Rates Technology Inc. v. Broadvox Holding Company, LLC et al

Filing 116

OPINION AND ORDER: For the foregoing reasons, Broadvox Holding's motion to dismiss and the motion for sanctions are both denied. RTI's motion for a protective order is moot. The Clerk of the Court is directed to close these motions [Docket Nos. 30, 57, and 71]. (Signed by Judge Shira A. Scheindlin on 1/6/2014) (cd)

tJSDCS~y

IXlCI1MENT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
X

RATES TECHNOLOGY INC.,

W~n.~ FIIli>
lXlC #:
.
DXtU Fll,ED: I j fa I ~

Plaintiff,
OPINION AND ORDER
- against­
13 Civ. 0152 (SAS)
BROADVOX HOLDING COMPANY, LLC,
CYPRESS COMMUNICATIONS
OPERATING COMPANY, LCC, AND ABC
COMPANIES, 1 TO 10,

Defendants.

-------------------------------------------------------- X
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION 1
Rates Technology Inc. ("RTI") brings this action against Broadvox

Holding Company, LLC ("Broadvox Holding"), its named subsidiary, Cypress
Communications Operating Company, LLC ("Cypress," and with Broadvox
Holding, "Defendants"), and its unnamed subsidiaries or corporate affiliates, ABC
Companies 1 to 10, for patent infringement. 2 Broadvox Holding moves to dismiss

This Court has jurisdiction over this patent infringement action under
28 U.S.C. §§ 1331 and 1338(a).
2

See First Amended Complaint ("FAC") ~ 6.
1

for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure
(“Rule”) 12(b)(2).3 Defendants also move for sanctions against RTI and its
attorneys on the grounds that filing the Amended Complaint violates Rule 11. For
the following reasons, both motions are DENIED.
II.

BACKGROUND 4
Broadvox Holding is private holding company organized under

Delaware law with a principal place of business in Ohio.5 Cypress is a Delaware
limited liability corporation with a principal place of business in Georgia.6 ABC
Companies 1 to 10 are corporate subsidiaries or affiliates of Broadvox Holding.7
Through its subsidiaries, Broadvox Holding provides IP-based information
services to approximately three hundred wholesale carriers, businesses, and
enterprise retail customers in New York and throughout the United States.8

3

Defendants have withdrawn their Rule 12(b)(6) motion to dismiss.
See Doc. No. 98.
4

The following facts are drawn from the First Amended Complaint and
the parties’ submissions on the pending motions, including affidavits and exhibits.
5

See FAC ¶ 2.

6

See id. ¶ 3.

7

See id. ¶ 4.

8

See Merger Application of Broadvox Holding and Cypress (“Merger
Application”), Ex. B to the Declaration of Tal S. Benschar at 3-4.
2

Specifically, Broadvox Holding, through its subsidiaries, operates a VoIP network
in New York, which is among its top ten retail markets.9
RTI, a Delaware company, owns several patents in the
telecommunications field, including the two telecommunications patents at issue,
United States Patent No. 5,425,085 (the “085 Patent”) and United States Patent No.
5,519,769 (the “769 Patent”).10 Both patents cover inventions related to the
automatic routing of telephone calls based on cost.11
RTI alleges that (1) defendants’ “systems and methods performed in
those systems” directly infringe the ‘769 Patent; and that (2) the systems use a
“device” that directly infringes the ‘085 Patent.12
III.

LEGAL STANDARD
A.

Rule 12(b)(2) Motion to Dismiss
District courts employ Federal Circuit law in assessing personal

jurisdiction over patent claims.13 On a motion to dismiss for lack of personal

9

See FAC ¶ 8; Merger Application at 11.

10

See FAC ¶¶ 11, 19.

11

See id.

12

Id. ¶¶ 13, 21.

13

See Grober v. Mako Prods. Inc., 686 F.3d 1335, 1345 (Fed. Cir.
2012); Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed. Cir. 2002).
3

jurisdiction, the plaintiff bears the burden of showing personal jurisdiction.14
“[W]here the district court’s disposition as to the personal jurisdiction question is
based on affidavits and other written materials in the absence of an evidentiary
hearing, a plaintiff need only to make a prima facie showing that defendants are
subject to personal jurisdiction.”15 “When analyzing this showing after a motion to
dismiss, the district court must accept uncontroverted allegations in plaintiff’s
complaint as true and resolve any factual conflicts in plaintiff’s favor.”16
1.

Personal Jurisdiction

The test for personal jurisdiction in the Federal Circuit mirrors the
one employed by the Second Circuit.17 Under the test, “[f]ederal courts are to
apply the personal jurisdiction rules of the forum state.”18 There are two types of
14

See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1294 (Fed. Cir. 2012)
(“[T]he burden of establishing personal jurisdiction ordinarily falls on the plaintiff
. . .”).
15

Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563
F.3d 1285, 1292 (Fed. Cir. 2009) (citing Electronics for Imaging, Inc. v. Coyle,
340 F.3d 1344, 1349 (Fed. Cir. 2003)).
16

Grober, 686 F.3d at 1345 (internal citations omitted).

17

See JetBlue Airways Corp. v. Helferich Patent Licensing, LLC, No. 12
Civ. 5847, 2013 WL 713929, at *4 (E.D.N.Y. Feb. 28, 2013); Steuben Foods, Inc.
v. Oystar Grp., No. 10 Civ. 780S, 2013 WL 2105894, at *1 (W.D.N.Y. May 14,
2013).
18

Penguin Grp. (USA) Inc. v. American Buddha (“Penguin I ”), 609
F.3d 30, 35 (2d Cir. 2010).
4

personal jurisdiction: “general or all-purpose jurisdiction, and specific or
case-linked jurisdiction.”19
First, the court determines if it has general jurisdiction over the
defendant. Under section 301 of the New York Civil Practice Law and Rules
(“CPLR”), a foreign corporation is subject to general jurisdiction if it is “doing
business” in New York.20 To meet this standard, the foreign corporation must be
“do[ing] business in New York not occasionally or casually, but with a fair
measure of permanence and continuity.”21 The plaintiff “must show that a
defendant engaged in continuous, permanent, and substantial activity in New
York.”22 “Factors considered include (1) the existence of an office in New York,
(2) the solicitation of business in the state, (3) the presence of bank accounts and
other property in the state, and (4) the presence of employees of the foreign

19

Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846,

2851 (2011).
20

Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000)
(citing N.Y. C.P.L.R. § 301).
21

Schultz v. Safra Nat. Bank of New York, 377 Fed. App’x 101, 102 (2d
Cir. 2010) (citing Wiwa, 226 F.3d at 95).
22

Gosain v. State Bank of India, 414 Fed. App’x 311, 314 (2d Cir. 2011)
(citing Wiwa, 226 F. 3d at 95).
5

defendant in the state.”23
If general jurisdiction is not satisfied, the court determines if specific
jurisdiction exists. Under Section 302(a) of the CPLR, “a court may exercise
personal jurisdiction over any non-domiciliary . . . who in person or through an
agent (1) transacts any business within the state . . . , (2) commits a tortious act
within the state . . . , or (3) commits a tortious act without the state causing injury
to person or property within the state . . . .”24 A court exercises specific jurisdiction
over a foreign defendant only “where the claim arises out of, or relates to, the
defendant’s contacts with the forum.”25
Second, if personal jurisdiction exists, the court decides whether the
exercise of personal jurisdiction comports with constitutional due process.26 In a
patent infringement case, “when analyzing personal jurisdiction for purposes of
compliance with federal due process, Federal Circuit law, rather than regional

23

Saudi v. Marine Atlantic, Ltd., 306 Fed. App’x 653, 655 (2d Cir.

2009).
24

N.Y. C.P.L.R. § 302(a).

25

Licci ex rel. Licci v. Lebanese Canadian Bank SAL (“Licci VI”), 732
F.3d 161, 170 (2d Cir. 2013). Accord Burger King Corp. v. Rudzewicz, 471 U.S.
462, 472 (1985) (for the proper exercise of specific jurisdiction, the defendant must
have “purposefully directed” his activities at the forum and the litigation must
“arise out of or relate to” those activities).
26

See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
6

circuit law, applies.”27 As set forth by the Supreme Court in International Shoe v.
Washington, due process requires that a defendant “not present within the territory
of the forum” have “certain minimum contacts with it such that the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.”28
“Even where a party has been shown to have minimum contacts with
the forum state, these contacts ‘may be considered in light of other factors to
determine whether the assertion of personal jurisdiction would comport with fair
play and substantial justice,’ i.e., whether exercising jurisdiction would be
reasonable.”29 Such relevant factors include:
[T]he burden on the defendant, the forum State’s interest in
adjudicating the dispute, the plaintiff’s interest in obtaining
convenient and effective relief, the interstate judicial
system’s interest in obtaining the most efficient resolution
of controversies, and the shared interest of the several
States in furthering fundamental substantive social
policies.30
Where a defendant who has purposefully directed its activities at the forum state

27

Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1409-10 (Fed.

Cir. 2009).
28

326 U.S. at 316 (internal citations omitted).

29

Patent Rights Prot. Grp., LLC v. Video Gaming Techs., Inc., 603 F.3d
1364, 1369 (Fed. Cir. 2010) (quoting Burger King, 417 U.S. at 476)).
30

Id. (citing Burger King, 417 U.S. at 476-77).
7

seeks to defeat jurisdiction, it must “present a compelling case that the presence of
some other considerations would render jurisdiction unreasonable.”31
2.

Activities of a Subsidiary

Under certain circumstances, a court may assert jurisdiction over a
foreign parent corporation based on the activities of its subsidiaries in New York.32
Specifically, the subsidiary must be either an “agent” or a “mere department” of
the foreign parent.33
Under agency theory, “[t]he parent-subsidiary relationship is enough
to give rise to a strong inference of a broad agency relationship.”34 To establish
agency, “a plaintiff need demonstrate neither a formal agency agreement, nor that
the defendant exercised direct control over its putative agent.”35 However, the
plaintiff must show that the subsidiary “renders services on behalf of the foreign
[parent] corporation that go beyond mere solicitation and are sufficiently important

31

Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356,
1362 (Fed. Cir. 2006) (internal citation omitted).
32

See Wiwa, 226 F.3d at 95.

33

Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998).

34

Airtran New York, LLC v. Midwest Air Grp., 844 N.Y.S.2d 233, 241
(1st Dep’t 2007). Accord Bellomo v. Pennsylvania Life Co., 488 F. Supp. 744, 746
(S.D.N.Y. 1980).
35

Wiwa, 226 F.3d at 95.
8

to the foreign entity that the corporation itself would perform equivalent services if
no agent were available.”36 Thus, the subsidiary’s activities must be of
“meaningful importance” to the parent.37 Moreover, “[t]he agent must be primarily
employed by the defendant and not engaged in similar services for other clients.”38
Where the parent is a holding company, New York courts distinguish
between two types:
Where a holding company is nothing more than an
investment mechanism — a device for diversifying risk
through corporate acquisitions — the subsidiaries conduct
business not as its agents but as its investments. The
business of the parent is the business of investment, and
that business is carried out at the parent level. Where, on
the other hand, the subsidiaries are created by the parent,
for tax or corporate finance purposes, to carry on business
on its behalf, there is no basis for distinguishing between
the business of the parent and the business of the
subsidiaries.39
Thus, when considering the agency issue, courts consider “whether subsidiaries are
carrying out their own business or that of the parent.” 40
36

Id.

37

Id. at 96.

38

Id. at 95.

39

Bellomo, 488 F. Supp. at 746. Accord Porter v. LSB Indus., Inc., 600
N.Y.S.2d 867, 874 (4th Dep’t 1993).
40

Ginsberg v. Government Props. Trust. Inc., No. 07 Civ. 365, 2007
WL 2981683, at *7 (S.D.N.Y. Oct. 10, 2007).
9

B.

Rule 11 Sanctions
In patent cases, the court applies the law of the regional circuit to

determine compliance with Rule 11.41 In the Second Circuit, a pleading, motion, or
other paper violates Rule 11 when it is submitted for “any improper purpose, or
where, after reasonable inquiry, a competent attorney could not form a reasonable
belief that the pleading is well grounded in fact and is warranted by existing law or
a good faith argument for the extension, modification, or reversal of existing
law.”42
The Supreme Court has cautioned that Rule 11 “must be read in light
of concerns that it will . . . chill vigorous advocacy.”43 Thus, “[w]hen divining the
point at which an argument turns from merely losing to losing and sanctionable”
courts must “resolve all doubts in favor of the signer of the pleading.”44 Sanctions
should be imposed only “where it is patently clear that a claim has absolutely no

41

See Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361,
1367 (Fed. Cir. 2012) (“In reviewing a district court’s decision to deny Rule 11
sanctions, we apply the law of the regional circuit.”).
42

Watkins v. Smith, No. 12 Civ. 4635, 2013 WL 655085, at *5
(S.D.N.Y. Feb. 22, 2013) (citing Kropelnicki v. Siegel, 290 F.3d 118, 131 (2d Cir.
2002)).
43

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990).

44

Rodick v. City of Schenectady, 1 F.3d 1341, 1350 (2d Cir. 1993).
10

chance of success.”45
In deciding a Rule 11 motion, a district court “must adhere to the
procedural rules which safeguard due process rights.”46 Rule 11 requires that a
motion for sanctions “be made separately from any other motion and . . . describe
the specific conduct that allegedly violates Rule 11(b).”47 In addition, once the
motion is served on the opposing party, “[the motion] must not be filed or be
presented to the court if the challenged paper, claim, defense, contention, or denial
is withdrawn or appropriately corrected within 21 days after service or within
another time the court sets.”48 This “safe harbor provision” gives parties
threatened with sanctions “the opportunity to withdraw the potentially offending
statements before the sanctions motion is officially filed.”49 “A motion that fails to

45

Libraire v. Kaplan, 395 Fed. App’x 732, 736 (2d Cir. 2010) (internal
citations omitted).
46

Castro v. Mitchell, 727 F. Supp. 2d 302, 305 (S.D.N.Y. 2010) (citing
Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 58 (2d Cir. 2000)).
Accord Williamson v. Recovery Ltd. P’ship, 542 F.3d 43, 51-52 (2d Cir. 2008).
47

48

Fed. R. Civ. P. 11(c)(2).
Id.

49

Castro, 727 F. Supp. 2d at 306 (citing Storey v. Cello Holdings,
L.L.C., 347 F.3d 370, 389 (2d Cir. 2003)).
11

comply with the safe harbor provision of Rule 11 must be denied.”50
IV.

DISCUSSION
A.

Rule 12(b)(2) Motion to Dismiss

To establish general jurisdiction, RTI must show that Broadvox Holding or
its agent is “doing business” in New York.51 RTI argues that Broadvox Holding is
subject to jurisdiction in New York based not on its own activities, but on those of
its subsidiaries, including Cypress,52 who are “doing business” here as its agents.53
Thus, personal jurisdiction over Broadvox Holding is premised on agency theory.
Broadvox Holding contends that “[i]t is simply a parent of
independent, operational holding companies,” and that “[i]ts only business is to
own the membership interests of other companies, including various operating
entities.”54 But the documents submitted by RTI suggests that Broadvox Holding
50

Id. (citing Fierro v. Gallucci, 423 Fed. App’x 17, 19 (2d Cir. 2013).
Accord Williamson, 542 F.3d at 51; Perpetual Sec., Inc. v. Tang, 290 F.3d 132, 142
(2d Cir. 2002) (reversing imposition of Rule 11 sanctions because “appellees did
not serve their [Rule 11] motion on Perpetual prior to filing it with the court”).
51

Wiwa, 226 F.3d at 95.

52

Cypress has waived the defense of lack of personal jurisdiction and
answered the First Amended Complaint on the merits. See Doc. No. 112.
53

See Plaintiff’s Memorandum in Opposition to Motions to Dismiss at

8-16.
54

Declaration of Peter Sandrev in Support of Motion by Broadvox
Holding to Dismiss for Lack of Personal Jurisdiction ¶ 5.
12

is more than just an “investment mechanism [that] diversif[ies] risk through
corporate acquisitions.”55 Instead, it is in the same business as its subsidiaries —
providing IP-based communication services to customers.
Specifically, the record demonstrates that Broadvox Holding (1) holds
100% ownership of its subsidiaries,56 (2) “operates through its subsidiaries,”57 (3)
and “owns and operates its own switches, routers, servers, and other network
equipment.”58 Unlike Cypress’s former parent, Arcapita, which was not a
“communications service provider” but was strictly interested in “investment,”
“Broadvox [Holding] and its current subsidiaries are established providers of IPbased services to wholesale and business customers.”59 Thus, Cypress and the
other subsidiaries “carry on business on [Broadvox Holding’s] behalf” by
maintaining and operating its telecommunications equipment and servicing
Broadvox customers in New York.60 Given the importance of its subsidiaries’
55

Bellomo, 488 F. Supp. at 746.

56

See Exhibit D to Merger Application (chart showing Broadvox
Holding’s corporate structure).
57

Id. at 3.

58

Id. at 4.

59

Id. at 10.

60

Bellomo, 488 F. Supp. at 746 (asserting personal jurisdiction based on
agency theory over “a holding company, a corporate shell [that] does not conduct
13

activities in New York — one of its “top ten retail markets” — it is fair to say that
Broadvox Holding would perform these functions if no agent were available.61
Broadvox Holding responds that RTI has failed to prove that
“Broadvox [Holding]’s subsidiaries are financially dependent on [it], that [it]
interferes with the selection of the subsidiaries’ executive personnel, that [its]
subsidiaries fail to observe corporate formalities, or that [it] asserts any degree of
control over its subsidiaries’ operations.”62 But these factors pertain to the “mere
department” theory of jurisdiction, and are irrelevant to the agency analysis here.63
Accordingly, on the limited record before me, I find that the RTI has established a
prima facie case that Broadvox Holding’s subsidiaries are doing business in New

business directly, but only through its subsidiaries.”).
61

See Merger Application at 11. See In re Ski Train Fire in Kaprun,
Austria on Nov. 11, 2000, 230 F. Supp. 2d 376, 386 (S.D.N.Y. 2002) (finding that
subsidiary that conducts “core business on behalf”of holding company is its agent).
62

See Reply Memorandum of Law in Further Support of the
Defendants’ Motion to Dismiss the Amended Complaint at 9-10.
63

See Jazini, 148 F.3d at 184-85 (To determine whether subsidiary is a
“mere department” of the parent, courts consider [1] “common ownership . . .,” [2]
“financial dependency of the subsidiary on the parent corporation,” [3] “the degree
to which the parent corporation interferes in the selection and assignment of the
subsidiary’s executive personnel and fails to observe corporate formalities,” and
[4] “the degree of control over the marketing and operational policies of the
subsidiary exercised by the parent.”).
14

York as its agents.64
Finally, exercising jurisdiction over Broadvox Holding satisfies due
process. As explained above, Broadvox Holding’s contacts with New York are not
insubstantial. Through Cypress and its other subsidiaries, it directly serves the IPbased communications market in New York.65 In fact, Broadvox Holding acquired
Cypress in order to better compete in the information services market in New
York.66 In exchange, Broadvox Holding provides Cypress with its “financial,
technical, and managerial resources.”67 Because Broadvox Holding purposefully
directed its business toward New York, it must make a “compelling case that the

64

See Medical Solutions, Inc. v. C Change Surgical, LLC, 541 F.3d
1136, 1140 (Fed. Cir. 2008) (“Absent discovery on the issue of personal
jurisdiction, [plaintiff] was required ‘only to make a prima facie showing’ of
jurisdiction to defeat [defendant’s] motion to dismiss.”) (internal citations
omitted). I do not reach the issue of specific jurisdiction as I have already found
that Broadvox Holding is subject to general jurisdiction in this Court.
65

See Merger Application at 4, 6, 11. See also SEB S.A. v. Montgomery
Ward & Co., Inc., No. 99 Civ. 9284, 2002 WL 31175244, at *4 (S.D.N.Y. Oct. 1,
2002) (holding that exercising jurisdiction over holding company whose subsidiary
was its “agent” did not offend due process); Newport Components, Inc. v. NEC
Home Elecs. (U.S.A.), Inc., 671 F. Supp. 1525, 1535 (C.D. Cal. 1987) (It is “well
settled . . . that where a nonresident parent corporation carries on ‘continuous and
systematic’ activities in the forum state through a subsidiary, due process is not
offended by the exercise of personal jurisdiction over the parent entity.”) (internal
citations omitted).
66

See Merger Application at 10-11.

67

Id. at 10.
15

presence of some other considerations would render jurisdiction unreasonable.”68
It has failed to do so.
Although Broadvox Holding might be inconvenienced by litigating
here and the alleged patent infringement is not particular to New York, Broadvox
Holding runs a vast nationwide network of IP-based communication services.69 It
has access to resources necessary to try a case here. It has relationships with New
York law firms and faces no language barrier.70 Accordingly, exercising personal
jurisdiction over Broadvox Holding would not offend due process.
B.

Rule 11 Motion for Sanctions
Defendants have moved for sanctions against RTI and its counsel

under Rule 11. Defendants argue that (1) RTI filed suit without any objectively
reasonable basis for alleging patent infringement, and (2) RTI failed to properly
construe elements of its claims at issue.71
Regardless of the merits of the motion, defendants’ failure to comply

68

Breckenridge, 444 F.3d at 1362.

69

See Merger Application at 1-2.

70

See Wiwa, 226 F.3d at 99; SEB S.A., 2002 WL 31175244, at *4.

71

See Defendants’ Memorandum of Law in Support for Sanctions
Under Rule 11 of the Federal Rules of Civil Procedure (“Broadvox Sanctions
Mem.”) at 1-2, 13.
16

with Rule 11’s safe harbor requirement bars any award of sanctions.72 Under the
requirement, the moving party must serve the motion on its adversary at least 21
days before filing with the court.73 The Second Circuit has held that “the filing of
an amended pleading resets the clock for compliance with the safe harbor
requirements of Rule 11(c)(2) before a party aggrieved by the new filing can
present a sanctions motion based on that pleading . . . .”74 Here, defendants
allegedly served RTI with their first motion for sanctions — directed at the original
Complaint — on January 23, 2012.75 RTI filed the First Amended Complaint on
March 4, 2013, thereby resetting the clock for defendants’ compliance with the
safe harbor period.76 Thus, regardless of whether they actually served their first
motion,77 defendants were required to serve RTI with their new sanctions motion

72

See Williamson, 542 F.3d at 51(affirming district court’s denial of
Rule 11 motion where defendants “failed to make a separate motion for sanctions
under Rule 11”); Perpetual Sec., Inc., 290 F.3d at 142.
73

See Fed. R. Civ. P. 11(c)(2).

74

Lawrence v. Richman Grp. of CT, LLC, 620 F.3d 153, 158 (2d Cir.

2010).
75

See Broadvox Sanctions Mem. at 7 (citing 1/23/13 Letter from George
Pazuniak to Milton Springut and Tal S. Benschar, Ex. K to the Declaration of
George Pazuniak in Support of Defendants’ Motion for Sanctions, at 4).
76

See FAC.

77

A review of the docket shows no certificate of service for the first
motion for sanctions.
17

— directed at the First Amended Complaint — twenty-one days before the July 11,
2013 filing.78 Neither defendants’ informal communications with RTI, nor their
pre-motion letter to the Court substitutes for serving the motion as required by
Rule 11.79 Moreover, because RTI conducted a pre-suit investigation to ascertain
information about defendants’ system and found that infringement may exist, it
should not be sanctioned for filing suit and seeking discovery to confirm its
suspicion.80 Therefore, defendants’ motion must be denied.81
VI.

CONCLUSION

78

See 7/11/13 Motion for Sanctions Under Rule 11, Doc. No. 57.

79

See Star Mark Mgmt., Inc . v. Koon Chun Hing Kee Soy & Sauce
Factory, Ltd., 682 F.3d 170, 175 (2d Cir. 2012) (“[A]n informal warning in the
form of a letter without service of a separate Rule 11 motion” does not satisfy Rule
11’s procedural requirements); Fed. R. Civ. P. 11 Advisory Committee’s Note
(“To stress the seriousness of a motion for sanctions and to define precisely the
conduct claimed to violate the rule, . . . the ‘safe harbor’ period begins to run only
upon service of the motion.”) (emphasis added)).
80

Hoffman-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1364 (Fed.
Cir. 2000) (Although [plaintiffs] “could have assumed non-infringement” when
“[a]t the end of [plaintiffs’] pre-suit investigation [they] had neither evidence of
infringement nor non-infringement . . . , that they chose to file suit and engage in
discovery instead does not subject them to sanctions.”). Accord K-Tech
Telecommunic’ns v. Time Warner Cable, Inc., 714 F.3d 1277, 1286 (Fed. Cir.
2013) (“A defendant cannot shield itself from a complaint for direct infringement
by operating in such secrecy that the filing of a complaint itself is impossible.”).
81

Because Broadvox Holding’s failure to comply with the safe harbor
requirement alone merits denial of its Rule 11 motion, the Court need not rule on
RTI’s Motion for a Protective Order. See Doc. No. 71.
18

For the foregoing reasons, Broadvox Holding's motion to dismiss and
the motion for sanctions are both denied. RTI's motion for a protective order is
moot. The Clerk of the Court is directed to close these motions [Docket Nos. 30,
57, and 71].
SO ORDERED:

/jl

( };'

,

Dated:

New York, New York
January 6, 2014.

19

- Appearances For RTI:

For Broadvox Holding:

Milton Springut, Esq.
Tal S. Benschar, Esq.
Springut Law PC
75 Rockefeller Plaza
New York, NY 10019
[phone]

Keith D. Nowack, Esq.
Andriy Roman Pazuniak, Esq.
Carter Ledyard & Milburn LLP
2 Wall Street
New York, NY 10005
[phone]

Scott Spencer, Esq.
Scott Spencer Law
75 Rockefeller Plaza
New York, NY 10019
[phone]

George Pazuniak, Esq.
Pazuniak Law Office LLC
216 Sorrel Drive
Wilmington, DE 19803
[phone]
Alexander Gertsburg, Esq.
Law Office of Alexander Gertsburg
8210 Macedonia Commons Blvd., Suite
68 - Pmb 151
Macedonia, OH
[phone]

20