Wordtech Systems Inc v. Integrated Network, et al

Filing 437

MEMORANDUM AND ORDER signed by Judge Morrison C. England, Jr on 7/6/11 ORDERING that Wordtech's MOTION for Partial Summary Judgment 417 is DENIED. Defendant Assadian's Request to be Relieved from this case pursuant to Rule 60 (d) (1) [432 ] and his Request for Judicial Review of USCA Audio Transcript, and related Attachments 433 are also DENIED. The parties are ORDERED to file, not later than thirty (30) days following the date this order is electronically filed, a Joint Status Report detailing their positions on the issues remaining to be decided and including a proposed briefing schedule with regard to those issues. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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WORDTECH SYSTEMS, INC.

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No. 2:04-cv-01971-MCE-EFB

Plaintiff,
v.

MEMORANDUM AND ORDER

INTEGRATED NETWORK SOLUTIONS,
INC., et al.,

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Defendants.
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Plaintiff Wordtech Systems, Inc. (“Wordtech”), filed this

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patent infringement action on September 22, 2004.

A jury in this

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Court found Defendants INSC, Nasser Khatemi and Hamid Assadian

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each liable to Wordtech for direct infringement, contributory

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infringement, and inducement of infringement involving technology

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for automated duplication of compact discs.

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individual Defendants Khatemi and Assadian (hereafter jointly

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“Defendants”) filed a post-trial motion for new trial, which was

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denied.

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and, on June 16, 2010, the Federal Circuit reversed the denial of

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Defendants’ new trial motion and remanded to this Court.

As is relevant here,

Defendants appealed the liability verdicts against them,

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Presently before the Court is Wordtech’s subsequently-filed

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Motion for Partial Summary Judgment as to Inducement (“Motion”).

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Defendants, both of whom are proceeding pro se, each filed

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oppositions.

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Assadian requests relief from this case pursuant to Federal Rule

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of Civil Procedure 60(d)(1) and judicial review of the Federal

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Circuit’s audio, transcript, and related attachments.

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following reasons, Wordtech’s Motion and Defendant Assadian’s

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requests are DENIED.1

In conjunction with his opposition, Defendant

For the

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BACKGROUND2

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In its operative First Amended Complaint, Wordtech alleges

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that Defendants infringed three of its patents, which cover

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“Programmable Self-Operating Compact Disk Duplication Systems,”

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by modifying and selling “Robocopiers.”

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duplication devices that copy video files from computers to

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multiple discs.

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Assadian, among others, directly and contributorily infringed

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Wordtech’s patents and induced third parties to do the same.

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Robocopiers are disc

According to Wordtech, INSC, Khatemi and

INSC, a Nevada corporation, was established by Khatemi’s

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mother in early 1994.

In 1994 and 1995, INSC listed Khatemi as

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both President and Director on annual forms required to be filed

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under state law.

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Because oral argument will not be of material assistance,
the Court ordered this matter submitted on the briefing. E.D.
Cal. Local Rule 230(g).
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The following facts are taken primarily from Wordtech
Systems, Inc. v. INSC, 609 F.3d 1308 (Fed. Cir. 2010).
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From 1995 through November of 2006, INSC failed to file any

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further required statements, though eventually, after initiation

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of this action, the corporation resumed at least some filings.

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Despite the references to Khatemi on corporate documents,

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Defendants both claim they never served as INSC officers.

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According to Defendants, Khatemi was a “salesman” and Assadian

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was an engineer responsible for “product development.”

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addition, and though Assadian was identified as the corporate

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representative, Khatemi testified that individuals generally were

In

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not given titles at INSC.

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had only a handful of employees between 2000 and 2005 and that

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Defendants were INSC’s only full-time employees at the time of

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trial.

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primarily responsible for the company.

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Defendants also testified that INSC

Finally, Assadian testified that he and Khatemi were

At the close of the trial on Wordtech’s claims, the jury

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found INSC and the individual Defendants liable on all

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infringement theories, including inducement.

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infringement of each patent was willful and awarded Wordtech a

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total of $250,000 in damages.

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case “exceptional” under 35 U.S.C. § 285, trebled damages, and

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awarded Wordtech attorneys’ fees, interest and costs.

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subsequently filed motions for judgment as a matter of law under

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Rule 50 of the Federal Rules of Civil Procedure3 and a motion for

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new trial under Rule 59(a), all of which were denied.

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The jury determined

This Court subsequently found the

Defendants

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All further references to “Rule” or “Rules” are to the
Federal Rules of Civil Procedure unless otherwise noted.
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On appeal, Defendants challenged only the liability verdicts

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against them individually, the damages award and this Court’s

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denial of their motion to amend their answer.

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purposes of Wordtech’s instant Motion is Defendants’ appeal as to

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Wordtech’s inducement claim.

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liability verdicts on this theory because of mistakes in the

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verdict forms and because that court believed the legal test for

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inducement was never presented to the jury.

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for this Court to determine whether a new trial is warranted,

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Pertinent for

The appellate court vacated the

That court remanded

stating as follows:

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[W]e reverse the denial of [Defendants’] Rule 59(a)
motion..., and remand for consideration of whether a
new trial is warranted on their individual liability
for direct infringement, inducement, and contributory
infringement. On remand, the district court should
address the issues of piercing INSC’s corporate veil
and INSC’s corporate status, whether Wordtech preserved
these arguments for trial, the law governing these
issues and whatever jury instructions might be
necessary.

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Wordtech, 609 F.3d at 1317-18.

Wordtech since filed its instant

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Motion arguing that Defendants are liable as a matter of law for

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inducement of infringement under 35 U.S.C. § 271(b).

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addition, Defendant Assadian requested that this Court:

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1) relieve him from this case pursuant to Rule 60(d)(1); and

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2) grant judicial review of the appellate court’s audio,

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transcript, and related attachments.

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denied.

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In

Each of these requests is

ANALYSIS

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A.

Wordtech’s Motion for Partial Summary Judgment.
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Resolution of Wordtech’s Motion exceeds the scope
of the mandate.

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Proceedings in this Court are limited by the Federal

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Circuit’s mandate.

See Herrington v. County of Sonoma, 12 F.3d

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901, 904-905 (9th Cir. 1993) (“rule of mandate allows a lower

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court to decide anything not foreclosed by the mandate”).

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According to the mandate here, it was unclear to the appellate

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court whether Wordtech’s inducement theory was included in the

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Final Pretrial Order, in the jury instructions or in closing

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arguments. Wordtech, 609 F.3d at 1316. It was likewise unclear to

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that court whether Wordtech’s theories in support of piercing the

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corporate veil were preserved for trial.

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Federal Circuit’s reversal for this Court to determine whether a

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new trial is warranted was therefore based not on the theory that

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the evidence adduced at trial was capable of supporting a dispositive

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motion short-circuiting the need for a further trial, but rather

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on the theory that, if the relevant issues were not preserved in

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the Final Pretrial Order, etc., no further trial may be warranted

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at all. Accordingly, contrary to Wordtech’s unsupported assertion

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that entertaining dispositive motions is proper, Motion 6:25-27,

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no such motions should now be heard. Instead, the threshold issue

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before the Court at this point is whether all relevant issues were

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preserved justifying a further trial as to Defendants’ liability

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or whether judgment should simply be entered in favor of the

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individual Defendants now.

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exceeding the scope of the mandate.

Id. at 1315.

The

Wordtech’s Motion is thus denied as

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2.

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Wordtech’s Motion is untimely.

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Even if the mandate in this case was broad enough to

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encompass Wordtech’s current Motion, the time for filing such a

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dispositive motion without leave of the Court has long since

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passed.

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different time is set by local rule or the court orders

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otherwise, a party may file a motion for summary judgment at any

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time until 30 days after the close of all discovery.”

Federal Rule of Civil Procedure 56(b) states, “Unless a

Non-expert

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discovery closed on November 7, 2006, and expert discovery closed

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on January 23, 2007.

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(“PTSO”), 2:8-9, 18-21.

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motion was required to be filed by the end of February 2007.

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See Third Amended Pretrial Scheduling Order
Under Rule 56, any summary judgment

Likewise, this Court’s PTSO required that all dispositive

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motions be filed not later than April 23, 2007.

Id., 4:18-20.

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On September 2, 2008, months after expiration of the filing

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deadline, this Court denied a prior Wordtech request to extend

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time in which to file such motions.

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Modify PTSO (ECF No. 226).

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three years ago, Wordtech nonetheless makes no real attempt now

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to show why its current Motion is timely and should be permitted.

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In fact, though Wordtech states initially in its papers that it

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“seeks leave to file the forgoing motion for partial summary

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judgment as to inducement in light of the overwhelming evidence

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elicited at trial and during discovery,” Wordtech provides no

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justification for its request and simply moves forward with its

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substantive arguments.

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Order Denying Motion to

Despite denial of that request over

Motion, 2:20-22.

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Wordtech’s Motion thus fails as untimely and because Wordtech has

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not shown good cause why the Court’s original deadlines should be

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amended.

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3.

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Triable issues of fact preclude summary uudgment
on the issue of inducement.

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Finally, Wordtech’s Motion is denied on the merits as well.

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The Federal Rules of Civil Procedure provide for summary judgment

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when “materials in the record, including depositions, documents,

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electronically stored information, affidavits or declarations,

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stipulations..., admissions, interrogatory answers, or other

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materials” “show[] that there is no genuine dispute as to any

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material fact and the movant is entitled to judgment as a matter

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of law.”

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purposes of Rule 56 is to dispose of factually unsupported claims

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or defenses.

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(1986).

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Fed. R. Civ. P. 56(a), (c).

One of the principal

Celotex Corp. v. Catrett, 477 U.S. 317, 323-324

Rule 56 also allows a court to grant summary adjudication on

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part of a claim or defense.

See Fed. R. Civ. P. 56(a) (“A party

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may move for summary judgment, identifying each claim or defense-

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-or the part of each claim or defense–on which summary judgment

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is sought.”); see also Allstate Ins. Co. v. Madan, 889 F. Supp.

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374, 378-79 (C.D. Cal. 1995); France Stone Co., Inc. v. Charter

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Township of Monroe, 790 F. Supp. 707, 710 (E.D. Mich. 1992).

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The standard that applies to a motion for summary adjudication is

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the same as that which applies to a motion for summary judgment.

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See Fed. R. Civ. P. 56(a), 56(c); Mora v. ChemTronics,

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16 F. Supp. 2d. 1192, 1200 (S.D. Cal. 1998).
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A party seeking summary judgment always bears the
initial responsibility of informing the district court
of the basis for its motion, and identifying those
portions of “the pleadings, depositions, answers to
interrogatories, and admissions on file together with
the affidavits, if any,” which it believes demonstrate
the absence of a genuine issue of material fact.

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Celotex Corp. v. Catrett, 477 U.S. at 323 (quoting Rule 56(c)).

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If the moving party meets its initial responsibility, the

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burden then shifts to the opposing party to establish that a

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genuine issue as to any material fact actually does exist.

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

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585-87 (1986); First Nat’l Bank v. Cities Serv. Co., 391 U.S.

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253, 288-89 (1968).

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In attempting to establish the existence of this factual

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dispute, the opposing party must tender evidence of specific

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facts in the form of affidavits, and/or admissible discovery

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material, in support of its contention that the dispute exists.

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Fed. R. Civ. P. 56(c).

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the fact in contention is material, i.e., a fact that might

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affect the outcome of the suit under the governing law, and that

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the dispute is genuine, i.e., the evidence is such that a

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reasonable jury could return a verdict for the nonmoving party.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52

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(1986); Owens v. Local No. 169, Assoc. of Western Pulp and Paper

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Workers, 971 F.2d 347, 355 (9th Cir. 1987).

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“before the evidence is left to the jury, there is a preliminary

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question for the judge, not whether there is literally no

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evidence, but whether there is any upon which a jury could

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properly proceed to find a verdict for the party producing it,

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upon whom the onus of proof is imposed.”

The opposing party must demonstrate that

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Stated another way,

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Anderson, 477 U.S. at 251 (quoting Schuylkill and Dauphin

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Improvement Co. v. Munson, 81 U.S. 442, 448 (1871)).

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Supreme Court explained, “[w]hen the moving party has carried its

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burden under Rule 56(c), its opponent must do more than simply

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show that there is some metaphysical doubt as to the material

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facts .... Where the record taken as a whole could not lead a

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rational trier of fact to find for the nonmoving party, there is

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no ‘genuine issue for trial.’”

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As the

Matsushita, 475 U.S. at 586-87.

In resolving a summary judgment motion, the evidence of the

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opposing party is to be believed, and all reasonable inferences

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that may be drawn from the facts placed before the court must be

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drawn in favor of the opposing party.

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Nevertheless, inferences are not drawn out of the air, and it is

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the opposing party’s obligation to produce a factual predicate

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from which the inference may be drawn.

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Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985),

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aff’d, 810 F.2d 898 (9th Cir. 1987).

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Anderson, 477 U.S. at 255.

Richards v. Nielsen

Wordtech asks this Court to hold as a matter of law that

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Defendants are liable for inducement of infringement.

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actively induces infringement of a patent shall be liable as an

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infringer.”

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alleged infringer knowingly induced infringement and possessed

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specific intent to encourage another’s infringement.”

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Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc)

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(quotations and citations omitted).

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other individual liability theories are premised on a threshold

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determination that the corporate veil has been pierced, a person

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liable for inducement does not enjoy the same protections.

35 U.S.C. § 271(b).

“Whoever

“[I]nducement requires that the

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DSU Med.

While some of Wordtech’s

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See Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544,

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553 (Fed. Cir. 1990) (“[C]orporate officers who actively assist

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with their corporation’s infringement may be personally liable

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for inducing infringement regardless of whether the circumstances

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are such that a court should disregard the corporate entity and

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pierce the corporate veil.”) (emphasis in original).

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is well settled that corporate officers who actively aid and abet

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their corporation’s infringement may be personally liable for

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inducing infringement under 35 U.S.C. § 271(b) regardless of

Indeed, “it

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whether the corporation is the alter ego of the corporate

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officer.”

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806 F.2d 1565, 1578-79 (Fed. Cir. 1986).

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to any authority indicating employees rather than officers can be

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held liable under this theory.

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Orthokinetics, Inc. v. Safety Travel Chairs, Inc.,
Wordtech does not cite

The threshold issue as to inducement is thus whether

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Defendants were corporate officers or mere employees.

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the large quantity of evidence favoring the jury finding that

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Defendants were officers of the corporation, and despite

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Defendants’ lack of credibility at trial, there remains a factual

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dispute for current purposes as to whether Defendants were

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actually officers or employees.

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Despite

For example, in support of its Motion, Wordtech relies on

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conflicting statements in Defendants’ Answer and their discovery

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responses.

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that Khatemi served as the Vice President of Marketing, but in

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discovery responses and at their depositions, Defendants averred

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that only Ehteram Ghodsian and Shohreh Javadi had ever served as

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officers or directors of INSC.

More specifically, in Defendants’ Answer, they stated

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Separate Statement of Undisputed Facts (“SSUF”) No. 8, 10.

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Wordtech also submitted evidence that: 1) Khatemi was listed on

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corporate records in 1994 and 1995 as INSC’s president, director

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and/or treasurer (SSUF No. 14, 15); 2) the corporation

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historically had only a few employees, at times only Khatemi and

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Assadian (SSUF 17-19); 3) Khatemi never had a boss at INSC and

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hired Assadian and other INSC employees (SSUF 21-22); 4) Assadian

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and Khatemi kept accounting records for the INSC accountant

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(SSUF 23); 5) Khatemi kept sales and purchasing documents for

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INSC (SSUF 24); 6) Assadian was designated as the corporation’s

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person most knowledgeable (SSUF 25); 8) Khatemi prepared INSC’s

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discovery responses (SSUF 26); 9) Khatemi negotiated a corporate

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merger (SSUF 29); and 10) Assadian and Khatemi represented INSC

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in negotiations (SSUF 30).

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Wordtech relies almost entirely on Khatemi’s and Assadian’s

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discovery responses, deposition transcripts and trial testimony.

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Accordingly, Wordtech’s Motion presents issues regarding which

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portions of which testimony should be accepted or disregarded.

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These factual disputes and the related credibility determinations

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are more appropriately left for the jury.

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In support of these facts, however,

The current Motion is similar to motions for summary

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judgment Defendants filed prior to the original trial essentially

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arguing the converse of the position advocated by Wordtech here.

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See Defendants’ Motions for Summary Judgment (Mar. 19, 2007) (ECF

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No. 139, 140).

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claims against them individually should be dismissed because

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Defendants had never been officers of INSC and because they had

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never acted outside the scope of their employment.

In those motions, Defendants argued Wordtech’s

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In light of Wordtech’s contradictory evidence that Assadian had

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held himself out as owning and being in charge of INSC and that

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Khatemi and Assadian were the only two people working at INSC,

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the Court determined a triable issue of fact existed sufficient

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to preclude summary judgment.

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2007) (ECF No. 153).

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Motion support the same conclusion here, and Wordtech’s Motion

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fails on the merits.

See Memorandum and Order (June 25,

The facts before the Court on the current

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B.

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Defendant Assadian’s Requests.

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In his opposition to Wordtech’s Motion, Defendant Assadian

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asks this Court to relieve him from this case pursuant to

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Rule 60(d)(1).

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court’s power to...entertain an independent action to relieve a

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party from a judgment, order, or proceeding.”

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no support for request, especially after having litigated this

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suit through a full trial on the merits and an appeal.

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Assadian’s request is thus denied.

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Rule 60(d) provides, “This rule does not limit a

Defendant provides

Defendant

Defendant Assadian also requests judicial review of the

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Federal Circuit’s audio, transcripts and attachments.

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of the Court’s denial of Wordtech’s Motion, this request is

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denied as moot.

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In light

CONCLUSION

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For the reasons stated above, Wordtech’s Motion for Partial

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Summary Judgment (ECF No. 417) is DENIED.

Defendant Assadian’s

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Request to be Relieved From This Case Pursuant to Rule 60(d)(1)

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(ECF No. 432) and his Request for Judicial Review of USCA Audio,

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Transcript, and related Attachments (ECF No. 433) are also

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DENIED.

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(30) days following the date this Order is electronically filed,

The parties are ordered to file, not later than thirty

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a Joint Status Report detailing their positions on the issues

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remaining to be decided and including a proposed briefing

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schedule with regard to those issues.

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IT IS SO ORDERED.
Dated: July 6, 2011

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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