Antitrust Law Daily Wrap Up, ANTITRUST—NDCal: Noerr-Pennington Immunity Barred Manufacturer’s Claims that Competitor Sought to Monopolize Market Through Sham Patent Litigation, (Apr 26, 2013)

By Tobias J. Gillett, J.D., LL.M.

A manufacturer of fruit and vegetable juicers failed to assert antitrust and unfair competition counterclaims against a competitor for allegedly attempting to monopolize the juicer market through sham patent litigation, because the claims were barred by Noerr-Pennington immunity, the federal district court in San Francisco has ruled (Breville Pty Limited v. Storebound LLC, April 24, 2013, Tigar, J.).

Breville Pty Limited and Storebound LLC both manufacture fruit and vegetable juicers. In April 2012, Breville brought a lawsuit contending that Storebound had infringed two of its juicer patents. In its answer, Storebound asserted a variety of counterclaims and affirmative defenses, including an antitrust claim and an unfair competition claim. Breville moved to dismiss the counterclaims.

Antitrust. Storebound’s Sherman Act claim asserted that Breville’s patent lawsuit was an "attempt to monopolize the market for juicers and juice extractors, in violation of federal and state antitrust laws including Section 2 of the Sherman Antitrust Act." In response, Breville argued that Storebound’s claim was barred by Noerr-Pennington immunity. The court explained that the Noerr-Pennington doctrine shields petitioning activity from antitrust liability, unless the litigation is a "mere sham" covering "an attempt to interfere directly with the business relationships of a competitor." Sham litigation must be "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits."

Storebound initially contended that Breville knew its patent was unenforceable due to inequitable conduct, and therefore could not claim Noerr-Pennington protection. As the court previously concluded that Storebound had failed to plead an inequitable conduct claim, the court also found "that the possibility of an inequitable conduct defense" did not render the patent so obviously unenforceable that no reasonable litigant could expect to assert an infringement claim.

The court also rejected Storebound’s argument that Breville’s patent infringement claim was "frivolous" because its patent "disclose[d] a feed tube having the same diameter as the cutting disk, while in Storebound’s juicer the disc extends beyond the diameter of the feed tube." The court found that an "allegation that a single claim is objectively baseless" did not bring the entire complaint within the scope of the exception to the Noerr-Pennington doctrine. Since Storebound conceded that Breville’s other claim was not frivolous, the exception did not apply.

Moreover, the court had not yet construed the claims in the patents, and Breville contended that it could still maintain the challenged claim "by construing the term ‘substantially equivalent’ to encompass Storebound’s juicer and the" patent claim. The court found this contention, and Storebound’s argument to the contrary, "to be a valid debate between plausible positions." Therefore, Breville’s claim was not "objectively baseless" for Noerr-Pennington purposes.

Unfair competition. Storebound based its California Unfair Competition Law (UCL) claim on the same allegations as its Noerr-Pennington claim. Breville construed the claim as one under the UCL, and moved to dismiss it on the ground "that UCL claims are preempted for any activity which is entitled to Noerr-Pennington immunity." Since the court concluded that Storebound had conceded that its unfair competition claim would depend on the outcome of its Noerr-Pennington claim, the court dismissed it, noting that if Storebound intended to replead the claim it would have to specific the cause of action it was invoking.

The case is No. 12-cv-01783-JST.

Attorneys: Joseph Anthony Meckes (Squire Sanders US LLP) for Breville Pty Limited. Jeffrey Paul Widman (Law Offices of Jeffrey P. Widman) for Storebound LLC.

Companies: Breville Pty Limited; Storebound LLC

Cases: Antitrust StateUnfairTradePractices CaliforniaNews