain statement of the claim showing the pleader is entitled to relief.” J & J Sports 

Prods., Inc. v. Khachatrian, CV-10-1567-GMS-PHX, 2011 WL 720049, at *1 n.1 (D. 

Ariz. Feb. 23, 2011). Some courts, citing to Rule 8(b), have found that affirmative 

defenses which merely state a cause of action, such as laches, are insufficient. See, e.g.,

Qarbon.com Inc. v. eHelp Corp., 315 F. Supp. 2d 1046, 1049 (N.D. Cal. 2004). Rule 8(b) 

is the subpart governing defenses, and similar to the language in Rule 8(a), it requires that 

a party “state in short and plain terms its defenses.” However, this Court finds it 

persuasive that affirmative defenses are governed by a separate subpart and chooses to 

follow those courts that do not import the requirements for defenses from Rule 8(b). See, 

e.g., Pickern v. Chico Steakhouse, LP, 12-CV-02586-TLN-CMK, 2013 WL 4051640 

(E.D. Cal. Aug. 8, 2013). 

 Accordingly, the only pleading requirement for an affirmative defense, as opposed 

to a defense or a claim, is that “a party must affirmatively state” it. Fed. R. Civ. P. 

8(c)(1). That affirmative statement merely needs to give fair notice by meeting traditional 

notice-pleading standards. See Wyshak, 607 F.2d at 827 (citing Conley v. Gibson, 355 

U.S. 41, 47–48 (1957)). Although the Supreme Court has abrogated the notice-pleading, 

“any set of facts” standard from Conley, it did so only in the context of claims in a 

complaint. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554–63 (2007). The pleading of 

affirmative defenses is governed by a separate subpart of Rule 8 and this Court declines 

to read in the requirements from other subparts of Rule 8 or the cases interpreting them. 

 Here, Verco moves to strike CSI’s second, fifth, sixth, and seventh affirmative 

defenses. For the following reasons, the Court will not strike these affirmative defenses. 

 Verco asks the Court to strike CSI’s Second Affirmative Defense, which alleges 

that the patents are invalid. The affirmative defense of invalidity is sufficiently pleaded 

because it gives Verco fair notice. In fact, Verco all but concedes that it has been fairly 

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apprised when it recognizes the affirmative defense as “the same insufficient invalidity 

arguments that failed before the USPTO during reexamination.” (Doc. 49:14–15.) 

Although Verco believes that CSI’s attempt to relitigate these claims is implausible, CSI 

is not required to plead its affirmative defenses in a way that meets the plausibility 

standard from Twombly for pleading claims. 

 Next, Verco asks the Court to strike CSI’s Fifth and Sixth Affirmative Defenses, 

but only to the extent that they rely on the invalidity of the patents-in-suit. At the outset, 

it is not clear how the Court would even grant such relief. Although the Court may strike 

an insufficient defense, it cannot rewrite CSI’s pleadings or remove the parts of sentences 

that reference invalidity. Regardless and for the reasons just discussed, Verco has been 

given fair notice of the invalidity claims and the Fifth and Sixth Affirmative Defenses are 

not insufficiently pleaded to the extent they rely on invalidity. 

 Verco also raises additional arguments against the Fifth and Sixth Affirmative 

Defenses, essentially arguing that they are insufficiently pleaded and lack factual support. 

Again seeking a piecemeal edit, Verco suggests that the Court could strike the part of the 

Fifth Affirmative Defense related to estoppel while leaving the part related to laches. 

These arguments fail because the Fifth and Sixth Affirmative Defenses give fair notice 

and do not need to meet a higher pleading standard. 

 Finally, Verco asks the Court to strike CSI’s Seventh Affirmative Defense, but 

only to the extent that it includes the ‘469 method patent. This request to strike is 

predicated on the legal argument discussed above that CSI can have no intervening rights 

as to the ‘469 patent. Although the Court granted the motion to dismiss Count VI, there is 

no reason to strike the Seventh Affirmative Defense. In it, CSI does not claim that it has 

intervening rights as to the ‘469 patent. It merely alleges generally that Verco’s claims 

“are barred by CSI’s intervening rights.” This Court will not strike this affirmative 

defense because it gives Verco fair notice as to the alleged intervening rights in the ‘932 

patent. 

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 B. The Remaining References to Inequitable Conduct 

 In addition to allowing a court to strike insufficient defenses, Rule 12(f) also 

allows a court to strike “any redundant, immaterial, impertinent, or scandalous matter.” 

“‘Immaterial matter is that which has no essential or important relationship to the claim 

for relief or the defenses being pleaded.’” Skydive Ariz., Inc. v. Quattrochi, 2006 WL 

2460595, at *3 (D. Ariz. Aug. 22, 2006) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 

1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994)). “‘Impertinent 

matter consists of statements that do not pertain, and are not necessary to the issues in 

question.’” Id. (internal quotations omitted). “Scandalous material is that which ‘cast[s] 

an excessively adverse light on the character of an individual or a party.’” Reichert v. 

Nat’l Credit Sys., Inc., 2005 WL 55549677, at *4 (D. Ariz. March 31, 2005) (quoting 

OKC Corp. v. Williams, 461 F. Supp. 540, 550 (N.D. Tex. 1978)). 

 The “function of a 12(f) motion to strike is to avoid the expenditure of time and 

money that must arise from litigating spurious issues by dispensing with those issues 

prior to trial.” Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). 

“Motions to strike are generally viewed with disfavor, and will usually be denied unless 

the allegations in the pleading have no possible relation to the controversy, and may 

cause prejudice to one of the parties.” Osei v. Countrywide Home Loans, 692 F. Supp. 2d 

1240, 1247 (E.D. Cal. 2010) (citing 5A C. Wright & A. Miller, Federal Practice and 

Procedure § 1380 (2d ed.1990)). 

 Here, although previous versions of the answer contained an affirmative defense 

and counterclaim based on inequitable conduct, the current Amended Answer does not. 

(Docs. 37, 44.) The Amended Answer does contain two paragraphs that reference 

deceptive intent and inequitable conduct in the “Factual Allegations Common to All 

Counts” portion of the Counterclaim section. (Doc. 44 at 16:9–11, 17:14–19.) It also 

contains a prayer for relief in the Counterclaim section that asks the Court to declare the 

patents unenforceable because of inequitable conduct during the reexamination 

proceedings. (Doc. 44 at 23:25–27.) 

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 The two references to deceptive intent and inequitable conduct in the facts section 

cannot be struck as insufficiently pleaded defenses. They are only included as factual 

allegations to support the counterclaims. They can only be struck if they can be 

considered a “redundant, immaterial, impertinent, or scandalous matter.” Here the 

references, while couched in legal terms, are part of the factual foundation of the claims 

and they at least pertain to and have an important relationship with the claims and issues 

raised. They also do not cast an excessively adverse light on the character of Verco. 

Therefore, the Court will not strike the two paragraphs in the factual allegation. 

 Finally, the Court strikes without prejudice the prayer for relief that is based on 

inequitable conduct because in its current form it is an insufficient defense. Although CSI 

previously included inequitable conduct as an affirmative defenses and a counterclaim, 

the current Amended Answer only contains a prayer for relief based on inequitable 

conduct. (Docs. 37, 44.) CSI admits that it intended to withdraw the claims of inequitable 

conduct. (Doc. 55 at 2 n.2.) The prayer for relief that remains is an insufficient defense 

that the Court now strikes. The Court makes no finding on the merits of an inequitable 

conduct defense in this case. CSI may, if otherwise permitted, attempt to amend its 

pleadings to include an inequitable conduct defense or counterclaim in the future. 

IT IS HEREBY ORDERED that Plaintiff’s Rule 12 Motion to Dismiss 

Counterclaims and Strike Affirmative Defenses (Doc. 49) is granted in part and denied 

in part.

 Dated this 20th day of December, 2013. 

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