SMARTE CARTE, INC. v. INNOVATIVE VENDING SOLUTIONS LLC

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

SMARTE CARTE, INC. and

CHARLES E. BAIN, 1:19-cv-08681-NLH-AMD

Plaintiffs, OPINION

v.

INNOVATIVE VENDING SOLUTIONS

LLC and INNOVATIVE STROLLERS

LLC,

Defendants.

INNOVATIVE VENDING SOLUTIONS

LLC and INNOVATIVE STROLLERS

LLC,

Counterclaimants,

v.

SMARTE CARTE, INC. and

CHARLES E. BAIN,

Counter-Defendants.

APPEARANCES:

RYAN W. O’DONNELL

VOLPE AND KOENIG P.C.

830 BEAR TAVERN ROAD, SUITE 303

EWING, NJ 08628

ANTHONY R. ZEULI

MICHAEL A. ERBELE

PETER S. SELNESS

MERCHANT & GOULD P.C.

SUITE 2200 150 SOUTH FIFTH STREET

MINNEAPOLIS, MN 55402-2215

On behalf of Plaintiffs/Counter-Defendants

CHRISTOPHER R. KINKADE

KAREN A. CONFOY

FRANK T. CARROLL

CALI R. SPOTA

FOX ROTHSCHILD LLP

PRINCETON PIKE CORPORATE CENTER

997 LENOX DRIVE

LAWRENCEVILLE, NJ 08648

On behalf of Defendants/Counterclaimants

HILLMAN, District Judge

This matter concerns claims by Plaintiffs arising from

Defendants’ alleged infringement of their patent for a

commercial stroller dispensing system, and Defendants’

counterclaims concerning Plaintiffs’ alleged “sham litigation”

and antitrust conduct. Presently before the Court is

Plaintiffs’ motion to dismiss two counts in Defendants’

counterclaim complaint regarding their alleged “sham litigation”

and anticompetitive actions. For the reasons expressed below,

the Court will deny Plaintiffs’ motion.

BACKGROUND

According to its amended complaint, Plaintiff/Counter-

Defendant Smarte Carte, Inc. is the market-leading designer,

developer, manufacturer and lessor of dispensing systems for

commercial strollers for use in malls, retail stores and other

locations, named “Kiddie Kruzzer.”1 Plaintiff Charles E. Bain

1 Smarte Carte’s amended complaint does not identify the trade

name of its commercial stroller dispensing system, but it is

invented a dispensing system for wheeled devices, and on October

14, 2008, Bain obtained United States Patent No. 7,434,674 (the

“’674 patent”) for his invention. Smarte Carte is the exclusive

licensee of the ’674 patent.

Defendants/Counterclaimants Innovative Vending Solutions,

LLC and Innovative Strollers, LLC (hereinafter “IVS”) operate a

commercial stroller dispensing system under the name “Zoomaroo.”

Smarte Carte has asserted a one-count patent infringement claim

against IVS, claiming that IVS’s Zoomaroo system infringes on

its ’674 patent.

IVS filed four counterclaims, two against Smarte Carte and

Bain, and two against Smarte Carte. Counts One and Two against

both Smart Carte and Bain seek a declaration of non-infringement

and invalidity of the ’674 patent. Counts Three and Four

against Smarte Carte claim that Smarte Carte’s patent

infringement claim against IVS is a “sham litigation” and Smarte

Carte’s suit is in furtherance of their monopoly of the

commercial stroller system market, in violation of federal and

state antitrust laws.

Smarte Carte has moved to dismiss Counts Three and Four in

IVS’s counterclaim complaint. Smarte Carte argues that its

patent infringement suit is an objectively viable action and

provided in Smarte Carte’s briefing.

IVS’s counterclaims are not sufficiently pleaded to sustain

their high burden of showing that Smarte Carte should lose its

Noerr-Pennington immunity.2 IVS has opposed Smarte Carte’s

motion.

DISCUSSION

A. Subject matter jurisdiction

Because this is a claim of patent infringement arising

under the Acts of Congress relating to patents, 35 U.S.C. §§

271, 281-285, this Court has subject matter jurisdiction over

Plaintiffs’ patent infringement claim pursuant to 28 U.S.C. §§

1331 and 1338(a). This Court may exercise subject matter

jurisdiction over Defendants’ counterclaims pursuant to the

Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and 28

U.S.C. §§ 1331, 1337, 1338, and 1367.

B. Standard for Motion to Dismiss

When considering a motion to dismiss a complaint3 for

failure to state a claim upon which relief can be granted

2 As discussed below, lawsuits are ordinarily protected activity

under the Noerr-Pennington doctrine, but the Supreme Court has

established a “sham exception,” which strips a plaintiff’s

immunity if its suit is objectively and subjectively intended to

interfere directly with the business relationships of a

competitor. See Professional Real Estate Investors, Inc. v.

Columbia Pictures Industry, Inc., 508 U.S. 49, 51 (1993).

3 “The standards for a properly pled complaint[] by extension

apply to counterclaims.” U.S. v. Boston Scientific

Neuromodulation Corp., 2014 WL 4402118, at *2 (D.N.J. 2014)

(citing Cnty. of Hudson v. Janiszewski, 351 Fed. App’x 662, 667–

pursuant to Federal Rule of Civil Procedure 12(b)(6), a court

must accept all well-pleaded allegations in the complaint as

true and view them in the light most favorable to the plaintiff.

Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well

settled that a pleading is sufficient if it contains “a short

and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2).

“While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do . . . .” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (alteration in original)

(citations omitted) (first citing Conley v. Gibson, 355 U.S. 41,

47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc.,

40 F.3d 247, 251 (7th Cir. 1994); and then citing Papasan v.

Allain, 478 U.S. 265, 286 (1986)).

To determine the sufficiency of a complaint, a court must

take three steps: (1) the court must take note of the elements a

plaintiff must plead to state a claim; (2) the court should

identify allegations that, because they are no more than

68 (3d Cir. 2009) (applying Twombly to counterclaims)).

conclusions, are not entitled to the assumption of truth; and

(3) when there are well-pleaded factual allegations, a court

should assume their veracity and then determine whether they

plausibly give rise to an entitlement for relief. Malleus v.

George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 664, 675, 679 (2009) (alterations,

quotations, and other citations omitted).

A district court, in weighing a motion to dismiss, asks

“not whether a plaintiff will ultimately prevail but whether the

claimant is entitled to offer evidence to support the claim.”

Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416

U.S. 232, 236 (1974)); see also Iqbal, 556 U.S. at 684 (“Our

decision in Twombly expounded the pleading standard for ‘all

civil actions’ . . . .”); Fowler v. UPMC Shadyside, 578 F.3d

203, 210 (3d Cir. 2009) (“Iqbal . . . provides the final nail in

the coffin for the ‘no set of facts’ standard that applied to

federal complaints before Twombly.”). “A motion to dismiss

should be granted if the plaintiff is unable to plead ‘enough

facts to state a claim to relief that is plausible on its

face.’” Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at

570).

A court in reviewing a Rule 12(b)(6) motion must only

consider the facts alleged in the pleadings, the documents

attached thereto as exhibits, and matters of judicial notice.

S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd.,

181 F.3d 410, 426 (3d Cir. 1999). A court may consider,

however, “an undisputedly authentic document that a defendant

attaches as an exhibit to a motion to dismiss if the plaintiff’s

claims are based on the document.” Pension Benefit Guar. Corp.

v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.

1993). If any other matters outside the pleadings are presented

to the court, and the court does not exclude those matters, a

Rule 12(b)(6) motion will be treated as a summary judgment

motion pursuant to Rule 56. Fed. R. Civ. P. 12(b).

C. Analysis

“The Noerr–Pennington doctrine takes its name from a pair

of Supreme Court cases that placed a First Amendment limitation

on the reach of the Sherman Act.” Campbell v. Pennsylvania

School Boards Association, --- F. 3d ---, 2020 WL 5049051, at *4

(3d Cir. Aug. 27, 2020) (citing E.R.R. Presidents Conf. v. Noerr

Motor Freight, Inc., 365 U.S. 127 (1961); Mine Workers v.

Pennington, 381 U.S. 657, 670 (1965)). Lawsuits are ordinarily

protected activity under Noerr-Pennington, but the Supreme Court

has established a “sham exception.” See Professional Real

Estate Investors, Inc. v. Columbia Pictures Industry, Inc., 508

U.S. 49, 51 (1993). A lawsuit “does not qualify for . . .

immunity if it ‘is a mere sham to cover . . . an attempt to

interfere directly with the business relationships of a

competitor.”’ Id. (quoting Noerr, 365 U.S. at 144).

In order to determine whether a lawsuit is a “sham,” the

party invoking the sham exception must show that (1) the lawsuit

is “objectively baseless in the sense that no reasonable

litigant could realistically expect success on the merits[;]”

and (2) the lawsuit conceals “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[.]” Campbell, 2020 WL

5049051, at *4 (quoting PREI, 508 U.S. at 60-61) (emphasis in

original) (other citations omitted).

The “objectively baseless” standard in the first prong of

the test is analogized to the concept of “probable cause as

understood and applied in the commonlaw tort of wrongful civil

proceedings.” PREI, 508 U.S. at 62. “Probable cause to

institute civil proceedings requires no more than a reasonable

belief that there is a chance that a claim may be held valid

upon adjudication.” Id. (citation omitted). The first prong of

the test, with its emphasis on the reasonable litigant, is

concerned with the objective merits of the lawsuit at issue.

Id. “Thus, if probable cause exists, [a court’s] inquiry is at

an end.” Campbell, 2020 WL 5049051, at *4.

If the objective prong is met, “the fact that a suit may

lack any objective merit is not itself determinative.” Id. A

court must then inquire into the plaintiff’s subjective

motivations for bringing suit. Id. (citation omitted). A court

takes “this additional step to ascertain whether the actual

motivation is to dragoon the ‘governmental process’ itself into

use as a competitive tool,” which “often means examining

‘evidence of the suit’s economic viability.’” Id. (citation

omitted). “The difficulty of proving subjective motivation

obviously ‘places a heavy thumb on the scale’ in favor of

granting protection.” Id. (citation omitted). “Only if these

objective and subjective tests are satisfied is Noerr-Pennington

protection lost and the suit permitted to proceed.” Id.

Even if, however, a party defeats the other party’s Noerr-

Pennington immunity by demonstrating both the objective and the

subjective components of a sham litigation, that party must

still prove a substantive antitrust violation. PREI, 508 U.S.

at 61. “Proof of a sham merely deprives the defendant of

immunity; it does not relieve the plaintiff of the obligation to

establish all other elements of his claim.” Id.

To prevail on a monopolization claim under Section 2 of the

Sherman Act a plaintiff must prove: “(1) the possession of

monopoly power in the relevant market and (2) the willful

acquisition or maintenance of that power as distinguished from

growth or development as a consequence of a superior product,

business acumen, or historic accident.” McGary v. Williamsport

Regional Medical Center, 775 F. App’x 723, 728–29 (3d Cir. 2019)

(citing Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306-07

(3d Cir. 2007)).4 To recover damages on a Section 2 claim, a

plaintiff must also prove it suffered an “antitrust injury.”

Marjam Supply Co. v. Firestone Building Products Company, LLC,

2019 WL 1451105, at *6 (D.N.J. 2019). Antitrust injuries have

three elements: (1) an injury-in-fact; (2) that has been caused

by the Act’s violation; and (3) that is the type of injury

contemplated by the Act. Id. (citing Brunswick Corp. v. Pueblo

Bowl-O-Mat, 429 U.S. 477, 489 (1977)).

Thus, here, in order to overcome Smarte Carte’s Noerr-

Pennington immunity and to be successful on its counterclaims,

IVS must prove that Smarte Carte’s patent infringement claim is

(1) objectively baseless and (2) was brought as a competitive

tool. If IVS succeeds on both of those elements, IVS must then

prove that Smarte Carte (1) had monopoly power of the commercial

stroller dispensing systems market, (2) it maintained its power

4 The Sherman Act “directs itself not against conduct which is

competitive, even severely so, but against conduct which

unfairly tends to destroy competition itself.” Spectrum Sports,

Inc. v. McQuillan, 506 U.S. 447, 458 (1993). The New Jersey

analog to the Sherman Act, N.J.S.A 56: 9-1, et seq., which forms

the basis for IVS’s fourth counterclaim, is analyzed similarly.

Acme Markets, Inc. v. Wharton Hardware and Supply Corp., 890 F.

Supp. 1230, 1238 n.6 (D.N.J. 1995) (explaining that New Jersey's

antitrust statutes are construed in harmony with the federal

antitrust statutes) (citing N.J.S.A. 56:9–18; Regency

Oldsmobile, Inc. v. General Motors Corp., 723 F. Supp. 250, 270

(D.N.J. 1989)).

separate from growth or development as a consequence of a

superior product, and (3) it suffered an injury caused by Smarte

Carte’s anticompetitive actions. At this motion to dismiss

stage in the case, however, the inquiry is not whether IVS can

prove all of those elements, but rather whether IVS has pleaded

sufficient facts, which if considered true, would show that IVS

may plausibly prove all those elements.

Smarte Carte argues that its patent infringement complaint

against IVS is not objectively baseless, as patents are afforded

a presumption of validity and support the patent holder’s right

to enforce its rights.5 Smarte Carte further argues that IVS’s

contentions regarding the merits of Smarte Carte’s patent

infringement claims against it are common assertions in every

routine patent infringement case. Smarte Carte further argues

that IVS’s allegations regarding its subjective motivations, as

well as its alleged anticompetitive conduct, are conclusory

without sufficient factual support.

Focusing solely on the allegations in IVS’s amended

counterclaim complaint, as the Court must on a motion to

dismiss, the Court finds that at this pleading stage IVS has

5 Issued patents are presumptively valid, and “that presumption

takes away any need for a plaintiff to prove his patent is valid

to bring a claim.” Commil USA, LLC v. Cisco Sys., Inc., 135 S.

Ct. 1920, 1929 (2015).

satisfied its obligation under Twombly/Iqbal and Rule 8.6

Whether IVS can show that its claims are more than plausible is

a finding for another day.

First, with regard to the objective prong of the Noerr-

Pennington doctrine, IVS alleges:

•

“Counterclaim Defendants’ allegations of infringement are

meritless. . . . Counterclaim Defendants served their

Infringement Contentions on Counterclaimants on September

24, 2019. The Infringement Contentions clearly evidenced

Counterclaim Defendants’ failure to conduct a proper pre-

suit investigation of the Zoomaroo Dispensing System. For

example, many of the pictures in Counterclaim Defendants’

claim charts were vague and had no arrows or explanations

to show how the Zoomaroo Dispensing System met the elements

of the asserted claim. Counterclaim Defendants’

Infringement Contentions also used the same non-annotated

pictures to identify several separate elements of an

asserted claim, and Counterclaim Defendants’ were

inconsistent in the elements they did attempt to identify.

This is an implicit admission by Counterclaim Defendants

that several elements of the claims of the ’674 Patent are

absent from the accused Zoomaroo Dispensing System, since

by definition different claim elements must correspond to

different structures.”

•

“Counterclaim Defendants relied on their observation of a

prototype of the Zoomaroo Dispensing System from a trade

show in 2018, rather than inspecting a commercial version

6 Smarte Carte argues that the timing of IVS’s counterclaims is

suspect. Smarte Carte contends that its action had been pending

for nearly one year, Defendants delayed filing their “sham

litigation” claims until the deadline to file motions to amend

pleadings, and Defendants only raised these alleged antitrust

counterclaims after dismissing their prior counterclaim of

patent infringement that very same week. (Docket No. 53-1 at

8.) IVS refutes Smarte Carte’s characterization of its actions.

On this motion to dismiss, the Court may only consider the

allegations contained in IVS’s counterclaims. If Smarte Carte

wishes to seek relief on these issues, Smarte Carte may avail

itself to other avenues available under the local and federal

rules.

of the system after it was later launched.”

•

“[IVS’s] Non-Infringement Contentions further showed how

crucial elements of the asserted claims of the ’674 Patent

were missing from the Zoomaroo Dispensing System, which

Counterclaim Defendants should have recognized even from a

basic observation of the system (putting aside that they

apparently never disassembled the system), and as was

implicitly admitted by claiming that the same features of

the Zoomaroo Dispensing System amounted to different claim

limitations—a violation of canons of claim construction.”

(Docket No. 52 at 13-14.)

IVS’s allegations regarding Smarte Carte’s objectively

baseless patent infringement suit continue with various examples

of the alleged non-infringing differences between the Kiddie

Kruzzer and Zoomaroo systems that would have been obvious to

Smarte Carte, thus allegedly demonstrating that Smarte Carte

could not realistically expect success on the merits. (Id. at

14-17.) IVS further alleges in its counterclaim, as it did in

its Non-Infringement Contentions, that Smarte Carte should have

known the well-established law that Bain’s patent is invalid -

and therefore its patent infringement lawsuit objectively

baseless - because products embodying the claimed invention were

sold in the United States more than one year before the filing

of the ’674 Patent. (Id. at 18-20.)

These allegations, when accepted as true, state a plausible

claim that Smarte Carte’s patent infringement suit is

objectively baseless.

Second, with regard to the subjective element of the Noerr-

Pennington doctrine, IVS alleges:

•

Smarte Carte historically competed against IVS in the

vending massage chair market.

•

Smarte Carte was intrigued by IVS’s Zoomaroo product and

inquired about buying out IVS, but IVS declined.

•

Smarte Carte is pursuing “this meritless litigation in bad

faith in an attempt to gain access to Counterclaimants

commercially sensitive documents. Counterclaim Defendants

have sought discovery of customer, financial,

manufacturing, and other competitively sensitive

information.”

•

Despite Counterclaimants repeatedly providing technical

information about the Zoomaroo Dispensing System, which

show the product’s non-infringing nature, Counterclaim

Defendants have continued to more urgently press for this

type of commercially sensitive information.”

•

“After multiple conversations soliciting the acquisition of

Counterclaimants business—rather than compete openly in the

marketplace—Counterclaim Defendants have utilized this

litigation, purporting to enforce an old patent in a legacy

product that they are not even deploying anymore, as a

means to obtain commercially sensitive information from

their main competitor.”

(Id. at 20-22.)

Regarding Smarte Carte’s motivation for bringing this suit

against IVS as a competitive tool, IVS further alleges:

•

“Prior to this lawsuit, Counterclaimants were rapidly

cutting into Smarte Carte’s share in the marketplace.”

•

“Prior to filing this lawsuit, Smarte Carte approached

Counterclaimants concerning acquiring Counterclaimants’

stroller business. Upon information and belief, Smarte

Carte has historically acquired its competition rather than

compete in the marketplace. Counterclaimants declined

Smarte Carte’s advances.”

•

“Counterclaim Defendants are utilizing this lawsuit to

deter Counterclaimants from continuing to compete, or at

least slow down Counterclaimants’ expansion, so that

Counterclaim Defendants can try to replace the antiquated

patented Kiddie Kruzzer systems with new systems and new

contract terms that will foreclose new competition.”

(Id. at 23.)

Based on these allegations, IVS has sufficiently pleaded

that Smarte Carte’s instant suit was brought as a competitive

tool.

Third, as to IVS’s antitrust claims, IVS alleges:

• “Upon information and belief,7 Smarte Carte currently

7 Smarte Carte challenges IVS’s use of the phrase “upon

information and belief” as an indicator that IVS’s pleadings are

insufficient. The Third Circuit “has explained that pleading

upon information and belief is permissible ‘[w]here it can be

shown that the requisite factual information is peculiarly

within the defendant's knowledge or control’—so long as there

are no ‘boilerplate and conclusory allegations’ and

‘[p]laintiffs ... accompany their legal theory with factual

allegations that make their theoretically viable claim

plausible. In fact, this Court has explained that ‘[s]everal

Courts of Appeals accept allegations ‘on information and belief’

when the facts at issue are peculiarly within the defendant's

possession.” McDermott v. Clondalkin Group, Inc., 649 F. App’x

263, 267–68 (3d Cir. 2016) (citing In re Rockefeller Ctr.

Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002); In

re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1418 (3d

Cir. 1997); Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d

99, 107 n.31 (3d Cir. 2015)) (other citations omitted). This is

the situation here. IVS’s use of “upon information and belief”

is related to information that is within Smarte Carte’s

knowledge, and IVS provides sufficient facts to support the

claims which contain that phraseology. See, e.g., Skycliff IT,

LLC v. N.S. Infotech Limited, 2018 WL 2332219, at *3 (D.N.J.

2018) (citing McDermott) (“A Rule 12(b)(6) motion looks to

pleadings, not evidence, and pleading upon information and

belief is undoubtedly permissible.”); see also Shareholder

Representative Services LLC v. Medidata Solutions, Inc., 2020 WL

972618, at *2 (D. Del. 2020) (“[I]if the phrase ‘upon

information and belief’ was stripped altogether from the

controls approximately ninety percent (90%) of the relevant

product market.”

•

“The relevant product and geographic market is the leasing

of dispensing systems for commercial strollers in the

United States.”

•

“Upon information and belief, before Counterclaimants

entered the marketplace, Smarte Carte had nearly full

control of the relevant product market. In fact, consumers

would complain to IVS, stating that they were unhappy with

the product offered by Smarte Carte, but were forced to

continue their business relationship with Smarte Carte

because there were no other options available.”

•

“Upon information and belief, Counterclaim Defendants have

not recently updated the design of their Kiddie Kruzzer

dispensing system, nor are particularly responsive in the

maintenance of those systems currently installed.”

•

“Additionally, upon information and belief, Counterclaim

Defendants are no longer installing new units of the Kiddie

Kruzzer dispensing system; rather, they are installing new

‘stackable’ stroller systems that do not practice the

claimed inventions of the ’674 Patent.”

•

“Counterclaim Defendants are abusing the judicial systems

through the wrongful filing and maintenance of this

litigation for the exclusionary and anticompetitive

purposes, with the direct and intended effect of stopping

Counterclaimants expansion into the marketplace and harming

Counterclaimants reputation.”

•

“As a direct and proximate result of Counterclaim

Defendants’ improper and exclusionary conduct, consumers in

the United States are being limited in their ability to

choose.”

Complaint . . . the allegations would set forth plausible facts

that (if proven true) could establish breaches of the SPA and

EEA. Moreover, even were Plaintiff—because of its repeated use

of this ‘upon information and belief’ phraseology—required to

demonstrate that more robust factual information was ‘peculiarly

within the defendant’s knowledge or control,’ the Court would

find that the Complaint’s allegations can support such a

conclusion.”).

•

“Prior to this lawsuit, Counterclaimants were rapidly

cutting into Smarte Carte’s share in the marketplace.”

•

“Counterclaim Defendants are also utilizing the public

forum of this lawsuit to indicate to the marketplace that

there is a risk associated with doing business with

Counterclaimants.”

•

“[T]he mere filing of the present lawsuit has greatly

harmed Counterclaimants reputation, of which

Counterclaimants spent many years and very significant

expenses to achieve.”

•

“As a direct and proximate cause of Counterclaim

Defendants’ filing and prosecution of the sham litigation,

Counterclaimants have suffered and will continue to suffer

significant competitive harm. Counterclaim Defendants’

wrongful and exclusionary conduct has caused a substantial

delay in Counterclaimants expansion efforts, causing a

substantial and unjustified delay in the commencement of

Counterclaimants sales of the Zoomaroo Dispensing System.

Counterclaim Defendants’ wrongful conduct is also causing

irreparable harm to Counterclaimants’ hard-earned

reputation in the marketplace.”

•

“[D]ue to Counterclaim Defendants wrongful conduct,

Counterclaimants have suffered actual damages in loss

profits due to being foreclosed from selling in the

relevant market, loss of future sales and profits due to

being foreclosed from selling in the relevant market, and

loss of valuable customer goodwill and competitive

advantage from having these baseless allegations brought

against them.”

(Docket No. 52 at 8-9, 22-24.)

Smarte Carte argues that IVS has failed to properly allege

sufficient facts to support the product market and the

geographic market elements of their antitrust claim. Smarte

Carte also argues that IVS has failed to properly allege how

Smarte Carte has engaged in anticompetitive conduct that is

causally linked to an antitrust injury. The Court disagrees.

As noted, supra, note 7, data to support Smarte Carte’s

market share is peculiarly within Smarte Carte’s possession.

Additionally, IVS does not simply plead that Smarte Carte has

control of the market, but rather IVS specifies the percentage

of the market control. Further, in its amended complaint,

Smarte Carte describes itself as: “Smarte Carte is the market-

leading provider of commercial stroller dispensing systems for

use in malls, retail stores and other locations.” (Docket No.

19 at 3.)

Next, IVS has properly alleged the specific product market

- namely, leasing of commercial stroller dispensing systems.8

Further, IVS has properly defined the geographic market by

pleading it encompasses the United States. Indeed, Smarte

Carte’s amended complaint defines the same geographic market.

(Id. at 4. “Defendants have used, leased, sold and/or offered

for sale in the United States commercial stroller dispensing

systems under the name Zoomaroo. This includes the dispensing

system shown below, which directly infringes at least exemplary

claim 1 of the ’674 patent.”).

8 Smarte Carte argues that “sales” can be interchanged with

“leases,” and therefore IVS’s allegation concerning the product

market is deficient. Because IVS precisely states that the

product market is the “leasing of commercial stroller dispensing

systems,” the Court does not find that “leasing” may be

interchanged with “sales.”

Finally, as outlined above, IVS has sufficiently

articulated it suffered an injury as a result of Smarte Carte’s

alleged conduct that has affected the competitive process of

leasing commercial stroller dispensing systems.

Thus, IVS has properly pleaded its antitrust counterclaims

by alleging sufficient facts to support the plausibility of the

necessary elements of those counterclaims.

The Court recognizes that “[b]ecause of the innovation and

commercial viability that they encourage, courts have afforded

suits to enforce patents a presumption of good faith,” and that

“[i]t naturally follows that a higher standard of proof is

needed to overcome that presumption.” Campbell, 2020 WL

5049051, at *7 (further observing that the Court of Appeals for

the Ninth Circuit has explained, “[t]he road to the Patent

Office is so tortuous and patent litigation is usually so

complex,” that “no less than [c]lear, convincing proof of

intentional fraud involving affirmative dishonesty” would

suffice in patent cases (citation omitted)). But the Court

further recognizes “district courts within this Circuit have

routinely prohibited parties from invoking the protections of

Noerr-Pennington at the dismissal stage of a case in the context

of patent suits, at which time the factual record remains

undeveloped and insufficient for the purpose of determining

whether a ‘sham litigation’ has been filed.” Takeda

Pharmaceutical Company Limited v. Zydus Pharmaceuticals (USA)

Inc., 358 F. Supp. 3d 389, 394–95 (D.N.J. 2018) (citations

omitted).

IVS has surmounted the first hurdle of sufficiently

pleading the elements of a sham litigation, as well as the

elements of its antitrust claims. Going forward, IVS will have

a “higher standard of proof” to meet the “exacting standard” to

overcome the “heavy thumb on the scale” in favor of Smarte

Carte’s Noerr-Pennington immunity. Hanover 3201 Realty, LLC v.

Village Supermarkets, Inc., 806 F.3d 162, 180 (3d Cir. 2015).

CONCLUSION

For the reasons expressed above, Plaintiffs’ motion to

dismiss Counts Three and Four in Defendants’ counterclaim

complaint will be denied.

An appropriate Order will be entered.

Date: September 23, 2020 s/ Noel L. Hillman

At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.