MD District Court Grants Motion to Dismiss for Insufficient Pleading

Thursday, August 22, 2019

In a patent infringement action, Durr Sys., Inc.,  the plaintiff patentee, moved to dismiss counterclaims brought by EFC Sys., Inc., the defendant, for violations of the Lanham Act, unfair trade practices, and tortious interference with business expectation.  The counterclaims were factually predicated on alleged “knowingly false” accusations of patent infringement made by the Plaintiff to a customer of both parties.  U.S. District Judge George J. Hazel explained that “[s]tatements related to a party’s patent rights are conditionally privileged under the patent laws, so that such statements are not actionable unless made in bad faith.”  Judge Hazel found that the Defendant’s pleadings alleged that the main infringement accusations were made by an employee of Plaintiff’s German parent company, which was not a party to the case.  Nothing in the Defendant’s pleadings allowed the Court to find that the parent company’s employee was acting as an agent for the Plaintiff, and thus the infringement accusations were not attributable to the Plaintiff.  Judge Hazel then found that other more general allegations in the counterclaims about separate incidents attributable to the Plaintiff’s representatives were so “unspecific” that the Court could not conclude from the pleadings that the Plaintiff had improperly asserted patent rights where none existed or that the accusations of patent infringement were made with subjective bad faith.  Based on these findings, Judge Hazel granted the plaintiff’s motion and dismissed the counterclaims.   Durr Sys., Inc. v. EFC Sys., Inc., No. GJH-18-2597, 2019 WL 3555347 (D. Md. Aug. 5, 2019).