A Blog About Intellectual Property Litigation and the District of Delaware

Overflowing with delicious facts
Overflowing with delicious facts Natalie Grainger, Unsplash

The seeds of a motion to dismiss are often planted in the complaint. To some extent this is unavoidable—for instance, try asserting software patent claims without raising the specter of a § 101 motion. Sometimes, though, you can avoid a motion to dismiss by just including a little less detail in the complaint—and especially by not referring to troublesome documents.

Peloton Interactive, Inc. v. ICON Health & Fitness, Inc., C.A. No, 20-662-RGA, D.I. 103 (D. Del. May 28, 2021) is a good example (we discussed another aspect of this opinion last week). There, Icon brought counterclaims for patent infringement related to a series of patents that the parties had previously litigated, resulting in a settlement agreement and license. Peloton moved to dismiss those claims, arguing that the referenced license disposed of the infringement claims.

The interesting bit is that the license itself was not attached to Icon's counterclaims, but was only supplied to the Court with Peloton's motion to dismiss. In ruling on the motion, Judge Andrews noted that this would normally convert the 12(b)(6) motion into a summary judgment motion, unless the counterclaimant "'relied upon these documents in framing the complaint.’” Id. at 4 (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

Here, Icon briefly referenced the previous license in several paragraphs, presumably to bolster wilfulness claims*—each time noting the license's "limited scope." See Id. at 4 (citing Icon's amended counterclaims, D.I. 27). The Court found these references "sufficient to indicate that it relied on the Settlement Agreement in framing its claims" and went on to consider the merits of the motion. Id. at 5.

The Court ultimately denied the motion to dismiss, finding the license at issue ambiguous as to what products it covered. Id. at 9-10. The motion as a whole might have been avoided, however, if those few references to the license agreement had been left on the cutting room floor.

*Another small takeaway from the case is the continuing trend towards less redactions and sealing. Each mention of the license was redacted from the as-filed counterclaims, but those sections were quoted liberally in the unredacted opinion.

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