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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`___________________________________
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`NUANCE COMMUNICATIONS, INC.,
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`Plaintiff,
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`v. )
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`OMILIA NATURAL LANGUAGE SOLUTIONS, )
`LTD.,
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`Defendant.
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`___________________________________)
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`Civil Action
`No. 19-11438-PBS
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`MEMORANDUM AND ORDER
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`May 6, 2020
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`Saris, D.J.
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`Plaintiff Nuance Communications, Inc. brings this action
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`against Defendant Omilia Natural Language Solutions, Ltd.,
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`alleging infringement of eight patents concerning automated
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`speech recognition and interactive voice response systems used
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`in large scale call centers.
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`
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`Omilia counter-punched with numerous counterclaims
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`alleging, among other things, a violation of Section 2 of the
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`Sherman Act (Count 17); a violation of Section 7 of the Clayton
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`Act (Count 18); common law unfair competition (Count 19);
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`tortious interference with contractual relations (Count 20); and
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`1
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 2 of 24
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`tortious interference with advantageous business relations
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`(Count 21)1.
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`Now, Nuance moves to dismiss Omilia’s antitrust and state
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`law counterclaims (Counts 17-21), or in the alternative to stay
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`those counterclaims pending resolution of the underlying patent
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`infringement suit. After hearing, the Court ALLOWS the motion to
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`dismiss Omilia’s claim of common law unfair competition (Count
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`19) and DENIES the motion with regard to Omilia’s remaining
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`antitrust and state law counterclaims.
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`FACTUAL BACKGROUND
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`The following facts are drawn from Omilia’s
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`countercomplaint (Docket No. 44) and must be taken as true at
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`this stage. See Newman v. Lehman Bros. Holdings Inc., 901 F.3d
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`19, 25 (1st Cir. 2018).
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`I.
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`Nuance
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` Nuance develops and provides Automated Speech Recognition
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`(“ASR”) technology, which allows a machine to recognize and
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`respond to human voice commands. Nuance’s ASR software is used
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`by enterprise-level call centers around the world.
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` Nuance was created in 2005 from a merger of ScanSoft and
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`another entity named Nuance (“Pre-2005 Nuance”). ScanSoft had
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`already acquired at least three other voice recognition firms
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`1 Omilia’s answer labeled this claim as Count 20. Docket No. 44
`at 68.
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`2
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 3 of 24
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`between 2001 and 2005. From 2005 to 2018, the newly formed
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`Nuance acquired at least 16 additional companies “that developed
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`and/or commercialized voice recognition-related technology.”
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`Docket No. 44 ¶ 106. Nuance also acquired over 5,000 voice-
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`recognition related patents during the 2005-2018 timeframe.
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`Omilia alleges that, due to these corporate and intellectual
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`property acquisitions, Nuance has maintained an international
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`market share of over 70% since 2001.2 Nuance is now the owner of
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`one of the largest speech-recognition patent portfolios in the
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`world.
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`Omilia alleges that Nuance has a strategy of “acquir[ing]
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`actual and potential competitors through a calculated scheme of
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`threatening to assert and/or actually asserting baseless patent
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`infringement litigation using its massive portfolio of acquired
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`patents to drive its competitors out of the market and/or coerce
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`them into being acquired by Nuance.” Id. ¶ 112. Since 2011,
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`ScanSoft/Nuance has initiated at least seventeen patent lawsuits
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`against its competitors. At least three of these lawsuits were
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`initiated shortly after the defendant corporation refused a buy-
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`out offer by Nuance.
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`2 Omilia argues that the Court may reasonably infer that, given
`Nuance’s 70% international market share, Nuance’s market share
`within the United States is at least 70%. See Dkt. No. 80 at 44
`(motion hearing transcript).
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`3
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 4 of 24
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`Omilia alleges that this strategy enables Nuance to
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`“maintain supra-competitive prices for its software . . .
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`without innovating that software, which it would have been
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`forced to do” if it was subject to competition. Id. ¶ 114. For
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`example, Nuance introduced a new major release related to its
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`speech recognition software once a year between 1994 and 2005,
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`but since 2005 has issued only three new releases. The
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`Department of Justice (“DOJ”) Antitrust Division investigated a
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`Nuance transaction related to the medical transcription sector
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`in 2008 and “raised concerns” about Nuance’s proposed
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`acquisition of a voice recognition firm in 2009. Id. ¶ 115.
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`II. Omilia’s Relationship with Nuance
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`Omilia is a Cyprus-based company that sells a proprietary
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`ASR software system for use in large enterprise call centers.
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`Omilia resold Nuance’s ASR technology from 2007 to 2013, along
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`with Omilia’s own proprietary natural language understanding
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`(“NLU”) engine and dialogue manager (“DM”).
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`In April 2010, Omilia’s Managing Director Dimitris Vassos
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`contacted Nuance’s CEO to discuss the possibility of an expanded
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`partnership. Vassos met with Peter MacKinnon, the General
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`Manager of Nuance Europe, in January 2011. During that meeting
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`and in related emails, Vassos provided Nuance with documents
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`describing Omilia’s proprietary NLU and DM system, known as
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`DiaManT.
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`4
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 5 of 24
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`In 2012, Nuance introduced an amendment to its reseller
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`agreement with Omilia. The amendment required Omilia to bundle
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`Nuance’s professional support services with Omilia’s products
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`and required Omilia to sell the full stack of Nuance’s products,
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`so that Omilia could not integrate Omilia’s NLU with Nuance’s
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`ASR. Omilia alleges that Nuance implemented the same amendments
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`with other resellers, in order to use its dominant position in
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`the ASR market to gain monopoly profits in the market for
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`professional services.
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`In October 2013, Nuance asked Omilia to disclose its full
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`list of customers and projects as part of a “global partner
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`review.” Id. ¶ 125. Nuance represented that it would maintain
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`the list in confidence. However, soon after Omilia provided the
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`list, Nuance contacted an Omilia customer and an Omilia partner
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`organization, allegedly to interfere with Omilia’s relationships
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`with those organizations. On October 31, 2013, Nuance served
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`Omilia with a 90-day notice to terminate the Nuance-Omilia
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`reseller agreement. After termination of the reseller agreement,
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`Omilia implemented a proprietary ASR technology.
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`III. Procedural Background
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`In January 2018, Nuance sent Omilia a letter demanding it
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`to submit to an audit of all transactions and royalty payments
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`it received from any customer since the inception of its
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`Reseller Agreement with Nuance. Omilia refused this demand. In
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`5
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 6 of 24
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`September 2018, Nuance sent Omilia a letter asserting that
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`Omilia’s systems infringe three patents owned by Nuance. Two of
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`those patents are at issue in Nuance’s infringement lawsuit
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`here.
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`Omilia alleges that before Nuance sent the September 2018
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`letter, Nuance represented to Omilia’s customers and potential
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`customers in the U.S. and Canada that it had already brought a
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`patent infringement lawsuit against Omilia. Omilia claims it
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`lost commercial opportunities and “hundreds of millions of
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`dollars of potential revenue” due to those representations. Id.
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`¶¶ 133-34.
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`In March 2019, Omilia responded to Nuance’s letter, stating
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`that Omilia did not infringe Nuance’s patents. In June 2019,
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`Nuance filed suit in this Court, alleging that Omilia infringed
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`eight of its patents. Omilia subsequently filed a motion to
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`dismiss for lack of personal jurisdiction, which this Court
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`denied in December 2019.
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`Omilia filed an Answer and Counterclaims in November 2019.
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`Omilia alleged that Nuance engaged in a “monopolistic scheme” in
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`the ASR Enterprise Software Market in the United States by
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`acquiring more than fifty companies and “thousands” of patents.
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`Id. ¶¶ 91, 143-44, 146. Omilia also claimed that Nuance told at
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`least two actual or potential Omilia customers, Connex and TD
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`Bank, about Omilia’s alleged patent infringement. Nuance filed
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`6
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`the present motion to dismiss in January 2020, and Omilia
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`opposed in February 2020.
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`The underlying patent dispute is scheduled to proceed in
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`phases. Claims related to two of the eight patents will be
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`considered during Phase 1, for which a trial is currently
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`scheduled for October 2021.
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`STANDARD OF REVIEW
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`A Rule 12(b)(6) motion is used to dismiss complaints that
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`do not “state a claim upon which relief can be granted.” See
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`Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to
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`dismiss, the factual allegations in a complaint must “possess
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`enough heft” to state a claim to relief that is plausible on its
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`face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–57 (2007).
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`In evaluating the motion, the Court must accept the factual
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`allegations in the plaintiff’s complaint as true, construe
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`reasonable inferences in his favor, and “determine whether the
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`factual allegations in the plaintiff’s complaint set forth ‘a
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`plausible claim upon which relief may be granted.’” Foley v.
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`Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014) (quoting
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`Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 353 (1st Cir.
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`2013)).
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`In addition to the complaint, the court may also consider
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`“documents incorporated by reference into the complaint, matters
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`of public record, and facts susceptible to judicial notice.”
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`7
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 8 of 24
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`Haley v. City of Boston, 657 F. 3d 39, 46 (1st Cir. 2011)
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`(cleaned up).
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`I.
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`Antitrust Claims
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`DISCUSSION
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`Nuance argues that Omilia’s antitrust claims should be
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`dismissed because (1) Omilia fails to allege unlawful
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`monopolization under Section 2 of the Sherman Act; (2) Omilia
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`fails to plead a plausible market definition for its Sherman Act
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`and Clayton Act claims; and (3) all but one of the transactions
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`challenged by Omilia under the Clayton Act are time-barred by
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`the four-year statute of limitations period, and the single
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`remaining transaction is insufficient to state a claim.
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`A. Section 2 of the Sherman Act (Count 17)
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`Nuance argues that Omilia fails to allege unlawful
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`monopolization under Section 2 of the Sherman Act. That section
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`imposes liability upon “every person who shall monopolize, or
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`attempt to monopolize . . . any part of the trade or commerce
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`among the several States.” 15 U.S.C. § 2. To establish a Section
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`2 monopolization claim, a plaintiff must show “(1) that the
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`defendant possesses monopoly power in the relevant market, and
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`(2) that the defendant has acquired or maintained that power by
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`improper means.” In re Lantus Direct Purchased Antitrust
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`Litigation, 950 F.3d 1, 7 (1st Cir. Feb. 13, 2020) (quoting Town
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`of Concord v. Bos. Edison Co., 915 F.2d 17, 21 (1st Cir. 1990)).
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`8
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 9 of 24
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`Here, neither party contests that Nuance plausibly
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`possesses monopoly power in the ASR Enterprise Market. The
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`parties disagree about the proper geographic scope of that
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`market, as described below in section I.B. The parties also
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`disagree as to whether Omilia has plausibly alleged that Nuance
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`has acquired or maintained its monopoly power by improper means.
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`Omilia alleges that Nuance has a strategy of “acquir[ing]
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`actual and potential competitors through a calculated scheme of
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`threatening to assert and/or actually asserting baseless patent
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`infringement litigation using its massive portfolio of acquired
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`patents to drive its competitors out of the market and/or coerce
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`them into being acquired by Nuance.” Docket No. 44 ¶ 112; see
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`id. ¶ 118 (quoting New York Times report that Nuance’s CEO had
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`told a potential competitor, “I have patents that can prevent
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`you from practicing in this market.”); id. ¶¶ 117, 119
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`(providing additional example of lawsuit filed after a
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`competitor refused a buy-out offer). Omilia supports this theory
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`with examples of Nuance acquiring competitors and patents in the
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`ASR market, pursuing patent enforcement lawsuits, and
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`“interfer[ing] with rivals’ relationships with customers.”
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`Docket No. 72-1 at 3; see also Docket No. 44 ¶¶ 91-92, 125-27,
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`129, 132-33. Nuance responds that each of the individual
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`complained-of acts are lawful. See, e.g., Automatic Radio Mfg.
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`Co. v. Hazeltine Res. Inc., 339 U.S. 827, 834 (1950) (“[M]ere
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`9
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 10 of 24
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`accumulation of patents, no matter how many, is not in and of
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`itself illegal.”).
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`In the antitrust context, however, “acts which are in
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`themselves legal lose that character when they become
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`constituent elements of an unlawful scheme.” Cont’l Ore Co. v.
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`Union Carbide & Carbon Corp., 370 U.S. 690, 707 (1962); see also
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`id. at 699 (“[P]laintiffs should be given the full benefit of
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`their proof without tightly compartmentalizing the various
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`factual components and wiping the slate clean after scrutiny of
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`each.”); LePage’s Inc v. 3M, 324 F.3d 141, 162 (3d Cir. 2003)
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`(explaining that “courts must look to the monopolist’s conduct
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`taken as a whole rather than considering each aspect in
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`isolation”); City of Anaheim v. S. Cal. Edison Co., 955 F.2d
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`1373, 1376 (9th Cir. 1992) (“[I]t would not be proper to focus
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`on specific individual acts of an accused monopolist while
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`refusing to consider their overall combined effect.”)
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`Courts examining a monopolist’s otherwise lawful acts must
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`ask whether the actions “impaired competition in an
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`unnecessarily restrictive way,” such as by “exclude[ing] rivals
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`on some basis other than efficiency.” Aspen Skiing Co. v. Aspen
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`Highlands Skiing Corp., 472 U.S. 585, 605 (1985); see also Barry
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`Wright Corp. v. ITT Grinell Corp., 724 F.2d 227, 230 (1st Cir.
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`1983) (asking whether the defendant’s conduct was “reasonable in
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`light of its business needs” or whether it “unreasonably
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`10
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 11 of 24
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`restrict[ed] competition”). A motion to dismiss a Section 2
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`claim must be denied if there is a plausible allegation that the
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`defendant acted to artificially restrict competition and inflate
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`prices in the market. See In re Lantus, 950 F.3d at 7 (reversing
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`dismissal of antitrust claims).
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`Here, Omilia has plausibly alleged that Nuance violated
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`Section 2 of the Sherman Act by wielding its pool of patents
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`against competitors to threaten costly, baseless litigation
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`unless the competitors agree to a buy out or merger, and by
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`notifying the competitors’ potential customers of the
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`possibility of litigation, all with an anti-competitive motive.
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`Cf. Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416, 423-24 (10th
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`Cir. 1952) (upholding jury’s finding of violations of Sections 1
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`and 2 of the Sherman Act where defendant had monopoly on patents
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`in market and sent plaintiff’s potential customers notices of
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`patent infringement lawsuits). Omilia has plausibly alleged that
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`a monopolization scheme by Nuance has resulted in
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`supracompetitive prices for customers and less frequent
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`innovation for consumers, and impeded Omilia’s ability to
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`compete in the ASR Enterprise market.
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`1. Noerr-Pennington Doctrine and “Sham” Litigation Exception
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`a. Legal Framework
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`The Noerr-Pennington doctrine “provides a party immunity
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`from antitrust liability for . . . enforcing one’s intellectual
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`11
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 12 of 24
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`property rights in court.” United Food & Commercial Workers
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`Unions & Employers Midwest Health Benefits Fund v. Novartis
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`Pharms. Corp., 902 F.3d 1, 4-5 (1st Cir. 2018); see also Cal.
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`Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510
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`(1972). The immunity is grounded in the First Amendment right to
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`petition the government. Novartis, 902 F.3d at 4-5.
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`“Noerr-Pennington immunity has two exceptions. An antitrust
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`defendant may not enjoy the immunity in enforcing its patent if
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`it obtained that patent through a fraud on the Patent Office, or
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`if its suit to enforce the patent is a ‘sham’ for impermissible
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`anti-competitive conduct.” Id. at 5 (citations omitted).
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`The “sham” litigation exception to Noerr-Pennington
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`immunity applies if the lawsuit is (1) “objectively baseless in
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`the sense that no reasonable litigant could realistically expect
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`success on the merits,” and (2) “conceals ‘an attempt to
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`interfere directly with the business relationships of a
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`competitor’ through the ‘use [of] the governmental process – as
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`opposed to the outcome of that process – as an anticompetitive
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`weapon.’’” Id. at 13 (citation omitted). An objectively
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`reasonable patent suit is not a “sham” within the meaning of the
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`exception to Noerr-Pennington immunity, even if the litigant has
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`a subjective intent to monopolize. Prof’l Real Estate Investors,
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`Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 57 (1993)
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`(“PREI”).
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`12
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 13 of 24
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`b. Parties’ Arguments
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`Nuance argues that Omilia’s Section 2 counterclaim must be
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`dismissed because Nuance enjoys Noerr-Pennington immunity.
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`Omilia responds that the “sham” litigation exception to Noerr-
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`Pennington immunity applies because Nuance’s patent infringement
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`lawsuit is objectively baseless and intended to harm
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`competition. Omilia also points to Nuance’s past lawsuits
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`against other competitors as evidence of a “pattern of
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`anticompetitive conduct.” Docket No. 74 at 8.
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`It is premature for the court to determine whether Noerr-
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`Pennington immunity applies here. Without a claim construction
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`hearing and discovery, this court has no basis to assess the
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`merits of the underlying patent suit. Moreover, even if the
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`litigation is not baseless, Omilia has also alleged non-
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`litigation conduct by Nuance, such as threats to litigate if a
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`competitor does not agree to a buy-out, threats to competitors’
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`customers, and statements to the market via the press regarding
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`Nuance’s buy-out strategy. The motion to dismiss the Sherman Act
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`Section 2 claim under the Noerr-Pennington doctrine is
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`accordingly denied.
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`B. Market Definition (Counts 17 and 18)
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`Nuance also alleges that Omilia fails to plead a plausible
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`market definition for its antitrust claims. Antitrust plaintiffs
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`must allege both a plausible product market and plausible
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`13
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 14 of 24
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`geographic market. Coastal Fuels of P.R., Inc. v. Caribbean
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`Petroleum Corp., 79 F.3d 182, 197 & n.11 (1st Cir. 1996). A
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`geographic market is “the geographic area in which the defendant
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`faces competition and to which consumers can practically turn
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`for alternative sources of the product.” Id. at 196; see also
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`United States v. Phila. Nat’l Bank, 374 U.S. 321, 259 (1963).
`
`Neither party contests Omilia’s product market definition
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`of the “ASR Enterprise software market.” The conflict centers on
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`the geographic market definition: Omilia alleges that the
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`geographic market for its Sherman and Clayton Act claims is the
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`United States. Nuance contends that this allegation, on its own,
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`is insufficient to survive a motion to dismiss, because the
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`market for ASR Enterprise Software is global, or at least
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`includes all English-speaking countries.
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`Market definition is a question of fact that generally
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`cannot be decided on a motion to dismiss. See Morales-Villalobos
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`v. Garcia-Llorens, 316 F.3d 51, 55 (1st Cir. 2003) (reversing a
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`motion to dismiss because parties’ dispute as to whether the
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`relevant geographic market was an individual town, all of Puerto
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`Rico, or the entire United States could not “be resolved on the
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`face of the complaint”); see also Coastal Fuels, 79 F.3d at 196
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`(“[M]arket definition is a question of fact.”).
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`Here, Omilia has plausibly alleged that the United States
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`is the relevant geographic market for its antitrust claims.
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`14
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 15 of 24
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`Omilia alleges that Nuance uses its U.S. patents to exclude
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`competitors within the United States. Omilia also alleges
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`“massive barriers to entry” to the market due to challenges in
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`“acquiring the [speech] data required to train an ASR system.”
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`Docket No. 44 ¶ 145; see also id. ¶ 94 (explaining that “time-
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`intensive analysis of real-life human speech for a given
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`language . . . is critical for an ASR engine to function well as
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`to that language”). Given the location-specific nature of the
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`technology, Omilia has plausibly alleged that the United States
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`is “the geographic area in which [Nuance] faces competition, and
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`to which consumers can practically turn for alternative sources
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`of the product.” See Coastal Fuels, 79 F.3d at 196. These
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`allegations are sufficient to survive a motion to dismiss.
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`C. Clayton Act (Count 18)
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`Nuance argues that Omilia’s claim under Section 7 of the
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`Clayton Act is time-barred and insufficient to state a claim.
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`Omilia alleges that in the four years prior to this suit, Nuance
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`acquired patents related to “speech recognition that’s used in
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`enterprises in the United States.” Docket No. 80 at 40 (hearing
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`transcript); Docket No. 51 at 21 & n.4. Moreover, Omilia argues
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`that its challenges to Nuance’s earlier acquisitions are not
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`time-barred under the Clayton Act, because those acquisitions
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`ripened into a prohibited effect and caused Omilia injury within
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`the four-year limitations period.
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`15
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 16 of 24
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`Section 7 of the Clayton Act prohibits asset acquisitions
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`whose effect “may be substantially to lessen competition, or to
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`tend to create a monopoly.” 15 U.S.C. § 18. The statute requires
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`Section 7 claims to be brought “within four years after the
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`cause of action accrued.” 15 U.S.C. § 15(b).
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`The Supreme Court has articulated two formulations of
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`Section 7’s “accrual” standard. In a case brought by the United
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`States, the Court held that a Section 7 claim accrues “any time
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`when the acquisition threatens to ripen into a prohibited
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`effect.” United States v. E.I. du Pont de Nemours & Co., 353
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`U.S. 586, 587 (1957) (permitting Section 7 prosecution to
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`proceed thirty years after the challenged stock acquisition,
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`even where no anticompetitive threat existed at the time of the
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`acquisition). In a case brought by a private plaintiff, the
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`Court held that a Section 7 claim accrues “when a defendant
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`commits an act that injures a plaintiff’s business.” Zenith
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`Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338
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`(1971).
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`Although these capacious holdings have been criticized,
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`see, e.g., Paul J. Stancil, Atomism and the Private Merger
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`Challenge, 78 Temp. L. Rev. 949, 1011 (2005), they are still
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`applied. See id. (describing the precedents as “still-valid (and
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`still-cited)”); see also United States v. ITT Cont’l Baking Co.,
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`420 U.S. 223, 240 (1976) (holding that Section 7’s restriction
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`16
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 17 of 24
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`on “acquisitions” includes “both the purchase of rights in
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`another company and the retention of those rights”); U.S. Gypsum
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`Co. v. Indiana Gas Co., Inc., 350 F.3d 623, 628 (7th Cir. 2003)
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`(explaining that “old activity . . . is not immunized, if the
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`potential for [an antitrust injury] is created or realized more
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`recently as market conditions change”); Telectronics
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`Proprietary, Ltd. v. Medtronic, Inc., 687 F. Supp. 832, 844
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`(S.D.N.Y. 1988) (denying summary judgment because of factual
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`dispute existed as to whether plaintiff suffered Section 7
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`injury when defendant acquired certain patents or when defendant
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`asserted those patents against the plaintiff). Cf. Midwestern
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`Machinery, Co., Inc. v. Nw. Airlines, Inc., 392 F.3d 265, 276
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`(8th Cir. 2004) (holding, at summary judgment stage, that
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`Section 7 claim was barred because plaintiffs had not filed suit
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`within four years of suffering “a quantifiable injury”); Concord
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`Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1051 (8th Cir.
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`2000) (explaining that the Clayton Act’s statute of limitations
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`can be tolled “where a plaintiff’s damages are only speculative
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`during the limitations period”); Phillip E. Areeda & Herbert
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`Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles
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`and Their Application § 320b (4th Ed. 2013-2018) (explaining
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`that antitrust cause of action accrues at time plaintiff is
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`injured, even if defendant committed the illegal act more than
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`four years before the injury); id. § 320d (“In some cases the
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`17
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 18 of 24
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`injury caused by a merger might not occur until many years after
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`the transaction was completed.”).
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`Here, Omilia alleges that its Section 7 claim accrued
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`within the statute of limitations because Nuance’s past
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`acquisitions “ripened into a prohibited effect” and caused
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`Omilia an injury within that timeframe. Docket No. 74 at 8.
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`Specifically, Omilia alleges it “discovered the effects of
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`Nuance’s anticompetitive acquisitions” only when it attempted to
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`enter the U.S. market in 2015 and 2016. Id. Omilia has plausibly
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`alleged a Section 7 violation within the four-year statute of
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`limitations.
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`II. State Law Claims
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`A. Unfair Competition (Count 19)
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`Omilia alleges that Nuance is liable for the Massachusetts
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`common law tort of unfair competition. However, “[i]t is settled
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`in Massachusetts that ‘the gravamen of an unfair competition
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`claim is the likelihood of consumer confusion as to the source
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`of the goods or services.’” Open Software Found., Inc. v. U.S.
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`Fid. & Guar. Co., 307 F.3d 11, 17 (1st Cir. 2002) (quoting
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`Datacomm Interface, Inc v. Computerworld, Inc., 489 N.E.2d 185,
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`191 (Mass. 1986)).
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`Here, Omilia has failed to allege any customer confusion
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`regarding the source of an ASR product. Instead, Omilia argues
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`that Nuance engaged in unfair competition under Massachusetts
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`18
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 19 of 24
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`common law by providing Omilia’s customers with incorrect
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`information regarding the instant patent infringement suit.
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`Omilia has not cited any case law to support this interpretation
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`of the unfair competition tort. Omilia’s unfair competition
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`claim is therefore dismissed for failure to state a claim upon
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`which relief can be granted. See Pegasystems, Inc. v. Appian
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`Corp., No. 19-11461, 2019 WL 6560120, at *6 (D. Mass. Dec. 5,
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`2019) (dismissing unfair competition claim for failure to allege
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`customer confusion about the source of litigant’s products).
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`B. Tortious Interference (Counts 20 and 21)
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`Omilia also brings counterclaims against Nuance for
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`tortious interference with contractual relations (Count 20) and
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`advantageous business relations (Count 21). Omilia alleges that
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`Nuance intentionally and with improper means informed Omilia’s
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`current and prospective customers of the instant patent lawsuit
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`in order to interfere with Omilia’s contractual and business
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`relations. Nuance responds that these claims must fail because
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`Nuance’s conduct was incidental to lawful patent enforcement
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`protected by Noerr-Pennington immunity.
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`
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`Under Massachusetts law, a plaintiff claiming tortious
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`interference must show “(1) a business relationship or
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`contemplated contract of economic benefit; (2) the defendant’s
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`knowledge of such relationship; (3) the defendant’s interference
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`with the relationship through improper motive or means; and, (4)
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`19
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 20 of 24
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`the plaintiff’s loss of advantage as a direct result of the
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`defendant’s conduct.” Singh v. Blue Cross/Blue Shield of Mass.,
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`Inc., 308 F.3d 25, 47 (1st Cir. 2002) (citation omitted). Here,
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`Omilia alleges that Nuance knowingly communicated with Omilia’s
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`current client Connex and prospective client TD Bank regarding
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`the instant patent lawsuit. Omilia alleges that as a direct
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`result of these actions, Omilia “suffered substantial economic
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`damages.” Docket No. 44 ¶¶ 163, 168. Omilia has plausibly
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`alleged claims of tortious interference with contractual and
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`advantageous business relations.
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`Some courts have held that communications related to
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`ongoing patent suits are protected by Noerr-Pennington immunity
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`in some circumstances. Compare Golan v. Pingel Enter., Inc., 310
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`F.3d 1360, 1364-65 (Fed. Cir. 2002) (holding that notices sent
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`to distributors of alleged infringer were protected by Noerr-
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`Pennington immunity, because they were not sent in bad faith
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`despite the patent having been expired at the time the letters
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`were sent) and Storage Tech. Corp. v. Custom Hardware Eng’g &
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`Consulting Ltd., No. 02-12102, 2006 WL 1766434, at *35 (D. Mass.
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`June 28, 2006) (dismissing tortious interference claim because
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`defendant’s communication with plaintiff’s business partner
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`regarding court’s preliminary injunction decision was an act
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`“incidental to protected litigation”), with Nuance Commc’ns,
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`Inc. v. MModal LLC, No. 17-01484, 2018 WL 6804488, at *3 (D.
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`
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`20
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 21 of 24
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`Del. Dec. 27, 2018) (explaining that “blog posts and press
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`releases providing status updated regarding the litigation” did
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`not enjoy Noerr-Pennington immunity). Here, Omilia argues that
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`Noerr-Pennington immunity does not protect Nuance from tort
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`liability because some communications were made before the
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`patent lawsuit was filed. Omilia has plausibly alleged claims
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`for tortious interference.
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`III. Request to Bifurcate and Stay Discovery
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`Nuance argues that if dismissal is not warranted, discovery
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`on Omilia’s antitrust and state law counterclaims should be
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`stayed pending resolution of the patent infringement claims.
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`Federal Rule of Civil Procedure 42(b) permits bifurcation of
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`claims “[f]or convenience, to avoid prejudice, or to expedite
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`and economize” issues for trial. “[F]ederal courts possess the
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`inherent power to stay proceedings for prudential reasons.”
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`Microfinancial, Inc. v. Premier Holidays Intern., Inc., 385 F.3d
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`72, 77 (1st Cir. 2004).
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`The Federal Circuit has noted that the “standard practice”
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`is to separate “for trial patent issues and those raised in an
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`antitrust counterclaim.” In re Innotron Diagnostics, 800 F.2d
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`1077, 1084 (Fed. Cir. 1986) (emphasis added). This Court has
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`affirmed that view multiple times. See, e.g., Hewlett-Packard
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`Co. v. Genrad, Inc., 882 F. Supp. 1141, 1157-58 (D. Mass. 1995)
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`(“[C]ourts often separate patent issues from antitrust
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`
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`21
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`Case 1:19-cv-11438-PBS Document 92 Filed 05/06/20 Page 22 of 24
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`counterclaim issues.”); Skinder-Strauss Assocs. v. Mass.
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`Continuing Legal Educ., Inc., 870 F. Supp. 8, 11 (D. Mass. 1994)
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`(“[P]roceedings on the counterclaims should be stayed until
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`after the resolution of the [intellectual property] action. This
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`procedure will avoid a waste of judicial and party resources on
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`the question of [the defendant’s] intent in filing the
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`lawsuit.”). Courts sometimes allow discovery on patent claims
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`and antitrust counterclaims to proceed in tandem, while
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`preserving the possibility of bifurcation at trial. See, e.g.,
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`Wi-LAN Inc. v. LG Elecs., Inc., 382 F. Supp. 3d 1012, 1026 (S.D.
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`Cal. 2019).
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`Nuance points out that if it succeeds in its original
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`patent suit, its success could demonstrate that the original
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`suit is not a sham, but rather merits Noerr-Pennington immunity.
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`See Skinder-Strauss, 870 F. Supp. at 11 (staying defendant’s
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`antitrust counterclaims because resolution of the underlying
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`intellectual property dispute would create “a record for
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`determining whether the challenged litigation is objectively
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`meritless”); see also PREI, 508 U.S. 49, 60 n.5 (1993) (“A
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`winning lawsuit is by definition a reasonable effort at
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`petitioning for redress and therefore not a sham.”); U.S.
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`Philips Corp. v. Sears Roebuck & Co., 55 F.3d 592, 597 (Fed.
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`Cir. 1995) (“The charge that Philips’ patent infringement suit
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`