Patent Lawyer Blog

Published on: April 24, 2019

Bell Northern Research v. ZTE: Court Grants Protective Order to Prevent Plaintiff from Using a Former Consultant of Defendant as an Expert Witness

In a previous litigation involving ZTE (but not the plaintiff), ZTE entered into a consulting arrangement with Dr. Madisetti. ZTE asserted that ZTE provided Dr. Madisetti with confidential information under the consulting agreement. When the plaintiff in this case, Bell Northern Research (“BNR”) retained Dr. Madisetti as an expert against ZTE, ZTE moved for a protective order to preclude BNR from using Dr. Madisetti as an expert.

ZTE initially asserted that the terms of the Consulting Agreement prohibited Dr. Madisetti from serving as an expert for BNR in this case. BNR responded to that argument that the Agreement is no longer valid and Dr. Madisetti’s expertise in the current litigation would not involve products at issue in the previous matter.

The court agreed with ZTE, noting that the Consulting Agreement provided that it would terminate after the longest of three distinct time periods. “Though two years have passed from the effective date of the Agreement, the latter two time periods are not yet complete. First, Dr. Madisetti has not necessarily completed all work performed under the agreement, because the InterDigital District Litigation remains stayed, and there is a chance that more claims may arise. Second, because the InterDigital District Litigation is currently stayed and not complete—meaning the requisite one-year period following the close of that case has not yet begun—the agreement remains in effect. While BNR is correct that the InterDigital District Litigation has been stayed for a long time and that ZTE has advocated for the litigation to end, the fact remains that the litigation has not ended and therefore, the Consulting Agreement between ZTE and Dr. Madisetti remains in effect.”

Published on: April 19, 2019

District Court Denied Motion to Dismiss for Lack of Personal Jurisdiction Where Defendant Failed to Submit Any Evidence and Merely Relied upon Allegations of Complaint

by Stan Gibson

In this patent infringement action, the defendants, Synergistics, Inc. (“Synergistics”), filed a motion to dismiss the complaint for lack of personal jurisdiction. The plaintiff, Parabit Systems, Inc. (“Parabit”), opposed the motion on the ground that it was not required to establish personal jurisdiction in the complaint and that Synergistics had failed to come forward with any evidence that the district court did not have personal jurisdiction over it.

The district court agreed with Parabit, noting that a plaintiff does not have plead allegations pertaining to personal jurisdiction in the complaint. “The motion is mainly focused on the adequacy of allegations of personal jurisdiction in the complaint, but plaintiff has no obligation under Rule 8 to plead any allegations pertaining to personal jurisdiction, and so a complaint cannot inadequately allege the basis for personal jurisdiction.”

The district court also determined that Synergistics had not set forth any facts in any evidentiary form to switch the burden of proving personal jurisdiction to Parabit: “defendants have merely made allegations in their brief, but have submitted no affidavits or other evidence to support those statements. Although plaintiff has the burden of proving personal jurisdiction when it is properly challenged, defendants had the burden of going forward to show at least a colorable basis for challenging personal jurisdiction, and unsupported statements in a brief do not do that.”

Published on: April 9, 2019

Magistrate Judge Recommends Denial of Motion to Amend Final Infringement Contentions Where Plaintiff Should Have Sought Additional Information in Discovery

by Stan Gibson

Plaintiff, Fox Factory, moved to amend its final infringement contentions, asserting that the defendant, SRAM, LLC, had failed to produce relevant information regarding its custom “BRAIN” product that had delayed Fox Factory from learning that the BRAIN product infringed the patent-in-suit. SRAM opposed the motion and contended that Fox Factory was well aware of the BRAIN product before the amendment deadline and that SRAM had no obligation to craft or intuit Fox Factory’s infringement position.

In analyzing whether there was good cause to permit the amendment, the court first looked at whether Fox Factory was diligent—and found that it was not. “Strikingly, Plaintiff’s arguments sidestep its own knowledge—and when it gained such knowledge—about the existence and functionality of Defendants’ customized BRAIN shock for Specialized. Instead, FOX Factory seeks to direct the court’s attention to Defendants’ discovery shortcomings. But in considering good cause, this court first focuses on whether the original deadline could have been met with reasonable diligence by Plaintiffs, not any bad faith by Defendants. Colorado Visionary Academy, 194 F.R.D. at 687. Using this framework, based on the record before it, this court is not persuaded that FOX Factory exercised adequate diligence to warrant amendment of its Final Infringement Contentions at this late juncture.”

In reaching the conclusion that Fox Factory was not diligent, the court specifically noted that “FOX Factory carefully never argues it only learned of Defendants’ BRAIN shock at the end of the discovery period. Indeed, the record before this court belies any suggestion that FOX Factory’s knowledge of the BRAIN shock was dependent upon Defendants’ disclosures late in discovery. And while FOX Factory vigorously argues that it was diligent in pursuing Defendants’ identification of all its rear shock products so that it could pursue discovery and understand the full scope of infringement, Plaintiff never cogently explains why its own internal document related to competitive analysis from September 28, 2017 is insufficient to constitute knowledge of the BRAIN product and trigger its own independent obligation to diligently pursue discovery on the topic.”

Published on: March 22, 2019

District Court Dismisses Complaint with Prejudice for Plaintiff’s Failure to Participate in Discovery and for Failure to Comply with Court Orders

by Stan Gibson

In this patent infringement action, the defendant moved to dismiss the plaintiff’s complaint for the plaintiff’s failure to participate in discovery and for ignoring several court orders. The motion explained that dismissal sanctions were appropriate in the light of, among other things, the plaintiff’s failure to comply with court orders, sanction order and to appear for a court hearing.

In analyzing the motion, the district court explained that Federal Rule of Civil Procedure 37 empowers the district court to compel compliance with discovery procedures though a broad choice of remedies and penalties, including dismissal with prejudice. Griffin v. Aluminum Co. of Am., 564 F.2d 1171, 1172 (5th Cir. 1977). “Dismissal of a complaint with prejudice is such a drastic remedy that a district court should only apply it only in extreme circumstances.” Id. However, dismissal with prejudice may be appropriate where a plaintiff’s failure to comply involves “either repeated refusals or an indication of full understanding of discovery obligations coupled with a bad faith refusal to comply.” Id.

The district court concluded that dismissal with prejudice was appropriate under the circumstances. As noted by the Magistrate Judge, the plaintiff had “willfully, in bad faith, and in disregard of his responsibilities failed to comply with the Court’s Order.” Furthermore, since the case was filed eight months ago, “Plaintiff has been sanctioned twice and has failed to: respond to an order to show cause; timely file a case management report; appear for a hearing; comply with the Court’s Order compelling discovery; and, most recently, respond to three separate motions by Defendant.” The district court found that these repeated violations establish a “clear record of delay or willful contempt,” far beyond mere negligence or confusion. See Goforth v. Owens, 766 F.2d 1533, 1535 (11th Cir. 2010). Given these “extreme circumstances,” the district court determined that dismissal with prejudice was warranted. See Griffin, 564 F.2d at 1172.

Published on: March 12, 2019

Motion to Disqualify Based on Representation of “Sister” Companies Denied Where There Was No Showing of Actual Conflict or Possession of Confidential Information

by Stan Gibson

In this patent infringement action, the plaintiff, International Designs Corporation, LLC (“IDC”), moved to disqualify the counsel for defendant Hair Art Int’l, Inc. (“Hair Art”). IDC moved to disqualify counsel for Hair Art on the grounds that Hair Art’s counsel also represented/represents an entity named Halo Couture, LLC, a California limited liability company (“HC1”) and, potentially, Halo Couture, LLC, a Delaware limited liability company (“HC2”), which were apparently “sister companies” of IDC and share a common parent.

The district noted that neither HC1 and HC2 were parties to the litigation. The district court also noted that there is “no contention that IDC, Hairtalk GmbH or Günter Alex were ever clients of Defendant’s counsel. The district court also found that IDC had not “presented the Court with any case indicating that representation of an entity that serves as a ‘sister company’ to a present litigation opponent provides a basis under applicable law for disqualification of that counsel in the present litigation, either by way of an actual-conflict theory or a theory based on the presumption of possession of confidential information. Moreover, Movants’ ‘unity of interests’ theory appears to look to a unity of interest between an entity and its ‘parent,’ not between an entity and its ‘sister.’”

The district court also disregarded IDC’s other theories for disqualification, concluding that IDC had “not demonstrated a sufficient basis to conclude that there is a ‘subject matter (technology) based conflict’ because of HC1-HC2’s pending design patent application and Defendant’s product line. Nor have Movants demonstrated that there is a realistic basis for a potential or future conflict based on the continued presence of an antitrust affirmative defense in this action. Their concern on that point is that Defendant ‘can pursue its anti-trust defense, seeking competitive sales data for the hair extension industry, including sales records of HC1 and HC2 and IDC’ and that ‘[i]f DEFENSE COUNSEL pursue the anti-trust discovery, such discovery demand to HC1 and HC2 will pass through’ an attorney who is both in-house general counsel of IDC and ‘special in-house I.P. counsel’ of the corporate parent and HC2.”

Published on: March 5, 2019

District Court Denies Motion to Stay Pending Resolution of Dispositive Motion

by Stan Gibson

In this patent infringement action, the defendant, Playmonster LLC (“Playmonster”), requested that the district court stay discovery during the pendency of its forthcoming dispositive motion. As part of its request, Playmonster contended that a dispositive motion “would be the most efficient resolution of this case,” and that a stay of discovery would promote judicial efficiency and conserve the Parties’ resources, which would include reducing the attorney’s fees that would be spent on the case should the dispositive motion be granted.

The plaintiffs, Quality Innovative Products, LLC (“Quality”), opposed the stay of discovery in the case. As its main argument, the plaintiffs asserted that the case was filed over a year ago, “and the Defendant has enjoyed substantial delay already while it pursued a first dispositive motion” that it used “as an excuse not to comply with its discovery obligations.” Quality further argued that they “should not have to piece meal litigation for the convenience of the Defendant.” Quality also asserted that they oppose filing of dispositive motions until discovery closes.

The district court concluded that a stay of discovery was inappropriate. “The court is disinclined to stay discovery pending the filing of a dispositive motion. While Defendant may file a dispositive motion at any time it deems appropriate on or before the set deadline, the court’s practice standards do limit parties to one dispositive motion without leave of the court. See NYW Civ Practice Standards 56.1. In addition, leave to file additional dispositive motions is only granted in exceptional circumstances. See id. Further, stays of discovery in this District are generally disfavored, see Church Mut. Ins. Co. v. Coutu, No. 17-CV-00209-RM-NYW, 2017 WL 3283090, at *2 (D. Colo. Aug. 2, 2017), and nothing in the record before the court at this juncture justifies a stay.”

Published on: March 1, 2019

TC Technology v. Sprint: District Court Grants Motion to Amend Complaint to Add Willfulness Claim Finding Good Cause Based on Deposition Testimony

by Stan Gibson

TC Technology filed a patent infringement action against Sprint alleging that Sprint infringed a patent pertaining to wireless services used on an LTE network. The complaint did not allege willful infringement.

171030-JMBM-14-Jill-Skinner-001-300x269 During discovery, Sprint responded that it had received an email several years before the lawsuit was filed with an offer to purchase the patent-in-suit. An attachment to the email identified and described the patent-in-suit. Although the general counsel for Sprint forwarded the email and attachment to several Sprint employees, Sprint explained that it believed the attachment was never opened. TC Technology took the deposition of one of these employees and then filed a motion to amend the complaint to add a claim for willful infringement. Because the motion was filed after the cut-off established to amend the pleadings, TC Technology could not amend the complaint without a showing of good cause.

During deposition, the Sprint witness (Mr. Ball) testified that “there was no way to verify one way or the other” whether the attachment had been opened, other than the recollections of himself, Mr. Wunsch, and Mr. Cowan that it was not opened. As explained by the district court, Mr. Ball also testified that he did not think he, Mr. Wunsch, or Mr. Cowan would have opened the attachment in the normal course of business.

Published on: February 11, 2019

District Order Issues Sanctions Deeming Defendant’s Summary Of Infringing Sales Established As True Where Defendant Failed to Comply With Multiple Court Orders

by Stan Gibson

In this patent infringement action, the plaintiff, Stuebing Automatic Machine Co. (“Stuebing”) filed a motion for violation of multiple discovery orders against the defendant. As part of the motion, Stuebing sought issue sanctions, including to have certain sales information deemed established.

Stuebing had previously served multiple discovery requests, including interrogatories and document requests. Over a year after responses to the discovery requests were due, the district court ordered the defendant to fully respond to the requests in several different court orders. Despite these orders, the defendant provided Stuebing with incomplete discovery information.

In analyzing the motion, the district court explained that “[a] party becomes vulnerable to sanctions upon the party’s failure to comply with a court’s discovery order. See U.S. v. $49,000 Currency, 330 F.3d 371, 379 (5th Cir. 2003). “A court has broad discretion to determine an appropriate sanction under [Federal Rule of Civil Procedure (hereafter “FRCP”)] 37(b), […] which may include an order directing that certain designated facts be taken as true.” Bradt v. Corriette, No. 16-CV-805-LY, 2018 WL 1866112, at *2 (W.D. Tex. April 18, 2018) (citing Pressey v. Patterson, 898 F.2d 1018, 1021 (5th Cir. 1990)). FRCP 37(b)(2) authorizes the imposition of a “concurrent sanction of reasonable expenses, including attorney’s fees, caused by the failure obey a discovery order.” Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012).”

Published on: February 5, 2019

District Court Excludes Opinion Of Damage Expert On Licenses That Were Not Economically Comparable

by Stan Gibson

The plaintiff, Bayer, moved to exclude the opinion of the defendant’s damage expert, Dr. Rausser, for failing to show that the licenses that he used for his reasonable royalty analysis were technologically or economically comparable to the license resulting from the hypothetical negotiation. The district court agreed with Bayer on the economically comparable point and granted the motion to exclude on that basis.

As explained by the district court, Bayer asserted that the license resulting from the hypothetical negotiation would be a non-exclusive, running royalty license between competitors, and of Dr. Rausser’s four selected licenses, only one was a non-exclusive license, two were between competitors, and none of them used a running royalty.

The district court stated that the strongest argument by Bayer “relates to Dr. Rausser’s use of lump-sum licenses to support a running royalty hypothetical license. ‘Significant differences exist between a running royalty license and a lump-sum license.’ Lucent, 590 F.3d at 1326. A lump-sum license can still be relevant to running royalty damages, but “some basis for comparison” must exist. See id. at 1330. Defendants argue that Lucent is inapposite because here, unlike in Lucent, the parties agree that damages should be in the form of a running royalty. Defendants further argue that, “while it may be difficult to determine a lump sum from a running royalty,” as shown in Lucent, “the opposite is not true.”

Published on: January 29, 2019

Qualcomm v. Apple: District Court Excludes Apple’s Experts’ Testimony Where Relied Upon Licenses Were Not Technologically Comparable

by Stan Gibson

In the ongoing litigation war between Qualcomm and Apple, spanning multiple forums around the country, Qualcomm moved to exclude Apple’s technical experts’ reliance on certain license agreements by asserting that the agreement involved technology that was not sufficiently comparable. After reviewing the license agreements, the experts’ opinions, and the law, the district court concluded that Qualcomm’s motion should be granted.

After reviewing the license agreements at issue (which have been redacted as confidential), the district court explained that “the first question is whether Apple’s technical experts have shown that any patents underlying these License Agreements are technologically comparable to the patents at issue here. The Federal Circuit has cautioned “that ‘district courts performing reasonable royalty calculations [must] exercise vigilance when considering past licenses to technologies other than the patent in suit,’ and ‘must account for differences in the technologies and economic circumstances of the contracting parties[.]’” VirnetX, Inc. v. Cisco Systems, Inc., 767 F.3d 1308, 1330 (Fed. Cir. 2014) (citations omitted). “When relying on licenses to prove a reasonable royalty, alleging a loose or vague comparability between different technologies or licenses does not suffice.” LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 79 (Fed. Cir. 2012).

The district court then explained that “Apple’s experts have gone through the License Agreements and found at least one patent from each Agreement that they believe is technologically comparable to the patents in suit. Qualcomm’s motion goes directly to those opinions, and asserts they are conclusory and do not meet the standard for technological comparability.”