United States District Court, S.D. New York
April 1, 2014
RADIANCY, INC., Plaintiff,
VIATEK CONSUMER PRODUCTS GROUP, INC., Defendant and Counterclaim-Plaintiff
RADIANCY, INC., and PHOTOMEDEX, INC., Counterclaim-Defendants
Radiancy, Inc., Plaintiff: Baldassare Vinti, Benjamin Moses
Rattner, LEAD ATTORNEYS, Steven Michael Kayman, Victoria L.
Loughery, Proskauer Rose LLP (NY), New York, NY.
Viatek Consumer Products Group, Inc., Defendant: Anthony H.
Handal, HANDAL & MOROFSKY, LLC, New York, NY.
Viatek Consumer Products Group, Inc., Counter Claimant:
Anthony H. Handal, HANDAL & MOROFSKY, LLC, New York, NY.
Radiancy, Inc., Counter Defendant: Baldassare Vinti, LEAD
ATTORNEY, Steven Michael Kayman, Victoria L. Loughery,
Proskauer Rose LLP (NY), New York, NY.
OPINION AND ORDER
S. ROMÁN, United States District Judge.
(" Plaintiff" ) commenced this action against
Viatek (" Defendant" and " Counterclaim
Plaintiff" ) under 35 U.S.C. § § 271 and 281
for patent infringement and pursuant to 15 U.S.C. §
1125(a) for false advertising, trade dress infringement,
trademark infringement, and unfair competition. In defense,
Defendant asserted twenty-one Affirmative Defenses and seven
Counterclaims against Radiancy and its parent company,
PhotoMedex, Inc. (together, " Counterclaim
Defendants" ). Before the Court is Counterclaim
Defendants' motion to strike Affirmative Defenses six,
seven, and twenty-one pursuant to Fed.R.Civ.P. 9(b) and
12(f), dismiss PhotoMedex, Inc. from this action pursuant to
Fed.R.Civ.P. 12(b)(5) and (6), and dismiss the Second
Counterclaim pursuant to Rule 12(b)(1), the Third
Counterclaim pursuant to Rule 9(b) and 12(b)(6), and the
Fourth and Fifth Counterclaims pursuant to Rule 12(b)(6).
This opinion amends the opinion previously issued by this
Court on March 28, 2014, Docket No. 113. For the following
reasons, Counterclaim Defendant's motion is granted in
part and denied in part.
is a Delaware company specializing in skincare products,
specifically light and heat-based skincare equipment for
professionals and household consumers. Amend. Compl. ¶
2. Plaintiff obtained U.S. Patent No. 7,170,034 (" the
'034 Patent" ) from the United States Patent and
Trademark Office (" USPTO" ) for its product
no!no!® Hair, which is a handheld device that uses heat
to remove hair. Id. at ¶ 4 & Ex. 1. The
'034 Patent is entitled " PULSED ELECTRIC
SHAVER" and was granted on January 30, 2007.
Id. In addition to the '034 Patent, Plaintiff is
also the owner of Patent No. 6,825,445 (" the '445
Patent" ), entitled " REAL ELECTRIC SHAVER."
Counterclaim ¶ 8 & Ex. B. On December 13, 2011
PhotoMedex, Inc. and Radiancy effectuated a reverse merger
whereby Radiancy became a wholly-owned subsidiary of
PhotoMedex. Counterclaim ¶ 2; Douglass Dec. Ex. K.
Following the merger, the pre-merger shareholders of
PhotoMedex owned approximately 20% of the outstanding common
stock in PhotoMedex and its subsidiaries while the pre-merger
shareholders of owned approximately 80% of the outstanding
common stock of PhotoMedex and its subsidiaries. Douglass
Dec. Ex. K. Defendant is a Florida corporation that develops,
manufacturers, and markets home goods and personal care
products, including hair removal devices, personal fans,
flashlights, beauty products, dental products, kitchen
supplies, and cleaning products. Counterclaim ¶ 1.
manufacturers and sells the Pearl[TM] Hair Remover, the
allegedly infringing product. Amend. Compl. ¶ 5.
Defendant also manufacturers the Samba[TM], a hot wire hair
removal device that does not use a pulsed heating source.
Counterclaim ¶ 32. The Samba was first sold on August
27, 2013 by ShopNBC, one of Defendant's customers.
Id. Plaintiff alleges that in Defendant's
advertising of its hair removal products, Defendant uses
false and misleading information to confuse consumers,
including directly lifting photographs and videos from
Plaintiff's advertising materials and using them to
promote the Pearl Hair Remover. Id. at ¶ ¶
first confronted Defendant about the alleged patent
infringement in a letter sent on April 27, 2012. Ratner Dec.
Ex. G. In that letter, Plaintiff stated that it believed
Defendant was infringing both the '034 Patent and the
'445 Patent. Id. Subsequent exchanges between
the parties show that Viatek contested Radiany's
assertion of infringement and that Radiancy did not change
its original position.
brought suit against Defendant alleging violations of 35
U.S.C. § § 271 and 281, based on belief that
Defendant " markets, distributes, advertises, uses,
offers for sale, sells and imports into the United States the
Pearl Hair Remover, which infringes the '034
Patent." Amended Complaint (" Amend. Compl." )
¶ 5. Plaintiff's Amended Complaint also claims that
Defendant violated Section 43(a) of the Latham Act (15 U.S.C.
§ 1125(a)) by engaging in false advertising, trade dress
infringement, trademark infringement, and unfair competition.
the filing of this action on June 3, 2013, Plaintiff filed an
Amended Complaint on June 24, 2013, in which it added claims
for false advertising, trade dress infringement, and unfair
competition to its claims of patent infringement. Viatek
filed an Answer and Counterclaims on September 23, 2013.
Dock. No. 22. An Amended Answer with Counterclaims was filed
on September 29, 2013. Dock. No. 24. Viatek filed a Second
Amended Answer and Counterclaims on October 1, 2013. Dock.
No. 26. In its Second Amended Answer and Counterclaim ("
Sec. Amend. Ans. & Counterclaims" ), Viatek asserts
twenty-one affirmative defenses and seven counterclaims
against Counterclaim Defendants. The present motion to strike
addresses three affirmative defenses (the Sixth, for
inequitable conduct, the Seventh, for violation of the best
mode requirement, and the Twenty-First, for unclean hands)
and four counterclaims (the Second, for declaratory judgment
of noninfringment and invalidity of the '445 patent, the
Third, for violation of Section 2 of the Sherman Act, the
Fourth, for unfair competition, and the Fifth, for tortious
interference), and seeks to dismiss PhotoMedex, Inc. from the
Motion to Strike Affirmative Defenses
The court may strike from a pleading an insufficient defense
or any redundant, immaterial, impertinent, or scandalous
matter." Fed.R.Civ.P. 12(f). In order to prevail on a
motion to strike affirmative defenses under Fed.R.Civ.P.
12(f), plaintiff must satisfy the following three-part test:
" (1) there must be no question of fact that might allow
the defense to succeed; (2) there must be no substantial
question of law that might allow the defense to succeed; and
(3) the plaintiff must be prejudiced by the inclusion of the
defense." Coach, Inc. v. Kmart Corps., 756
F.Supp.2d 421, 425 (S.D.N.Y. 2010) (citation omitted). "
In assessing the sufficiency of an affirmative defense, the
Court 'should construe the pleadings liberally to give
the defendant a full opportunity to support its claims at
trial, after full discovery has been made.'"
Cartier Int'l AG v. Motion in Time, Inc., No. 12
Civ. 8216(JMF), 2013 WL 1386975, at *3 (S.D.N.Y. 2013)
(quoting Coach, Inc., 756 F.Supp.2d at 425). "
Increased time and expense of trial may constitute sufficient
prejudice to warrant striking an affirmative defense."
Coach, Inc., 756 F.Supp.2d at 426.
Motion to Dismiss Counterclaim
A motion to dismiss a counterclaim is evaluated under the
same standard as a motion to dismiss a complaint."
Revonate Mfg., LLC v. Acer Am. Corp., No. 12 Civ.
6017(KBF), 2013 WL 342922, at *2 (S.D.N.Y. Jan. 18, 2013)
(citation omitted). On a motion to dismiss under Fed.R.Civ.P.
12(b)(6), dismissal is proper unless the complaint "
contain[s] sufficient factual matter, accepted as true, to
'state a claim to relief that is plausible on its
face.'" Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell
A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955,
167 L.Ed.2d 929 (2007)). " 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."
Iqbal, 556 U.S. at 678. " Although for the
purposes of a motion to dismiss [a court] must take all of
the factual allegations in the complaint as true, [it is]
'not bound to accept as true a legal conclusion couched
as a factual allegation.'" Id. (quoting
Twombly, 550 U.S. at 555).
there are well-pleaded factual allegations in the complaint,
" a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement
to relief." Iqbal, 556 U.S. at 679. It is not
necessary for the complaint to assert " detailed factual
allegations," but must allege " more than labels
and conclusions." Twombly, 550 U.S. at 555.
" [A] formulaic recitation of the elements of a cause of
action will not do." Id. The facts in the
complaint " must be enough to raise a right to relief
above the speculative level on the assumption that all the
allegations in the complaint are true." Id.
Ultimately, determining whether a complaint states a facially
plausible claim upon which relief may be granted is " a
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense."
United States Court of Appeals for the Federal Circuit has
" exclusive jurisdiction of an appeal from a final
decision of a district court of the United States ... in any
civil action arising under, or in any civil action in which a
party has asserted a compulsory counterclaim arising under,
any Act of Congress relating to patents." 28 U.S.C.
§ 1295(a)(1). Based on the Federal Circuit's
jurisdiction, a " district court must . . . follow
Federal Circuit precedent in a case arising under the patent
laws." Foster v. Hallco Mfg. Co., Inc., 947
F.2d 469, 475 (Fed. Cir. 1991). A case " aris[es] under
the patent laws" if the complaint establishes that
" plaintiff's right to relief necessarily depends on
resolution of a substantial question of federal patent law,
in that patent law is a necessary element of one of the
well-pleaded claims." Christianson v. Colt Indus.
Operating Corp., 486 U.S. 800, 809, 108 S.Ct. 2166, 100
L.Ed.2d 811 (1988). If a plaintiff presents a claim "
supported by alternative theories in the complaint,"
that claim does not depend on patent law and accordingly
Federal Circuit precedent is not controlling. Id. at
810. " In other words, an antitrust claim only gives
rise to Federal Circuit jurisdiction and only necessitates
the application of Federal Circuit law, if 'patent law is
essential to each of [the] theories" of liability under
the antitrust claims alleged in the complaint.'"
In re Lipitor Antitrust Litigation, Master Docket
No. 3:12-cv-2389 (PGS), 2013 WL 4780496, at *14 (D.N.J. Sept.
5, 2013) (quoting Christianson, 486 U.S. at 809).
PhotoMedex Should be Dismissed From this Action
Fed.R.Civ.P. 12(b)(5), a defendant may move to dismiss on the
basis that service of process was improper. Fed.R.Civ.P.
12(b)(5). Without proper service, the court lacks personal
jurisdiction over the defendant. Under New York law, a
corporation may be served by personal service on a director,
officer, managing or general agent, or cashier or assistant
cashier, or any other agent authorized by law to accept
service. N.Y. C.P.L.R. § 311(a)(1); Fed.R.Civ.P.
New York Courts have consistently held that service of
process on one corporation does not confer jurisdiction over
another, even where one corporation may wholly own another,
or where they may share the same principals."
McKibben v. Credit Lyonnais, No. 98 Civ. 3358 LAP,
1999 WL 604883, at *3 (S.D.N.Y. Aug. 10, 1999) (internal
quotation and citation omitted). " The standards set in
Rule 4(d) for service on individuals and corporations are to
be liberally construed, to further the purpose of finding
personal jurisdiction in cases in which the party has
received actual notice." Grammenos v. Lemos,
457 F.2d 1067, 1070 (2d Cir. 1972). " But there must be
compliance with the terms of the rule, and absent waiver,
incomplete or improper service will lead the court to dismiss
the action unless it appears that proper service may still be
Viatek filed its Counterclaims, PhotoMedex, Inc. was not a
party to this action. As such, Viatek was required to serve
PhotoMedex, Inc. in accordance with New York law. Viatek
served PhotoMedex by electronically serving a copy of the
Answer and Counterclaims on Radiancy's counsel. Sec.
Amend. Ans. & Counterclaims p. 54. This is not proper service
on PhotoMedex. In order to effectuate proper service, Viatek
needed to serve PhotoMedex, Inc., a company, pursuant to
C.P.L.R. § 311. There was no personal service made on
PhotoMedex's directors, officers, or agents, and
Radiancy's counsel was not authorized to accept service
on behalf of PhotoMedex. Even if Viatek were given leave to
properly effectuate service, such service would be futile
because Viatek does not satisfy the standard under Delaware
law for piercing the corporate veil and holding PhotoMedex
liable for Radiancy's harms.
Piercing the Corporate Veil
order to hold PhotoMedex liable for Radiancy's actions,
Viatek must seek to pierce the Radiancy's corporate veil.
" It is a general principle of corporate law deeply
'ingrained in our economic and legal systems' that a
parent corporation (so-called because of control through
ownership of another corporation's stock) is not liable
for the acts of its subsidiaries." U.S. v.
Bestfoods, 524 U.S. 51, 61, 118 S.Ct. 1876, 141 L.Ed.2d
43 (1998). It is equally ingrained, however, that in certain
circumstances, " the corporate veil may be pierced and
the shareholder held liable for the corporation's conduct
. . . ." Id at 62.
New York's choice of law rules provide that 'the law
of the state of incorporation determines when the corporate
form will be disregarded and liability will be imposed on
shareholders.'" Taizhou Zhongneng Import and
Export Co. v. Koutsobinas, 509 Fed.Appx. 54, 56 n. 2 (2d
Cir. 2013) (quoting Fletcher v. Atex, 68 F.3d 1451,
1456 (2d Cir. 1995)). Radiancy is incorporated in Delaware,
thus, the Court must apply Delaware law to determine whether
to pierce the corporate veil.
To pierce a corporate veil under Delaware law, a plaintiff
must show that the individual has 'complete domination
and control' over the entity such that it 'no longer
ha[s] legal or independent significance of [its]
own.'" Carotek, Inc. v. Kobayashi Ventures,
LLC, 875 F.Supp.2d 313, 350 (S.D.N.Y. 2012) (quoting
Wallace ex rel. Cencom Cable Income Partners II, L.P. v.
Wood, 752 A.2d 1175, 1183 (Del. Ch. 1999)). The alter
ego theory, under which Counterclaim Plaintiff proceeds, is a
subset of the general corporate veil piercing theory and
" 'requires that the corporate structure cause fraud
or similar injustice.' Effectively, the corporation must
be a sham and exist for no other purpose than as a vehicle
for fraud." Wallace, 752 A.2d at 1184 (quoting
Outokumpu Eng'g Enters., Inc. v. Kvaerner
Enviropower, Inc., 685 A.2d 724, 729 (Del. 1996)).
In order to succeed on an alter ego theory of liability,
plaintiffs must essentially demonstrate that, in all aspects
of the business, the corporations actually functioned as a
single entity and should be treated as such." Blair
v. Infineon Techs. AG, 720 F.Supp.2d 462, 470 (D. Del.
2010) (quoting Pearson v. Component
Tech. Corp., 247 F.3d 471, 485 (3d Cir. 2001)
(alterations omitted)). " Under the single entity test,
the Third Circuit has considered seven factors in determining
whether a corporation operated as a single economic entity:
(1) gross undercapitalization; (2) failure to observe
corporate formalities; (3) non-payment of dividends; (4)
insolvency of the debtor corporations at the time; (5)
siphoning of the corporation's funds by the dominant
stockholder; (6) absence of corporate records; and (7)
whether the corporation is merely a facade."
Blair, 720 F.Supp.2d at 470-71. " While the
list of factors is not exhaustive and no single factor is
dispositive, some combination is required, and an overall
element of fraud, injustice, or unfairness must always be
present." Id. at 471.
not contained in the Complaint, or here, Counterclaim, cannot
be considered in determining the sufficiency of the pleadings
on a motion to dismiss. Blair, 720 F.Supp.2d at 472
n. 15. In its Counterclaim, Viatek supports its claim by
stating that Radiancy is " completely controlled by
PhotoMedex," both entities have the same CEO, that
PhotoMedex is the alter ego of Radiancy, and that PhotoMedex
is the real owner of the patent at issue. Sec. Amend. Ans. &
Counterclaims p. 17 ¶ 3. The alter ego and patent
ownership allegations are conclusory and are therefore not
accepted as factual allegations. Even taking the other
assertions as true, there is no allegation of fraud or
injustice, and there are no facts from which such could be
inferred. The standard for piercing the corporate veil under
Delaware law is high and requires allegations beyond those
that are present in Viatek's pleadings. Viatek makes
additional claims in its opposition brief, including that
Radiancy and PhotoMedex share legal counsel and support
staff, are operating as the same company, there is common
ownership of the two entities as indicated in SEC filings,
PhotoMedex included Radiancy's assets on its balance
sheets, and that company statements refer to the two entities
as a common unit. However, on a motion to dismiss, the Court
is bound by the four corners of the Complaint and will not
consider these additional allegations.
Sixth Affirmative Defense: Inequitable Conduct
Sixth Affirmative Defense for inequitable conduct alleges
that Radiancy " intentionally omitted, and/or withheld
from, and/or misrepresented to, and/or mischaracterized,
and/or buried information respecting the prior art to the
[USPTO] . . . with the intent to deceive the [USPTO] and
cause the issuance of each one of the Patents." Sec.
Amend. Ans. & Counterclaims p. 13. The Federal Circuit in
Therasense, Inc. v. Becton, Dickinson & Co., 649
F.3d 1276 (Fed. Cir. 2011), chastised the use of the doctrine
of inequitable conduct as having led to undesirable results
in patent cases, including " increased adjudication cost
and complexity, reduced likelihood of settlement, burdened
courts, strained PTO resources, increased PTO backlog, and
impaired patent quality." Id. at 1290. In an
attempt to remedy such consequences, the court established
stricter substantive standards -- in addition to the higher
pleading standards established in Exergen Corp. v.
Wal-Mart Stores, 575 F.3d 1312, 1328 (Fed. Cir. 2009) --
in order to " redirect a doctrine that has been overused
to the detriment of the public." Therasense,
649 F.3d at 1290.
[T]o plead the 'circumstances' of inequitable conduct
with the requisite 'particularity' under Rule 9(b),
the pleading must identify the specific who, what, when,
where, and how of the material misrepresentation or omission
committed before the PTO." Exergen Corp., 575
F.3d at 1328. This means that the pleading must " name
the specific individual associated with the filing or
prosecution of the application . . . who both knew of the
material information and deliberately withheld or
misrepresented it," id. at 1329; "
identify the specific prior art that was allegedly known to
the applicant and not disclosed," id. at 1327;
" identify which claims, and which limitations in those
claims, the withheld references are relevant to, and where in
those references the material information is found,"
id. at 1329; " identify the particular claim
limitations, or combination of claim limitations, that are
supposedly absent from the information of record,"
id. Further, " the accused infringer must prove
that the patentee acted with the specific intent to deceive
the PTO." Therasense, 649 F.3d at 1290. "
Because direct evidence of deceptive intent is rare, a
district court may infer intent from indirect and
circumstantial evidence." Aventis Pharma S.A. v.
Hospira, Inc., 675 F.3d 1324, 1334 (Fed. Cir. 2012)
(quoting Therasense, 649 F.3d at 1290).
motion to strike the affirmative defense of inequitable
conduct is granted. Viatek fails to establish with
particularity the who, what, when, where, why, and how of the
deceptive actions taken before the PTO to satisfy the
pleading standards. Nor can those specifics be inferred from
the Counterclaims. C.f., Cognex Corp. v.
Microscan Sys., Inc., No. 13 Civ.2027(JSR), 990
F.Supp.2d 408, 2013 WL 6906221, at *8-9 (S.D.N.Y. Dec. 31,
2013) (on a motion to strike affirmative defense of
inequitable conduct, court found that there was an inference
of intent that could be drawn from a number of facts stated
in the pleading which satisfied the who, what, when, where,
why, and how pleading requirement of Exergen ).
Allegations relevant to this affirmative defense are wholly
conclusory and lack specifics regarding exactly what it was
that was misrepresented, mischaracterized, or omitted in
Radiancy's application to the USPTO.
opposition brief, Viatek states that U.S. Patent No.
6,307,181 is the relevant prior art that, if properly
disclosed and characterized, the PTO would not have issued
the '034 Patent. Opp'n Br. 34-35. Viatek asserts that
this prior art was " buried" by Plaintiff in order
to intentionally deceive the PTO Examiner, but courts have
generally rejected the claim that a reference, if submitted
to the PTO Examiner, can be buried for the purposes of
establishing inequitable conduct. See, e.g.,
Fiskars, Inc. v. Hunt Mfg. Co., 221 F.3d 1318, 1327
(Fed. Cir. 2000) (" An applicant can not be guilty of
inequitable conduct if the reference was cited to the
examiner, whether or not it was a ground of rejection by the
examiner." ). Furthermore, these allegations were not
made in the Counterclaim. The Federal Circuit in
Exergen made clear that it is the pleading that must
allege the specifics of the misrepresentation or omission
that occurred before the PTO. Viatek's pleading falls
short of making the requisite factual allegations. Moreover,
even if the Court could consider the additional claims made
in Viatek's opposition brief, there are no factual claims
regarding the " who," or the person or persons that
were involved in the fraudulent conduct. Accordingly, this
affirmative defense is stricken.
Seventh Affirmative Defense: Best Mode
Seventh Affirmative Defense states: " The applicant in
the patent failed to disclose the best mode for practicing
the alleged invention." Sec. Amend. Ans. & Counterclaims
p. 13. Under the Leahy-Smith America Invents Act, Pub. L. No.
112-29, 125 Stat. 284 (2011), in all proceedings commenced on
or after September 16, 2011, " the failure to disclose
the best mode shall not be a basis on which any claim of a
patent may be canceled or held invalid or otherwise
enforceable." 35 U.S.C. § 282(b)(3)(A). Under 35
U.S.C. § 112(a), the statutory language requires that
the patent " specification . . . shall set forth the
best mode . . . of carrying out the invention." 35
U.S.C. 112(a). Viatek states that while best mode may not be
the basis for cancelling a claim or holding a claim invalid
following the amendment to the Leahy-Smith Act, it
nonetheless remains valid on the issues of enforceability,
injunctive relief and damages. Sec. Amend. Ans. &
Counterclaims p. 27.
The version of the Patent Act currently in effect provides
that, although an applicant must disclose the best mode to
register a patent, a party to a lawsuit may not rely on an
alleged best mode disclosure violation to cancel, invalidate,
or hold a patent otherwise unenforceable." In re
Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent
Litig., 676 F.3d 1063, 1084 (Fed. Cir. 2012). Thus,
under section 112, the best mode must still be included in
the patent application, but it may no longer be used as a
defense in a patent litigation action. Memorandum re:
Requirement for a Disclosure of the Best Mode, dated
September 20, 2011,
The Court grants Plaintiff's motion to strike the Seventh
Affirmative Defense. See Coach, Inc., 756
F.Supp.2d at 426 (" [I]nclusion of a defense that must
fail as a matter of law prejudices the plaintiff because it
will needlessly increase the duration and expense of
Twenty-First Affirmative Defense: Unclean Hands
twenty-first Affirmative Defense states, " The Complaint
is barred, in whole or in part, by the doctrine of unclean
hands." Sec. Amend. Ans. & Counterclaims p. 15.
Viatek's argument for the application of the doctrine of
unclean hands is essentially that Radiancy engaged in the
same conduct that it is asserting against Viatek in its
Complaint. Specifically, Viatek points to the claim that
Viatek is using Radiancy's trademark in its website
metadata, directing Google searches toward its product, and
the allegations of false advertising with respect to
statements made by Viatek that the hair removal devices cause
the cessation of hair growth. Viatek alleges that Radiancy is
similarly using Viatek's trademark in Radiancy's
website metadata, Counterclaim ¶ 39, that Radiancy
similarly have taken actions to influence Google searches,
Counterclaim ¶ 38, and that Radiancy also advertised
that the hair removal devices could stop hair growth. Sec.
Amend. Ans. & Counterclaims, p. 12.
The 'unclean hands' doctrine 'closes the door of
a court of equity to one tainted with inequitableness or bad
faith relative to the matter in which he seeks relief,
however improper may have been the behavior of the
defendant.'" ABF Freight Sys., Inc. v.
NLRB, 510 U.S. 317, 329-30, 114 S.Ct. 835, 127 L.Ed.2d
152 (1994) (quoting Precision Instrument Mfg. Co. v.
Auto. Maint. Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993,
89 L.Ed. 1381, 1945 Dec. Comm'r Pat. 582 (1945)). "
It is undisputed that an unclean hands defense requires a
finding of bad faith . . . [and] to assert a defense of
unclean hands, a party must have been injured by the
allegedly inequitable conduct." Obabueki v.
Int'l Bus. Machs. Corp., 145 F.Supp.2d 371, 401
Pleading the words 'unclean hands' without more . . .
is not a sufficient statement of such defense."
Obabueki, 145 F.Supp.2d at 401; see also
Cartier Int'l, AG, No. 12 Civ. 8216(JMF), 2013
WL 1386975, at *3 (S.D.N.Y. Apr. 5, 2013) (" Because
Defendant's Answer offers no indication of how the
doctrine of unclean hands . . . would bar Plaintiffs'
claims, the motion to strike Defendant's second
affirmative defense is granted." ); Daiwa Special
Asset Corp. v. Desnick, No. 00 CIV. 3856(SHS), 2002 WL
1997922, at *12 (S.D.N.Y. 2002) (" defense of unclean
hands should fail . . . [because] the mere pleading of the
defense . . . without more is insufficient." ). Although
Plaintiff does not state why not striking this affirmative
defense would be prejudicial, courts have held that " [a
plaintiff] would be prejudiced by inclusion of this claim . .
. [because] additional discovery would be required as a
result of the inclusion of the unclean hands defense . . .
[and] the length and scope of the trial . . . would be
expanded." Specialty Minerals, Inc. v.
Pluess-Staufer AG, 395 F.Supp.2d 109, 114 (S.D.N.Y.
2005). Viatek's claims regarding the advertising of the
hair removal products is not clearly set forth in its
respect to the claims of use of Viatek's trademark in
Radiancy's website metadata and directing Google
searches, Viatek adequately alleges that Radiancy is engaging
in the same conduct of which it is accusing Viatek. Thus,
with respect to these two issues only, the Court denies
Radiancy's motion to strike the affirmative defense of
Declaratory Relief Under Patent Number 6,825,445
The purpose of the Declaratory Judgment Act . . . in patent
cases is to provide the allegedly infringing party relief
from uncertainty and delay regarding its legal rights."
Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824
F.2d 953, 956 (Fed. Cir. 1987). When a party seeks
declaratory relief under the Declaratory Judgment Act, the
moving party bears the burden of proving that " the
facts alleged, under all the circumstances, show that there
is a substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to
warrant the issuance of a declaratory judgment."
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (quoting
Maryland Casualty Co. v. Pacific Coal & Oil Co., 312
U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)). The
standard espoused in MedImmune is that the "
dispute [must] be definite and concrete, touching the legal
relations having adverse legal interests and that it be real
and substantial and admit of specific relief through a decree
of a conclusive character, as distinguished from an opinion
advising what the law would be upon a hypothetical state of
facts." Id. at 127 (internal quotations and
citations omitted). " Article III jurisdiction may be
met where the patentee takes a position that puts the
declaratory judgment plaintiff in the position of either
pursuing arguably illegal behavior or abandoning that which
he claims a right to do." SanDisk Corp. v.
STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir.
2007). The Federal Circuit in SanDisk held that
" where a patentee asserts rights under a patent based
on certain identified ongoing or planned activity of another
party, and where that party contends that it has the right to
engage in the accused activity without license, an Article
III case or controversy will arise and the party need not
risk a suit for infringement by engaging in the identified
activity before seeking a declaration of its legal
states that it has been made to " believe it will be
sued for patent infringement under the '445 patent with
respect to Accused Products and Planned Products,"
Counterclaim ¶ 66, and therefore seeks a declaratory
judgment that it is not infringing the '445 Patent. This
apparent fear arises from an exchange of letters between
counsel for the two entities beginning in 2012. In a letter
sent to Viatek on April 27, 2012, Radiancy stated that it
believed that Viatek was infringing the '445 Patent as
well as the '034 Patent. Ratner Dec. Ex. G. In response,
Viatek stated that it disagreed with the determination that
its products infringed either the '445 Patent or the
'034 Patent. Ratner Dec. Ex. H. Radiancy responded on May
17, 2012, holding firm to its initial position that
Viatek's products infringed Radiancy's
patents (plural). Ratner Dec. Ex. I. Finally, in a
May 15, 2013 letter, Radiancy detailed to Viatek why it
believed that the Pearl Hair Remover infringes the '034
Patent, making no reference to the '445 Patent.
Counterclaim Ex. J. Ultimately, Radiancy filed the current
action against Viatek, stating claims solely under the
'034 Patent. It amended its Complaint to add trade dress
claims, but continued not to assert infringement of the
[A] communication from a patent owner to another party,
merely identifying its patent and the other party's
product line, without more, cannot establish adverse legal
interests between the parties, let alone the existence of a
'definite and concrete' dispute."
Hewlett--Packard Co. v. Acceleron LLC, 587 F.3d
1358, 1362. The letters, although initially asserting the
'445 Patent, must be taken in the context of the
circumstances. In this case, it is significant that although
Radiancy initially asserted both the '034 Patent and the
'445 Patent, it filed this action only under the '034
patent. See Cepheid v. Roche Molecular Sys.,
Inc., No. C-12-4411 EMC, 2013 WL 184125, at *11 (N.D.
Cal. Jan. 17, 2013) (" Significantly, even in the midst
of a heated legal battle over the  patent[-in-suit] when
Defendant could have invoked the [uncontested] patent as
leverage in that battle, Defendants made no move to pressure
Plaintiff into licensing the [uncontested] patent, and did
not threaten legal action on the [uncontested] patent."
). Surely, if Radiancy believed that Viatek was infringing
the '445 Patent, it would have asserted such a claim in
this action, which has been vigorously litigated. Since the
initial letters referencing the '445 Patent -- sent
almost two years ago -- there has been no conduct indicating
that Radiancy believes Viatek is infringing the '445
Patent. See Furminator, Inc. v. Ontel Prods.
Corp., 246 F.R.D. 579, 589 (E.D. Mo. 2007) (" Nor
is there any evidence that [the patent holder] has asserted
that [plaintiff is] engaged in present, ongoing infringement
of . . . patent, or demanded that [plaintiff] license the
patents, as occurred in SanDisk." ); see
also Cepheid, 2013 WL 184125, at *12 ("
While the Federal Circuit has held in several cases that the
passage of time between a defendant's threat and the
filing of a declaratory action suit does not necessarily
defeat standing, these cases involved a more concrete
original threat, and in many cases ongoing activity during
the elapsed time suggested that the threat of enforcement had
not dissipated." ).
also points to a trademark infringement action Radiancy filed
against Viatek in Canada as further supporting its
apprehension that Radiancy will not hesitate to file another
lawsuit against it based on the '445 Patent. Counterclaim
Ex. D. When considering whether there is an actual
controversy, " prior litigious conduct is one
circumstance to be considered in assessing whether the
totality of circumstances creates an actual
controversy." Prasco, LLC v. Medicis Pharm.
Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008); see
also Hewlett--Packard Co. v. Acceleron LLC, 587
F.3d 1358, 1364 n. 1 (Fed. Cir. 2009) (" [a] history, or
the lack thereof, of litigating in the industry can certainly
be a factor to be considered." ); Plumtree Software,
Inc. v. Datamize, LLC, 473 F.3d 1152, 1159 (Fed. Cir.
2006) (finding standing in party because the defendant had
previously brought suit for infringement of a patent that
" describe[d] a similar technology and share[d] a common
specification" with the patent-in-suit). However, the
Canadian action was filed for trademark infringement, and
that lawsuit, too, did not assert the '445 Patent against
there is no indication that Viatek is not pursuing its
Planned Products for fear that Radiancy will assert the
'445 Patent as against those products. See
Ass'n for Molecular Pathology v. U.S. Patent and
Trademark Office, 689 F.3d 1303, 1321 (Fed. Cir. 2012),
affirmed in relevant part by Ass'n for
Molecular Pathology v. Myriad Genetics, Inc., __ U.S.
__, 133 S.Ct. 2107, 2115 n. 3, 186 L.Ed.2d 124 (2013) (the
court found that there was a controversy even though ten
years had passed since the defendant sent a warning letter
because that letter prompted the plaintiff to refrain from
conducting the allegedly infringing tests). Therefore, as the
circumstances stand, there is no controversy regarding the
'445 Patent and the Court does not have authority to
issue any declaratory action with respect to this issue.
Sherman Act, Section 2 Claims
alleges that Radiancy is attempting to monopolize the hot
wire hair cutting device market in the United States and
asserts that Radiancy's conduct in attempting to do so
constitutes a violation of Section 2 of the Sherman
Act. Counterclaims ¶ ¶ 69-77.
Such actions include defrauding the USPTO in order to obtain
patents for devices, knowingly filing " sham"
lawsuits to enforce those patents, and interfering with
Viatek's business relationships. " To state a claim
for attempted monopolization, a plaintiff must allege that a
defendant '(1) engaged in anticompetitive or predatory
conduct with (2) a specific intent to monopolize and (3) a
dangerous probability of achieving monopoly power.'"
Navarra v. Marlborough Gallery, Inc., 820 F.Supp.2d
477, 485 (S.D.N.Y. 2011) (quoting AD/SAT, Div. of
Skylight, Inc. v. Associated Press, 181 F.3d 216, 226
(2d Cir. 1999)). Proof of the first element -- that there was
anticompetitive conduct -- may be used to infer the existence
of the second element. See Volvo North Am. Corp.
v. Men's Int'l Prof'l Tennis Council, 857
F.2d 55, 74 (2d Cir. 1988). The third element, however, must
be separately established because " in the absence of
monopoly power, even the specific intent to drive another
company out of business, coupled with arguably tortious
conduct in furtherance of that objective, are not enough to
sustain an antitrust claim of attempted monopolization."
All Star Carts and Vehicles, Inc. v. BFI Canada Income
Fund, 887 F.Supp.2d 448, 453 (E.D.N.Y. 2012).
Private plaintiffs seeking to enforce Section 2 of the
Sherman Act must satisfy the standing requirement of Sections
4 and 16 of the Clayton Act . . . . [which] requires
plaintiff to 'prove antitrust injury[.]'"
Xerox Corp. v. Media Sciences Int'l, Inc., 511
F.Supp.2d 372, 380 (S.D.N.Y. 2007) (quoting Brunswick
Corp. v. Pueblo Bowl --O-- Mat, Inc.,
429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977)).
Antitrust injury is " injury of the type the antitrust
laws were intended to prevent and that flows from that which
makes defendants' acts unlawful." Brunswick
Corp., 429 U.S. at 489. " [A]ntitrust standing is a
threshold, pleading-stage inquiry and when a complaint by its
terms fails to establish this requirement we must dismiss it
as a matter of law." Gatt Communications, Inc. v.
PMC Assocs., LLC, 711 F.3d 68, 75 (2d Cir. 2013).
is " require[d to] identify the practice complained of
and the reasons such a practice is or might be
anticompetitive," Alternative Electrodes, LLC v.
EMPI, Inc., 597 F.Supp.2d 322, 328 (E.D.N.Y. 2008),
meaning it must allege that Radiancy's actions had a
detrimental effect on competition in the market. " Under
Section 4 of the Clayton Act, a plaintiff 'does not
necessarily' need to allege and 'prove an actual
lessening of competition in order to recover,' so long as
competition is likely to decrease, although 'the case for
relief will be strongest where competition has been
diminished.'" Xerox Corp., 511 F.Supp.2d at
381 (quoting Brunswick Corp., 429 U.S. at 489 n.
14). Viatek does not allege how Radiancy's actions have
had " 'an adverse effect on competition
market-wide.'" Ruotolo v. Fannie Mae, 933
F.Supp.2d 512, 2013 WL 989740, at *7 (S.D.N.Y. 2013) (quoting
Todd v. Exxon Corp., 275 F.3d 191, 213 (2d Cir.
2001)); see also Bhanusali v. Orange Regional
Med. Ctr., No 10-CV-6694 (CS), 2013 WL 4828657, at *9
(S.D.N.Y. Aug. 12, 2013). Viatek does not allege price
increases, competitor exits from the market, or anything else
that could substantiate the injury necessary to have standing
to sue under the antitrust laws. Thus, Viatek has failed to
adequately show that it has standing to bring its antitrust
Pleading Relevant Market and Market Power
In order to survive a motion to dismiss, a claim under
Sections 1 and 2 of the Sherman Act must allege a relevant
geographic and product market in which trade was unreasonably
restrained or monopolized." Kramer v.
Pollock-Krasner Foundation, 890 F.Supp. 250, 254
(S.D.N.Y. 1995); Marchon Eyewear, Inc. v. Tura LP,
No. 98 CV 1932(SJ), 2002 WL 31253199, at *5 (E.D.N.Y. Sep.
30, 2002) (" Without a definition of the relevant
product market, there is no way to measure a company's
ability to act as a monopolist." ). " In
determining the relevant market, the general rule is that
commodities reasonably interchangeable by consumers for the
same purposes make up that part of the trade or commerce
monopolization of which may be illegal." Vitale v.
Marlborough Gallery, No. 93 Civ. 6276, 1994 WL 654494,
at *3 (S.D.N.Y. July 5, 1994). Viatek defines the relevant
market as both " bladeless non-laser heated hair element
hair remover device," Counterclaim ¶ 15, and "
trade in hot wire hair cutting devices in the United
States." Counterclaim ¶ 76.
definition of a relevant market is bare-bones and omits
reference to the size of the market, Radiancy's share of
the market, whether there are any other competitors, or any
explanation for why the market should be defined as such.
See Thomson Info. Servs., Inc. v. Lyons
Commercial Data, Inc., No. 97 CIV. 7716(JSR), 1998 WL
193236, at *2 (S.D.N.Y. 1998); see also McCagg
v. Marquis Jet Partners, 05 Civ. 10607(PAC), 2007 WL
2454192, at *5 (S.D.N.Y. Mar. 29, 2007) (court stated that
plaintiffs must offer " a theoretically rational
explanation for why the boundaries of the market are defined
as they are" and must " define the market according
to the rules of interchangeability and cross-elasticity"
) (quotation and citation omitted); Intellective, Inc. v.
Mass. Mut. Life Ins. Co, 190 F.Supp.2d 600, 609
(S.D.N.Y. 2002) (court stated that granting a motion to
dismiss is appropriate where a plaintiff fails to "
allege facts regarding substitute products, distinguish among
comparable products, or allege facts relating to
cross-elasticity of demand" ); A & E Prods. Group
L.P. v. The Accessory Corp., 00 Civ. 7271(LMM), 2001 WL
1568238, at *2 (S.D.N.Y. Dec. 7, 2001) (court stated that
plaintiff should allege (1) " all products reasonably
interchangeable, where there is cross-elasticity of
demand" ; and (2) " products [that] can be
effectively substituted for the product allegedly being
monopolized" ; and explain " why the market alleged
is a relevant, economically significant market, that is
unique" ). Without a relevant market definition, the
Court cannot begin to assess the allegedly anticompetitive
power (or monopoly power) is " the power to control
prices or exclude competition." United States v.
E.I. du Pont de Nemours & Co., 351 U.S. 377, 389-91, 76
S.Ct. 994, 100 L.Ed. 1264 (1956). " Monopoly power can
be demonstrated directly by showing the power to set prices
or exclude competition, or indirectly, by showing
defendant's large percentage of market share."
All Star Carts and Vehicles, 887 F.Supp.2d at 453.
Viatek states only that Radiancy has a " very
substantial market share." Counterclaim ¶ 47. This
is a conclusory statement and does not given the Court an
adequate factual basis upon which to determine that there is
a " dangerous probability" that Radiancy will
achieve market power. In addition to failing to show
antitrust standing, allege a relevant market, or that there
is a dangerous probability that Radiancy will obtain market
power, Viatek cannot sustain its claims that Radiancy engaged
in anticompetitive or predatory conduct on either a
Walker Process or a sham litigation theory.
Theories of Anticompetitive Conduct
A patentee who brings an infringement suit may be subject to
antitrust liability for the anti-competitive effects of that
suit if the alleged infringer (the antitrust plaintiff)
proves (1) that the asserted patent was obtained through
knowing and willful fraud within the meaning of Walker
Process Equipment, Inc. v. Food Machinery & Chemical
Corp., . . . or (2) that the infringement suit was
'a mere sham to cover what is actually nothing more than
an attempt to interfere directly with the business
relationships of a competitor.'" Nobelpharma AB
v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed.
Cir. 1998) (quoting Eastern R.R. Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127, 144, 81 S.Ct.
523, 5 L.Ed.2d 464 (1961)).
first established in Walker Process Equip., Inc. v. Food
Mach. & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15
L.Ed.2d 247 (1965), antitrust liability under Section 2 of
the Sherman Act " may arise when a patent has been
procured by knowing and willful fraud, the patentee has
market power in the relevant market, and has used its
fraudulently obtained patent to restrain competition."
C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340,
1367 (Fed. Cir. 1998). Under this theory of antitrust
liability, " [f]irst, the plaintiff must show that the
defendant procured the relevant patent by knowing and willful
fraud on the PTO . . . . Second, the plaintiff must prove all
the elements otherwise necessary to establish a Sherman Act
monopolization charge." Ritz Camera & Image, LLC v.
SanDisk Corp., 700 F.3d 503, 506 (Fed. Cir. 2012).
under Walker Process are fraud claims and must
therefore satisfy the heightened pleading standards of Rule
9(b), see MedImmune, 427 F.3d at 967,
meaning that " 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." Fed.R.Civ.P. 9(b). This
particularity requirement requires " that a party
claiming Walker Process fraud must plead with
particularity the materiality of the references which the
patent applicant omitted, by presenting particularized
allegations that 'but for' the omissions, the PTO
would not have granted the patent." Netflix, Inc. v.
Blockbuster, Inc., No. C 06-02361 WHA, 2006 WL 2458717,
*4 (N.D. Cal. Aug.22, 2006).
Viatek's inequitable conduct Affirmative Defense, its
pleading falls short of the particularity requirement for
this fraud-like claim. Viatek states that Radiancy did not
disclose relevant prior art of which it was aware to the
USPTO in its application for the '034 Patent. Viatek also
pleads that the technology patented by Radiancy existed
already and was " described in patent applications,
printed publications, and other prior art teachings, and/or
were otherwise merely obvious and not patentable in view of
such prior art and/or relate to physical features admitted by
Counterclaim-Defendants to be meaningless." Counterclaim
¶ 43. Viatek states only generalities and makes claims
that could easily be lifted from this Counterclaim and be
asserted in a different counterclaim against a different
defendant regarding a different patent. Walker
Process claims are a variation on common law fraud and
therefore require the particularity that is required of fraud
claims. In re Spalding Sports Worldwide, Inc., 203
F.3d 800, 807 (Fed. Cir. 2000). Although Viatek makes further
arguments and substantiations in its opposition brief, this
does not make up for the failure to plead with particularity.
have previously provided parties an opportunity to amend
Sherman Act claims to further particularize the claim before
taking the extreme measure of granting dismissal with
prejudice. The Court might be inclined to do so here,
especially where facts stated in Defendant's opposition
brief help overcome some of the deficiencies in
Defendant's Counterclaim pleading. See, e.g.,
Viva Optique, Inc. v. Contour Optik, Inc., No. 03
Civ. 8948(LTS)(AJP), 2007 WL 4302729, at *3 (S.D.N.Y. 2007)
(granting defendant leave to amend its counterclaim to
properly state a Sherman Act Walker Process
antitrust claim); Christen Inc. v. BNS Industries,
Inc., 517 F.Supp. 521, 526 (S.D.N.Y. 1981) (noting that
defendant in Walker Process given leave to amend to
state a Section 2 claim but denying leave to amend because
defendant had already been granted leave to amend after
having been made aware of the deficiencies in its Section 2
claim but failed to fix them); Arista Records LLC v. Lime
Group LLC, 532 F.Supp.2d 556, 585 (S.D.N.Y. 2007)
(" Without some indication of what additional facts, if
any, [defendant] can assert in support of its failed
counterclaims, the Court cannot conclude that leave to
replead is in the interests of justice, and the Court
accordingly will not grant [defendant] an open-ended
permission to replead that could result in another round of
motions to dismiss. However, without such an indication,
neither can the Court determine that the projected repleading
would be futile. Thus, if [defendant] submits another motion
for leave to replead, it must provide the Court with an
" indication of what additional facts [it] would allege
if permitted to amend" by attaching its proposed
pleading to the motion." ) However, Defendant was made
aware at a pre-motion conference that its antitrust claims
were deficient and made no effort or request to amend its
pleading. Further, it had amended its counterclaims twice
before the conference, neither of which remedied the
deficiencies. Due to these facts, and the clear deficiencies
in the pleading, the Court dismisses the antitrust
counterclaims with prejudice.
Under the Noerr-Pennington doctrine, litigation as
well as concerted efforts incident to litigation may not
serve as a basis for an antitrust claim." Viva
Optique, Inc. v. Contour Optik, Inc., No. 03 Civ.
8948(LTS)(AJP), 2007 WL 4302729, at *2 (S.D.N.Y. 2007).
" However, under the 'sham exception' to the
doctrine, Noerr-Pennington 's antitrust immunity
does not apply where litigation or other petitioning activity
'is a mere sham to cover what is actually nothing more
than an attempt to interfere directly with the business
relationships of a competitor.'" Id. "
To establish 'sham' administrative or judicial
proceedings, a plaintiff must show that the litigation in
question is: (i) 'objectively baseless,' and (ii)
'an attempt to interfere directly with the business
relationships of a competitor through the use of the
governmental process--as opposed to the outcome of that
process--as an anticompetitive weapon.'"
Primetime 24 Joint Venture v. Nat'l Broad., Co.,
219 F.3d 92, 100-01 (2d Cir. 2000) (quoting Professional
Real Estate Investors, Inc. v. Columbia Pictures Indus.,
508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993)).
a patent infringement action is brought " 'with
knowledge the patent is invalid or not infringed, and the
litigation is conducted for anti-competitive purposes'
[the case] is a 'sham' litigation." Teva
Pharm. Indus., Ltd. v. Apotex, Inc., No 07-5514
(GEB)(JJH), 2008 WL 3413862, at *5 (D.N.J. Aug. 8, 2008)
(quoting C.R. Bard Inc. v. M3 Sys., Inc., 157 F.3d
1340, 1368 (Fed. Cir. 1998)). Viatek alleges that Radiancy
brought this action knowing that its patent was invalid.
However, subjective intent is only relevant if it is found
that the litigation is objectively without merit.
See Prof'l Real Estate Investors, Inc. v.
Columbia Pictures Indus., 508 U.S. 49, 60, 113 S.Ct.
1920, 123 L.Ed.2d 611 (1993) (" Only if challenged
litigation is objectively meritless may a court examine the
litigant's subjective motivation." ). The existence
of probable cause, requiring only " a reasonable belief
that there is a chance that a claim may be held valid upon
adjudication," defeats the objective component necessary
to find that a plaintiff has engaged in sham litigation.
Id. at 62-63.
cannot proceed on a sham litigation theory. Patents are
presumptively valid and Viatek pleads no facts to support its
sham litigation claim other than its subjective belief that
Radiancy is deliberately pursuing a strategy to push Viatek
out of the market. See Viva Optique, 2007
WL 4302729, at *2 (" Aside from the allegation of
subjective intent, the Amended Complaint simply asserts that
Defendants owned a patent and sought to enforce it. Given
that such behavior is normally expected of patent holders . .
. the additional generalized allegation that Defendants
subjectively believed that their patents were actually
invalid or not infringed is insufficient to sustain a
plausible claim that Defendants' suits are objectively
meritless." (internal citations omitted)). Its
allegations are wholly conclusory and therefore, it does not
state an antitrust claim based on this theory.
brings an unfair competition claim under the Lanham
Act. " The standard of unfair
competition under New York law is a virtual cognate of the
federal Lanham Act and is predicated on the theory of the
misappropriation of a claimant's commercial
goodwill." Bangkok Crafts Corp. v. Capitolo Di San
Pietro in Vaticano, 331 F.Supp.2d 247, 255 (S.D.N.Y.
2004) (internal citation omitted). " The essence of both
sources of protection is the likelihood that the consuming
public will be confused about the source of the allegedly
infringing product." E.R. Squibb & Sons, Inc. v.
Cooper Labs., Inc., 536 F.Supp. 523, 526 (S.D.N.Y.
1982). " In order for defendant to succeed in
demonstrating unfair competition under both the Lanham Act
and the common law, defendant must show a likelihood of
confusion or deception of the consuming public as to the
source of the allegedly infringing product and bad faith on
the part of plaintiffs." Major League Baseball
Props., Inc. v. Opening Day Prods., Inc., 385 F.Supp.2d
256, 269 (S.D.N.Y. 2005).
A cause of action for unfair competition, under both the
Lanham Act and New York common law, arises when there is an
attempt by a party to 'pass off' his goods as those
of another . . . . Additionally, both unfair competition laws
prohibit 'a broader range of unfair trade practices
generally described as the misappropriation of the skill,
expenditures and labors of another.'" Tri-Star
Pictures v. Unger, 14 F.Supp.2d 339, 363 (S.D.N.Y. 1998)
(quoting Pan American World Airways, Inc. v. Panamerican
School of Travel, Inc., 648 F.Supp. 1026, 1039 (S.D.N.Y.
1986)). At the pleading stage, there must at least be
allegations of the goods allegedly misappropriated or
marketed to the public, how such goods competed with those of
the counterclaim-plaintiff, the basis upon which the
consuming public would be confused, and the damages
sustained. See Bangkok Crafts Corp. v. Capitolo
Di San Pietro in Vaticano, 331 F.Supp.2d 247, 255
claim for unfair competition states, " all previous
allegations of the Complaint constitute unfair competition
under the laws of several states." Counterclaim ¶
91. In its opposition brief, Viatek argues that unfair
competition encompasses a broad range of conduct and that
Radiancy's threats, groundless lawsuits, and contacting
ShopNBC fall within the gamut of an unfair competition claim.
Opp'n Br. 33. Viatek may not base its unfair competition
claim on the bad faith litigation claim because " [t]he
weight of authority clearly holds that bad faith
litigation-including bad faith patent infringement
litigation-does not give rise to an unfair competition claim
under New York law." Bayer Schera Pharma AG v.
Sandoz, Inc., Nos. 08 Civ. 03710(PGG), 08 Civ.
08112(PGG), 2010 WL 1222012, at *7 (S.D.N.Y. Mar. 29, 2010).
Counterclaims include the allegation that Radiancy's
internet marketing techniques are designed to "
piggyback" Viatek's marketing by using the Pearl
trademark in the code for its website and by paying Google to
have results for the no!no!® hair remover appear before
results for Viatek's product when searching " Pearl
hair remover." Counterclaim ¶ 91. The question of
whether " use of another company's registered
trademark in metadata or as part of a sponsored search
constitutes use of a trademark in commerce under the Lanham
Act . . . [has been sustained by] other circuits . . . . The
courts in this Circuit, however, have largely rejected these
claims." Site Pro-1, Inc. v. Better Metal, LLC,
506 F.Supp.2d 123, 125 (E.D.N.Y. 2007). The Second Circuit
addressed Viatek's claims regarding a Google search in
1-800 Contacts v. WhenU.com, Inc., 414 F.3d 400 (2d
Cir. 2005). The Second Circuit stated,
[I]n the search engine context, defendants do not "
place" the ZOCOR marks on any goods or containers or
displays or associated documents, nor do they use them in any
way to indicate source or sponsorship. Rather, the ZOCOR mark
is " used" only in the sense that a computer
user's search of the keyword " Zocor" will
trigger the display of sponsored links to defendants'
websites. This internal use of the mark " Zorcor"
as a key word to trigger the display of sponsored links is
not use of the mark in a trademark sense.
Id. at 415.
" [t]he key question is whether the defendant placed
plaintiff's trademark on any goods, displays, containers,
or advertisements, or used plaintiff's trademark in any
way that indicates source or origin." Id. at
127. Viatek does not allege this, nor any other claims that
would state a claim either a misappropriation or a palming
off theory. Therefore, Viatek has not stated a claim for
unfair competition under the Lanham Act and this counterclaim
[T]o prevail on . . . a claim [of tortious interference], a
plaintiff in New York must prove that (1) it had a business
relationship with a third party; (2) the defendant knew of
that relationship and intentionally interfered with it; (3)
the defendant acted solely out of malice, or used dishonest,
unfair, or improper means; and (4) the defendant's
interference caused injury to the relationship."
Carvel Corp. v. Noonan, 350 F.3d 6, 17 (2d Cir.
2003). ShopNBC sold Viatek's product on its website,
evidencing that there was a relationship between the two
entities. Douglass Dec. Ex. B. Radiancy clearly knew the
relationship existed because it sent a letter to ShopNBC to
inform it that Viatek's product was infringing
Regarding the issue of malice or dishonest, unfair, or
improper means, " [a] trademark owner is entitled to
advise others of his trademark rights, to warn others that
they or others are or may be infringing his rights, to inform
others that he is seeking to enforce his rights through legal
proceedings, and to threaten accused infringers and their
customers with suit." Dessert Beauty, Inc. v.
Fox, 568 F.Supp.2d 416, 428-29 (S.D.N.Y. 2008) (quoting
Leopold v. Henry I. Siegel Co., No. 86 Civ. 0063
(MGC), 1987 WL 5373, at *4 (S.D.N.Y. Jan. 5, 1987)). "
[C]onduct undertaken to economically benefit defendants and
not solely based on malice toward the plaintiff does not
amount to tortious interference with business
relations." Anderson News, LLC v. Am. Media,
Inc., 732 F.Supp.2d 389, 404 (S.D.N.Y. 2010),
vacated on other grounds, 680 F.3d 162 (2d Cir.
2012). Radiancy's letter to ShopNBC states that ShopNBC
is offering for sale the Samba Total Body Hair Removal
System, which it believes infringes Radiancy's
intellectual property. This is the type of conduct that a
patent-owner may undertake in order to protect its patents,
which are presumed valid. There is nothing from the letter
that indicates that the sole purpose behind Radiancy's
action was malicious or that it used dishonest, unfair, or
improper means. Furthermore, Viatek does not adequately
allege an injury.
respect to the injury showing, " [i]nterference that
does not rise to the level of a breach of agreement or
severance of the relationship does not amount to an injury
sufficient to make a tortious interference claim."
RFP, LLC v. SCVNGR, Inc., 788 F.Supp.2d 191, 198
(S.D.N.Y. 2011). Viatek does not allege in its Counterclaims
that the actions taken by Radiancy caused the end of the
business relationship that it enjoyed with ShopNBC. Viatek
alleges only that Radiancy's actions have "
damaged" Viatek, a conclusory statement. Absent
allegations that Radiancy's conduct caused the
deterioration of the business relationship between Viatek and
ShopNBC, Viatek's claim for tortious interference fails.
a lack of opposition is evidence that Counterclaim-Plaintiff
" apparently concedes that the claim fails."
Wasserman v. Maimonides Medical Ctr., 970 F.Supp.
183, 192 (E.D.N.Y. 1997). Viatek does not oppose the motion
to dismiss this counterclaim, further supporting its
conclusion, Plaintiff's motion to strike Affirmative
Defenses Six and Seven is granted. Plaintiff's motion to
strike Affirmative Defense twenty-one is granted in part and
denied in part. Plaintiff's motion to dismiss PhotoMedex
as a Counterclaim Defendant is granted. Plaintiff's
motion to dismiss the Counterclaim for (1) Declaratory Relief
of non-infringement of the '445 Patent is granted; (2)
Antitrust violation under the Sherman Act is granted; (3)
unfair competition is granted; (4) tortious interference is
granted. This opinion amends the opinion previously issued by
this Court on March 28, 2014, Docket No. 113.
Clerk of the Court is respectfully requested to terminate
PhotoMedex from this case and terminate Docket No. 55.
Neither the Answer, Amended Answer, nor
Second Amended Answer was personally served on PhotoMedex.
See Dock. Nos. 22, 24, 26.
Viatek erroneously asserts that Nevada law
should apply because PhotoMedex is incorporated in Nevada.
However, Viatek is seeking to pierce Radiancy's corporate
veil and therefore, the state of incorporation of Radiancy is
the determining factor. See Nat'l Gear &
Piston, Inc. v. Cummins Power Sys., LLC, Case No.
10-CV-4145 (KMK), 975 F.Supp.2d 392, 2013 WL 5434638, at *6
(S.D.N.Y. Sept. 27, 2013) (" [T]he subsidiary is a
Delaware-based corporation, and . . . the parent, is an
Indiana-based corporation. Because Plaintiff seeks to
disregard the subsidiary's . . . corporate form and hold
the parent . . . liable, Delaware law governs Plaintiff's
veil-piercing attack." ).
Note that " [t]he alter ego analysis
is in fact the same under state or federal law because
'[v]eil piercing is not dependent on the nature of the
liability. Under both state and federal common law, abuse of
the corporate form will allow courts to employ the tool of
equity known as veil-piercing.'" Blair v.
Infineon Techs. AG, 720 F.Supp.2d 462, 470 n. 11 (D.
Del. 2010) (quoting 18 Francis C. Amendola et al., C.J.S.
Corporations § 14 (2010)).
 " The seven 'single entity'
factors used by the Third Circuit apply in Delaware
regardless of whether the cause of action is based on federal
or state law." Blair, 720 F.Supp.2d at
Similarly, the surreply submitted by Viatek
to the Court in a letter on January 9, 2014 and
Radiancy's response submitted on January 14, 2014 are not
considered on this motion to dismiss.
Viatek states that its Planned Products are
" products with heater elements driven by oscillating
current signals in excess of 50-60 Hz and/or in excess of 250
Hz," Counterclaim ¶ 61, and that " [i]t is
contemplated that Planned Products will be controlled by an
on/off switch, and/or a manual heat intensity control in the
form of a knob or up-and-down temperature controls, and/or
motion detection, and/or velocity detection, and/or other
mechanisms for shutting down the system if excessive heat is
threatened or detected." Id. Viatek defines
Accused Products as " heat-based haircutting devices in
which the heater element was driven by 1) an oscillating
current signal having a frequency in excess of 50 Hz and 2) a
DC signal." Id.
Although not attached to the Counterclaim,
these letters are deemed incorporated by reference into the
Counterclaim. The letter attached as Exhibit J to the
Counterclaim begins, " Further to our letter dated April
27, 2012, and your response to that letter dated May 4, 2012
. . . ." Counterclaim Ex. J. As such, those previous
letters are important to the context of the letter included
with the Counterclaim and may be considered on this motion to
dismiss. See, e.g., McCarthy v. Dun & Bradstreet
Corp., 482 F.3d 184, 191 (2d Cir. 2007) (on a motion to
dismiss, a court may consider those facts " asserted
within the four corners of the complaint, the documents
attached to the complaint as exhibits, and any documents
incorporated in the complaint by reference." ).
 Section 2 of the Sherman Act prohibits:
" Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person or
persons, to monopolize any part of the trade or commerce . .
. ." 15 U.S.C. § 2.
Although the inequitable conduct
Affirmative Defense and Walker Process claim are
substantiated upon the same general factual allegations --
that Radiancy engaged in fraud before the USPTO in obtaining
its patent -- these claims do differ slightly in analysis.
" Consistent with the Supreme Court's analysis in
Walker Process, . . . we have distinguished
'inequitable conduct' from Walker Process fraud,
noting that inequitable conduct is a broader, more inclusive
concept than the common law fraud needed to support a
Walker Process counterclaim. . . . Inequitable
conduct in fact is a lesser offense than common law fraud,
and includes types of conduct less serious than 'knowing
and willful' fraud." Nobelpharma, 141 F.3d
The Counterclaim does not make clear
whether Viatek's unfair competition claim is brought as a
common law claim or under the Lanham Act. However, in its
declaration of jurisdiction over the Counterclaims, Viatek
states that the Court has jurisdiction based on the federal
patent laws and the federal antitrust laws, and does not make
any claim to supplemental jurisdiction over state law claims.
Accordingly, the Court assumes Viatek brings its unfair
competition claim under the Lanham Act.