Luv N Care Ltd v. Laurain et al
Filing
96
MEMORANDUM ORDER granting in part and denying in part 76 Motion to Amend/Correct; granting 85 Motion Motion to Enforce. Signed by Magistrate Judge Joseph H L Perez-Montes on 1/29/2018. (crt,Tice, Y)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
LUV N’ CARE LTD,
Plaintiff
CIVIL ACTION NO. 3:16-CV-00777
VERSUS
JUDGE JAMES
LINDSEY LAURAIN, ET AL.,
Defendants
c
MAGISTRATE JUDGE PEREZ-MONTES
MEMORANDUM ORDER
Before the Court are: (1) Plaintiff Luv N’ Care LTD’s (“LNC’s”) Motion and
Supporting Memorandum to Revise the Scheduling Order or In the Alternative for
Leave to File an Early Summary Judgment Motion (“Motion to Revise”) (Doc. 76); and
(2) Defendant Eazy-PZ, LLC’s (“EZPZ’s”) Emergency Motion to Enforce the
Stipulated Protective Order and Exclude One of Counter-Defendants’ Attorneys, Mr.
Robert Chiaviello (“Chiaviello”), From Having Access to EZPZ’s Confidential
Information (“Motion to Enforce”) (Doc. 85).
The Court heard oral argument on both motions on December 18, 2017, and
took the motions under advisement. LNC’s Motion to Revise (Doc. 76) is denied in
part as moot regarding deletion of claim construction briefing deadlines and granted
in part to delete the claim construction hearing deadline and allow for extension of
discovery deadlines. LNC’s request for leave to file Motion for Summary Judgment
(Doc. 76) is denied as premature, as this Court has determined claims need to be
construed first per the Scheduling Order. EZPZ’s Motion to Enforce (Doc. 85) is
granted on the basis that Chiaviello is determined to be a competitive decisionmaker.
I.
Background
LNC filed a Complaint, as amended, against Lindsey Laurain (“Laurain”) and
EZPZ for damages and injunctive relief for false advertising, false representation,
unfair competition under the Lantham Act, 15 U.S.C. §§ 1051, et seq., and the
Louisiana Unfair Trade Practices and Consumer Protection Law, La. Rev. Stat.
51:1401, et seq. (Doc. 21). LNC also seeks a declaratory judgment under 28 U.S.C.
§§ 2201 and 2202 that LNC violates no valid claim of EZPZ’s 1 design patent, utility
patent, or any other intellectual property right of EZPZ. (Doc. 21). The alleged
intellectual property rights at issue are:
(1) On July 17, 2014, Laurain filed United States Patent Application No.
14/333,682 (“the ‘682 Utility Application”) for Surface Contact Self-Sealing
Integrated Tablewear and Dining Mat. (Doc. 21, Doc. 27).
(2) On December 3, 2014, Laurain filed a design patent application for Dining
Mat with Integrated Tablewear, and on December 15, 2015, the United
States Patent and Trademark Office (“USPTO”) issued United States
Patent No. D745,327 (“the ‘327 Design Patent”). (Doc. 21, Doc. 27).
(3) On March 17, 2016, the application for the ‘682 Utility Application
published as United States Published Patent Application No.
2016/0073805, Surface Contact Self-Sealing Integrated Tablewear and
Dining Mat (“the ‘805 Publication”). (Doc. 27).
(4) On October 11, 2016, the USPTO issued United States Patent No.
9,462,903, Surface Contact Self-Sealing Integrated Tablewear and Dining
Mat (“the ‘903 Utility Patent”). (Doc. 21, Doc. 27).
LNC seeks an injunction and damages for EZPZ’s alleged acts of false
advertising, false representation, and unfair competition allegedly based on false
claims of infringement. (Doc. 21). LNC alleges the product giving rise to this action
At the time LNC filed this action, the intellectual property (“IP”) that is the subject of this action
listed Laurain as the title owner. (Doc. 31). Subsequent to the filing of this action, Laurain
documented a transfer of her right, title, and interest in and to the IP to EZPZ. (Doc. 31). Laurain
was dismissed without prejudice by Joint Motion for Voluntary Partial Dismissal. (Doc. 32).
1
2
is a feeding mat, which is an integrated self-sealing silicone place mat with a built-in
bowl or plate that attaches to the table using suction. (Doc. 21). LNC alleges EZPZ
has no valid existing intellectual property right that covers any aspect of LNC’s
feeding mats. (Doc. 21). LNC alleges EZPZ sells competing feeding mats. (Doc. 21).
EZPZ filed an Answer to Complaint, Answer to Amended Complaint, and
Counterclaim against LNC alleging that LNC infringed the ‘903 Utility Patent and
the ‘327 Design Patent, violated 15 U.S.C. § 1114 and 15 U.S.C. § 1125(a), and
unfairly competed with EZPZ in violation of state and common law. (Doc. 27). EZPZ
seeks monetary damages and a permanent injunction against LNC. (Doc. 27).
LNC answered EZPZ’s Counterclaim asserting various affirmative defenses.
(Doc. 33). EZPZ amended its Counterclaim asserting claims against third party
Counter-Defendants Admar International, Inc. (“Admar”) and Nouri E. Hakim
(“Hakim”). (Doc. 40). Defendants Admar, Hakim, and LNC answered asserting
various affirmative defenses. (Doc. 45).
This Court adopted EZPZ’s proposed scheduling order in this case so that the
parties would be able to identify any disputed terms, discovery, or expert issues at
the outset of this case. 2 (Doc. 62). The parties filed a Joint Motion for Protective
Order to govern the production, use, and disclosure of confidential information of the
The deadline for the parties to exchange proposed terms and claim elements for claim construction
was July 28, 2017. The deadline for parties to exchange claim constructions and extrinsic evidence
was August 11, 2017. The deadline for EZPZ’s opening claim construction brief was September 8,
2017. The deadline for LNC’s claim construction response brief was September 29, 2017. The deadline
for EZPZ’s claim construction reply brief was October 11, 2017. The parties have fully briefed claim
construction. A claim construction hearing date has not been set. (Doc. 62).
2
3
parties. (Doc. 65). The Court granted in part and denied in part the joint motion.
(Doc. 70), and issued a Stipulated Protective Order. (Doc. 71).
II.
Law and Analysis
A.
LNC’s Motion to Revise (or in the alternative leave to file Summary
Judgment) (Doc. 76) is denied in part and granted in part.
LNC’s Motion to Revise seeks to revise the scheduling order to delete the
deadlines relating to claim construction and for leave to file an early summary
judgment motion as to infringement and invalidity. (Doc. 76).
1.
Standards governing claim construction.
Absent a local rule to the contrary, 3 a judge has complete discretion regarding
when to make his or her claim construction ruling, with one exception. Cytologix
Corp. v. Ventana Med. Sys., Inc., 424 F.3d 1168, 1172-73 (Fed. Cir. 2005); Sofamor
Danck Grp. V. DePuy-Motech, 74 F.3d 1216, 1221 (Fed. Cir. 1996). The exception is
that, in a case where the right to trial by jury has not been waived, the judge should
complete the claim construction before giving the jury its final instructions because
the jurors should know the claim construction to apply in their deliberations. Sulzer
Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1366-68 (Fed. Cir. 2004); Hewlett-Packard
Co. v. Mustck Sys., Inc., 340 F.3d 1314, 1320-21 (Fed. Cir. 2003). Jurisdictions that
have adopted local patent rules generally favor claim construction earlier in the
action, following a mandatory exchange of contentions by the parties, but before the
3
This Court has not adopted local patent rules for procedural issues presented in patent actions.
4
close of fact discovery. See N.D. Cal. Patent Local Rules 4-1 – 4-6 (2014); E.D. Tex.
Local Civil Rules, Appendix B., Patent Rules 4-1 – 4-6 (2015). 4
Claim construction can also be addressed as part of the dispositive motion
process. See, e.g., MediaCom Corp. v. Rates Tech., 4 F.Supp. 2d 17, 20-24, 35-38 (D.
Mass. 1998); but cf. Amgen, Inc. v. Hoechst Marion Roussell, Inc., 126 F.Supp. 2d 69,
80 (D. Mass. 2001) (suggesting the better practice was to hold a claim construction
hearing before any hearing on dispositive motions, and independent of that hearing),
aff’d in part, rev’d in part, 314 F.3d 1313 (Fed. Cir. 2003).
2.
LNC’s Motion to Revise is denied in part as moot regarding
deletion of claim construction briefing deadlines, and granted in
part to delete the claim construction hearing and to allow for
extension of discovery deadlines pending a ruling on claim
construction.
Under Fed. R. Civ. P. 16(b)(3)(A), the scheduling order must limit the time to
join other parties, amend the pleadings, complete discovery, and file motions. Under
Fed. R. Civ. P. 16(b)(4), a schedule may be modified only for good cause and with the
court’s consent. Squyres v. Heico Companies, L.L.C., 782 F.3d 224, 237 (5th Cir.
2015).
This Court adopted EZPZ’s proposed scheduling order in this case so that the
parties would be able to identify any disputed claim terms, discovery, or expert issues
at the outset of this case, and to allow for claim construction. (Doc. 62). While claim
construction can be addressed as part of the dispositive motion process, see, e.g.,
While the Court has not adopted local patent rules, this Court agrees that claim construction is most
appropriate before the close of fact discovery.
4
5
MediaCom Corp., 4 F. Supp. 2d at 20-24, 35-38, this Court has already determined
that the better practice is to construe the claims first.
Since the filing of LNC’s Motion to Revise, the parties have fully briefed claim
construction in accordance with this Court’s scheduling order claim construction
deadlines – those which LNC seeks to delete. (Docs. 79, 83, 84). The deadlines
remaining on claim construction are for the Court to set a hearing on claim
construction, and for final infringement and validity contentions from the parties
after a claim construction ruling. (Doc. 62). LNC’s motion seeks to delete the claim
construction deadlines to allow for early summary judgment on the ‘903 patent
infringement issues.
Upon oral argument, the parties agreed that LNC’s Motion to Revise is
partially moot as to LNC’s request for deletion of claim construction briefing
deadlines, considering the parties had since fully briefed claim construction. Both
parties agreed there would be no need for expert testimony at a claim construction
hearing, but oral argument could be presented by the attorneys for the benefit of the
Court. The parties agreed that there was still a need to revise the scheduling order
to remove a claim construction hearing and to account for additional fact discovery
and expert discovery following a ruling on claim construction.
LNC argued an
additional six months would be needed if the Court were to grant EZPZ’s Motion to
Enforce (Doc. 85) for time to review document production of approximately 300,000
pages without assistance from Chiaviello. EZPZ argues three months should be
6
ample time for LNC to complete discovery upon document production after the
Court’s ruling on its Motion to Enforce.
Considering the agreement of the parties and the record before the Court,
LNC’s Motion to Revise is denied in part as moot regarding deletion of claim
construction briefing deadlines, and granted in part to delete the claim construction
hearing and to revise the scheduling order to allow for extension of discovery
deadlines pending a ruling on claim construction. LNC’s request to delete claim
construction briefing deadlines is moot as it has been fully briefed. Further, the Court
agrees that the parties briefing is sufficient at this time for the Court to make a ruling
on claim construction. 5 Additionally, the parties agree no testimonial evidence will
be presented at a hearing. Thus, LNC’s request to delete the deadline to hold a claim
construction hearing is granted. Given the pendency of the parties’ motions and the
fact discovery expired on January 18, 2018, LNC’s request for a six month extension
of discovery deadlines is granted.
3.
LNC’s request for leave to file an early summary judgment
motion is denied as premature.
Summary judgment is appropriate if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as
to any material fact and that the movant is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(c); see Johnston v. IVAC Corp., 885 F.2d 1574, 1576-77 (Fed. Cir.
1989). When a motion for summary judgment is properly supported by documentary
A claim construction ruling will follow separately. The claims will be construed using the parties’
claim construction submissions. Should the Court need any additional explanation or argument, the
Court is satisfied with addressing any questions it has through a conference with the parties.
5
7
and testimonial evidence, however, the nonmoving party may not rest upon mere
allegations or denials of his pleadings, but rather must present significant probative
evidence to establish a genuine issue of material fact. Corp. v. Catrett, 477 U.S. 317,
327 (1986).
Summary judgment is as available in patent cases as in other areas of
litigation. Continental Can Co. USA, Inc. v. Monsanto Co., 948 F.2d 1264, 1265 (Fed.
Cir. 1991). Where the parties do not dispute any relevant facts regarding the accused
product, but disagree over possible claim interpretations, the question of literal
infringement collapses into claim construction and is amenable to summary
judgment. See General Mills, Inc. v. Hunt-Wesson, Inc., 103 F.3d 978, 983 (Fed. Cir.
1997). When a district court’s determination of infringement is premised on an
erroneously construed claim, however, that determination is not entitled to deference.
Flex-Rest, LLC v. Steelcase, Inc., 455 F.3d 1351, 1357 (Fed. Cir. 2006); Warren v.
Kyler, 422 F.3d 132 (3d Cir. 2005).
The presumption of validity under 35 U.S.C. § 282 that a patent enjoys must
be overcome only through facts supported by clear and convincing evidence. See U.S.
Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1563 (Fed. Cir. 1997). Thus, a moving
party seeking to invalidate a patent at summary judgment must submit such clear
and convincing evidence of facts underlying invalidity that no reasonable jury could
find otherwise. See Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 716 (Fed. Cir. 1991).
Evaluation of summary judgment of noninfringement is a two-part inquiry:
first, a court construes the scope and meaning of the asserted patent claims, and then
8
compares the construed claims to the accused product or process. Infringement is a
question of fact. As such, a grant of summary judgment of noninfringement is proper
when no reasonable factfinder could find that the accused product contains every
claim limitation or its equivalent. Medgraph, Inc. v. Medtronic, Inc., 843 F.3d 942
(Fed. Cir. 2016).
As an alternative to revisiting the Scheduling Order, LNC seeks leave to file a
motion for summary judgment that the LNC products do not infringe and that the
EZPZ patent is invalid. (Doc. 76).
LNC argues there should be no factual dispute
regarding the accused LNC product and that it has a curved surface molded into the
bottom surface of the mat. (Doc. 76). LNC claims the only issue would be the proper
construction of two EZPZ patent claim terms relating to the mat bottom surface and
EZPZ’s requirement that the bottom surface be flat and not curved. (Doc. 76).
LNC argues the mat sold by LNC has a curved bottom surface that is neither
flat nor non-curved.
(Doc. 76).
Additionally, LNC argues under either parties’
constructions, the EZPZ patent is invalid, having been invented by another more than
a year prior to the filing date of the EZPZ patent. 6
(Doc. 76).
LNC stated it
understands that, under the current scheduling order, a summary judgment based
on a claim interpretation should only be filed after the Court issues its claim
construction order. (Doc. 76). LNC requests this Court forgo the claim construction
LNC submits that subsequent to the Court issuing Letters Rogatory, it is negotiating with Yanko
Design to obtain evidence regarding a dog bowl mat combination that was published more than a year
prior to the EZPZ patent filing date.
6
9
hearing and decide any claim construction issues in the context of a summary
judgment motion. 7 (Doc. 76).
EZPZ opposes an early summary judgment on the basis that it would be
inefficient and prejudicial to EZPZ. (Doc. 78). EZPZ argues there are more than two
terms that remain in dispute and need to be construed. (Doc. 76). EZPZ claims that
an early summary judgment would result in a fully briefed claim construction without
a ruling on the proposed constructions. (Doc. 78). EZPZ argues both sides would also
be without the other side’s final contentions. (Doc. 78). EZPZ suggests the parties
proceed with the current schedule and prepare final contentions and expert reports
after claim construction. (Doc. 78). Further, EZPZ argues that if the Court were to
move forward and their proposed constructions adopted, there would still be
substantial questions of fact that would remain unanswered in connection with
EZPZ’s claim for literal infringement. (Doc. 78).
EZPZ also maintains there are numerous accused products – all with different
configurations and designs. (Doc. 78). EZPZ argues it has not agreed that the accused
LNC product “has a curved surface molded into the bottom surface of the mat.” (Doc.
78). EZPZ asserts significant factual issues remain regarding the variety of the
accused products. (Doc. 78). Further, depending on the Court’s constructions, EZPZ
may claim infringement under the doctrine of equivalents – a fact specific inquiry
more appropriate for a jury. (Doc. 78).
The Court is granting in part LNC’s Motion to Revise the scheduling order to delete the claim
construction hearing.
7
10
EZPZ asserts that LNC’s asserted constructions raised by LNC in its motion
are incorrect, as the words “flat” and “non-curved” do not appear in the claims. (Doc.
78). 8 EZPZ argues that LNC does not correctly represent the scope of the asserted
claims or relevant case law. (Doc. 78). LNC only discusses relief sought with respect
to the ‘903 patent.
(Doc. 76).
However, as EZPZ points out, LNC’s Amended
Complaint provides five separate counts, one relating to the relief sought with respect
to the ‘903 patent. (Docs. 21, 78). Also, EZPZ’s Counterclaim includes 13 separate
counts, three of which relate to the ‘903 patent. (Docs. 40, 78).
Further, LNC argues that EZPZ contends there are no terms needing
construction other than the issue of whether the preamble is limiting. (Doc. 76). LNC
cites C.R. Bard, Inc. v. M3 Sys., 157 3d 1340, 1350 (Fed. Cir. 1998) for the general
rule that a preamble is not limiting unless it provides antecedents for ensuing claim
terms. (Doc. 76). LNC claims that, in this case, the terms recited in the preamble
are not referenced in the claim, so the preamble provides no antecedent basis and
plays no role in claim construction. (Doc. 76). However, EZPZ asserts this is not true.
(Doc. 78).
EZPZ argues the preamble of claim 1 recites: “A surface contact self-sealing
integrated tableware and dining mat comprising.” (Docs. 40, Ex. B, claim 1; 78).
EZPZ argues the body of claim 1 then recites “an entirely suffuse undersurface
disposed for sealable contact with an underlying surface upon which said mat is
disposed.” (Docs. 40, Ex. B, claim 1; 78). EZPZ asserts the preamble is providing the
EZPZ fully briefed the claim construction issues in its separately filed Markman briefing, but
addresses certain items raised by LNC in its motion. (Doc. 78).
8
11
antecedent basis for the “said mat” in the body of claim 1. EZPZ asserts it relied upon
the “self-sealing” limitation of the preamble leading to allowance of the claims, as
discussed in greater detail in its Opening Markman Brief. (Doc. 78).
LNC counters that it seeks to eliminate EZPZ’s ‘903 patent infringement claim.
(Doc. 81). LNC argues there are only two disputed claim terms to be resolved and the
issues of noninfringement and/or invalidity of the ‘903 patent are ripe for summary
judgment. (Doc. 81). LNC notes that EZPZ argues that three claims, not two, are in
dispute. (Docs. 78, 81). LNC argues that interpretation of both “planar portion” in
claims 1, 2, 5 and 9 and “[a]n entirely suffuse undersurface” in claim 1 necessarily
resolves the interpretation of “[a]n undersurface entirely suffuse upon the planar
portion” in claims 5 and 9. (Doc. 81). LNC argues that terms in a patent claim must
be consistently defined and may not be interpreted one way for one patent claim and
another way for another patent claim. (Doc. 81). LNC seeks to combine the claim
construction issues with an early LNC summary judgment motion to resolve EZPZ’s
‘903 patent infringement claim. (Doc. 81).
Here, the Court, in its discretion, has adopted a scheduling order that requires
claim construction and Markman hearing on the claim terms pursuant to Markman
v. Westview, Inc., 517 U.S. 370, 390 (1996). (Doc. 62). See Cytologix Corp., 424 F.3d
at 1172-73; Sofamor Daneck Grp., Inc., 74 F.3d 1216 at 1221. A patent describes “the
exact scope of an Invention and its manufacture to ‘secure to [the patentee] all to
which he is entitled, [and] to apprise the public of what is still open to them.’”
Markman, 517 U.S. at 373 (citation omitted).
12
“[I]t is only fair (and statutorily
required) that competitors be able to ascertain to a reasonable degree the scope of the
patentee’s right to exclude.” Markman v. Westview Instruments, Inc., 52 F. 3d 967,
978 (5th Cir. 1995 (en banc), aff’d, 517 U.S. 370 (1996). The claims of a patent define
the patented invention to which the patentee is entitled the right to exclude.
Markman, 517 U.S. at 373-374; Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir.
2005) (en banc) (citations omitted).
“Victory in any infringement suit requires a finding that the patent claim[s]
‘cover[ ] the alleged infringer’s product…’ which in turn necessitates a determination
of ‘what the word[s] in the claim[s] mean.’” Markman, 517 U.S. at 374 (citation
omitted). The meaning and scope of any disputed terms and limiting expressions in
the claims are determined by the court as a matter of law. Vivid Techs., Inc. v. Am.
Sci. & Eng’g, Inc., 200 F.3d 795, 803 (Fed.Cir.1999) (citing Markman, 52 F.3d at 976
and EMI Group North America, Inc. v. Intel Corp., 157 F.3d 887, 891 (Fed.Cir.1998));
Markman, 517 U.S. at 389–390. “[O]nly those terms need be construed that are in
controversy, and only to the extent necessary to resolve the controversy.” Vivid
Techs., Inc., 200 F.3d at 803 (citing U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d
1554, 1568 (Fed.Cir.1997) (claim construction is for “resolution of disputed
meanings”).
District Courts have considerable discretion as to whether, when, and how to
conduct claim construction proceedings. See Vivid Techs., Inc., 200 F.3d at 795;
Sofamor Danek Grp., 74 F.3d at 1221. Here, given the dispute among the parties
regarding the relevant facts of the accused product, the number of claim terms at
13
issue, as well as the construction of those terms, the Court finds it necessary to issue
its claim construction ruling prior to conducting an infringement analysis on LNC’s
summary judgment motion as to infringement and invalidity. LNC’s request for leave
to file an early summary judgment motion is denied.
B.
EZPZ’s Motion to Enforce (Doc. 85) the Stipulated Protective Order is
granted on the basis that Chiaviello is a competitive decisionmaker.
1.
Standards governing the Stipulated Protective Order and
“competitive decisionmaking.”
Whether a protective order should include a patent prosecution bar is a matter
governed by Federal Circuit law. In re Deutsche Bank Trust Co. Americas, 605 F.3d
1373, 1378 (Fed. Cir. 2010). A party seeking a protective order carries the burden of
showing good cause for its issuance. Id. (citing Fed. R. Civ. P. 26(c); Truswal Sys.
Cor. V. Hydro-Air Eng’g, Inc., 813 F.2d 1207, 1209-10 (Fed. Cir. 1987)). The same is
true for a party seeking to include in a protective order a provision effecting a patent
prosecution bar.
Id.
“Whether an unacceptable opportunity for inadvertent
disclosure exists…must be determined…by the facts on a counsel-by-counsel basis.”
Id. (citing U.S. Steel Corp. v. U.S., 730 F.2d 1465, 1468 (Fed. Cir. 1984)).
The counsel-by-counsel determination should turn on the extent to which
counsel is involved in “competitive decision-making” with its client.
Id.
When
deciding whether to impose a prosecution bar, courts must balance “one party's right
to broad discovery and the other party's ability to protect its confidential materials
from misuse by competitors.” Ameranth, Inc. v. Pizza Hut, Inc., 2012 WL 528248, at
14
*3 (S.D. Cal. 2012) (citing Avocent Redmond Corp. v. Rose Electronics, 242 F.R.D.
574, 577 (W.D. Wash. 2007)).
Status as in-house counsel cannot alone create the probability of serious risk
to confidentiality, and cannot serve as the sole basis for denial of access to confidential
information. U.S. Steel Corp., 730 F.2d at 1468-1469. In U.S. Steel Corp., the parties
referred to involvement in “competitive decisionmaking” as shorthand for a counsel’s
activities, association, and relationship with a client that are such as to involve
counsel’s advice and participation in any or all of the client’s decisions (pricing,
product design, etc.) made in light of similar or corresponding information about a
competitor. Id. at 1468, n. 3.
“[T]he U.S. Steel court’s listing of client decisions was not limited to ‘pricing
and product design.’ The court’s use of ‘etc.’ reveals that those are only examples of
the kinds of client decisions that may be made ‘in light of similar or corresponding
information about a competitor.’ A number of courts have held that advice by counsel
in prosecuting patent applications falls within the scope of ‘competitive
decisionmaking.’” Cummins-Allison Corp. v. Glory Ltd., 2003 WL 26620151, at *6
(N.D. Ill. 2003). “A crucial factor in the U.S. Steel case was whether in-house counsel
was involved in competitive decisionmaking; that is, advising on decisions about
pricing or design made in light of similar or corresponding information about a
competitor.” Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.
1992) (citing Matsushita Elec. Indus. Co. v. United States, 929 F.2d 1577, 1579 (Fed.
Cir. 1991)).
15
2.
Chiaviello is a “competitive decisionmaker” under the terms of
the Stipulated Protective Order.
This Court previously granted in part and denied in part the parties’ Joint
Motion for Protective Order. (Doc. 70), and entered a Stipulated Protective Order.
(Doc. 71). The Court concluded that EZPZ had not met their burden of establishing
good cause to include a patent prosecution bar in the protective order. (Doc. 70). At
that time, EZPZ had not yet shown that any in-house counsel at LNC was a
competitive decisionmaker or would pose an unacceptable risk of inadvertently
disclosing confidential information.
EZPZ’s Motion to Enforce (Doc. 85) now seeks to enforce the Joint Stipulated
Protective Order and exclude Chiaviello from having access to EZPZ’s confidential
information. (Doc. 85). EZPZ argues that LNC, Hakim, and Admar fought for a
protective order that allowed their in-house counsel to view EZPZ’s sensitive business
information. (Doc. 85-1). EZPZ argues they do not seek to reargue the protective
order, but seek to enforce the terms specifically requested by LNC and adopted by the
Court. (Doc. 85-1). EZPZ alleges it has discovered additional facts not previously
presented to the Court that render Chiaviello a “competitive decisionmaker” who
should be excluded from seeing EZPZ’s confidential documents.
(Doc. 85-1).
Specifically, EZPZ asserts Chiaviello is prosecuting patents on behalf of the CounterDefendants Hakim and Admar related to the very technology at issue in this case.
(Doc. 85-1).
EZPZ argues that one of the primary issues here, and at the time the protective
order was disputed, is what defines a “competitive decisionmaker.” (Doc. 85-1). EZPZ
16
points out that under the current protective order, an individual that is a competitive
decision maker (as defined in U.S. Steel Corp. v. U.S., 730 F.2d 1465 (Fed. Cir. 1984))
may not have access to the other party’s confidential or highly confidential
information. (Doc. 71). EZPZ urges it is now forced to seek an order that Chiaviello
is a competitive decisionmaker. (Doc. 85-1).
EZPZ attempted resolution via written correspondence with Chiaviello for him
to exclude himself from having access to confidential information under the protective
order. (Doc. 85-2). EZPZ alleges they also offered to produce documents to LNC’s
other attorneys, once LNC provided a written declaration they are not involved in
patent prosecution or advising on prosecution. (Doc. 85-2). LNC has not accepted
either proposal. (Doc. 85-1).
LNC claims that Chiaviello is not a competitive decisionmaker and is not
“substantially involved” in the prosecution of LNC’s PCT application. (Doc. 88). LNC
argues that removing Chiaviello’s access to EZPZ’s confidential information will
cause undue financial burden, undue hardship, and delay LNC’s prosecution of this
lawsuit. (Doc. 88). LNC argues there is no allegation that LNC or its counsel has
violated the Stipulated Protective Order. (Doc. 88). LNC argues EZPZ’s motion is a
pretext for withholding its long overdue production of approximately 300,000
documents. 9 (Doc. 88). LNC interprets EZPZ’s actions as characterizing the entire
300,000 pages of document production as confidential, to which EZPZ seeks to restrict
9
The deadline for fact discovery was on January 18, 2017. (Doc. 62).
17
Chiaviello’s access. 10 (Doc. 88). LNC submits that it has already implemented a
solution – Chiaviello plans to transfer LNC’s patent application for LNC’s feeding
mat to outside counsel. (Doc. 88). There is no evidence in the record that Chiaviello
has transferred the patent application.
LNC submits that EZPZ takes issue with LNC’s PCT Patent Application No.
PCT/US17/45110. (Doc. 88). Chiaviello prepared and filed, on behalf of Hakim, a
provisional patent application for a “Feeding Mat” with the PTO on August 10, 2016.
(Doc. 88-1). Chiaviello, through his legal assistant, filed a PCT patent application on
August 9, 2017 in the PTO, based on the previous Hakim provisional application for
the “Feeding Mat.” (Doc. 88-1).
LNC argues Chiaviello made no changes to the patent application itself. (Doc.
88-1). During the International Phase, there is no substantive prosecution of the PCT
patent application.
(Doc. 88-1).
Chiaviello attests that he currently serves as
Hakim’s legal representative for the Hakim PCT Application. (Doc. 88-1). Chiaviello
attests that he likely would have not been engaged in any prosecution, substantive
or not, while the Hakim PCT Application is in the International Phase and during
this litigation. (Doc. 88-1). However, Chiaviello attests that as a resolution he was
instructed by LNC’s CEO and patentee, Hakim, to transfer this application to outside
counsel for prosecution of this application. (Doc. 88-1).
LNC submits that it has requested EZPZ’s social media posts, messages, texts and blogs, as well as
documents and communications containing affidavits submitted by EZPZ to the PTO as well as prior
art. (Doc. 88). LNC asserts that it will seek sanctions and other appropriate relief if EZPZ has failed
to produce among the 300,000 documents those documents that are not confidential and improperly
being withheld from production.
10
18
Chiaviello attests he is in the process of transferring the application as
instructed. (Doc. 88-1). LNC argues and Chiaviello attests that, under PCT patent
practice, there is no prosecution activity that could involve Chiaviello before February
2020. (Doc. 88). LNC argues this disposes of EZPZ’s sole basis of its position that
Chiaviello is a competitive decision maker. (Doc. 88). LNC argues that, effectively,
EZPZ’s proposed enforcement would remove or disqualify Chiaviello as LNC’s counsel
in this suit. (Doc. 88).
LNC further argues it provided to one of EZPZ’s attorneys, Jordan Bolton, a
copy of the provisional application. (Doc. 88-1). LNC asserts EZPZ knew of the filing
of PCT application in August of 2016. (Doc. 88-1). However, EZPZ asserts that LNC
failed to include anything identifying Chiaviello as the prosecuting patent attorney
on the PCT patent application. (Doc. 91). Bolton attested he was never informed by
Chiaviello that he handled the filing of the provisional patent application or other
design patent applications identified in August 2016. (Doc. 91-5).
EZPZ argues that this was highly relevant to the protective order dispute, yet
not known to EZPZ until September 2017, prompting this motion. (Doc. 91). EZPZ
asserts Chiaviello could have changed the claims or added claims when filing the PCT
application, but chose not to – after the issuance of the EZPZ ‘903 Patent almost a
year earlier. (Doc. 91). EZPZ argues Chiaviello is a competitive decisionmaker who
after the filing of this lawsuit acknowledges he prepared and filed the provisional
application in August 2016 – two months after this suit was filed. (Doc. 91). Further,
EZPZ asserts LNC failed to disclose Chiaviello as a witness on its Rule 26 disclosures.
19
(Doc. 91). EZPZ argues it assumed that this meant an outside firm would have
handled prosecution of LNC’s patent application. (Doc. 91).
EZPZ asserts that finding Chiaviello is a competitive decision maker would not
exclude Chiaviello from participating in this lawsuit as it would not prevent him from
handling claim construction, as well as a majority of the issues related to
infringement and validity. (Doc. 91). EZPZ asserts none of the information relating
to those issues concerning the prosecution history, the accused products, and the
alleged prior art is confidential. (Doc. 91).
LNC argues EZPZ seeks to modify the protective order, and thus bears the
burden of proof to show “good cause” for the modification. (Doc. 88). However, EZPZ
asserts, rather, it seeks to enforce the protective order to preclude a competitive
decisionmaker from access to its confidential information. (Doc. 91). Thus, for the
purposes of EZPZ’s Motion to Enforce, the Court must determine whether Chiaviello
falls within the definition of a competitive decision-maker under the Stipulated
Protective Order, Section 2.B.a. 11
Chiaviello is part of the “Nuby Law legal team” for LNC.
(Doc. 65-3).
Chiaviello joined LNC on February 17, 2016. (Doc. 88-1). Chiaviello provides legal
advice and counseling to LNC primarily with regard to intellectual property issues
and on occasion more general legal issues. (Doc. 65-3). Chiaviello is registered to
practice before the PTO and is familiar with U.S. Patent Laws and the rules and
The Court notes that the Stipulated Protective Order protects the rights of a party to seek
determination whether information or material is subject to the terms of the protective order, and
relating to any persons to whom such information may be disclosed. (Doc. 62).
11
20
regulations of the PTO including those relating to filing, examination, and
prosecution of patent applications. (Doc. 88-1).
Chiaviello attests he has not been asked to provide any business advice or
participate in competitive decisionmaking for LNC and would not be qualified to give
such advice. (Doc. 65-3). Chiaviello, however, also attests he prepared and filed, on
behalf of Hakim, a provisional patent application for a “Feeding Mat” with the PTO
on August 10, 2016. (Doc. 88-1). Chiaviello, through his legal assistant, filed a PCT
patent application on August 9, 2017, in the PTO based on the previous Hakim
provisional application for the “Feeding Mat.” (Doc. 88-1).
EZPZ asserts this application was not publicly available to anyone other than
the inventor or assignee and their counsel. (Doc. 85-1). Chiaviello attests that the
PCT Application is the only utility patent application filed by Hakim involving the
subject matter of feeding mats. (Doc. 88-1). The parties dispute whether it was
disclosed in August 2016 to EZPZ’s counsel that Chiaviello was the attorney who filed
the application on behalf of LNC. (Doc. 88-1, Doc. 91). Chiaviello also prepared and
filed design patent applications for Hakim for five other feeding mat designs. (Doc.
88-1). EZPZ asserts that Chiaviello’s role in prosecuting the Hakim PCT application
should have been disclosed during the protective order dispute when the question of
competitive decisionmaking was presented. (Doc. 85-1).
However,
not
every
patent
prosecution
attorney
is
a
competitive
decisionmaker. Deutsche Bank, 605 F.3d at 1379. In Deutsche Bank, the Federal
Circuit distinguished between counsel with administrative and oversight duties
21
related to patent prosecution and counsel involved “in crafting the content of patent
applications or advising clients on the direction to take their portfolios.” Id. at 1379–
80. A party's counsel engaged in the latter category of activities poses a more
significant risk of inadvertent disclosure than the former. Id. at 1380. The court is
required to “examine all relevant facts surrounding counsel's actual preparation and
prosecution activities, on a counsel-by-counsel basis” to determine the risk of
inadvertent disclosure. Id.
EZPZ cites to Deutsche Bank, as the only post-U.S. Steel Federal Circuit case
that recites the standard of activities constituting competitive decision making. (Doc.
85-1). EZPZ states that Deutsche Bank, 605 F.3d at 1379, distinguishes between
attorneys managerially involved in prosecution and those “substantially engaged” in
prosecution. (Doc. 85-1). EZPZ argues Chiaviello falls into the latter category on the
basis that “[h]e analyzes and submits prior art, e.g. identifying EZPZ’s patent
application (Dkt. 83-2 at 1-2 (citing U.S. App. No. 14/333,682)), he makes strategic
decisions concerning claim scope, and has the ability to amend the claims.” (Doc. 851). EZPZ argues that Chiaviello’s access to EZPZ’s key projects could result in LNC
filing patents on EZPZ’s inventions or blocking EZPZ from strategic markets – what
EZPZ claims LNC is attempting with its Sure Grip mats in this case. (Doc. 85-1).
The court in Deutsche Bank found that attorneys more “substantially engaged”
in prosecution are those who participate in “obtaining disclosure materials for new
inventions and inventions under development, investigating prior art relating to
those inventions, making strategic decisions on the type and scope of patent
22
protection that might be available or worth pursuing for such inventions, writing,
reviewing, or approving new applications or continuations-in-part of applications to
cover those inventions, or strategically amending or surrendering claim scope during
prosecution.” Deutsche Bank, 605 F.3d at 1379.
The Court further notes that “the opportunity to control the content of patent
applications and the direction and scope of protection sought in those applications
may be significant. The risk of inadvertent disclosure of competitive information
learned during litigation is therefore much greater for such attorneys. Such attorneys
would not likely be properly exempted from a patent prosecution bar.” Id. The court
noted it is important “to examine all relevant facts surrounding counsel’s actual
preparation and prosecution activities, on a counsel-by-counsel basis.” Id.
In light of the submissions of the parties, this Court finds EZPZ has shown
that Chiaviello is a competitive decisionmaker. Chiaviello participated in preparing
patent applications before the PTO on behalf of LNC.
Specifically, Chiaviello
prepared and filed both a provisional application and the Hakim PCT patent
application – for an integrated feeding mat relevant to this suit – making him a
competitive decisionmaker. 12 The record shows Chiaviello is the prosecuting attorney
on the applications.
See In re Papst Licensing, GmbH, Patent Litig., MDL 1298, 2000 WL 554219, at *3–4 (E.D. La. May
4, 2000) (upholding protective order which required counsel having access to confidential information
to refrain from advice in patent prosecution for one year after conclusion of litigation, including
appeals) (“[A]dvice and participation of the Papst parties' counsel in preparation and prosecution of
patent applications related to the patents in suit is an intensely competitive decisionmaking activity
and would be informed by access to the Non–Papst parties confidential information.”); see also Chan
v. Intuit, Inc., 218 F.R.D. 659, 661–662 (N.D.Cal. 2003) (“[I]f advice related to patent prosecution is
defined as competitive decision-making ... then advice on the scope of patent claims must also be
defined as competitive decision-making.”).
12
23
Chiaviello would be informed by access to EZPZ’s confidential information.
EZPZ has legitimate concerns that Chiaviello’s access to their confidential material
would allow him to draft claims related to products not yet publicly released or
disclosed in his ongoing prosecutions. (Doc. 85-2). Chiaviello is the only member of
the Nuby Law legal team who is registered to practice before the PTO to prepare and
prosecute patent applications. (Docs. 65-3, 65-4, 65-5). Further, Hakim attested the
legal team is called on to vet its designs to ensure they violate no valid intellectual
property rights of others and for obtaining appropriate legal protection. (Doc. 65-2).
Knowledge of EZPZ’s confidential information would place Chiaviello in the
“untenable position” of having to refuse his employer legal advice on the primary area
he provides counsel – intellectual property including representation before the PTO
– or try to “lock-up trade secrets in his mind, safe from inadvertent disclosure.” (Doc.
65-3); See e.g. Brown Bag Software, 960 F.2d at 1471.
As to prejudice to LNC, the Nuby Law legal team consists of two other lawyers,
who have been involved in this litigation from the outset. While not registered to
practice before the PTO to prepare and prosecute patents, at least one other member
of the Nuby Law legal team is an experienced intellectual property attorney. (Doc.
65-5).
Any hardship to LNC is mitigated by the presence of other intellectual
property counsel in the case representing LNC. 13
Additionally, this Court has
See e.g. Cummins-Allison Corp. v. Glory Ltd., 02 C 7008, 2003 WL 26620151, at *6–7 (citing Mikohn
Gaming Corp., 50 U.S.P.Q. at 1785.) (“The court in Mikohn barred defendant's patent counsel from
access to the plaintiff's confidential information, finding that the hardship to defendant was mitigated
by the presence of other patent counsel in the case representing the defendant and, in any event, was
outweighed by the risk of unauthorized disclosure.”).
13
24
granted a six-month extension for completion of fact and expert discovery, which also
alleviates any burden to LNC.
The risk of inadvertent disclosure of EZPZ’s
confidential information outweighs any impairment, if any, of LNC’s ability to litigate
this action. Deutsche Bank, 605 F.3d at 1381. EZPZ’s Motion to Enforce is granted
insofar as Chiaviello is determined to be a competitive decisionmaker.
III.
Conclusion
IT IS ORDERED that LNC’s Motion to Revise (Doc. 76) is DENIED IN PART
as moot as to deletion of claim construction briefing deadlines, and GRANTED IN
PART to delete the claim construction hearing 14 and to allow for a six month
extension of discovery deadlines pending this Court’s ruling on claim construction.
IT IS FURTHER ORDERED that the scheduling order deadlines are extended
as follows:
•
The deadline for completion of fact discovery is July 18, 2018.
•
The deadline for parties to exchange disclosures for expert witnesses by the
party with the burden of proof is August 19, 2018.
•
The deadline for the parties to exchange rebuttal expert reports is
September 22, 2018.
•
The deadline for completion of expert discovery is October 2, 2018.
•
The deadline for dispositive motions and Daubert motions is October 16,
2018.
The deadline for the parties’ contentions upon this Court’s claim construction ruling remains. EZPZ
will have fourteen days for its final infringement contentions. LNC will have fourteen days for its final
invalidity and unenforceability contentions. (Doc. 62).
14
25
•
The deadline for response briefs on dispositive motions and Daubert
motions is November 8, 2018.
•
The deadline for reply briefs on dispositive motions and Daubert motions is
November 21, 2018.
•
The deadline for submission of proposed final pretrial order is December
26, 2018.
•
The deadline for filing Motions in Limine is February 22, 2019.
•
The deadline for responses to Motions in Limine is March 5, 2019.
•
The deadline for submissions of proposed joint jury instructions and
proposed joint verdict forms is March 25, 2019.
•
The pretrial conference and trial date will be set at a later date.
IT IS FURTHER ORDERED that LNC’s request for leave to file early motion
for summary judgment (Doc. 76) is DENIED as premature.
IT IS FURTHER ORDERED EZPZ’s Motion to Enforce (Doc. 85) is GRANTED
as this Court finds Chiaviello to be a competitive decisionmaker as set forth in the
Stipulated Protective Order. Thus, this Court finds Chiaviello should be treated as a
competitive decisionmaker in terms of access to discovery materials designated
“Confidential” as set forth in the Stipulated Protective Order.
THUS DONE AND SIGNED in chambers in Alexandria, Louisiana, this
29th
_______ day of January, 2018.
______________________________
Joseph H.L. Perez-Montes
United States Magistrate Judge
26
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?