Skyline Steel, L.L.C. v. Pilepro, L.L.C.
Filing
204
MEMORANDUM OPINION AND ORDER re: 175 MOTION to Strike Document No. 156 filed by Pilepro, L.L.C., 131 MOTION to Stay Counts One and Two of Skyline Steel, LLC's Second Amended Complaint Pending Reissue of Patent filed by Pilepro, L.L.C.: For the foregoing reasons, PilePro's motions to stay and to strike are DENIED. The Clerk of Court is directed to terminate Docket Nos. 131 and 175. (Signed by Judge Jesse M. Furman on 2/9/2015) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SKYLINE STEEL, LLC,
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Plaintiff,
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-v:
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PILEPRO, LLC,
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Defendant.
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02/09/2015
13-CV-8171 (JMF)
MEMORANDUM OPINION
AND ORDER
JESSE M. FURMAN, United States District Judge:
In this heated patent case, familiarity with which is assumed, Plaintiff Skyline Steel
(“Skyline”) brings claims against Defendant PilePro, LLC (“PilePro”) arising out of PilePro’s
public assertions that Skyline is infringing one of its patents (the “’543 Patent”). This
Memorandum Opinion and Order addresses two of seven pending motions: (1) PilePro’s motion
to stay Skyline’s claims of noninfringement and patent invalidity pending the Patent and
Trademark Office’s (“PTO”) decision on PilePro’s recently filed reissue application (Docket No.
132); 1 and (2) PilePro’s motion to strike a declaration by its former attorney, Matthias Weigel,
that Skyline submitted in connection with its opposition to PilePro’s motion (Docket No. 176).
For the reasons explained below, PilePro’s motions are both DENIED.
PilePro states that it limited its stay motion to Skyline’s noninfringement and invalidity
claims because it intends to seek an order compelling arbitration on the remaining claims, but no
such motion or petition to compel arbitration has been filed. (Def. PilePro LLC’s Mem. Supp.
Mot. To Stay Pending Reissue Patent (Docket No. 132) (“Def.’s Stay Mem.”) 1). In any event,
for such an application to succeed, PilePro would have to show that it has not waived whatever
right to arbitration it may have had through its litigation conduct. See PPG Industries, Inc. v.
Webster Auto Parts, Inc., 128 F.3d 103, 107 (2d Cir. 1997) (“[A] party waives its right to
arbitration when it engages in protracted litigation that prejudices the opposing party.”).
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A.
Motion To Stay
It is undisputed that district courts have discretion to stay litigation while the PTO
considers a related patent reissue application. See, e.g., Medichem, S.A. v. Rolabo, S.L., 353 F.3d
928, 936 (Fed Cir. 2003). Nonetheless, “a court is under no obligation to delay its own
proceedings by yielding to ongoing PTO [proceedings], regardless of their relevancy.” Tyco
Fire Prods. LP v. Victaulic Co., No. 10-CV-4645 (ECR), 2011 WL 4632689, at *2 (E.D. Pa.
Oct. 4, 2011) (internal quotation marks omitted); see also Viskase Corp. v. Am. Nat’l Can Co.,
261 F.3d 1316, 1328 (Fed. Cir. 2001) (similar). In deciding whether to grant a stay, courts
generally consider three factors: “‘(1) whether a stay would unduly prejudice or present a clear
tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the issues in
question and trial of the case; and (3) whether discovery is complete and whether a trial date has
been set.’” Firepass IP Holdings, Inc. v. Airbus Americas, Inc., No. 09-CV-4234 (ENV) (LB),
2011 WL 2650484, at *1 (E.D.N.Y. July 6, 2011) (quoting Xerox Corp. v. 3com Corp., 69 F.
Supp. 2d 404, 406 (W.D.N.Y. 1999)). The Court will consider each factor in turn.
The first factor strongly favors Skyline. For one thing, a stay would significantly delay
the litigation. Skyline cites statistics suggesting that the reissue process takes an average of five
years to complete. (Pl. Skyline Steel LLC’s Opp’n Def. PilePro LLC’s Mot. To Stay Pending
Reissue Patent & PilePro’s Mot. To Amend Its Answer (Docket No. 155) (“Pl.’s Stay Mem.”)
12). PilePro contests those numbers, emphasizing that the PTO expedites reissue applications
involved in stayed litigation and that the five-year average includes both expedited and nonexpedited cases. (See Def.’s Stay Mem. 14). But even if the Court were to disregard Skyline’s
suggested timeline, the reissue process is likely to delay these proceedings for a substantial
period of time, particularly if PilePro chooses to appeal whatever decision the PTO ultimately
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makes. Courts in this Circuit have found that the prejudice resulting from the potential for delay
justifies denying a request for a stay pending parallel PTO proceedings, and there is no reason to
reach a different conclusion here. See, e.g., Capital Bridge Co., Ltd. v. IVL Technologies Ltd.,
No. 04-CV-4002 (KMK), 2006 WL 2585529, at *2 n.1 (S.D.N.Y. Aug. 30, 2006) (denying the
plaintiff’s motion for a stay in light of pending PTO proceedings and noting that “the uncertain
length of the delay contemplated by Plaintiff’s request alone” justifies refusing to grant a stay).
Additionally, given the totality of the circumstances, PilePro’s motion is plainly tactically
motivated to achieve either delay or a second bite at the apple. For one thing, PilePro has tried
several times already to delay this litigation. (See, e.g., Docket No. 41 (requesting a stay of
discovery pending the Court’s resolution of PilePro’s motion to dismiss two counts of the
Amended Complaint); Docket No. 186 (requesting that the Court issue a Letter of Request for
International Judicial Assistance nearly eight months after PilePro first stated that it would need
such assistance)). For another, the timing and nature of PilePro’s PTO application make plain
that it is little more than a bald-faced attempt to circumvent this Court’s unfavorable ruling on
claims construction. PilePro did not file its application until October 31, 2014 — approximately
one month after the Court adopted Skyline’s proposed claim construction — and it has not even
attempted to argue that it could not have filed the application earlier. See Tyco Fire Prods., 2011
WL 4632689, at *4 (noting that the timing of the plaintiff’s filing for reissue raised “some alarm
bells” that the reissue proceedings were a “litigation gambit” when the application was filed only
after the plaintiff saw the defendant’s proposed claim construction). (Decl. Tyson K. Hottinger
Supp. Def. PilePro, LLC’s Mot. To Stay Pending Reissue Patent (Docket No. 133) (“Hottinger
Stay Decl.”), Ex. A (“Reissue Application”); Docket No. 89 (“Hr’g Tr.”). In fact, PilePro has all
but admitted its intent, acknowledging in its memorandum of law in opposition to Skyline’s
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motion for partial summary judgment that it “sought a reissue of the ’543 Patent” only “after
receiving what PilePro believes to be a claim construction that was wrong as a matter of law”
(PilePro, LLC’s Opp’n Skyline Steel, LLC’s Mot. Partial Summ. J. (Docket No. 141) (“Def.’s
MSJ Mem.”) 22), and making plain in its memorandum here that it intends to seek to reopen
claim construction based on the PTO’s adjudication of its application (Def.’s Stay Mem. 10).
Allowing PilePro to engage in such strategic behavior would plainly prejudice Skyline. Cf.
Viskase Corp., 261 F.3d at 1328 (affirming a district court’s decision declining to stay or reopen
proceedings after judgment was entered against the defendant pending ongoing patent
reexaminations that the defendant initiated post-trial).
Turning to the second factor, the Court finds that a stay is unlikely to simplify the issues
involved in this case. While PilePro claims that it “will soon add additional independent claims
and variations to the current independent claim” (Def.’s Stay Mem. 2), the reissue application
now before the PTO includes only a proposed additional dependent claims (Reissue Application
25). As Skyline correctly points out in its memorandum of law, “dependent claims are presumed
to be of narrower scope than the independent claims from which they depend.” AK Steel Corp.
v. Sollac & Ugine, 344 F.3d 1234, 1242 (Fed. Cir. 2003). (Pl.’s Stay Mem. 2). Consequently,
the reissue application is irrelevant to Skyline’s contentions with regard to the independent
claim. And even if the reissued patent is dramatically different in scope than the original patent,
only Skyline’s invalidity claim would be simplified. Some claims, such as the noninfringement
claim, would become more complicated, as the Court would have to determine whether Skyline
had any intervening rights. See 35 U.S.C. § 252 (protecting third parties who have relied on the
previous scope of a patent); Tyco Fire Prods., 2011 WL 4632689, at *3, *5. And other claims
would be unaffected by the PTO’s decision. For example, many of Skyline’s claims, such as its
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Lanham Act claims, depend on the truth or falsity of PilePro’s statements about the scope of the
’543 patent at the time they were made. Any decision that the PTO makes would not affect the
analysis of those claims. Where, as here, several claims will survive no matter what the PTO
does, courts have declined to issue stays. See, e.g., TouchTunes Music Corp. v. Rowe Intern.
Corp., 676 F. Supp. 2d 169, 177 (S.D.N.Y. 2009) (finding that the issues were not likely to be
simplified where “numerous issues, such as non-infringement, lack of written description,
anticipation, and obviousness [would likely] remain” after the completion of the reexamination
procedure). The second factor therefore also weighs in Skyline’s favor.
The last factor — the stage of the litigation — does not point strongly in either direction.
This case was commenced in November 2013. (Docket No. 1). Further, discovery has been
ongoing since at least April 2014 (see Case Management Plan (Docket No. 24) (“CMP”)), the
Court has already held a claims construction hearing (see Hr’g Tr.), and Skyline has filed an
early motion for partial summary judgment (Docket No. 102). That said, significant discovery
remains to be done, 2 the discovery is not scheduled to close until June 19, 2015 (CMP 2), and no
trial has been scheduled. See, e.g., Protegrity Corp. v. Ingrian Networks Inc., No. 08-CV-618
(RNC), 2011 WL 3962493 (D. Conn. Apr. 21, 2011) (finding that the stage of the case favored a
stay when “th[e] case was filed three years [earlier], claims construction proceedings ha[d] been
completed, and documents ha[d] been produced in discovery” but “no other discovery ha[d] been
done”). Nonetheless, even if the third factor favors PilePro, because the other two factors so
heavily favor Skyline, the Court finds that a stay is inappropriate, and PilePro’s motion is
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According to PilePro, “very little discovery has actually taken place.” (Def.’s Stay Mem.
3). As the Court has made clear, the parties should not anticipate any further extensions of the
discovery deadlines in this case. If the parties are not proceeding expeditiously to complete
discovery, they do so at their own peril.
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DENIED. Cf. Network Appliance, Inc. v. Sun Microsys., Inc., No. 07-CV-6053 (EDL), 2008 WL
2168917, at *3 (N.D. Cal. May 23, 2008) (“[T]here appears to be a growing concern among at
least some judges in this district that, on balance, staying a case even in its early stages pending
reexamination has not led to the just, speedy, and efficient management of the litigation, but
instead has tended to prolong it without achieving sufficient benefits in simplification to justify
the delay.”).
B.
Motion To Strike
In connection with its opposition to PilePro’s motion to stay, Skyline submitted a
declaration from Matthias Weigel, PilePro’s former attorney. (Decl. Matthias Weigel (Docket
No. 156) (“Weigel Decl.”) ¶ 3-4). That declaration responds to PilePro’s contention that it
conceived of the invention of the ’543 patent prior to another reference, the “Hermes II Patent,”
cited during the original patent prosecution, but that it cannot prove its prior invention because
Weigel has wrongfully withheld relevant documents. (Def.’s Stay Mem. 5). PilePro moves to
strike Paragraphs 6-7 and 9-12 from the declaration on the grounds of attorney-client privilege.
(Def. PilePro, LLC’s Mem. Law Supp. Mot. To Strike Decl. Matthias Weigel (Docket No. 176)
(“Def.’s Strike Mem.”) 1, 4). Specifically, it argues that the Weigel Declaration discloses
confidential information in violation of his obligations under German law. (Id. at 3-4).
Even accepting that German law applies and that Weigel originally had an obligation to
keep some of the information in his declaration confidential, however, PilePro has waived
whatever privilege it might have had. 3 “[T]he attorney-client privilege cannot at once be used as
The parties have neither briefed whether German law applies to the waiver analysis nor
cited German law in their waiver analyses. (See Def. PilePro, LLC’s Reply Mem. Supp. Mot. To
Strike Various Paragraphs Decl. Matthias Weigel (Docket No. 184) (“Def.’s Reply Mem.”) 4-5;
Pl. Skyline Steel, LLC’s Opp’n Def. PilePro LLC’s Mot. To Strike Various Paragraphs Decl.
Matthias Weigel (Docket No. 182) 6-9). Accordingly, the Court applies United States law. See,
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a shield and a sword.” United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991). Thus,
“the privilege may implicitly be waived when defendant asserts a claim that in fairness requires
examination of protected communications,” id., including “when a client testifies concerning a
portion of the attorney-client communication, when a client places the attorney-client
relationship directly at issue, and when a client asserts reliance on an attorney’s advice as an
element of a claim or defense,” In re County of Erie, 546 F.3d 222, 228 (2d Cir. 2008) (internal
quotation marks omitted); see also In re EchoStar Communications Corp., 448 F.3d 1294, 1299
(Fed. Cir. 2006) (stating that once a waiver is made, that waiver “applies to all other
communications relating to the same subject matter” (internal quotation marks omitted)). Here,
those principles compel the conclusion that PilePro waived any privilege that might have applied
to the paragraphs at issue.
PilePro argues that it waived privilege only with regard to “PilePro’s efforts to obtain an
infringement opinion and to devise an enforcement strategy after issuance of the German parent
of the ’543 patent, not communications regarding PilePro’s prosecution strategies and
considerations during the prosecution of the German patent.” (Def.’s Reply Mem. 4). As an
initial matter, however, several of the paragraphs at issue discuss the prosecution of the ’543
Patent, not just the German patent. (Weigel Decl. ¶¶ 9-10). And, with regard to the other
challenged paragraphs, PilePro’s arguments about its good faith depend on the supposed
similarities between the German and ’543 patents. (See, e.g., Def.’s MSJ Mem. 30 (arguing that
its infringement claims were “supported by the opinions of its German counsel on the very
analogous German Patent”); id. at 29 (“[T]he ’543 Patent was extremely similar to the German
e.g., Gold-Flex Elastic Ltd. v. Exquisite Form Indus., Inc., No. 95-CV-3881 (LMM), 1995 WL
764191, at *3 (S.D.N.Y. 1995) (“The parties’ silence on the applicability and substance of
foreign law constitutes a waiver on the issue.”).
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Patent and there are cases where a foreign counsel’s opinion of an analogous foreign patent is
relevant to the ‘totality of the circumstances.’”)). PilePro has intentionally adopted a strategy of
tying all of its patents together, going so far as to refer to them collectively as “the patent family
of the ’543 Patent.” (See, e.g., PilePro, LLC’s Resp. Skyline Steel, LLC’s Statement Undisputed
Material Facts (Docket No. 149) ¶¶ 30-33). It cannot now turn around and argue that they are
entirely separate. Skyline is therefore entitled to information regarding the process of obtaining
the German patent in order to assess the reasonableness of relying on German counsels’ opinions
about that patent in asserting infringement of the ’543 Patent. 4 Further, PilePro has claimed that
Weigel has documents in his possession relevant to the invention history of the subject of the
’543 Patent, which is also, it claims, the subject of the German patent. Information about the
prosecution of the German patent sheds light on what kind of documents Weigel is likely to
have. Accordingly, PilePro’s motion to strike is DENIED.
C.
Redactions
By letter dated December 4, 2014 (Docket No. 180), PilePro requested permission to file
in redacted form its consolidated reply brief in support of its motion to stay pending reissue and
its motion to amend. It justified the redactions only by observing that Skyline had designated
And even if it were not, much of the challenged information was publicly filed in a
related lawsuit (Decl. Jenna W. Logoluso Opp’n PilePro, LLC’s Mot. To Strike Various
Paragraphs Decl. Matthias Weigel (Docket No. 183) (“Logoluso Decl.”), Ex. 1 ¶¶ 10, 13), see
Madanes v. Madanes, 186 F.R.D. 279, 293 (S.D.N.Y.1999) (stating that a party waived the
attorney-client privilege by “failing to take reasonable steps to maintain the confidentiality” of
documents publicly filed in a separate lawsuit), or put in issue during the deposition of Roberto
Wendt (see, e.g., Logoluso Decl., Ex. 2 at 147:9-148:16 (discussing Weigel’s assessment of the
validity of the German patent (and the possibility of obtaining similar patents in other countries)
in the face of a lawsuit initiated by ArcelorMittal); 149:6-7 (stating that Weigel handled all of
PilePro’s patents); 317:6-319:3 (discussing an e-mail from Weigel about the fact that German
patent office had issued a notice of allowance of the patent claim and the potential international
ramifications); 322:24-323:5-8 (discussing an e-mail from Weigel about ArcelorMittal’s
opposition to the German patent)).
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certain deposition testimony as “Highly Confidential-Attorneys’ Eyes Only.” The mere fact that
information is subject to a confidentiality agreement between litigants, however, is not a valid
basis to overcome the presumption in favor of public access to judicial documents. See, e.g.,
Dandong v. Pinnacle Performance Ltd., 10-CV-8086 (JMF), 2012 WL 6217646, at *2 (S.D.N.Y.
Dec. 3, 2012) (“The consent of the parties is not a valid basis to justify sealing, as the rights
involved are the rights of the public.” (internal quotation marks omitted)); Vasquez v. City of
New York, No. 10-CV-6277 (LBS), 2012 WL 4377774, at *3 (S.D.N.Y. Sept. 24, 2012)
(similar). Accordingly, the parties are granted leave to file letter briefs, no later than February
17, 2015, and not to exceed five pages, addressing the propriety of the redactions in light of the
presumption in favor of public access. See, e.g., Lugosch v. Pyramid Co. of Onondaga, 435 F.3d
110, 119-20 (2d Cir. 2006) (discussing the presumption in favor of public access). If no party
files a brief justifying the redactions, PilePro shall file an unredacted version of its reply by no
later than February 19, 2015.
CONCLUSION
For the foregoing reasons, PilePro’s motions to stay and to strike are DENIED. The
Clerk of Court is directed to terminate Docket Nos. 131 and 175.
SO ORDERED.
Date: February 9, 2015
New York, New York
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