# SMARTE CARTE, INC. v. INNOVATIVE VENDING SOLUTIONS LLC

> District Court, D. New Jersey · September 28, 2020

URL: https://www.frixlaw.com/law-library/cases/10269020

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** September 28, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10269020

## How later opinions describe it (automated extraction)

- explaining that New Jersey's antitrust statutes are construed in harmony with the federal antitrust statutes

## Opinion text

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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10269020. Public record. Not legal advice.