Dodocase VR, Inc. v. Merchsource, LLC, 3:17-cv-07088

Dodocase (later transferred patent rights to DDC) owns three patents covering a VR viewer/input mechanism; MerchSource licensed those patents under a Master License Agreement (MLA).
MerchSource disputed validity, withheld post-October 2017 royalties, and in January 2018 filed three PTAB petitions challenging the Dodocase patents based on three prior-art references.
The district court granted a preliminary injunction ordering withdrawal of the PTAB petitions; the Federal Circuit affirmed and the PTAB proceedings were terminated.
Plaintiffs filed a second amended complaint (SAC); Defendants filed an amended answer asserting several "additional" defenses (including no infringement, prosecution-history estoppel, limitations on damages/costs, venue, unclean hands, and patent misuse).
Plaintiffs moved to strike multiple additional defenses and separately moved for Rule 11 sanctions; the court reviewed the pleadings and related emails/evidence when resolving those motions.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of additional defenses (Twombly/Iqbal standard)	Defenses are boilerplate, inadequately pled and should be struck.	Many challenged items are negative defenses or adequately pled; Twombly/Iqbal may not apply to negatives.	Grant in part/deny in part: most defenses allowed; first "No Infringement" defense struck as an improper affirmative defense (no leave to amend).
Prosecution-history estoppel defense — affirmative or negative; sufficiency	P sought strike for pleading defects.	D argued it is a negative defense but in any event adequately pled.	Court treated it cautiously and found it sufficiently pled (allowed).
Sections 287/288 (marking/limits on damages/costs) asserted as defenses	P argued pleadings deficient.	D asserted they may be pled as affirmative defenses; courts permit such defenses.	Allowed; court found these defenses properly asserted.
Rule 11 sanctions for allegedly frivolous denials/pleadings	Plaintiffs claimed defendants' denials were frivolous, abused process, and deprived procedural tools (e.g., Rule 12(c)).	Defendants said Rule 11 is premature, factual disputes remain, and sanctions should not substitute for discovery or merits motions.	Denied: court found pleadings not objectively baseless or sanctionable; some denials were proper. Court did require amendment to the response to paragraph 39.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible to survive).
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Twombly standard applied to plausibility of pleadings).
Wyshak v. City Nat'l Bank, 607 F.2d 824 (9th Cir. 1979) (affirmative defenses must give plaintiff fair notice).
Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080 (9th Cir. 2002) (attack on plaintiff's prima facie case is a negative, not affirmative, defense).
Holgate v. Baldwin, 425 F.3d 671 (9th Cir. 2005) (two-prong inquiry for Rule 11 sanctions: objective baselessness and reasonable inquiry).
United Nat. Ins. Co. v. R & D Latex Corp., 242 F.3d 1102 (9th Cir. 2001) (weak but plausible allegations avoid Rule 11 sanctions).
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (Rule 11 sanctions are collateral to merits; not a merits judgment).
Brulotte v. Thys Co., 379 U.S. 29 (1964) (royalty agreements extending beyond patent term can constitute misuse per se).
Princo Corp. v. Int'l Trade Comm'n, 616 F.3d 1318 (Fed. Cir. 2010) (doctrine and scope of patent misuse doctrine).
Pacific Coast Marine Windshields v. Malibu Boats, 739 F.3d 694 (Fed. Cir. 2014) (discussion of prosecution-history-estoppel pleading and waiver).