Global Tech Led, LLC v. Hilumz International Corp. et al

Filing 94

OPINION AND ORDER denying 64 Defendants' Motion for Rule 11 Sanctions. Plaintiffs' request for an award of fees and costs is also denied. Signed by Judge John E. Steele on 12/21/2016. (KP)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GLOBAL TECH LED, LLC, a
Florida limited liability
company,
Plaintiff,
v.

Case No: 2:15-cv-553-FtM-29CM

HILUMZ INTERNATIONAL CORP.,
a
Georgia
corporation,
HILUMZ,
LLC,
a
Georgia
limited liability company,
and HILUMZ USA, LLC, a
Georgia limited liability
company,
Defendants/Third
Party Plaintiffs,
JEFFREY J.
MART, GARY
J. NEWMAN,
JEFFREY J.

NEWMAN, GARY K.
K. MART, JEFFREY
GARY K. MART and
NEWMAN,

Third Party Defendants.
OPINION AND ORDER
This matter comes before the Court on Defendants’ Motion for
Rule 11 Sanctions (Doc. #64) filed on June 22, 2016.

Plaintiff

filed a Response in Opposition (Doc. #70) on July 11, 2016 and
Defendants filed a Reply (Doc. #79) on August 17, 2016.

For the

reasons set forth below, Defendants’ Motion is denied.
I.
This case involves a patent dispute between two business
partners-turned-competitors

in

the

LED

lighting

industry.

On

September 15, 2015, Plaintiff Global Tech LED, LLC (Global Tech)
filed a one-count Complaint (Doc. #1) against Defendants HiLumz

International

Corp.,

HiLumz,

LLC,

and

HiLumz

USA,

LLC

(collectively, Defendants) alleging direct and indirect patent
infringement under 35 U.S.C. § 271 and seeking injunctive relief
and

money

damages.

Specifically,

Defendants

are

accused

of

“making, using selling, or offering for sale” one or more lighting
products that infringe United States Patent No. 9.091,424 (the
‘424

Patent),

equivalents. 1

either

literally

(Doc. #1, ¶ 36.)

or

under

the

doctrine

of

Defendants are also alleged to

have “induced infringement of claims of at least the ‘424 Patent
by having one or more of its [sic] distributors and other entities
use, sell or offer for sale the Accused Products and others
substantially identical to the Accused Products with knowledge of
the ‘424 Patent.”
On

June

Counterclaim

22,
and

(Id. ¶ 37.)
2016,
Third

Defendants
Party

filed

Complaint

a

Second

Amended

(the

Second

Amended

Counterclaim Complaint) (Doc. #63), which alleges claims of false
advertising under Section 1125(a) of the Lanham Act, 15 U.S.C. §
1051 et seq., unfair competition, deceptive and unfair trade
practices under the Florida Deceptive and Unfair Trade Practices
Act (FDUTPA), Fla. Stat. § 501.201 et seq., and trade libel, and
which

also

seeks

a

declaration

1

that

the

‘424

Patent

is

“The theory on which the doctrine of equivalents is founded is
that if two devices do the same work in substantially the same
way, and accomplish substantially the same result, they are the
same, even though they differ in name, form or shape.” MDS (Can.)
Inc. v. Rad Source Techs., Inc., 720 F.3d 833, 846 (11th Cir. 2013)
(internal alteration omitted) (quoting Graver Tank & Mfg. Co. v.
Linde Air Prod. Co., 339 U.S. 605, 608 (1950)).
- 2 -

unenforceable. 2

The third-party claims are pled against Gary K.

Mart (Mart) and Jeffrey J. Newman (Newman), who are managing
members of Global Tech and the inventors of the “screw base” LED
lighting product for which Global Tech obtained the ‘424 Patent. 3
That same day, Defendants also filed the instant Motion, which
contends

that

Global

Tech’s

infringement

cause

of

action

is

frivolous and asks the Court to impose sanctions against Global
Tech and The Concept Law Group, P.A. (collectively referred to as
Plaintiffs, for purposes of this Motion), pursuant to Federal Rule
of Civil Procedure 11.

Plaintiffs oppose the Motion substantively

and argue that Defendants are using Rule 11 to try to accelerate
the claim construction process.

Plaintiffs also request an award

of the costs and fees they accrued in defending against the Motion.
II.
A.

Federal Rule of Civil Procedure 11
Where an attorney or unrepresented party presents the Court

with

a

signed

pleading,

written

motion,

or

other

paper,

the

individual “certifies that to the best of the person’s knowledge,
information, and belief, formed after an inquiry reasonable under
the circumstances”: i) the document “is not being presented for
any improper purpose,” ii) “the claims, defenses, and other legal

2

The Court dismissed (Doc. #62) Defendants’ Amended Counterclaims
and Third-Party Claims (Doc. #8) for failure to sufficiently allege
commercial or reputational injury, as required to state a claim
under the Lanham Act.
3

The Second Amended Counterclaim Complaint is the subject of a
pending Motion to Dismiss (Doc. #71), collectively filed by Global
Tech, Mart, and Newman.
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contentions are warranted” under the law, and iii) the factual
assertions therein have, or are likely to have, “evidentiary
support.”

Fed. R. Civ. P. 11(b).

In other words, the party or

attorney must do his homework before presenting a document to the
court.

Where another party believes Rule 11 has been violated,

it must afford the offending party 21 days in which to correct the
problem,

after

sanctions.

which

time

it

may

move

the

court

to

impose

Fed. R. Civ. P. 11(c)(1).

In assessing whether Rule 11 has been violated, a court must
initially “determine[] whether the party’s claims are objectively
frivolous — in view of the facts or law.”

Jones v. Int’l Riding

Helmets,

Cir.

Ltd.,

49

F.3d

692,

695

(11th

1995)

(citation

omitted).

In so doing, “the court’s inquiry focuses only on the

merits

the

of

pleading

gleaned

from

facts

and

law

available to the attorney at the time of filing.”

known
Id.

or
“In

deciding whether the claims of a represented party are objectively
frivolous, the court must ‘determine whether a reasonable attorney
in like circumstances could believe his actions were factually and
legally justified.’”

Adams v. Austal, U.S.A., L.L.C., 503 F.

App’x 699, 703 (11th Cir. 2013) (quoting Kaplan v. DaimlerChrysler,
A.G., 331 F.3d 1251, 1255 (11th Cir. 2003)).
Only if the court determines that the claims are objectively
frivolous does it next evaluate “whether the individual who signed
the pleadings should have been aware that they were frivolous;
that is, whether he would have been aware had he made a reasonable
inquiry.”

Jones, 49 F.3d at 695.
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“The reasonableness of the

prefiling inquiry may depend on such factors as how much time for
investigation was available to the signer; whether he had to rely
on a client for information as to the underlying facts; and whether
the paper was based on a plausible view of the law.”
omitted).

Id. (citation

In a patent infringement case, Rule 11 “require[s], at

a minimum, that an attorney interpret the asserted patent claims
and compare the accused device with those claims before filing a
claim alleging infringement.” 4

Q-Pharma, Inc. v. Andrew Jergens

Co., 360 F.3d 1295, 1300–01 (Fed. Cir. 2004) (citations omitted).
Notwithstanding a finding that Rule 11 has been violated, whether
to impose sanctions, and the nature of those sanctions, ultimately
rests in the Court’s discretion.
B.

Fed. R. Civ. P. 11(c)(1), (4).

Literal Infringement
The Complaint alleges generally that the “Accused Products”

infringe the ‘424 Patent literally and under the doctrine of
equivalents; however, Plaintiffs’ subsequent filings clarify that
the literal patent infringement claim is limited to a prior version
of Defendants’ retrofit LED product, which Defendants refer to as
the “First Generation Retrofit Kit.”

According to Defendants,

this claim is frivolous because the First Generation Retrofit Kit
“has not been manufactured, sold or offered for sale since June

4

Counsel for Global Tech avers that they “did conduct a pre-suit
investigation that included a comparison between Defendants’ and
their representatives’ advertised and/or marketed retrofit
products and the claims of the ‘424 Patent and determined that a
majority of the claims . . . infringed literally or under the
[doctrine of equivalents],” (Doc. #70, p. 11), in addition to
“thoroughly review[ing] the prosecution history of the ‘424 Patent
before . . . filing the Complaint.” (Id. p. 21.)
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28, 2014, over a year before the [‘424] patent issued.” 5
6; see also Doc. #83, p. 3.)

(Id. at

In other words, while Defendants

seemingly do not dispute the legal basis for Plaintiffs’ literal
infringement claim, they believe the claim lacks an adequate
factual basis.
The

Court

cannot

agree.

Even

assuming

the

veracity

of

Defendants’ contention that the First Generation Retrofit Kit was
last sold in June 2014, Plaintiffs have presented evidence, in the
form of a website screenshot (Doc. #70-4), that at least one of
Defendants’ product resellers, Shine Retrofits, was offering to
sell the infringing First Generation Retrofit Kit at least as late
as September 25, 2015 6 – more than two months after the ‘424 Patent

5

To support this assertion, Defendants attach an invoice from June
28, 2014 (Doc. #64-2, p. 34). However, the invoice itself bears
no indicia of being the final sale of the First Generation Kit.
6

Defendants argue that the website printout depicts an
advertisement, not an “offer to sell.” But the printout does not
merely advertise Defendants’ product; it contains a description of
the HiLumz DZ130 First Generation Retrofit Kit detailing the
product’s inputs, specifications, and features, it lists a price,
and it even has an “add to cart” button. It is, therefore, an
offer to sell that Kit. E.g., 3D Sys., Inc. v. Aarotech Labs.,
Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998).
Defendants’
contention that “there must be an actual sale of an infringing
product during the enforceable term of the patent in order to
establish ‘offer for sale’ liability” is similarly unsupported.
(Doc. #79, p. 6.)
The case Defendants cite, Fieldturf
International, Inc. v. Sprinturf, Inc., held that there was no
infringing offer to sell, since the offer at issue (a sports field
project bid) involved a turf product that was found not to infringe
the claims of the plaintiffs’ own patented turf product. 433 F.3d
1366, 1370 (Fed. Cir. 2006).
In affirming that holding, the
Federal Circuit specifically noted that “[a] bid to supply a
product specified in a RFP is a traditional offer to sell,” as
that term is used in 35 U.S.C. § 271(a), without any reference to
or consideration of a separate sale requirement. Id. at 1369-70.
- 6 -

issued and ten days after the Complaint was filed.

Because an

“offer to sell” an infringing product constitutes “infringement”
under the patent laws, 35 U.S.C. § 271(a), and because one who
actively induces another to make an offer of sale (as Defendants
are alleged to have done) “shall be liable as an infringer,” id.
§

271(b),

Plaintiffs’

literal

infringement

claim

is

not

objectively baseless - that is, the Court cannot find, based on
this evidence, that “a reasonable attorney” would have concluded
differently.

Adams, 503 F. App’x at 703.

As such, the Court need

not address whether Plaintiffs’ pre-filing inquiry was “adequate.”
See Meininger v. Target Nat’l Bank, No. 8:12-CV-871-T-17EAJ, 2013
WL 5278496, at *2 (M.D. Fla. Sept. 18, 2013).

Defendants’ request

for sanctions on this claim is denied.
C.

Doctrine of Equivalents Infringement
Defendants assert that Plaintiffs’ claim that the Accused

Products violate the ‘424 Patent under the doctrine of equivalents
is

similarly

baseless,

since

Defendants’

Second

Generation

Retrofit Kit uses a “Flex-Mount” hose-clamp base, which has no
screw threads, and which does not draw electrical power from the
receiving socket.

Defendants also contend that Global Tech’s

patent prosecution history – specifically, the “narrowing” of the
‘424 Patent’s claims – bars Plaintiffs from invoking the doctrine
of equivalents.

Plaintiffs, in response, claim that Defendants

are “attempt[ing] to improperly use Rule 11 to effectively force
a ruling on the construction of the term ‘screw connector’ and use

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that ruling to test the sufficiency of its [sic] non-infringement
defense.” 7

(Doc. #70, p. 12.)

Motives aside, the Court finds the request for sanctions
premature.

“[F]ee litigation is not the time to address the

substantive merits in the first instance, especially when the
question of infringement appears to turn on the construction of
[disputed] claim term[s] . . . .”

Am. Tech. Inc. v. Am. Future

Tech. Corp., No. 6:11-CV-113-ORL-22, 2012 WL 859345, at *4 (M.D.
Fla. Mar. 14, 2012).

The Court has not yet construed the claims

of the ‘424 Patent to determine whether they are limited to LED
products with a “threaded” screw base that conveys power to the
connecting bulb, nor has the Court otherwise had the opportunity
to assess the merits of Plaintiffs’ case.

Consequently, the Court

will not evaluate the legal and factual adequacy of Plaintiffs’
doctrine of equivalents infringement theory at this time.

See id.

(denying post-dismissal motion for attorney’s fees and litigation
expenses,

despite

noninfringement,”

the
since

defendant’s
the

Court

“compelling
had

not

argument

issued

a

for
claim

construction order prior to the case’s dismissal); see also Eon–
Net LP v. Flagstar Bancorp, 249 Fed. App’x 189, 196 (Fed. Cir.
2007) (vacating the district court’s award of Rule 11 sanctions as
“clearly erroneous” since, “without a full claim construction
analysis[,]

it

[was]

impossible

7

to

assess

whether

[the

Plaintiffs’ Response reiterates their continued belief that the
“Flex-Mount System” is the functional equivalent of the screw
connector and thus does infringe the claims of the ‘424 Patent.
- 8 -

plaintiff’s] claim construction was unrealistic”); cf. Dominant
Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1262 (Fed.
Cir. 2008) (underscoring the plaintiff’s failure to “identif[y] a
single case in which, when a party had not lost the underlying
litigation, a court awarded Rule 11 sanctions against that party
for failing to conduct a sufficient infringement analysis prior to
filing suit”).
The parties’ upcoming “Markman hearing” is set for January
19, 2017, at which time the Court will consider each side’s
position as to the proper construction of the claims of the ‘424
Patent.

Thereafter, if supported by the claim construction order,

Defendants may renew their request for sanctions under Rule 11. 8
Accordingly, it is hereby
ORDERED:
1.

Defendants’ Motion for Rule 11 Sanctions (Doc. #64) is

DENIED.
2.

Plaintiffs’ request for an award of costs is DENIED.

DONE and ORDERED at Fort Myers, Florida, this 21st day of
December, 2016.

Copies: Counsel of Record

8

Because the Court is not denying the Rule 11 Motion entirely on
the merits, the Court does not believe an award of Plaintiffs’
fees and costs associated with defending against the Motion is
“warranted.” See Fed. R. Civ. P. 11(c)(2).
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