Luxpro Corporation v. Apple, Inc.

Filing 54

NOTICE OF FILING OFFICIAL TRANSCRIPT of Argument on Motions held on September 1, 2009, before Judge Harry F. Barnes. Court Reporter/Transcriber: Donna McKinney, Telephone number 870-862-1303. Envelope Number: 09-38. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before or after the deadline for Release of Transcript Restriction. After that date it, or a redacted transcript, may be obtained through PACER. A Notice of Intent to Request Redaction of the Transcript MUST be filed within 7 calendar days of the filing of the transcript and served manually on the court reporter/transcriber. Redaction Request due 11/18/2009. Redacted Transcript Deadline set for 11/30/2009. Release of Transcript Restriction set for 1/26/2010. (cap)

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Luxpro Corporation v. Apple, Inc. Doc. 54 Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 1 of 45 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS TEXARKANA DIVISION LUXPRO CORPORATION, a Taiwanese corporation, Plaintiff, vs. APPLE, INC., f/k/a Apple Computer, Inc., Defendant. ] ] ] ] ] ] ] ] ] ] No. 08-CV-4092 September 1, 2009 Texarkana, AR TRANSCRIPT OF ARGUMENT ON MOTIONS BEFORE THE HONORABLE HARRY F. BARNES, UNITED STATES DISTRICT JUDGE. Appearances: For Plaintiff: PATTON ROBERTS, PLLC By: Phillip N. Cockrell, Esquire Richard A. Adams, Esquire Cory Darnell McGaha, Esquire Reid D. Miller, Esquire P O Box 6128 Texarkana, TX 75505 SHORE CHAN BRAGALONE LLP By: Patrick J. Conroy, Esquire Bank of America Plaza 900 Main Street, Suite 3300 Dallas, TX 75202 For Defendant: FRIDAY ELDREDGE & CLARK By: Kevin A. Crass, Esquire 2000 Regions Center 400 West Capitol Ave. Little Rock, AR 72201-3493 Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 2 of 45 MORRISON FOERSTER LLP By: Stuart C. Plunkett, Esquire 425 Market Street San Francisco, CA 94105 JAMES M. PRATT, JR., PA By: James M. Pratt, Jr., Esquire 144 Washington NW Camden, AR 71701 Court Reporter: Donna S. McKinney, CCR-CVR U.S. District Court 101 South Jackson El Dorado, AR 71730 PROCEEDINGS RECORDED BY STENOMASK; TRANSCRIBED FROM DICTATION. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 3 of 45 INDEX Court's Remarks Argument on Behalf of Parties: For Defendant, Mr. Crass Response, Mr. Cockrell Rebuttal, Mr. Crass Reply, Mr. Cockrell Reporter's Certificate 9 20 38 41 45 4 Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 4 of 45 4 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 September 1, 2009 [Commencing at 9:47 a.m.] THE COURT: All right, ladies and gentlemen, the United States District Court for the Western District of Arkansas, Texarkana Division is now in session. I want to welcome all of you that are here, my old friends, certainly, but folks that are from out-of-state and I want to welcome you to this court. down here. We enjoy it. This is a good bar We We enjoy the bar, we enjoy trying good lawsuits. enjoy having good lawyers here to try them. So welcome, all of you that are here from out-of-state, and then of course, our dear friends from in-state. Today we're going to deal with Case No. 08-CIV-4092, Luxpro Corporation, a Taiwanese corporation, versus Apple, Inc., formerly known as Apple Computer, Inc. Now I talked with you briefly and I think just to kind of give an overview of what we know and what we want to know from you is to kind of hone your arguments and give me some help. We have pending motions, both by Apple and they're going to be the Motion to Dismiss and the Motion to Transfer Venue. Now plaintiff's claims - plaintiff claims tortious interference of perspective economic advantage, tortious interference with contract, attempted common law monopolization, violation of California Business and Professional Code 17200 and commercial disparagement. Those are the allegations as set Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 5 of 45 5 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 forth in the First Amended Complaint. Background, I know a little bit about the background. We've studied and hopefully, are ready for you. Luxpro is a small Taiwanese corporation manufacturing many different MP3 players on its Tangent line. Apple is a California company and also manufactures MP3 players. Apple calls their player the iPod. Apple has, in effect, dominated the market. Shuffle. Apple players are called iPod April, June and September of 2005, Luxpro entered into several agreements with Chinese companies and a Canadian company to distribute its MP3 players. Luxpro showed that as a Super And Shuffle and the CeBit Trade Show in Germany in March 2005. these dates are important because they're going to deal with your statute of limitations argument. Apple received an injunction from the German court enjoining Luxpro from using the word "shuffle" on its MP3 player even though Apple really didn't have a trademark, as I read, for shuffle registered. Luxpro renamed Super Shuffle Super Tangent adding the word Luxpro underneath their MP3 players. November 2005, a Taiwanese injunction against Top Tangent and EZ Tangent MP3 - well, let me go back. In August of 2005, Apple received an injunction from the Taiwanese court enjoining Luxpro from manufacturing, distributing and marketing any of its MP3 players. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 6 of 45 6 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Then in November 2005, the Taiwanese injunction against Top Tangent and EZ Tangent MP3 players was revoked except for the name Shuffle. March 2008, the Taiwan Supreme Court dismissed Apple's appeal of this revocation. Apple then filed a motion with the Fair Trade Commission alleging Luxpro violated Taiwan's Fair Trade Act. The commission held that Luxpro's Tangent MP3 player produced was not in violation of that act. April 2006, Luxpro became aware that in September 2005 Apple sent letters and exerted pressure or alleged exerted pressure on InterTan, a Canadian distributor for Luxpro causing them to pull Luxpro's MP3 player off their shelves and end their business relationship. April 2006, Starbucks of Japan, and other companies ended their relationship. So those are the allegations that have been set forth in the Complaint, the Response and the Motions to Dismiss and Motions to Transfer. We have read and note that Apple's Motion to Dismiss 12(b)(6). I understand Apple's arguments. Basically, one that Noerr-Pennington doctrine immunizes Apple from claims in this suit and under that precedent if it's a valid, non-sham litigation then that would so stand. Luxpro has responded. I thought well. Apple did breach their choice of law arguments. Luxpro has not so briefed those yet, however says that analysis Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 7 of 45 7 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is premature. Our research, court's research, particularly on NoerrPennington, we had to study that some time. easiest issue or theory of the law. But basically, initially from anti-trust laws for action intended to influence legislative, executive, administrative or judicial decision making, provided that such action was not a sham to cover what was actually nothing more than a baseless interference with a competitor's ability to compete. Noerr-Pennington immunity is available outside the antiIt's not the trust realm, or has so been held, and tortious interference with business expectancy claims have been tried under that. Sham litigation exception is only if the court finds the challenged litigation is objectively meritless, may the court examine then Apple's subjective motivation. I think the question that I'd sure like to talk about is whether seeking the injunction in Germany and Taiwan was objectively meritless. If not, then I think, my research tells If objectively me, that Noerr-Pennington would apply. meritless, then Apple's subjective modification in filing the injunction is dealt with and if it were a sham, then NoerrPennington would not apply. Now I think I'm having some trouble with the letters sent out which are alleged as anti-competition. I know in Noerr- Pennington are the - in that case post trial letters were sent Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 8 of 45 8 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 which were covered under the umbrella of immunity of NoerrPennington. Now how about subsequent letters? Are they under the same umbrella, or are they not? Statute of limitations, the 2005 and 2006 may well be out of the statute of limitations. the statute of limitations. I mean, they may be barred by However, how about the letters that That's why I think it is went out to competitors thereafter? very important to determine the umbrella of Noerr-Pennington as it relates to that. I'm going to be listening for again, and it may be premature for Luxpro, but choice of law, pre-suit and post-suit demand letters. Now I think probably the Motion to Transfer would come after we deal with the Motion to Dismiss. listen a lot about that. So I'm not going to You can argue it is you want to, but it may determine that the crux of this case could be handled right here in this court on the Motion to Dismiss. Then if I do not dismiss the case and we start discovery, then we might deal with the Motion to Transfer. That seems logical to me. So you can argue it if you want to, touch briefly on it, anything that you can do to help me to understand this better will be of great assistance to me. I was talking about my law clerks and bragging on them. have had many, many discussions on this case. interesting to hear what you say about it. We It's going to be So, with that having Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 9 of 45 9 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 morning? MR. CRASS: --let me make sure I understand. been done, I'm betting you that you can make all the arguments you want to and we'll be out of here before noon, and even earlier if you want to. know it, too. So, what that, I'm ready to listen to you. Why don't we Cory ought to know that and Jamie would hear from Apple as to their Motion to Transfer, and Mr. Crass, if you'd like to do that, you may proceed. MR. CRASS: Your Honor-- THE COURT: Is that an acceptable procedure this You said Motion to Transfer, did you mean Motion to Dismiss? THE COURT: Motion to Dismiss, you're correct. MR. CRASS: Okay. Why don't you THE COURT: Is everybody okay with that? make your motion to dismiss, we'll hear a response, then if you want to talk about transfer, I don't want to listen too long about it, but you can tell me what your high points are. I have pretty well a pretty good high point here and then you all can likewise respond. MR. CRASS: Thank you, Your Honor. It's a pleasure to be before Your Honor and again, for the record, we have Jamie Pratt, co-counsel with us, Stuart Plunkett from Morrison & Foerster and Elise Bigelow from Apple. With the court's opening discussion, I think I will Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 10 of 45 10 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dispense with a lot of the prepared remarks that provided some of the background. I do want to highlight a couple of things in the background for emphasis, Your Honor. It's Apple's view of this case that we have a plaintiff, a Taiwanese company, that was selling knock-offs of a product that Apple had designed, engineered, built, and marketed. Some might not like the word "knock off" so I'll use the word that the Taiwanese court used which was "a look-alike." We're not talking about a trademark product, per se, as much as we're talking about trade dress. I don't think Luxpro disputes that we have intellectual properties at stake here that are legally protectable. Once we discovered those look-alikes or knock-offs were being shown at the German Trade show and then sold in Taiwan, we took action. And Your Honor, this may go to the second prong of the Noerr-Pennington and that is the subjective intent which I submit you shouldn't get to, but I think the court understands that in this global economy it is critical for American industry, American commerce, to be able to protect its international or intellectual property against misappropriation, whether in this country or abroad. It's the subject of trade discussions between foreign countries. I was interested to note that the Taiwanese court talked about how important it was to Taiwan that companies like Apple take steps to protect their intellectual property. He says that Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 11 of 45 11 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 "To allow Luxpro to confuse customers and damage the fair competition rights of Apple would also lead to negative consequences for Taiwan and the international community, as many will see our country as fostering dishonest activities." So this is not about targeting a particular competitor. It's about protecting our markets and so did Apple have a right to go to Taiwan and to go to Germany and seek protection, indeed, they do. My analysis may be too simple, Judge, but you know I haven't dealt a lot with Taiwanese cases and things of this sort. But the question is, was this objectively baseless? We have a German court and a Taiwanese court saying that not only was it not baseless, from a merit standpoint, it had merits enough to warrant the issuance of injunctions. In the Taiwanese situation it gets a little bit complicated in that there were initially an injunction against three products that was later modified to apply to only one of the three products. The way it's been described to me, Judge, is The one two of the three had screens, one of them didn't. without the screen is the one that looks most like - or looks most like our product. So that injunction was not only issued initially by the court, but has been affirmed all the way up to the Taiwanese appellate system. I don't see how one could argue with a straight face that where a court of law­ Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 12 of 45 12 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well now they altered their Shuffle product, did they not? MR. CRASS: THE COURT: Only after the original­ And called it Tangent, and then wrote on the bottom of it Luxpro. MR. CRASS: Correct. As I understand, only after the So it original injunction was issued by the Taiwanese court. was a - I stand to be corrected if my timing is off on that, but I believe that was in reaction to our demands and our legal action. THE COURT: I think that is probably so, yes. MR. CRASS: So I really don't understand how one could argue, although these are good lawyers and I have a high regard for them, they know that and I want the court to know that. don't know how one could argue that if a Taiwanese court, a German court granted our injunction, that it was baseless. I think what they try to do is broaden this beyond the court action and say this was an overall scheme to, and that's such a vague and nebulous concept, I have a hard time getting my hands on it. We submit their pleading of it doesn't comply with But they say there is this I Twombly and the Federal Rules. overall scheme where you took action to harm Luxpro. I think that leads me to the court's question, what about these letters. And I want to make sure that I'm clear on the record and the court hears me on it, it is my understanding Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 13 of 45 13 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there were letters sent after the litigation was instituted against Luxpro. Their allegations, and we have to rely upon their allegations at this point in the stage, that their allegations are that we sent letters, cease and desist letters, to people other than Luxpro. I submit that letters to somebody other than Luxpro have nothing to do with this litigation. Those folks have not complained and alleged that we've attempted to monopolize. So I think the question for the court is, is it just litigation that falls within Noerr-Pennington, or is it additional communication? THE COURT: Let me ask a question. Did Apple send out letters before initiating the first German injunction and thereafter the Taiwanese injunction? MR. CRASS: Let me ask for some help on that, Your I'm told and I submit that Honor. [Confers with co-counsel.] there would have been letters sent before the Taiwanese action. THE COURT: Yes. MR. CRASS: I thought so. And, Your Honor, having been involved in the protection of intellectual property on a much smaller scale, you would always send a letter before­ THE COURT: Yes. I would say that if Noerr-Pennington pertained and immunized Apple, that those letters would be covered within that umbrella of immunity. MR. CRASS: right. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 14 of 45 14 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Now the second is after the Taiwanese letter, or after the Taiwanese injunction and then letters sent to say the Canadian company, the Chinese company, are they within the umbrella of that protection and immunity? MR. CRASS: I would submit they have to be, Your If the letter to Luxpro Honor, because they're the first. before litigation falls within Noerr-Pennington, then the letter to the Canadian company is the same first step in that process. And it may be that the Canadian company said, we're not going to fight you. We agree. We'll pull it off the market so we didn't I'm speaking somewhat hypothetically have to go to court. there, but I would submit that if the first letters to NoerrPennington - to Luxpro fall within Noerr-Pennington, even though they ultimately had to file a lawsuit, that pre-litigation letters to the Canadian company - same protection. THE COURT: Now initially, I agree with you. and we began to talk about it. I came in And then a response was that if the injunction was to petition properly under Noerr-Pennington and that injunction caused Luxpro to change, drop Shuffle, put in Tangent, then they've complied with what the injunction said. Now the second group of letters, that's what I'm concerned about. That second group of letters that caused apparently this - the Canadian company, the Starbucks Company over in Japan, and the Chinese companies. Letters went out to them. Now would those letters still have the immunity that was initially covered Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 15 of 45 15 Maybe I may be Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those initial letters that were sent out? looking at it in too complicated­ MR. CRASS: the question. No, Your Honor, I appreciate the point and I think it has to do with what, at least the We cited the court the Eighth courts have said is covered. Circuit case, the IBP­ THE COURT: I've read that and I understand that. MR. CRASS: It seems to me to say it's a fairly broad, it's defined as activities reasonably and normally attendant to effective petition. THE COURT: That's one of the real keys that I think we're looking at in this lawsuit right now. MR. CRASS: Correct. And so if we have an order from Taiwan and an order from Germany and we can't communicate it to people in Canada it is somewhat ineffective. like something-THE COURT: My question was that from that order, Luxpro did comply and they changed the name. They dropped I mean it's not Shuffle, they put in Tangent and wrote Luxpro on the bottom of their MP3, that's what I understand. alert me to that. MR. CRASS: Your Honor. I'll try to get to the bottom of that, Now if I'm incorrect, then I'm a little unclear on that, as well. I didn't mean to interrupt. THE COURT: Okay. MR. CRASS: No, sir, I appreciate it. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 16 of 45 16 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Thank you. MR. CRASS: Thank you. I can take credit because question. THE COURT: There are some things that we've really been concerned about as to this. MR. CRASS: Go ahead, excuse me. That's all right, Your Honor. Maybe I can get this answered now. [Conferring with co-counsel] Your Honor, two points I think with regard to the postinjunction letters. They still have to show that those are And it may be that someone We still baseless in terms of the merits. says well, the injunction caused them to change. believe it violated our trade dress and we've not, I don't think we've been in litigation with the Canadian company, but the bottom line is, we do believe it is protected by NoerrPennington. THE COURT: Okay. MR. CRASS: Let me look at my notes on your other Your Honor, you mentioned that you wanted them to address the choice of law and I would just say, I don't believe one has to wait until the end of discovery or really the commencement of discovery to address the choice of law provision as you said, we briefed it. chose­ THE COURT: You briefed it well. I understand it. We appreciate the compliment. They somebody else wrote it. Your Honor, they've not briefed it. I would just say it Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 17 of 45 17 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seemed somewhat inconsistent to me for a plaintiff to say we're going to sue you under a California statute and then argue that California law doesn't apply. emphasis I would make. I think you covered the fact that Noerr-Pennington covers things outside of anti-trust, including the rights to protect intellectual property. The next point you raised, Your Honor, was the statute of limitations. We believe that the cause of action accrued more Arkansas, That would just be the point of than three years before the filing of this lawsuit. at least to the extent it would apply here, and we think California, as well, would not allow some sort of continuing tort theory. THE COURT: I understand. MR. CRASS: They can't just wait until - once they're on notice that there's action and they know, or they believe that damage has been incurred, the cause of action accrues and absent some tolling theory, which they've not alleged, we do believe all of the-THE COURT: I'm thinking with Apple on the statute of limitations on both - talking about the lawsuits in Germany and Taiwan, certainly three years has gone after that. However these post letters are within the three year statute if they are not covered by the umbrella of Noerr-Pennington. MR. CRASS: Correct. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 18 of 45 18 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: That may be where your lawsuit is, or your Motion to Dismiss is. MR. CRASS: I guess I'll just wait and see what their We believe it is all part They can't then argument on that is, Your Honor. they claim it is all part of an overall scheme. divide it up and say, well, we're entitled to file a claim on things that occurred within three years of the statute, of the filing of the lawsuit rather. But, I think the question­ THE COURT: I think the letters to Japan, Canada and China were afterwards. of limitations. MR. CRASS: They would be within the three years. I mean they would come under the statute THE COURT: If, if they weren't under the cover of Noerr-Pennington. MR. CRASS: Your Honor. That would be one argument we would make, But we also make the argument that once it is started, they couldn't - I mean, what you're doing basically is splitting the cause of action and saying they can't sue for the injunctive actions but they can sue for letters. submit­ THE COURT: They've got to, you know, you've got to tie this in to that subjective intent then. MR. CRASS: Correct. I just Your Honor, you didn't address the other arguments we made in the 12(b)(6) motion with regard to attempted common law Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 19 of 45 19 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 monopolization. find it in AMI-THE COURT: I couldn't find it. MR. CRASS: --I wonder if it exists. You know, I'm pretty simple minded, if I can't I can't see that it exists under Arkansas law and they've briefed the California law. I won't belabor that. The California statute, if deemed to apply, has tests in it that we briefed. THE COURT: Generally, I could clean this up. That's why I mentioned the causes of action with the Motion to Dismiss. It's kind of like a summary judgment, you can kind of knock some things off and let others go in, if you get by that initial hurdle. That's the linchpin. MR. CRASS: Yes, sir. THE COURT: Because that's going to be tortious interference. I think that would still be on the board if that one issue that we talked about didn't prevent these subsequent letters, which could certainly be characterized as tortious interference. MR. CRASS: that's the question. THE COURT: Yeah. MR. CRASS: And the question, I think in terms of how Absent immunity, Your Honor. I think far does Noerr-Pennington stretch, you know, what is the policy of Noerr-Pennington, that is to allow people to take action, to petition to protect their intellectual property in this case. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 20 of 45 20 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 point. THE COURT: Okay. I'm going to say notwithstanding Thank And if you said, well, because these letters were post- injunction, they fall outside the immunity umbrella, it shields our ability to protect. THE COURT: That's why I'm glad we had this hearing today is to deal with that issue. MR. CRASS: Your Honor, I think I'll sit down at this Luxpro saying we don't need a hearing, I sure need one. you. MR. COCKRELL: Thank you, Your Honor. Phillip Cockrell on behalf of the plaintiff today, Luxpro. And we also appreciate the opportunity to be before you today. And for the record we do have other counsel at the table with us, Rick Adams, Cory McGaha, Reed Miller and Patrick Conroy. Patrick will also be-THE COURT: I know some of these folks. MR. COCKRELL: All right. Thank you, Your Honor. I appreciate the court's efforts to clarify the issue that is most important, the issues that are most important to the court. And one thing we want to emphasize at the very beginning, that while the facts may very well be inter-related and while some of the arguments may sound very similar, we believe that the Noerr-Pennington doctrine is very distinct and different Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 21 of 45 21 They are trying to Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from the statute of limitations issue. immunize their conduct under both of those doctrines, but they have to be analyzed separately to be able to understand why Luxpro's claims do still exist and are alive and can be discovered and litigated in the courts. The Noerr-Pennington doctrine came out of the anti-trust type litigation. anti-trust cases. In fact, that Noerr-Pennington case dealt with What it was saying was if you have got a federal statute, if you've got an established body of law that allows you to assert certain intellectual property rights, or assert rights that have been established and defined, then you ought to have the right to petition the court to be able to enforce those. We don't question or challenge whether or not NoerrPennington is a valid doctrine. We do challenge whether or not that doctrine applies at all to this case because of the points the court has already made. We are not complaining in this litigation that the injunction, either in Germany or in Taiwan is the crux of our causes of action. The crux of our causes of action are the post injunction interference with our contracts with other people. We do not believe that­ THE COURT: And that would have to be those letters that you're talking about. MR. COCKRELL: That's correct, Your Honor. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 22 of 45 22 We're on the same sheet of Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 music. MR. COCKRELL: All right. The letters to Luxpro that THE COURT: All right. were asking, demanding, that Luxpro stop producing the one that they claimed violated their trade dress, which we still haven't gotten any definition about what really trade dress means in this context. We'll talk about that in just a second. But I want to make the point, the demand letters to Luxpro to stop producing its products is one thing. We actually exceeded, when you're dealing with a company as large as Apple and they make threats of litigation and they have sued you and they can carry that on forever, you have to obviously take that into consideration, and Luxpro did do that. Luxpro changed the name, stopped using the word Shuffle, and actually started making its product look even more different. Even though the functionality of the products were already different, we're trying to make them look different, as well. Luxpro exceeded to those demands in 2005. What Luxpro is complaining about in this lawsuit is what Apple did after that took place and after Luxpro exceeded to those demands and they didn't just make demands to Luxpro and say stop producing. They then went to the business partners in 2006-2007 and even 2008 and told our business partners that you stop doing business with Luxpro or we will either sue you, or we'll boycott your products. If you want to sell our products, Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 23 of 45 23 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 then you'll not sell Luxpro products. That is what we were being told in the 2006-2007 time frame by our business partners. I'm talking about suppliers, I'm You want our talking about distributors, as well as customers. products, you don't buy their product. That's different from trying to protect our intellectual property rights. I think it's very instructive for the court to look and see what were those intellectual property rights. any patent that was being infringed. They don't claim They don't claim any And they don't registered trademark that was being infringed. claim any copyright that was being infringed by the production of these products. As we go through the factual development of the case, the paragraphs where we describe the global domination of the MP3 market that Apple was trying to accomplish, and did in fact to some extent accomplish that, they were coming out with their own products, but other people were too. Not just Luxpro, but there were other companies that were producing products that looked very similar. Now, in this case in 2005, when Apple was rolling out its Shuffle, the iPod Shuffle, Luxpro was also rolling out one of its products that had more functionality than the Shuffle product. Did some of the same things, as well as other products They were very similar. performed some of the same functions. All of the products were very similar, not just exactly alike, Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 24 of 45 24 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 but very similar. Now in our case, we called ours, because it was a better product, the Super Shuffle. Apple took umbrage to that, took Got an offense to that, wanted us to stop using the name. injunction through an ex-parte presentation in the German court. Got an injunction in the CeBit Trade show to say, stop using the word Shuffle. Luxpro said fine, we'll stop doing it. We don't agree with your argument, don't think you have any rights we're infringing. You haven't given us a patent. registration. You haven't given us a trademark You haven't given us a copyright, but you are the We 800 pound gorilla and we cannot fight that, so we will stop. did. But it was the actions that took place after that. We don't think Noerr-Pennington, Noerr-Pennington does recognize that if you're going to go into court and try to enforce recognized rights then you may also need to write demand letters to say stop, cease and desist things that would flow out of that action. But I don't believe that Noerr-Pennington nor the cases that are cited by Apple actually say, but you can take it to another level. You can go out there and try to make people stop doing business with Luxpro at all, whether it's the Shuffle product that they complained about, or whether it's the subsequent next generation products that are completely different where courts have determined that there is no confusion in those products and they can be produced and the Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 25 of 45 25 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 please. MR. COCKRELL: All right. issued in 2005­ THE COURT: Yeah. The injunctions that were injunction overturned. What we're saying is the litigation should have stopped in 2005. The litigation didn't stop there. There were successive appeals, as explained in our pleadings. Successive appeals of the Taiwanese rulings that really, and this is the key, that litigation put a strangle hold on Luxpro. It could not sell, not just the Shuffle products, couldn't sell any of its products. THE COURT: All right, now back up and say that again, MR. COCKRELL: --the first one in Germany applied only to the Shuffle product, that was what the real fuss was about. When they went to Taiwan, after Apple[sic] said we'll stop using the word Shuffle, we'll put our name on our product. should have stopped the inquiry. problem, but it didn't. That That should have stopped the They went to Taiwan and got an injunction that covered not only the iPod Shuffle product, or the Luxpro Super Shuffle, they also got an injunction that stopped Luxpro from producing any of its products. It's next generation products, the ones that had the screens on them that the Shuffle did not have, that had other functionality that didn't even look like the iPod Shuffle, they stopped Luxpro from producing any of its products. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 26 of 45 26 We've got you stopped, Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now that's the strangle hold. Luxpro, you can't produce anything while you're tied up in litigation. And then they used that strangle hold to go to our business partners and say, you can't do business with those folks. You can't - it's not just limited to the Shuffle product, it is saying you cannot do business with them at all if you want to do business with us. We do not believe the Noerr-Pennington doctrine was ever intended to go to that extent. Things that are related to the enforcement of a registered established right, then you can also send out demand letters to the party that is infringing on that right. But when you go to the point of trying to interfere with their business as a total and try to destroy that business, that's not covered by the Noerr-Pennington doctrine. We think that's separate and distinct from the statute of limitations issue, but the facts flow along the same line. We are not basing the lawsuit that has been filed here today on the fact that Apple got an injunction in Germany, or that Apple got an injunction in Taiwan. Luxpro fought those injunctions in Taiwan and got them overturned. What Apple did after that is continue to appeal, continue to try to keep that in the litigation process. And it's that pattern of litigation conduct that we believe is the exception, if Noerr-Pennington applied at all, because we say the conduct was to third parties, not just to Luxpro trying to stop it from Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 27 of 45 27 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 producing its products. But they went to our suppliers, they went to our distributors, they went to InterTAN, people that had products on the shelves that were beyond what used to be called the Shuffle product, the Super Shuffle, but they were products that were in the next generations. Those are allegations in our complaint, and they had to, InterTAN was required to actually take those products off the shelves and destroy them. Your Honor, we don't believe that that is conduct that is supporting a valid challenge, or a valid enforcement through the courts of their rights, particularly when they do not identify what those rights are. They don't do it even today. Your Honor, there is no patent that they have asserted in any of their responses, in any of their briefing, that have been presented to this court, there are no copyrights that have been identified, there are no trade names that have been identified. This was a virgining, it was a developing business in 2001-2005 time frame. Everybody was trying to get in on that business and Everybody was developing it, and be able to compete with Apple. our allegations say that our products were developed through its own research and development programs and they were not just a copy of the product. knock-offs. But what do they do? They call them That's disparaging comments about our products and disparaging comments about the way Luxpro does its business that occurred not only in 2005, but it continued into 2006, 2007, Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 28 of 45 28 What we're You Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes. 2008. This is not a continuing tort argument. arguing is, in 2005 you addressed your attacks to Luxpro. said that we ought to stop doing some things that you felt were wrong. them. THE COURT: What I'm saying is the letters post were the interference. MR. COCKRELL: That is what we're complaining about. THE COURT: I think that's going to be, as I told Mr. Crass, that's going to be the whole key, as I see this. MR. COCKRELL: And Your Honor, we believe that if you look at the - there are some cases that the court, as you are doing your own research, needs to be aware of in looking at the Noerr-Pennington doctrine. And I believe we have cited some of We tried to address those issues and stopped some of this in our brief, we may not, but the Professional Real Estate Investors case, it's a U.S. Supreme Court case, 508 U.S. 49. THE COURT: I've read that and read that and read that, Go ahead. MR. COCKRELL: Then after that, if you look at, of course the California Motor Transport case was talking about the sham exception. THE COURT: Same case. MR. COCKRELL: Talking about how it was supposed to apply, you've read that. But there are also some cases that have occurred after Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 29 of 45 29 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that, one in the Middle District of Louisiana, one that's close to this jurisdiction, the Livingston Downs Racing Association and Jefferson Downs Corp, it's 192 Fd2. THE COURT: If I don't have them in your brief, please give them to me. MR. COCKRELL: And we'll be happy to do it, Your Honor. Those cases examine how the sham exception ought to operate and whether or not it is an exception to the Noerr-Pennington protection or immunization that Apple is trying to assert here today. Those cases say that, all right, litigation is something we can expect if you have a legitimate right that you need to protect. That's what the courts are for. But when you have developed a strategy that is basically a license to hunt through the litigation process and use it to interfere with right, rightful and lawful competitors that are out in that market­ THE COURT: You can't do it. MR. COCKRELL: --you cannot do that. And if you have shown a pattern of litigation that just continues and continues and continues, it brings into question whether or not you can even have probable cause, that it lessens that threshold examination and the court needs to look at that. was I trying to enforce a right. It's not just, First thing they've got to do What is define what that right is, trade dress, what is that? right to they have to dress their products in a way differently from other people's products? Do they have a registered right Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 30 of 45 30 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to do that? Now there is no doubt that the court in Taiwan was looking at whether or not there could be confusion to the public, and that we do need to be able to promote competition and growth in the industries and that sort of thing. And if it looks like that there is an effort to try to get somebody else's advantage, then we need to look at that and we need to examine it. But in this situation, it should be the proponent that has to come in and define what those rights are. Just look alike and then call us knock-offs and really accuse us of trying to just copy their product as the basis for our business was improper, and particularly when they make those accusations to our business partners, and use those as threats to make them stop doing business with us. It's not protecting the Shuffle. It is eliminating competition and that is not protected by the Noerr-Pennington doctrine. Never was intended to do that. It's very important that the court understand the distinction there because it is those post activities, the post injunction activities, it's not just that they were later in time, although that is important. shifted. But it how that conduct It was no longer trying to stop Luxpro and trying to It was going to third parties that had no recognize its rights. dog in that hunt. They were being threatened with boycott and litigation if they did business with Luxpro. That steps beyond the Noerr-Pennington protection, if it Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 31 of 45 31 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 exists and applies in this case, but also from a timing standpoint, it gets us into another area and that is a separate and distinct cause of action. It is a cause of action that we are alleging for interference of contractual relationships that we have with third parties that is separate and distinct from just writing us a demand letter and saying stop infringing on our products, even though they wouldn't define what the infringement really was, and what rights they were trying to protect. We believe that Noerr-Pennington, No. 1, shouldn't apply at all because of the post activity conduct and who they're writing the letters to. But also that the sham exception that is really Sometimes related to the pattern of litigation exception. they're called different but they­ THE COURT: I've got a little problem with that, it shouldn't apply at all. like the Apple's Shuffle. Certainly Luxpro's Shuffle is almost And so they at least had a probable cause maybe to go in there to get that initial injunction in Germany and possibly even going into Taiwan. have been covered. So that may well However, it's the post letters that I'm concerned about in that we begin to have problems ourselves in viewing this lawsuit. MR. COCKRELL: Well, and it's that post-litigation conduct combined with the fact we exceeded to their demands. Problem solved. There were no probable cause to go beyond Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 32 of 45 32 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 because the problem had been fixed. THE COURT: Right. MR. COCKRELL: And if they're going to make contacts with our distributors, with our business partners after that point in time, they are not protecting their intellectual property. Now they're saying stop doing business with Luxpro It gets into and that gets into the anti-competitive conduct. the tortious interference of contractual relationships. It gets into the issues that we don't believe Noerr-Pennington was trying to protect in this context. That's why those claims do still live and should be heard by the court today. Now those are very fact intensive examinations. If there was, if we are able to look into the intent and the purposes that Apple had or instilling and continuing-THE COURT: You're looking now to the second phase of Noerr-Pennington, objective intent. MR. COCKRELL: Your Honor, I believe that - if you believe that Noerr-Pennington does apply in this case, then the sham exception comes in where we ought to be able to explore the subjective intent. We believe that the Noerr-Pennington doctrine shouldn't apply because of the difference in the type of conduct and the approach and the purpose of it after the Shuffle product had been solved. THE COURT: At least that merits some discovery. MR. COCKRELL: That's right. That merits discovery, Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 33 of 45 33 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 but also, if you believe that Noerr-Pennington doctrine still has some application to this case, that pattern of litigation, that sham litigation, that we're saying occurred after the Shuffle problem had been fixed, entitles us to explore their subjective intent continuing that litigation, if it still applies. And that's why we believe that we do need to have discovery to find out what Apple was really up to. Your Honor, the Motion to Dismiss, as the court is very well aware, are intended to try and short circuit litigation and deny the plaintiffs their day in court. And we need at least to be able to discover and look into those issues so that they could be determined later, could be summary judgment, could be that there are other motions that will be available to the defendants after we have conducted discovery. But once we have pled that case under Rule 8, then we're at least entitled to look into them. Now I understand the court's concern, limitations could knock them out at the beginning, and the court needs to look at those issues and we've tried to brief those for the court and try to explain it, but it is not the conduct in 2005 that we're complaining about and that did not give rise to the cause of action for tortious interference that occurred in 2008. THE COURT: I think the statute of limitations would take care of that. MR. COCKRELL: That's correct. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 34 of 45 34 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statute. MR. COCKRELL: That's correct. THE COURT: And it's only those post letters to third parties that you're looking at. MR. COCKRELL: Now that's a different protection from the statute of limitations, what you're talking about there? THE COURT: Yes, of course it is. Those are within the And you're saying that post conduct should be immunized by the Noerr-Pennington doctrine, and of course we believe that it shouldn't. THE COURT: Here's my notes on this. I said, So the question is whether seeking the injunctions in Germany and Taiwan was objectively meritless, if not, then Noerr-Pennington applies. Now, if it was objectively meritless, then determine Apple's subjective modification in applying for the injunction. If to interfere with Luxpro's business, then Noerr-Pennington does not apply. And then if Noerr-Pennington applies to the litigation, then does it apply to the cease and desist letters Apple sent to Luxpro's distributors or potential distributors. MR. COCKRELL: Your Honor, we believe that those the cease and desist letters were not just stop selling Shuffle products. Those cease and desist letters were, in fact,-THE COURT: You're saying they gave rise to the tortious interference. MR. COCKRELL: That's correct. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 35 of 45 35 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: That's what I have right here. MR. COCKRELL: Does the court still have questions about the distinctions there that we're making? THE COURT: I really didn't need this hearing. MR. COCKRELL: Just trying to make sure we're responding to the court's inquiries. Your Honor, I do want to touch on a couple other issues that have been brought up. The choice of law, we do believe the choice of law is a premature analysis at this point in time. We've made the allegations of the conduct that took place. conduct took place globally and all over the United States. That And in our Response to the Motion to Transfer, we pointed out how we had customers, we had potential customers, we had people all over the United States that were trying to get to our products and showing interest in them and some of them even placing orders for them. Now we're going to have not only witnesses all over the United States, but there is a global and national impact that has taken place here. The analysis that the court has to make in trying to determine the choice of law is, which states' law should be applied based upon, not the most significant context, but the most significant connections to the litigation. believe that is still up in the air right now. There's no doubt the case has been filed in Arkansas. have provided to the court cases that we believe support the We We Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 36 of 45 36 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 application and the conduct and the prosecution of these claims in the state of Arkansas, if the court chooses to apply this state's law. There is no question that one of the causes of action is based upon a statute in California. This court will be asked to construe California law for that particular cause of action. But we believe the court is able to do that and fully capable of doing it, and entitled to do it under the cases that if you have other causes of action that could be controlled by the law of other states, the fact that you may directed to one state, for one of those causes of action doesn't limit you from the rest. We believe discovery is going to be necessary to find out exactly which state does have the most significant connection to this litigation. The largest worldwide distributor of electronic products today is located right here in this state. Wal-Mart is here. Wal-Mart and this state are going to have an interest in how this litigation plays out. That is a connection to this state. That doesn't mean California law has to be applied on every cause of action, or should be, and that we're going to have to look at that as we go down the road. So the choice of law is something that we believe the court should defer at this point in time until we've had an opportunity to discover. Now obviously, that presupposes, if the court can get beyond the issues of Noerr-Pennington and the Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 37 of 45 37 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statute of limitations and believe that the claims still have viability, then we need to do that, need to look into them and have some discovery to get there. Does the court have other questions that you'd like us to address? THE COURT: Well, I'm going to put y'all on notice, probably one of the greatest professors of law in this entire world on choice of law came from the University of Arkansas, Robert A. Leffler. I made a B in his course. So, I want to put you on notice right now that I'm supposed to be - you get a B in Leffler's class you did something, you really did. kidding with you. No, that's fine. So, I'm MR. COCKRELL: Your Honor, in summary, on these issues, we believe that the complaint that is before the court is a well pled complaint. And that under Rule 8 it is entitled to be able to go forward to let discovery be conducted and the facts to be explored because the tortious interference claims, the claims that we have raised that have to do with conduct that was directed to our business partners post dates the injunctive relief in both Germany and Taiwan and is not protected by the Noerr-Pennington doctrine, either because the doctrine doesn't apply at all, or because the exceptions we discussed, the sham and the pattern litigation exceptions take it out. We believe that Luxpro should be entitled the opportunity to have its day in court and we look forward to the court's Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 38 of 45 38 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rulings on these issues. THE COURT: Rebuttal? Thank you, Mr. Cockrell. MR. CRASS: Your Honor, let me start with what I submit would be an effort to counter what I think is his simplification of the chronology. He said, and I think the court has focused on this as well, that once the injunction was issued in Taiwan and this company changed the name, was there really any reason for Apple to worry about the protection of its intellectual property. And a fact that has not been mentioned today is that Luxpro appealed that injunction, and appealed it again. The most recent decision by So during the the Taiwan Supreme Court was July of 2009. pendency of the Taiwanese action, including the exhaustion of appeals, Apple is in jeopardy because we don't know what Luxpro has communicated, for example, InterTAN. Apparently InterTAN had some - taking their allegations at face value, InterTAN had some of their Shuffles. InterTAN apparently made a decision that if they sold them, they'd be violating Apple's intellectual property. So, I don't think it's fair under Noerr-Pennington, that may not be the right word, I don't think it's correct under Noerr-Pennington to say once you get an injunction you can't take additional steps to protect your IP rights, particularly in the face of an appeal that says we're going to try to get that injunction overturned. So they did, you know, they probably did Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 39 of 45 39 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the prudent thing and said we'll change the name and argue that they don't have any intellectual property rights just to cut our losses, so to speak, but we're going to continue to appeal it. So I submit that Noerr-Pennington's umbrella reaches communications as long as these people are disputing our right to intellectual property. Now it's interesting that on the one hand Mr. Cockrell will say, we're not questioning their intellectual property, but what is their intellectual property right? What is trade dress? The Supreme Court of the United States has defined what trade dress is. It's clearly a right to protect, just like In fact, in some ways it may be trade secret, just like patent. more valuable than patent because the patent has an expiration date. I'm wading into water that is not my typical water, but I know enough about patents to know there's an expiration date. There is no such thing for trade dress. The leading case on Supreme Court on trade dress had to do with the motif in a Mexican restaurant. I thought they all looked alike, but the court recognized there's trade dress. So here's a more serious point: they really can't come into this court and collaterally attack a decision by the Taiwanese court and the German court that were legitimate intellectual property rights. It would not be correct to put you in the position to say well, Taiwan and Germany found intellectual property rights that were protectable but, in the Western Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 40 of 45 40 That would be a Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 District of Arkansas they don't exist. collateral attack on a binding judgment that their client was a party to. So clearly we had rights. Your Honor, there's a lot of talk about letters, and I know we're bound by what's alleged. But I submit to the court that The only references I see there are no letters in the record. in the First Amended Complaint to a letter is paragraph, or letters, paragraph 30 says, "While the overarching injunctions were on appeal, unbeknownst to Luxpro, Apple sent warning letters to other companies who were doing business." the letters? What do the letters say? Where are I don't think it is fair to Apple, and that's one of our arguments in the Motion to Dismiss, Your Honor, is that they've not pled with specificity the acts that they claim fall outside Noerr-Pennington. These general allegations about letters and communications and threats is not sufficient enough for the court to say, those fall outside Noerr-Pennington. burden to prove the exception exists. that here. It's their I think we all recognize They are seeking an exception to a general rule. There is no allegation in the complaint, Your Honor, that the letters or the communications were a sham. they're saying to the court? You know what They weren't necessary because there were injunctions entered. They don't attack the injunctions as baseless. They are basically saying once you got the injunction the letters were Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 41 of 45 41 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 not necessary. That doesn't take it outside Noerr-Pennington. They've got to show that the letters themselves were objectively meritless and the subjective intent issue. the letters? What do they say? And so, where are As Forrest Gump once said, That's all I have to say about that, Judge. Thank you. THE COURT: Thank you. Anything further? MR. COCKRELL: respond very briefly. Mr. Crass has acknowledged that the court is, in this analysis, required to look at the complaint itself and be bound by what is there. All of the evidence has not been presented to this court. This is not a motion for summary judgment hearing. motion to dismiss. The complaint does allege that letters were sent. It does We This is a Yes, Your Honor, I would like to just allege that threats of boycott and litigation were asserted. have not attached all the letters to the pleading, we're not required to at this point in time. We just simply have to tell We have the court and the defendant what the fuss is all about. done that. Rule 8 says we have accomplished that and I believe we've met those pleading requirements is the point I'm trying to make, Your Honor. We're not required to prove our case. In fact, Twombly Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 42 of 45 42 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 says we're not required to prove our case at this point in time. All we have to do is get a cause of action pled that goes beyond speculation. We're not speculating this. They don't deny that They will get letters were sent. They just want to read them. an opportunity to do that in discovery. Now when we're talking about the application of the NoerrPennington doctrine, we don't believe it is our burden to prove that Noerr-Pennington applies or doesn't apply to these cases, to this case. I believe it is the defendant's, if they're going to use that as a defense to our claims, it is their burden to prove Noerr-Pennington does apply to this case. We've explained to the court why we don't believe it does and we've also explained to the court why we believe, if it does apply, why the exception should come into play, but it's not our burden to do that. I want to really emphasize to the court that if they had, if Apple had a right to protect the look of its product, this trade dress that they're arguing about here today, the issue that was presented to both the German court, excuse me, particularly the Taiwanese court is whether or not the public is going to be confused by those products, not that they had the right to make their products look better or look different from our products, all the way through. It was only on the Shuffle product and the name was involved there and there was confusion that was the issue. Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 43 of 45 43 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The issues that came before the Trade Commission was public confusion. Is that going to be a confusing aspect. That's what It was not really was being looked at in the Taiwanese court. whether or not they had an intellectual property right or a trade right or a copyright, a trade name or a copyright to protect. They're asserting that what they were trying to do was an intellectual property right, but I don't believe it has actually yet been defined in this court. And that is not our obligation and we're not acknowledging that they have IP rights. We're saying if they had one, they have a right to go to the court and have access to the court like everybody else, but that's not what they were doing here. that our products looked like theirs. They were just concerned Trade confusion, public confusion was the issue, not property rights. That's why we believe that the court needs to look very carefully at these issues that are being raised. They don't get to rewrite the pleading by adding facts that are not yet into evidence, is the point we're trying to make. really being accomplished here today. We stand on our pleadings and Rule 8, and believe we should be entitled to go forward. Thank you, Your Honor. That's what is THE COURT: Anything else? MR. CRASS: Not on the Motion to Dismiss, Your Honor. THE COURT: All right, good. MR. CRASS: Do you want to hear anything on our Motion Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 44 of 45 44 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 points. MR. McGAHA: We'll give them to you. to Transfer? I'm prepared-I'm going to THE COURT: Let's just withhold that. deal with this motion, I think. MR. CRASS: Thank you, Your Honor. THE COURT: And then if you wish to come back once I handle this, we'll listen to that. Is your Motion to Transfer - where did the power points come in? MR. McGAHA: We had a power point on both of them, Your Honor, but that's fine. THE COURT: I was kind of looking forward to the power THE COURT: My ex-law clerk wanted to do power points, I was going to let him do it. Thank y'all very much. a pleasure being with you. Court is adjourned. [Adjourned at 10:50 a.m.] Appreciate y'all being here. It's Case 4:08-cv-04092-HFB Document 54 Filed 10/28/09 Page 45 of 45 45 Luxpro Corporation v. Apple, Inc. No. 08-4092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/ Donna S. McKinney Donna S. McKinney, CCR-CVR I, Donna S. McKinney, CCR-CVR, certify the foregoing is a correct transcript from the record of the proceedings in the above-entitled matter. DATED this 28th day of October, 2009. CERTIFICATE

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