Digital Ally, Inc. v. Taser International, Inc.

Filing 163

MEMORANDUM AND ORDER granting 132 Motion for Leave to Amend, Motion to Dismiss the '292 Patent with Prejudice, and Motion to Dismiss the '292 Patent Counterclaim. Signed by District Judge Carlos Murguia on 3/5/2018. (ydm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

DIGITAL ALLY, INC.,
Plaintiff
v.
TASER INTERNATIONAL, INC.,
Defendant.

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Case No. 16-2032-CM

MEMORANDUM AND ORDER
This case is before the court on a multi-part motion filed by plaintiff (Doc. 132). Plaintiff asks
the court to (1) grant leave to amend the scheduling order to permit pleading amendments out of time;
(2) allow plaintiff to voluntarily dismiss the ‘292 patent infringement claim with prejudice; and (3)
dismiss defendant’s ‘292 patent counterclaim for lack of jurisdiction. Defendant does not oppose
plaintiff’s request for leave to amend to voluntarily dismiss the ‘292 patent infringement claim. But
defendant does oppose dismissal of its counterclaim relating to the ‘292 patent. For the following
reasons, the court grants plaintiff’s motion.
First: amending the scheduling order to delete the ‘292 patent claim. When, as here, the
deadline to amend pleadings has passed, a party seeking leave to amend must (1) demonstrate good
cause to modify the scheduling order under Fed. R. Civ. P. 16(b)(4) and (2) satisfy the standard for
amending pleadings under Rule 15(a). Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass’n, 771 F.3d
1230, 1240 (10th Cir. 2014). To show good cause, a party must “show that the deadline could not
have been met even if it had acted with ‘due diligence.’” Cent. States Underwater Contracting, Inc. v
Price, No. 12-2556-JWL-DJW, 2013 WL 12250909, at *1 (D. Kan. June 20, 2013). To show due

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diligence, a party “must provide an adequate explanation for any delay.” Minter v. Prime Equip. Co.,
451 F.3d 1196, 1205 n.4 (10th Cir. 2006).
Amendment under Rule 15(a)(2), on the other hand, is freely given “when justice so requires.”
The court ordinarily will grant leave except when it “finds undue delay, undue prejudice to the
opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously
allowed, or futility of amendment.” Bushnell Inc. v. Brunton Co., No. 09-2009-KHV, 2009 WL
2914209, at *1 (D. Kan. Sept. 9, 2009) (citation omitted).
Plaintiff has met both of the above standards. In any event, defendant now represents that it
does not oppose amendment and deletion of plaintiff’s ‘292 patent claim. The court finds that both
amendment and dismissal are appropriate, and grants this portion of plaintiff’s motion.
Defendant opposes plaintiff’s final request—that the court dismiss defendant’s counterclaim
for declaratory judgment of unenforceability of the ‘292 patent. On this issue, the court agrees with
plaintiff. Plaintiff has submitted a covenant not to sue for patent infringement. Once a party dismisses
infringement allegations, “a covenant not to sue for patent infringement divests the trial court of
subject matter jurisdiction over claims that the patent is invalid, because the covenant eliminates any
case or controversy between the parties.” Dow Jones & Co., Inc. v. Ablaise Ltd., 606 F.3d 1338, 1346
(Fed. Cir. 2010). The content of the covenant governs whether the court loses jurisdiction over a
counterclaim in this situation. Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294, 1297
(Fed. Cir. 2009). A case or controversy no longer exists if a covenant is comprehensive, covering
“current products whether they were produced and sold before or after the covenant.” Id. at 1300.
The accused infringer may show that a case or controversy continues to exist by showing “that it
engages in or has sufficiently concrete plans to engage in activities not covered by the covenant.”
Already, LLC v. Nike, Inc., 568 U.S. 85, 94 (2013). But a mere “fear of litigation over future

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products” is insufficient to demonstrate a continuing case or controversy. Amana Refrigeration, Inc. v.
Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999).
The covenant submitted by plaintiff is comprehensive. It covers all potential infringement
cases relating to the ‘292 patent. It relates to defendant’s products currently marketed, including but
not limited to the currently-accused products. A newer version of the covenant also includes precovenant products. While the covenant does not cover future products, defendant has not shown that it
has concrete plans to engage in activities not covered by the covenant. And although the covenant
does not address “colorable imitations,” this consideration derives from trademark law—not patent
law. See Already, LLC, 568 U.S. at 92 (referring to covenant not to sue on trademark designs).
Defendant argues that the court retains jurisdiction over its counterclaim because it has
jurisdiction to consider a claim for attorney fees under 35 U.S.C. § 285. Defendant is partially correct;
the court does retain jurisdiction for consideration of a motion for § 285 attorney fees. And in
considering such a request, the court may consider whether plaintiff engaged in inequitable conduct.
But these are distinct inquiries. Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229, 1242 (Fed.
Cir. 2008) (finding dismissal and a covenant not to sue “divest[s] the court of jurisdiction over a
declaratory judgment action regarding these patents,” but concluding that the court retained
independent jurisdiction over a § 285 request for attorney fees); HR Tech., Inc. v. Imura Int’l U.S.A.,
Inc., No. 08-2220-JWL, 2011 WL 2174919, at *3 (D. Kan. June 3, 2011) (“Monsanto does not
suggest, however, that the fee claim confers or creates jurisdiction over the declaratory judgment
claims. To the contrary, in Monsanto the court ruled that the district court retained jurisdiction over
the fee claim even if the covenant divested that court of jurisdiction over the declaratory judgment
claims.”); Gordon-Darby Sys., Inc. v. Applus Techs., Inc., No. 10 C 1863, 2010 WL 5419068, at *2
(N.D. Ill. Dec. 23, 2010) (analyzing Monsanto and finding “no basis for retaining jurisdiction over a

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declaratory judgment claim for unenforceability after a covenant not to sue has been filed and agreed
upon by the parties,” but allowing a motion for § 285 attorney fees.).
Defendant makes one additional argument: that the ‘292 patent is too interrelated with the ‘452
patent, and if the court dismisses defendant’s ‘292 counterclaim, it could potentially impact rulings on
the ‘452 patent. This is defendant’s “infectious unenforceability” argument. Again, the court is
unpersuaded by defendant’s argument. It is true that “inequitable conduct with respect to one or more
patents in a family can infect related applications . . . .” Nilssen v. Osram Sylvania, Inc., 504 F.3d
1223, 1230 (Fed. Cir. 2007). And as defendant points out, there are many similarities between the
‘292 patent and the ‘452 patent. But by dismissing the counterclaim without prejudice, the court is
making no finding on inequitable conduct or unenforceability with respect to the ‘292 patent. There is
no danger of impacting any ruling on the ‘452 patent. Interrelatedness is not a valid basis for
maintaining jurisdiction over the counterclaim in this instance.
IT IS THEREFORE ORDERED that plaintiff’s motion for leave to amend, motion to
dismiss the ‘292 patent with prejudice, and motion to dismiss the ‘292 patent counterclaim (Doc. 132)
is granted.
Dated this 5th day of March, 2018, at Kansas City, Kansas.

s/ Carlos Murguia_____________
CARLOS MURGUIA
United States District Judge

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