06 282
06 282
IGT, )
)
Plaintiff, )
)
v. ) Civ. No. 06-282-SLR
)
BALLY GAMING INTERNATIONAL )
INC., et aI., )
)
Defendants. )
MEMORANDUM ORDER
At Wilmington this 28th day of April, 2010, having reviewed plaintiff's renewed
IT IS ORDERED that said motion (D.I. 355) is granted, for the reasons that
follow:
Bally Gaming International Inc., Bally Technologies, Inc. and Bally Gaming, Inc. d/b/a
plaintiff alleged infringement of U.S. Patent Nos. RE 38,812 ("the '812 patent"), RE
37,885 (lithe '885 patent"), 6,832,958 (lithe '2958 patent"), 6,319,125 ("the '125 patent"),
6,224,958 ("the '4958 patent"), 6,431,983 (lithe '983 patent"), 6,607,441 ("the '441
Plaintiff alleged that defendants' "Bally Power Bonusing®" slot machine technology
2. On June 30, 2006, defendants filed their answer, and asserted counterclaims
the Sherman Antitrust Act, 15 U.S.C. § 2 ("count X"); false representation in violation of
the Lanham Act, 15 U.S.C. § 1125 ("count XI"); and "intentional interference with
business relationships" ("count XII"). (D.1. 40) Plaintiff moved to dismiss defendants'
antitrust and state law counterclaims ("counts X-XII"). (D.1. 53) Plaintiff also moved for
a preliminary injunction. (D.1. 75) The case was assigned to this judicial officer on April
2,2007.
3. During its June 2007 teleconference with the parties, the court stated that it
bifurcates antitrust counterclaims insofar as they generally do not survive unless there
plaintiff withdrew its pending motions. Discovery proceeded in the case on all but the
antitrust counterclaims and has now since closed. (D.1. 160, 175)
4. On February 25, 2008, by agreement of the parties, all claims, defenses, and
counterclaims related to the '125, '434, '4958, '046, and '2958 patents were dismissed.
(D.1. 152) The parties entered into an agreement on May 14, 2008 removing the '441
of the '812, '885, and '983 patents; defendants' counterclaims of invalidity and
5. On April 28, 2009, the court construed the disputed claim terms and issued a
memorandum opinion addressing seven motions for summary judgment filed by the
parties. (0.1. 281; 0.1. 283) The court found the '812 and '885 patents valid.
Defendants' motion for summary judgment of invalidity of the '983 patent was denied;
there was no cross-motion. (Id.) Regarding infringement, the court determined that
defendant's Power Rewards product4 infringes claims 10, 33 and 46 of the '885 patent
and claims 21 and 44 of the '812 patent; and ACSC Power Winners infringes claims 10
6. The case was set for a jury trial commencing June 1,2009. At that time, the
and defendants' counterclaim for invalidity of the '983 patent. The court and the parties
discussed the propriety of proceeding to trial on these issues and an agreement was
without prejudice. The parties also agreed that willfulness could be tried with plaintiffs
claim for damages after appeal. 5 Trial was cancelled and, on June 15, 2009, plaintiff
4The court provided a detailed description of the patents and technology at issue
in its prior opinion, and need not repeat it here. See IGT v. Bally Gaming Intern., Inc.,
610 F. Supp. 487 (D.Del. 2009).
51t is the court's practice to stay damages pending appeal. The parties have filed
letter briefs on whether the court should preclude plaintiff from asserting willful
infringement. (0.1. 289; 0.1. 293) The court need not resolve that issue now.
2
filed its motion for permanent injunction, which was denied by the court on December
February 23,2010. (0.1. 355) It is plaintiffs position that the unresolved claims pose
1292(c)(2). Plaintiff argues in the alternative that the lack of a damages determination
precludes an appeal under Federal Rule of Civil Procedure 54(b). Defendants oppose
the current motion insofar as plaintiff seeks to dismiss its counterclaims with prejudice.
8. Claims at issue. Defendants claim that plaintiff has violated Section 2 of the
Sherman Antitrust Act, 15 U.S.C. § 2, by: (1) "misusing the patent process ... in order
to intimidate and drive out competitors;" (2) filing infringement actions based on
"fraudulently obtained" patents; (3) "issuing [ ] vague and misleading press release[s]
litigation; and (4) "interfering with [defendants'] ability to properly test [their] products"
(on plaintiffs gaming machines). (0.1. 173 at,-r,-r 30-34; 62) Plaintiffs press releases
and statements are also the premise of defendants' "false representation" claim under
the Lanham Act, 15 U.S.C. § 1125, as well as their claim for intentional interference
immune from antitrust liability. Eastern R.R. Presidents Conference v. Noerr Motor
Freight, 365 U.S. 127 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657
3
to persons who petition all types of government entities, including courts. California
Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972). Although originally
developed in the antitrust context, courts have applied this doctrine universally to
business torts. See Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 128-29 (3d Cir.
1999).
litigation. In this regard, the Supreme Court has outlined a two-part test to determine
whether the "sham litigation" exception applies. See Prof! Real Estate Investors, Inc. v.
Columbia Pictures Indus., Inc., 508 U.S. 49 (1993). As an objective first part, "the
lawsuit must be objectively baseless in the sense that no reasonable litigant could
realistically expect success on the merits." Id. at 60. If an objective litigant could
conclude that the suit is reasonably calculated to elicit a favorable outcome, then the
suit does not qualify as sham litigation and is immunized under the Noerr-Pennington
doctrine. Id. The subjective second part of the definition arises only if the challenged
litigation is objectively meritless. In such a case, the court must decide whether the
"baseless lawsuit conceals 'an attempt to interfere directly with the business
defendant must prove, by clear and convincing evidence, that a plaintiffs activities were
not really efforts to vindicate its rights in court. See C.R. Bard, Inc. v. M3 Systems, Inc.,
157 F.3d 1340, 1368-69 (Fed. Cir. 1998) ("sham litigation requires more than a failed
legal theory") (quoting Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282. 1288 (9th Cir.
1984».
4
11. The redress plaintiff seeks through the current motion is, essentially, a
judgment that defendants cannot prevail in showing that the current litigation was a
Presumably due to the court's indication at the June 2007 teleconference that the
antitrust counterclaims were stayed, plaintiff did not move for summary judgment.
Plaintiff now brings a renewed motion to dismiss. Plaintiff, however, does not merely
seek a review of defendants' 2008 amended pleadings on their face. (D.1. 173) It
12. The court notes at this juncture that defendants did not respond to plaintiffs
challenge to the merits of their counterclaims. Rather, defendants argued that the stay
should be maintained for purposes of judicial economy, and reserved their right to
address their claims substantively should the Federal Circuit find in their favor on
appeal. In doing so, defendants have cast a shroud of doubt over the court's ability to
grant judgment sua sponte that defendants cannot prove their counterclaims as a
matter of law. See, e.g., Chambers Dev. Co. v. Passaic County Util. Auth., 62 F.3d
582, 584 n.5 (3d Cir. 1995) ("[A] judgment cannot be entered without first placing the
adversarial party on notice that the court is considering a sua sponte summary
judgment motion. The court must also provide the party with an opportunity to present
judgment opinion on appeal would nullify any argument that plaintiff's infringement
claims were "objectively baseless." See Proff Real Estate Investors v. Columbia
5
Pictures Indus., 508 U.S. 49, 61 n.5 (1993) ("A winning lawsuit is by definition a
reasonable effort at petitioning for redress and therefore not a sham.") Defendants
admit that their counterclaims do not survive if defendants do not succeed on appeal. 6
(D.1. 360 at 10 ("Once the Federal Circuit has ruled, the parties and this court will have
14. For the foregoing reasons, the court grants plaintiffs motion, dismisses the
plaintiff pursuant to Federal Rule of Civil Procedure 54(b). Should the court's opinion
be reversed and the case be remanded, the court will consider defendants' request for
further discovery and take up the merits of defendants' claims in due course.
United State
61t is not clear whether the Noerr-Pennington doctrine applies to Lanham Act
claims. See Santana Prods., Inc. v. Bobrick Washroom Equip., Inc., 401 F.3d 123,
130-31 (3d Cir. 2005) (declining to consider the district court's finding in the affirmative
on this question on appeal). The parties have not addressed the issue, and the court
need not consider it at this juncture.