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`
`
`CYNTHIA E. RICHMAN (D.C. Bar No.
`492089; pro hac vice)
` crichman@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`1050 Connecticut Avenue, N.W.
`Washington, DC 20036-5306
`Telephone: 202.955.8500
`Facsimile: 202.467.0539
`
`JASON C. LO (SBN 219030)
` jlo@gibsondunn.com
`JENNIFER J. RHO (SBN 254312)
` jrho@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`333 South Grand Avenue
`Los Angeles, CA 90071
`Telephone: 213.229.7000
`Facsimile: 213.229.7520
`
`CAELI A. HIGNEY (SBN 268644)
` CHigney@gibsondunn.com
`JULIAN W. KLEINBRODT (SBN 302085)
` JKleinbrodt@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`555 Mission Street, Suite 3000
`San Francisco, CA 94105-0921
`Telephone: (415) 393-8200
`Facsimile: (415) 393-8306
`
`Attorneys for Defendant Apple Inc.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`AliveCor, Inc.,
`
`Plaintiff,
`
`v.
`Apple Inc.,
`
` Defendant.
`
`
`
`
`CASE NO. 4:21-CV-03958-JSW-SK
`
`DEFENDANT APPLE INC.’S MOTION TO
`DISMISS FIRST AMENDED COMPLAINT
`
`Date:
`Time:
`Place:
`
`The Honorable Jeffrey S. White
`
`
`
`
`December 9, 2022
`9:00 a.m.
`Courtroom 5, 2nd Floor
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`DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
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`Case 4:21-cv-03958-JSW Document 116 Filed 11/02/22 Page 2 of 25
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`NOTICE OF MOTION
`PLEASE TAKE NOTICE that on December 9, 2022, at 9:00 a.m., or as soon thereafter as the
`matter may be heard, in the U.S. District Court for the Northern District of California, Courtroom 5,
`2nd Floor, Federal Courthouse, Defendant Apple Inc., through its undersigned counsel, will, and
`hereby does, move to dismiss in part Plaintiff AliveCor, Inc.’s First Amended Complaint (Dkt. 106)
`for failure to state a claim upon which relief can be granted. This Motion is supported by this Notice
`of Motion and Motion; the accompanying Memorandum of Points and Authorities; the accompanying
`Request for Judicial Notice; the Proposed Order filed herewith; the pleadings and papers on file herein;
`and such other matters that may be presented to the Court at the hearing.
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`STATEMENT OF ISSUES
`1. Whether AliveCor’s challenge to Apple’s petitions to the U.S. Patent and Trademark Office
`(“USPTO”) is barred under the Noerr-Pennington doctrine.
`2. Whether AliveCor fails to support its purported claim challenging Apple’s petitions to the
`USPTO with sufficient allegations of antitrust injury or standing.
`3. Whether AliveCor can state a separate theory of damages arising out of Apple’s petitions to
`the USPTO where those petitions do not relate to the other alleged anticompetitive conduct.
`4. Whether AliveCor’s new allegations related to Apple’s petitions to the USPTO should be
`stricken pursuant to California’s anti-SLAPP statute, with reasonable fees awarded to Apple.
`
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`TABLE OF CONTENTS
`I. INTRODUCTION ............................................................................................................................. 1
`II. BACKGROUND .............................................................................................................................. 2
`III. LEGAL STANDARD ..................................................................................................................... 5
`IV. ARGUMENT .................................................................................................................................. 5
`A.
`Apple’s Alleged Litigation Conduct Does Not Violate The Antitrust Laws ................ 5
`1.
`No Exception To The Noerr-Pennington Doctrine Applies Here .................... 5
`2.
`AliveCor Has Not Stated A Plausible Claim Based On Apple’s
`Litigation Conduct .......................................................................................... 10
`AliveCor Cannot Claim Damages For Apple’s Litigation Conduct ........................... 11
`The New Allegations Should Be Stricken Pursuant To California’s
`Anti-SLAPP Law ........................................................................................................ 14
`V. CONCLUSION .............................................................................................................................. 15
`
`
`B.
`C.
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`
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Amarel v. Connell,
`102 F.3d 1494 (9th Cir. 1996) .........................................................................................................10
`
`Apple Inc. v. Samsung Elecs. Co.,
`2012 WL 2571719 (N.D. Cal. June 30, 2012) ................................................................................12
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ..........................................................................................................................5
`
`Assigned Container Ship Claims, Inc. v. Am. President Lines, Ltd.,
`784 F.2d 1420 (9th Cir. 1986) ...........................................................................................................5
`
`Aventis Pharma S.A. v. Amphastar Pharms., Inc.,
`2009 WL 8727693 (C.D. Cal. Feb. 17, 2009) .......................................................................7, 12, 13
`
`Avery Dennison Corp. v. Acco Brands, Inc.,
`2000 WL 986995 (C.D. Cal. Feb. 22, 2000) .....................................................................................7
`
`B&G Foods N. Am., Inc. v. Embry,
`29 F.4th 527 (9th Cir. 2022) .....................................................................................................7, 8, 9
`
`Baral v. Schnitt,
`1 Cal. 5th 376 (2016) ................................................................................................................14, 15
`
`Boone v. Redev. Agency of City of San Jose,
`841 F.2d 886 (9th Cir. 1988) .........................................................................................................6, 9
`
`Bresnick v. U.S. Vitamin Corp.,
`139 F. 2d 239 (2d Cir. 1943) ...........................................................................................................11
`
`Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
`429 U.S. 477 (1977) ........................................................................................................................10
`
`Cal. Motor Transp. Co. v. Trucking Unlimited,
`404 U.S. 508 (1972) ......................................................................................................................7, 9
`
`Cardinal Chem. Co. v. Morton Int’l, Inc.,
`508 US 83 ........................................................................................................................................11
`
`Catch Curve, Inc. v. Venali, Inc.,
`2008 WL 11334024 (C.D. Cal. Nov. 3, 2008) ..................................................................................7
`
`Cuozzo Speed Techs., LLC v. Lee,
`579 U.S. 261 (2016) ..........................................................................................................................3
`
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`
`
`
`E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc.,
`365 U.S. 127 (1961) ........................................................................................................................14
`
`ERBE Elektromedizin GmbH v. Canady Tech. LLC,
`629 F.3d 1278 (Fed. Cir. 2010) .........................................................................................................9
`
`In re Flonase Antitrust Litig.,
`795 F. Supp. 2d 300 (E.D. Pa. 2011) ................................................................................................9
`
`Funai Elec. Co. v. LSI Corp.,
`2017 WL 1133513 (N.D. Cal. Mar. 27, 2017) ................................................................................12
`
`Gen-Probe, Inc. v. Amoco Corp., Inc.,
`926 F. Supp. 948 (S.D. Cal. Apr. 24, 1996) ......................................................................................7
`
`Hanover 3201 Realty, LLC v. Vill. Supermarkets, Inc.,
`806 F.3d 162 (3d Cir. 2015) ..............................................................................................................9
`
`Herring Networks, Inc. v. Maddow,
`8 F.4th 1148 (9th Cir. 2021) ...........................................................................................................15
`
`hiQ Labs, Inc. v. LinkedIn Corp.,
`485 F. Supp. 3d 1137 (N.D. Cal. 2020) ..............................................................................11, 12, 13
`
`Hynix Semiconductor Inc. v. Rambus, Inc.,
`527 F. Supp. 2d 1084 (N.D. Cal. 2007) ................................................................................2, 11, 12
`
`Intel Corp. v. Fortress Inv. Grp. LLC,
`2020 WL 6390499 (N.D. Cal. July 15, 2020) ...........................................................................12, 13
`
`Kaiser Found. Health Plan, Inc. v. Abbott Labs., Inc.,
`552 F.3d 1033 (9th Cir. 2009) .......................................................................................................7, 8
`
`Kendall v. Visa U.S.A., Inc.,
`518 F.3d 1042 (9th Cir. 2008) ...........................................................................................................5
`
`Kottle v. Nw. Kidney Ctrs.,
`146 F.3d 1056 (9th Cir. 1998) .......................................................................................................5, 6
`
`Ludwig v. Superior Ct.,
`37 Cal. App. 4th 8 (1995) ...............................................................................................................15
`
`Mandel v. Hafermann,
`503 F. Supp. 3d 946 (N.D. Cal. 2020) ............................................................................................15
`
`Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
`572 U.S. 545 (2014) ..........................................................................................................................1
`
`Olson v. Doe,
`12 Cal. 5th 669 (2022) ....................................................................................................................14
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`
`
`Planned Parenthood Fed’n of Am., Inc. v. Ctr. for Med. Progress,
`890 F.3d 828 (9th Cir.), as amended, 897 F.3d 1224 (9th Cir. 2018) ............................................15
`
`Polaris Indus. Inc. v. Arctic Cat Inc.,
`2017 WL 1180426 (D. Minn. Mar. 29, 2017) ...................................................................................9
`
`Prof’l Real Estate Invs., Inc. v. Columbia Pictures Indus., Inc.,
`508 U.S. 49 (1993) ..................................................................................................................6, 8, 10
`
`Retractable Techs., Inc. v. Becton Dickinson & Co.,
`842 F.3d 883 (5th Cir. 2016) ...........................................................................................................11
`
`Sosa v. DIRECTV, Inc.,
`437 F.3d 923 (9th Cir. 2006) .........................................................................................................5, 6
`
`Staley v. Gilead Scis., Inc.,
`2020 WL 5507555 (N.D. Cal. July 29, 2020) .................................................................................13
`
`Takhar v. People ex rel. Feather River Air Quality Mgmt. Dist.,
`27 Cal. App. 5th 15 (2018) .............................................................................................................15
`
`Tellabs, Inc. v. Makor Issues & Rts., Ltd.,
`551 U.S. 308 (2007) ..........................................................................................................................9
`
`Toscano v. PGA Tour, Inc.,
`201 F. Supp. 2d 1106 (E.D. Cal. 2002) ...........................................................................................11
`
`USS-POSCO Indus. v. Contra Cost Cnty. Bldg. & Constr. Trades Council, 31 F.3d
`800 (9th Cir. 1994) .................................................................................................................. passim
`
`Wonderful Real Estate Dev. LLC v. Laborers Int’l Union of N. Am. Local 220,
`2020 WL 91998 (E.D. Cal. Jan. 8, 2020) ..................................................................................7, 8, 9
`
`Statutes
`
`35 U.S.C. § 311 .......................................................................................................................................3
`
`35 U.S.C. § 312 .......................................................................................................................................4
`
`35 U.S.C. § 313 .......................................................................................................................................4
`
`35 U.S.C. § 314 ...............................................................................................................................3, 4, 8
`
`Cal. Civ. Proc. Code § 425.16 ...........................................................................................................2, 14
`
`Cal. Civil Code § 47 ..............................................................................................................................15
`
`Other Authorities
`
`157 Cong. Rec. S1375 (Mar. 8, 2011) ....................................................................................................3
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`
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`H.R. Rep. No. 107-120 (2001) ................................................................................................................3
`
`H.R. Rep. No. 112-98 (2011) ..................................................................................................................4
`
`Rules
`
`Fed. R. Civ. P. 12(b)(6) .................................................................................................................5, 9, 15
`
`Regulations
`
`37 C.F.R. § 42.104 ..................................................................................................................................4
`
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`I. INTRODUCTION
`The Apple Watch is an innovative device that allows consumers to use a host of advanced
`functionalities—from communication to navigation to fitness monitoring—on the go and in a
`small-form wearable device. The litigation history between AliveCor and Apple began when AliveCor
`sued Apple for alleged patent infringement on December 7, 2020, followed soon after by another
`infringement suit in a different forum. Months after first suing Apple, AliveCor then filed this case
`alleging that certain improvements to the Watch were anticompetitive because they prevented
`AliveCor’s app from working as intended. AliveCor now seeks to “advance a new legal theory.” Dkt.
`105 at 6. Having fired the opening salvo by suing Apple for patent infringement, AliveCor asserts in
`its First Amended Complaint (“FAC”) that Apple violated federal antitrust and state unfair competition
`laws by initiating inter partes review (“IPR”) proceedings in the U.S. Patent and Trademark Office
`(“USPTO”) challenging the validity of ten of AliveCor’s patents. These new allegations are meritless.
`First, AliveCor’s new theory of liability challenges constitutionally protected conduct. The
`Noerr-Pennington doctrine immunizes litigation activity from antitrust scrutiny. To “avoid chilling
`the exercise of the First Amendment right to petition the government,” the “exception for ‘sham’
`litigation,” which AliveCor seeks to invoke here, is extraordinarily “narrow.” Octane Fitness, LLC v.
`ICON Health & Fitness, Inc., 572 U.S. 545, 556 (2014). Far from being a sham, Apple only sought
`USPTO review of AliveCor’s patents after being sued for patent infringement, and over 95% of the
`IPRs involving AliveCor or other entities mentioned in the FAC have been deemed meritorious.
`AliveCor does not and cannot allege that any of Apple’s pending IPRs are baseless or frivolous. That
`alone compels dismissal under binding precedent.
`Second, AliveCor fails to state a claim under the Sherman Act and its new claim rests on a
`profound misunderstanding of patent law. AliveCor’s apparent theory is that Apple’s IPR petitions
`raise its rivals’ costs. But AliveCor nowhere alleges Apple’s IPRs have in fact prevented AliveCor
`from reentering the market. Nor could it: A basic principle of patent law is that a patent does not grant
`the patent owner any right to make its own invention; the patent gives the patent owner the right to
`exclude others from making, using, selling, or importing the invention. Thus, Apple’s successful
`challenges to AliveCor patents still allow AliveCor to compete and make products previously covered
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`by the invalid patents. The key difference is that others in the marketplace also would be able to enter
`the market and make the same products without risking an infringement lawsuit—increasing, not
`decreasing, competition with respect to a particular technology. Nor can AliveCor heap inference upon
`inference, speculating that potential competitors might learn about Apple’s IPR petitions, might
`interpret them as retaliatory, might believe Apple would retaliate against them, and might as a result
`decide not to enter the relevant market. That kind of rank speculation is not enough to establish antitrust
`injury to AliveCor. Were it otherwise, any antitrust plaintiff could state an antitrust claim against a
`litigation adversary as lawsuits always impose costs.
`Third, AliveCor cannot make out an independent theory of damages under Hynix
`Semiconductor Inc. v. Rambus, Inc., 527 F. Supp. 2d 1084 (N.D. Cal. 2007). That case allows antitrust
`plaintiffs to recover damages arising from litigation expenses in narrow circumstances where the
`petitioning conduct is symbiotic with the underlying anticompetitive conduct. But AliveCor alleges
`no facts that would show the IPR petitions were in furtherance of the alleged conduct challenged by
`the initial Complaint. To the contrary, AliveCor alleges that the patents Apple is challenging in the
`IPRs do not cover the technology at issue in this lawsuit.
`For these reasons, AliveCor’s new claims should not only be dismissed but also stricken under
`California’s anti-SLAPP statute. AliveCor’s Unfair Competition Law claim “incorporates” all of the
`FAC’s allegations of “anticompetitive conduct,” FAC ¶¶ 157, 160, including those targeting protected
`petitioning activity. Because AliveCor cannot state a claim on such a theory, it by definition cannot
`evade California’s proscription on strategic lawsuits against protected speech—requiring AliveCor to
`pay Apple’s reasonable fees in bringing this motion. Cal. Civ. Proc. Code § 425.16(c)(1).
`The Court should dismiss with prejudice AliveCor’s new theory of liability and damages, strike
`the allegations of anticompetitive conduct related to Apple’s IPR petitions, and award Apple its
`reasonable fees in an amount to be determined after this motion is fully resolved.
`II. BACKGROUND
`AliveCor filed this case on May 25, 2021, asserting claims under Section 2 of the Sherman Act
`and California’s Unfair Competition Law. Dkt. 1 ¶¶ 94–142. “[T]he true focus of the lawsuit” was
`AliveCor’s heartrate analysis app, Kardia, and its SmartRhythm feature. Dkt. 42 at 2. AliveCor alleged
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`that Apple “pre-announc[ed] Apple’s own heart initiative, inform[ed] AliveCor that SmartRhythm
`violated App Store guidelines, and ma[de] changes to watchOS that created technical problems for
`SmartRhythm.” Id. at 4 (citations omitted). AliveCor alleges it had “to remove SmartRhythm from
`the App Store” after Apple released the Series 4 Apple Watch in September 2018. Dkt. 1 ¶¶ 6–8.
`AliveCor has now amended the Complaint to assert a new theory: That “Apple has instituted a
`number of vexatious proceedings” before the USPTO seeking to invalidate some of AliveCor’s patents.
`Dkt. 84 at 1. These allegations “center[] on” inter partes review proceedings initiated by Apple, id.—
`that AliveCor alleges to be retaliation for AliveCor’s long-running patent lawsuits against Apple, FAC
`¶ 9. Congress established the IPR system through the America Invents Act as an efficient pathway to
`clear away invalid patents. See 35 U.S.C. § 314 et seq.; see also Cuozzo Speed Techs., LLC v. Lee, 579
`U.S. 261, 279–80 (2016) (“[I]nter partes review helps protect the public’s ‘paramount interest in seeing
`that patent monopolies . . . are kept within their legitimate scope.’” (italics added)). “[P]articipation
`by third parties,” who often are best positioned “to seek to invalidate an allegedly defective patent,” is
`“vital” to the IPR process. H.R. Rep. No. 107-120, at *4 (2001).
`An IPR begins with a petition for institution. 35 U.S.C. § 311. The petition faces an immediate
`hurdle: Demonstrating to the USPTO that there is a “reasonable likelihood that the petitioner would
`prevail.” 35 U.S.C. § 314(a). This standard is akin to the burden a party faces in seeking a preliminary
`injunction, “effectively requir[ing] the petitioner to present a prima facie case justifying a rejection of
`the claims in the patent.” 157 Cong. Rec. S1375 (Mar. 8, 2011). This is a demanding standard as
`almost half of all petitions fell short in the 2021 fiscal year. PTAB Trial Statistics: FY21 End of Year
`Outcome Roundup, IPR, PGR, CBM at 6, tinyurl.com/2z29by3c (59% institution rate). Only if the
`petitioner can surpass this hurdle does the USPTO even institute the IPR. 35 U.S.C. § 314(a).
`Since June 2021, Apple has filed ten IPR petitions regarding patents owned by AliveCor.
`App’x A; see also Decl. of Jason Lo Ex. A. Three have reached an institution decision, and each of
`those petitions has been instituted on every challenged claim. App’x A. For a fourth, AliveCor
`disclaimed, or declared invalid, all claims in the relevant patent rather than await institution (and
`invalidation). Id. The remainder are pending an institution decision; none have been denied. Id.
`Similarly, the USPTO instituted 20 of the 21 IPR petitions that Apple filed against Masimo Corp.’s
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`patents in late 2020—the only other proceedings mentioned in the FAC, which likewise involve a
`litigation adversary (an alleged medical technology company) pursuing infringement claims against
`Apple, FAC ¶ 104—and issued final written decisions invalidating 441 of the 480 challenged claims.
`Id. The USPTO has thus found Apple has at least a reasonable chance of success in over 95% of its
`IPRs involving AliveCor or Masimo’s patents, well above the 59% average for IPR petitions.
`AliveCor fails to recite these incontrovertible and public facts, mentioning in its FAC only five
`of the more recent IPR petitions filed against its patents—those that have yet to reach an institution
`decision. FAC ¶¶ 10, 98. Even though the applicable statute specifically provides that a patent owner
`need not respond at all to an IPR prior to institution, 35 U.S.C. § 313—allowing the owner (unlike a
`defendant in civil litigation) to avoid the associated costs of participating in the IPR—AliveCor alleges
`that the “sole intent” of these petitions is “raising AliveCor’s costs in an effort to make AliveCor buckle
`under the weight of litigation expenses.” FAC ¶ 98. That is, Apple’s supposed scheme is to stifle
`AliveCor by filing vexatious claims to which AliveCor need not respond at all unless and until a
`tribunal has determined that they have merit. Id. Even then, AliveCor omits that a patent owner may
`avoid costs of defending against a meritorious suit by abandoning a patent, as AliveCor recently chose
`to do). App’x A; see also Lo Decl. Exs. C–D.
`According to AliveCor, the five IPRs alleged in the FAC concern patents for technology that
`Apple does not “market or sell.” FAC ¶ 98. That is wrong. The patents in fact involve heartrate
`detection and ECG technology—the technological field at issue in litigation between Apple and
`AliveCor. But even if they were entirely unrelated to AliveCor’s claims and the disputes between the
`parties, Apple’s IPRs serve the statutory purpose of empowering the public to test “questionable
`patents.” H.R. Rep. No. 112-98 at 39 (2011); see also App’x A (showing Apple’s success rate far
`above IPR averages). Regardless, AliveCor does not allege that any of Apple’s IPR petitions, instituted
`or not, are baseless or frivolous. And that is not for lack of notice or opportunity: Every petition
`identifies “with particularity” the “grounds on which the challenge to each [patent] claim is based” as
`well as “the evidence that supports the grounds for the challenge.” 35 U.S.C. § 312(a)(3); see also 37
`C.F.R. § 42.104(a) (requiring certification that the challenged patent “is available for inter partes
`review and that the petitioner is not barred or estopped from requesting an inter partes review”).
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`DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`CASE NO. 4:21-CV-03958-JSW-SK
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`Case 4:21-cv-03958-JSW Document 116 Filed 11/02/22 Page 13 of 25
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`III. LEGAL STANDARD
`A plaintiff must allege “sufficient factual matter, accepted as true, to state a claim to relief that
`is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks omitted). To
`that end, a complaint must “plead not just ultimate facts . . . but evidentiary facts” that would prove up
`their claims. Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008). That burden is
`heightened where, as here, “a plaintiff seeks damages for conduct which is prima facie protected by
`the First Amendment,” requiring “more specific allegations than would otherwise be required.” Kottle
`v. Nw. Kidney Ctrs., 146 F.3d 1056, 1063 (9th Cir. 1998) (alteration and quotation marks omitted).
`IV. ARGUMENT
`The Court gave AliveCor leave to amend its Complaint with the caveat that Apple could “test
`the new theory on the merits.” Dkt. 105 at 4. AliveCor’s amendment flunks that test. First, Noerr-
`Pennington immunity bars AliveCor’s theory of liability (§ IV.A.1), which in any event fails to assert
`the essential elements of a vexatious-litigation antitrust claim (§ IV.A.2). Second, AliveCor cannot
`seek damages for Apple’s constitutionally protected conduct because AliveCor’s theory falls far
`outside the so-called Hynix doctrine, which applies principally to anticompetitive patent traps—not
`meritorious IPRs (§ IV.B). For all these reasons, AliveCor’s amended claims should not only be
`dismissed under Federal Rule of Civil Procedure 12(b)(6) but also stricken, with fees awarded to Apple,
`under California’s anti-SLAPP law (§ IV.C).
`A.
`Apple’s Alleged Litigation Conduct Does Not Violate The Antitrust Laws
`Under the Noerr-Pennington doctrine, “those who petition any department of the government
`for redress are generally immune from statutory liability for their petitioning conduct.” Sosa v.
`DIRECTV, Inc., 437 F.3d 923, 929 (9th Cir. 2006). Filing administrative petitions, such as IPRs, is
`protected conduct. Assigned Container Ship Claims, Inc. v. Am. President Lines, Ltd., 784 F.2d 1420,
`1422–24 (9th Cir. 1986). AliveCor’s claim fails because it has not pleaded facts to support any
`exception to the Noerr-Pennington doctrine, nor has it stated an actual claim based on Apple’s litigation
`conduct. For both reasons, AliveCor’s litigation-based claims should be dismissed.
`1.
`No Exception To The Noerr-Pennington Doctrine Applies Here
`The standard for pleading an exception to the Noerr-Pennington doctrine is high: “[W]hen a
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`DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT
`CASE NO. 4:21-CV-03958-JSW-SK
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`Case 4:21-cv-03958-JSW Document 116 Filed 11/02/22 Page 14 of 25
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`plaintiff seeks damages for conduct which is prima facie protected by the First Amendment, the danger
`that the mere pendency of the action will chill the exercise of First Amendment rights requires more
`specific allegations than would otherwise be required.” Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056,
`1063 (9th Cir. 1998) (alteration and quotation marks omitted). The complaint must “contain specific
`allegations demonstrating that the Noerr-Pennington protections do not apply.” Boone v. Redev.
`Agency of City of San Jose, 841 F.2d 886, 894 (9th Cir. 1988).
`The Ninth Circuit has recognized “three circumstances” in which liability nevertheless may be
`imposed, each falling under the umbrella of “sham litigation.” Sosa, 437 F.3d at 938. AliveCor has
`asserted only one of those exceptions here—sometimes called the USS-POSCO exception—which
`applies “where the conduct involves a series of lawsuits brought pursuant to a policy of starting legal
`proceedings without regard to the merits and for an unlawful purpose.” Id. (quotation marks omitted)
`(citing USS-POSCO Indus. v. Contra Cost Cnty. Bldg. & Constr. Trades Council, 31 F.3d 800, 810–
`11 (9th Cir. 1994)).
`Contrary to AliveCor’s suggestion that the USS-POSCO exception is purely subjective and
`applies any time the defendant lacks a sufficiently concrete stake in the underlying proceedings, Dkt.
`84 at 12, the Supreme Court squarely rejected any theory of “sham” litigation premised solely on “either
`indifference to outcome, or failure to prove that a petition for redress of grievances would have been
`brought but for a predatory motive.” Prof’l Real Estate Invs., Inc. v. Columbia Pictures Indus., Inc.,
`508 U.S. 49, 56 (1993) (citation, alterations, and quotation marks omitted). Indeed, the Supreme Court
`expressly rejected the argument that “litigation may be [a] sham merely because a subjective
`expectation of success does not motivate the litigant.” Id. at 57. The Court instead held that “an
`objectively reasonable effort to litigate cannot be sham regardless of subjective intent.” Id.; see also
`id. at 59 (“Our decisions therefore establish that the legality of objectively reasonable petitioning
`directed toward obtaining governmental action is not at all affected by any anticompetitive purpose the
`actor may have had.” (alteration and quotation marks omitted)). Thus, a plaintiff seeking to invoke the
`USS-POSCO exception must plead a “pattern or practice of successive filings,” USS-POSCO, 31 F.3d
`at 811, and “must allege both (1) a subjective policy of startin