W E T Automotive Systems, Ltd v. IGB Automotive Ltd

Filing 125

ORDER Granting Plaintiffs Leave to File Third Amended Complaint; Permitting Addition of Gentherm GmbH as a Party; denying 88 MOTION to Confirm Dismissal with Prejudice and Right to Pursue Exceptional Case Status, vacating in part 79 Supple mental Order Granting Plaintiff's Motion to Dismiss Fifth and Ninth Claims; Granting 92 MOTION To Reduce Gentherm's Number of Asserted Patent Claims; Ordering Defendant to Reduce Prior Art and Setting Discovery Cut-off Date: Discovery due by 4/30/2016. Signed by District Judge Arthur J. Tarnow. (MLan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

GENTHERM CANADA, LTD, ET AL.,
Case No. 13-11536
Plaintiffs,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW

v.
IGB AUTOMOTIVE, LTD,

U.S. MAGISTRATE JUDGE
ANTHONY P. PATTI

Defendant.
/

ORDER GRANTING PLAINTIFFS LEAVE TO FILE THIRD AMENDED COMPLAINT;
PERMITTING ADDITION OF GENTHERM GMBH AS A PARTY; DENYING
DEFENDANT’S MOTION TO CONFIRM DISMISSAL WITH PREJUDICE AND RIGHT TO
PURSUE EXCEPTIONAL CASE STATUS [88]; VACATING IN PART SUPPLEMENTAL
ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS FIFTH AND NINTH CLAIMS
[79]; GRANTING DEFENDANT’S MOTION TO REDUCE NUMBER OF ASSERTED
PATENT CLAIMS [92]; ORDERING DEFENDANT TO REDUCE PRIOR ART; AND
SETTING APRIL 30, 2016 DISCOVERY CUT-OFF DATE

Defendant IGB Automotive manufactures and sells products related to
heating and cooling systems for car seats. Plaintiffs Gentherm Canada and
Gentherm GmbH (collectively “Gentherm”) claim that Defendant’s manufacture
and sale of these products has infringed several of Plaintiffs’ patents. On January
22, 2016, Defendant filed a Motion to Dismiss [87], along with a Motion to
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Confirm Dismissal with Prejudice and Right to Pursue Exceptional Case Status
[88]. On February 9, 2016, Defendant filed a Motion to Reduce Number of
Asserted Patent Claims [92].
The Court finds the latter two motions suitable for determination without a
hearing in accord with Local Rule 7.1(f)(2). The Court does not now resolve the
Motion to Dismiss but, as explained below, will deny the motion without prejudice
if Gentherm files a Third Amended Complaint within 14 days after entry of this
Order.
I.

Motion to Dismiss [87]
Gentherm filed its original complaint on April 4, 2013, and its first amended

complaint on July 22, 2013. On December 23, 2015, the Court entered a proposed
order submitted by Defendant, requiring Gentherm to file a second amended
complaint. Gentherm filed its Second Amended Complaint [80] on January 5,
2016. The Second Amended Complaint dropped several claims and added as a
plaintiff a new Gentherm entity, Gentherm GmbH. Defendant moves to dismiss
the Second Amended Complaint in its entirety, arguing that it does not plead
sufficiently detailed or specific factual allegations and is therefore defective for
failing to articulate a plausible claim, as required by Ashcroft v. Iqbal, 556 U.S.
662 (2009). Defendant also moves to dismiss Gentherm GmbH on the grounds
that it was added as a party without an order of the Court permitting its addition.
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Without opining on the merits of Defendant’s Iqbal challenge, the Court
grants Gentherm leave to file a Third Amended Complaint to cure the purported
pleading defects.1 Gentherm may do so within 14 days after entry of this Order. If
Gentherm timely files a Third Amended Complaint, the Court will dismiss
Defendant’s Motion to Dismiss without prejudice, giving Defendant the option to
(1) file a renewed dispositive motion taking into account the more detailed
allegations of the Third Amended Complaint, or (2) reopen the original motion,
relying on the arguments presented in its support, by written notice to the Court.
The Court further orders that Gentherm GmbH may be added as a party.
FED. R. CIV. P. 21 (“On motion or on its own, the court may at any time, on just
terms, add or drop a party.”). If Gentherm files a Third Amended Complaint
including Gentherm GmbH as a plaintiff, it will do so with the Court’s express
permission. In that case, Defendant’s argument for dismissal of Gentherm GmbH
will likely be moot.
II.

Motion to Confirm [88]
Defendant’s Motion to Confirm Dismissal with Prejudice and Right to

Pursue Exceptional Case Status [88] is grounded in unusual procedural history. On
December 3, 2015, Gentherm filed a motion to voluntarily dismiss its fifth and

1

Cf. The Honorable Mark A. Goldsmith, A Judicial Response to the Iqbal
Revolution, 94 MICH. B.J. 56 (Sept. 2015).
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ninth claims for relief. The Court entered Gentherm’s proposed order granting the
motion. On December 21, 2015, Defendant filed a motion to amend the order
(styled as a response to the order). Defendant asked the Court to order Gentherm
to file an amended complaint and to confirm that Defendant retains the right to
move for exceptional case status with respect to the dismissed fifth and ninth
claims. Two days later—before Gentherm could respond—the Court entered the
proposed order granting this motion. The Court’s amended order thus required
Gentherm to submit a Second Amended Complaint, which it did on January 5,
2016. The Second Amended Complaint omitted not only the fifth and ninth
claims, but also the second and seventh claims. Defendant’s instant motion to
“confirm” asks the Court to rule with respect to the second and seventh claims, as
it did with respect to the fifth and ninth, that the claims were dismissed with
prejudice and that Defendant retains the right to move for exceptional case status
with respect to them.
Defendant cites no authority requiring that Gentherm’s voluntary dismissal
of its second and seventh claims be with prejudice. Defendant does cite authority
stating that a court may grant leave to amend on the condition that any omitted
claims are dismissed with prejudice. However, the Court did not make any such
condition clear when it entered the non-stipulated proposed order requiring

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Gentherm to amend its complaint. The Court declines to impose that condition
retroactively.
Defendant also fails to cite authority supporting reservation of its right to
move for exceptional case status. Whether Defendant has a “right” to file any
motion it may choose to file in the future is an issue best resolved when, if ever,
such motion is filed. The Court therefore declines to order that Defendant has
reserved a right to move for exceptional case status. Further, the Court vacates the
portion of its Supplemental Order Granting Plaintiff’s Motion to Dismiss Fifth and
Ninth Claims [79] concerning the reservation of Defendant’s right to move for
exceptional case status, pursuant to the Court’s inherent authority to reconsider
interlocutory orders. In re Saffady, 524 F.3d 799, 803 (6th Cir. 2008) (“[D]istrict
courts have inherent power to reconsider interlocutory orders and reopen any part
of a case before entry of a final judgment.”) (quoting Mallory v. Eyrich, 922 F.2d
1273, 1282 (6th Cir. 1991)).
In sum, Defendant’s Motion to Confirm Dismissal with Prejudice and Right
to Pursue Exceptional Case Status [88] is denied.
III.

Motion to Reduce Number of Asserted Patent Claims [92]
Where a defendant has produced evidence that the plaintiff’s patent claims

are duplicative, a district court may order the plaintiff to select a certain number of
claims and proceed to enter judgment not only on the claims that go to trial, but
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also on the non-selected claims. In re Katz Interactive Call Processing Patent
Litigation, 639 F.3d 1303, 1311–13 (Fed. Cir. 2011). This procedure violates due
process if a non-selected claim presents a unique legal issue and the patentee
objects, in the district court, to the deprivation of its right to adjudication of that
issue. Nuance Communications, Inc. v. ABBYY USA Software House, Inc., --- F.3d
---, 2016 WL 692497, at *8 (Fed. Cir. 2016). Thus, the district court should permit
a plaintiff to add any non-selected claim to the group of selected claims for good
cause, such as a showing that the non-selected claim presents a unique legal issue.
See In re Katz, 639 F.3d at 1311–13 (affirming district court’s entry of judgment
on non-selected claims, which the district court had refused to sever and stay,
where the reduction order included a proviso allowing new claims if they raised
non-duplicative issues); Stamps.com Inc. v. Endicia, Inc., 437 F. App’x 897, 902
(Fed. Cir. 2011) (affirming district court’s reduction of claims where the district
court stated that it “would remain flexible if plaintiffs showed good cause for
additional claims”).
Defendant’s Motion to Reduce Claims [92] asks the Court to order
Gentherm to select no more than two claims per patent (for a total of no more than
fourteen claims) with which to proceed. Gentherm has agreed to proceed on only
eighteen claims. Though Gentherm argues that its voluntary narrowing is
sufficient, it cites no authority limiting the Court’s discretion to order a further
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reduction in claims. The Court concludes that limiting Gentherm to two claims per
patent is both reasonable and within standard practice of other district courts. See,
e.g., 3D Systems, Inc. v. Envisiontec, Inc., No. 05–74891, 2011 WL 4691937, at
*2–*4 (E.D. Mich. Oct. 6, 2011) (unpublished) (limiting plaintiff to one claim per
patent); Joao Control and Monitoring Systems, LLC v. Ford Motor Co., Nos. 13–
CV–13615, 13–CV–13957, 2014 WL 106926, at *3 (E.D. Mich. Jan. 10, 2014)
(unpublished) (“[L]imiting the number of asserted claims to one to three claims per
patent would be consistent with the approaches of various district courts.”). The
Court therefore grants Defendant’s Motion to Reduce Claims and orders Gentherm
to select, within 21 days after entry of this Order, no more than two claims per
patent (for a total of no more than fourteen claims) on which to proceed.
IV.

Scheduling Matters
At two recent status conferences with counsel for the parties, the Court

communicated to counsel its expectation that Defendant will select twenty-two
items of prior art with which to proceed. Defendant is ordered to do so within 21
days after receiving notice of Gentherm’s selection of claims.
At a recent status conference, the Court informally set a discovery cut-off
date of April 30, 2016. The Court hereby formalizes the April 30 discovery cut-off
date. The Court acknowledges again, as it did at the status conference, that the
parties may move to extend discovery if necessary.
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The parties have argued about the appropriate timing of some additional
deadlines leading up to the Markman hearing scheduled for July 21, 2016. For the
time being, the Court trusts the parties and their counsel to resolve these disputes
and stipulate to the remaining pre-Markman hearing deadlines.
CONCLUSION
For the reasons stated above,
IT IS ORDERED that Plaintiffs are granted leave to file a Third Amended
Complaint within 14 days after entry of this Order.
IT IS FURTHER ORDERED that Gentherm GmbH may be added as a
party.
IT IS FURTHER ORDERED that Defendant’s Motion to Confirm
Dismissal with Prejudice and Right to Pursue Exceptional Case Status [88] is
DENIED.
IT IS FURTHER ORDERED that the Court’s Supplemental Order
Granting Plaintiff’s Motion to Dismiss Fifth and Ninth Claims [79] is VACATED
IN PART. The portion of the order concerning the reservation of Defendant’s
right to move for exceptional case status is vacated.
IT IS FURTHER ORDERED that Defendant’s Motion to Reduce Number
of Asserted Patent Claims [92] is GRANTED. Plaintiffs must select, within 21

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days after entry of this Order, no more than two claims per patent (for a total of no
more than fourteen claims) on which to proceed.
IT IS FURTHER ORDERED that Defendant must select, within 21 days
after receiving notice of Gentherm’s selection of claims, twenty-two items of prior
art with which to proceed.
IT IS FURTHER ORDERED that a discovery cut-off date is set for April
30, 2016.
SO ORDERED.

Dated: March 25, 2016

s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge

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