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Judge Ramos Finds “Bad Faith” Enforcement of a Patent is Not Patent Misuse

On March 23, 2020, U.S. District Court Judge Edgardo Ramos granted a motion to dismiss counterclaims and strike affirmative defenses because they were not plausible and did not meet the heightened pleading requirements of Fed. R. Civ. P. 9(b).

Plaintiff Signify (f/k/a Philips Lighting) sued defendant Reggiani for infringement of five patents related to light-emitting diode (LED) technology.  Reggiani responded by asserting defenses and counterclaims for, inter alia, inequitable conduct and patent misuse.

Inequitable conduct requires a defendant to prove, for example, that a specific individual (1) knew information is material to patentability, and (2) withheld that information during prosecution of a patent with the specific intent to deceive the USPTO.  The Court found Reggiani adequately pled that certain prior-art publications withheld during prosecution were material to patentability because they purportedly anticipated and/or rendered obvious specific patent claims.  However, Reggiani alleged only that one “and/or” more inventors and prosecuting attorneys committed the identified acts.  Accordingly, the Court ruled that Reggiani failed to plead with specificity that there was any single individual who both (1) knew of the materiality of the publications, and (2) withheld them with the intent to deceive the USPTO.

Patent misuse requires a defendant to prove that a patentee impermissibly broadened the physical or temporal scope of the patent, with anticompetitive effect.  Reggiani alleged that Signify committed patent misuse by filing the lawsuit in bad faith knowing the asserted patents are invalid and not infringed.  The Court found Reggiani failed to plead facts showing that the lawsuit seeks to impermissibly broaden the scope of the patents, and held that “bad faith” enforcement is not an example of patent misuse. 

Signify North America Corp. v. Reggiani Lighting USA, Inc., No. 18 Civ. 11098 (ER) (S.D.N.Y. Mar. 23, 2020)