ULTRA-MEK, INC. v. MAN WAH (USA), INC.
Filing
63
MEMORANDUM OPINION AND ORDER. Signed by JUDGE N. C. TILLEY, JR. on 12/28/2016, that Plaintiff Ultra-Mek, Inc.'s Motion to Compel Defendant Man Wah (USA), Inc. (Doc. # 19 ) is GRANTED IN PART AND DENIED IN PART. The motion is granted w ith respect to the production of documents in the possession of three of Man Wah (USA), Inc.'s affiliates; it is denied with respect to Man Wah's discovery responses; and it is granted with respect to Man Wah's Revised Preliminary Invalidity Contentions. FURTHER that Man Wah (USA), Inc. has twenty-one days from the entry of this Order to comply.(Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
Ultra-Mek, Inc.,
Plaintiff,
v.
Man Wah (USA), Inc.,
Defendant.
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)
)
)
)
)
)
)
1:16CV41
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff Ultra-Mek, Inc.’s (“Ultra-Mek”)
Motion to Compel [Doc. #19] entitled “Plaintiff Ultra Mek, Inc.’s Motion to Compel
Defendant Man Wah to Provide Responses to Discovery Requests and Patent Local
Rule Requirements”. In its motion, Ultra-Mek seeks an order requiring Defendant
Man Wah (USA), Inc. (“Man Wah”) to (a) produce documents, things, and
information in the possession of three of its affiliates, (b) otherwise more
completely respond to Ultra-Mek’s interrogatories and requests for production of
documents, and (c) fully comply with Local Patent Rules applicable to Man Wah’s
invalidity contentions. Man Wah responded with a brief in opposition to the
motion [Doc. #30] after which Ultra-Mek replied in further support of its motion
[Doc. #40].
After the motion was fully briefed, on October 14, 2016, Man Wah’s
counsel filed a declaration to which he attached “Defendant’s Second Amended
and Supplemental Objections and Responses to Plaintiff Ultra-Mek’s First Set of
Interrogatories to Defendant Man Wah (USA), Inc.” and “Defendant’s Amended
and Supplemental Objections and Responses to Plaintiff Ultra-Mek’s First Set of
Requests for Production of Documents”, which had been served on October 14
and October 5, respectively. [Doc. #47.] Soon thereafter, in response to UltraMek’s objection that the declaration was an unpermitted sur-reply, Man Wah
sought and received the Court’s permission to file a sur-reply in further opposition
to the motion, which it then filed on October 19, 2016 and to which it attached
the same revised discovery responses as it had attached to counsel’s declaration.
[Docs. #50, 51.] Ultra-Mek then filed its own sur-reply. [Doc. #55.]
For the reasons explained below, Ultra-Mek’s motion with respect to
documents in the possession of three of its affiliates is granted. The motion with
respect to Man Wah’s discovery responses is denied. Ultra-Mek’s motion with
respect to Man Wah’s invalidity contentions is granted.
I.
“The purpose of discovery is to provide a mechanism for making relevant
information available to the litigants.” Fed. R. Civ. P. 26, advisory committee’s
notes, 1983 Amendment. Not only does the information “need not be admissible
in evidence to be discoverable”, but the “[p]arties may obtain discovery regarding
any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case”. Fed. R. Civ. P. 26(b)(1).
Rule 34 of the Federal Rules of Civil Procedure provides, in relevant part,
that “[a] party may serve on any other party a request within the scope of Rule
26(b) . . . to produce and permit the requesting party or its representative to
2
inspect, copy, test, or sample [various items] in the responding party’s possession,
custody, or control.”
Ultra-Mek argues that Man Wah “has possession, custody, or control over
relevant information, documents, and things in the possession, custody, or control
of its affiliates” namely Man Wah Holdings, Ltd. (“Man Wah Holdings”), Remaco
Machinery Technology (Wujiang) Co. Ltd. (“Remaco”), and Man Wah Furniture
Manufacturing (Huizhou) Co., Ltd. (“Man Wah Furniture”). (Ultra-Mek’s Mot. to
Compel; Ultra-Mek’s Br. in Supp. of Mot. to Compel at 9 [Doc. #20].) Man Wah
disputes this.
In support of its argument, Ultra-Mek directs the Court to Uniden America
Corp. v. Ericsson, Inc., 181 F.R.D. 302 (M.D.N.C. 1998), for a discussion of the
factors used to determine whether documents in the possession of one corporation
can be deemed to be under the control of another corporation. (Ultra-Mek’s Br. in
Supp. of Mot. to Compel at 3-5.) On the other hand, Man Wah argues that Uniden
is not only not binding precedent, but that it “is in conflict with subsequent
decisions by North Carolina federal courts which appear to require more before
ordering a subsidiary to produce documents from non-parties.” (Man-Wah’s Opp’n
to Mot. to Compel at 10.) Man Wah cites In re: NC Swine Farm Nuisance
Litigation, No. 5:15-CV-13-BR, 2016 WL 3661266 (E.D.N.C. July 1, 2016) in
support of the proposition that the defendant must have a legal right to the
material that the plaintiff seeks. (Id. at 10-11.)
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“In ruling on Rule 34 motions to compel a corporation to produce documents
from another corporation, the courts have defined ‘control’ to include both the
legal right to control the company and the actual ability.” Uniden, 181 F.R.D. at
305; see also Steele Software Sys., Corp. v. DataQuick Info. Sys., Inc., 237
F.R.D. 561, 564 (D. Md. 2006) (“’Control’ has been construed broadly by the
courts as the legal right, authority, or practical ability to obtain the materials
sought on demand.”).
The court in In re: NC Swine Farm distinguished Uniden, which it described
as using “a practical-ability-to-obtain analysis” for determining control, from the
Eastern District of North Carolina, which has adopted the legal-right-to-documents
test. 2016 WL 3661266, at *4. The court explained that “[d]ocuments are
deemed to be within the possession, custody, or control of a party if the party has
actual possession, custody, or control or the legal right to obtain the documents on
demand.” Id. at *3 (emphasis added).
A close look at the court’s opinion in In re: NC Swine Farm further explains
the circumstances under which that court adopted the legal-right-to-documents
test. “When information is readily attainable through a subpoena duces tecum, no
compelling reason exists to expand the definition of control.” Id. at *3 (quoting
Bleecker v. Standard Fire Ins. Co., 130 F. Supp. 2d 726, 739 (E.D.N.C. 2000)). In
In re: NC Swine Farm, “there [was] no dispute that the information sought by
Plaintiffs [was] ‘readily attainable through a subpoena,’ and Plaintiffs [had], in fact,
4
served a subpoena . . . . Therefore, under the circumstances presented, the court
need not ‘expand the definition of control.’” Id. at *4 (internal citation omitted).
Here, though, neither party has informed the Court that a subpoena duces
tecum has been served on any of Man Wah’s affiliates nor has either party argued,
nor is it clear to the Court, that the information sought from these affiliates is
readily attainable through a subpoena. In light of these circumstances, the
practical-ability-to-obtain test, as opposed to the legal-right-to-documents test, will
be used to determine whether documents in the possession of Man Wah’s affiliates
are under Man Wah’s control such that it can be compelled to produce them.
Other district courts within the Fourth Circuit have continued to use this
test, as well. As similarly described in Uniden, the factors courts analyze include
(1) the corporate structure of the party/non-party[;] (2) the non-party’s
connection to the transaction at issue in the litigation[;] (3) the degree
that the non-party will benefit from the outcome of the case; (4)
whether the related entities exchange documents in the ordinary
course of business; (5) whether the nonparty [sic] has participated in
the litigation; (6) common relationships between a party and its
related non-party entity; (7) the ownership of the non-party; (8) the
overlap of directors, officers, and employees; (9) the financial
relationship between the entities; (10) the relationship of the parent
corporation to the underlying litigation; and (11) agreements among
the entities that may reflect the parties’ legal rights or authority to
obtain certain documents.
Flame S.A. v. Indus. Carriers, Inc., No. 2:13-cv-658, 2014 WL 1681426, at *1
(E.D. Va. Apr. 23, 2014); see also, e.g., Steele Software Sys., Corp., 237 F.R.D.
at 564-65; E.I. DuPont de Nemours & Co. v. Kolon Indus., Inc., 286 F.R.D. 288,
292 (E.D. Va. 2012); Baby Jogger, LLC v. Britax Child Safety, Inc.,
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No. 2:12CV452, 2013 WL 12092292, at *2 (E.D. Va. Apr. 25, 2013). Ultra-Mek,
as the party seeking production of documents that it contends are in Man Wah’s
control, has the burden of proof on this issue. See Steele Software Sys., Corp.,
237 F.R.D. at 565; Prodicious Ventures, Inc. v. YBE Hospitality Grp., LLC, No.
5:14-CV-433-F, 2016 WL 1248806, at *4 (E.D.N.C. Mar. 25, 2016).
Man Wah argues that application of these factors to this case reveals that it
has no control over Man Wah Holdings, Remaco, or Man Wah Furniture. Citing the
declaration of Man Wah’s chief executive officer and president, William Guy Ray1,
Man Wah contends that it is a small company that operates out of an office and
showroom in High Point, North Carolina. (Man Wah’s Opp’n to Mot. to Compel at
2 (citing Decl. of William Guy Ray at ¶¶ 3, 4 [Doc. #31]).) It is associated with
Man Wah Holdings, a large Chinese company, over which Man Wah has no
authority, nor does it have authority over any other company associated with Man
Wah Holdings. (Ray Decl. ¶ 5.) According to Ray, Remaco makes the alleged
infringing mechanism and supplies it to Man Wah Furniture to incorporate into
1
In his declaration, Ray stated that, as of September 2016, he was the president
of Man Wah (USA), Inc. and had been since early 2015. (Ray Decl. ¶ 2.) And,
Ultra-Mek directed its cease and desist letter to Ray as Man Wah’s president.
(Decl. of Robin A. Adkins Ex. U [Doc. #21].) Yet, in its Sur-Reply, Ultra-Mek
argued that Man Li Wong is Man Wah’s president. (Ultra-Mek’s Sur-Reply at 1.)
And, as of August 15, 2016, the information available on the Nevada Secretary of
State’s website listed Wong as the president of Man Wah (USA), Inc. (Adkins Decl.
¶ 7 & Ex. E.) This information may be outdated, as it also listed Stephen A. Barr
as the Director, but he preceded Ray. In any event, Ray also identified himself as
the “ceo [sic]” of Man Wah (USA), Inc. in his email communications. (See id. Exs.
A-C.)
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some of its armchairs. (Id. at 6.) Man Wah’s daily operations focus on the sale of
furniture made by Man Wah Furniture, but its sales of the armchairs at issue
“make[] up far less than one percent of the total sales of the furniture” that it sells
each year. (Id. ¶¶ 6, 7.) Because Man Wah merely “arranges for sales of furniture
made by Man Wah Furniture”, it does not have copies of the invoices even though
the invoices bear its name. (Id. ¶ 11.) Those invoices are maintained by Man Wah
Holdings. (Id.) Man Wah does not share an email system or server with Man Wah
Holdings or its associated companies, nor does it have authority to demand copies
of documents from Man Wah Holdings or its associated companies. (Id. ¶¶ 9, 10.)
No one from Man Wah Holdings or its subsidiaries is in charge of Man Wah’s daily
operations, and none of Man Wah Holdings’ other subsidiaries is located in High
Point, North Carolina. (Id. ¶¶ 8, 11.)
On the other hand, Ultra-Mek cites to other evidence that the Court agrees
supports a finding that Man Wah does have sufficient control over Man Wah
Holdings, Remaco, and Man Wah Furniture to compel Man Wah to produce
documents in their possession. Man Wah produced the following depiction of
company ownership that illustrates the relationships among the various entities,
including Man Wah, Man Wah Holdings, Remaco, and Man Wah Furniture. (See
Adkins Decl. Ex. F.)
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Man Wah Holdings is the parent company of Man Wah, and Man Wah Furniture
and Remaco are related closely to Man Wah. In addition, Man Wah produced the
following organizational chart specific to the relationship between Man Wah and
Man Wah Furniture. (See id.)
According to this chart, Man Wah Furniture’s research and development
department produces the furniture for which Man Wah facilitates the sale, the
result of which causes Man Wah Furniture’s purchasing, customer service,
production, shipping, and finance departments to finalize the sale.
8
In addition to these charts, Man Wah Holdings’ 2016 Annual Report
identifies Man Wah Holdings and its subsidiaries collectively as “the ‘Group’” (id.
Ex. G at 8) to which it refers throughout the entirety of the annual report. In so
doing, it is apparent that Man Wah Holdings’ executive team and corporate
business are inextricably intertwined with Man Wah and related entities. Wong
Man Li is Man Wah Holdings’ Chairman, Managing Director, and an Executive
Director, as well as “a director of a number of [its] subsidiaries”, and is responsible
for day-to-day overall management and growth strategy. (Id. at 2, 3, 42.) Man
Wah’s filing with the Nevada Secretary of State continues to list Wong as Man
Wah’s president, as of the August 15, 2016. (Id. Ex. E.) Both Wong’s wife and
daughter serve as executive directors of Man Wah Holdings, as well as directors of
its subsidiaries. (Id. Ex. G. at 2, 3, 4.)
Wang Guisheng is the Chief Financial Officer, Secretary, and an Executive
Director of Man Wah Holdings and “served as directors of certain subsidiaries”. (Id.
at 2, 3.) Man Wah’s filing with the Nevada Secretary of State lists Wang as its
Treasurer. (Id. Ex. E.) Dai Quanfa is also an Executive Director of Man Wah
Holdings and “is currently a director of a number of [its] subsidiaries . . . , including
Man Wah Furniture . . . [and] Remaco . . . .” (Id. Ex. G at 2, 4.) He is “also a
senior director of the manufacturing center of the Group . . . [and] is responsible
for the Group’s manufacture of furniture.” (Id. at 4.)
Notably, Man Wah Holdings’ annual report states that all of its executive
directors “are respectively responsible for the various aspects of the business and
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operations of the Group. These executive directors are regarded as the members
of the senior management team of the Group.” (Id. at 6.) Further, “[t]he Board is
responsible for overall strategic formulation and performance monitoring of the
Group.” (Id. at 40.)
The overlap in decision-making, particularly with respect to this underlying
litigation, is evidenced in Man Wah’s response to Ultra-Mek’s November 2015
cease and desist letter. (See id. Exs. A-C, U.) On November 25, 2015, Ray wrote
that he received the cease and desist letter, but had “just returned from china for
thanksgiving and will be returning to china next week for a quick trip.” (Id. Ex. A.)
Several weeks later, after having received no other response from Ray, Ultra-Mek’s
counsel wrote him again to which Ray responded, “i was not able to meet with the
‘decision making’ principles on my last trip to china but i am returning january 4
and we will finalize a response and proposal for you at that time.” (Id. Ex. C
(emphasis added).) In addition to the overlap of management and decision-makers,
the Group’s employees are reported in the annual report as a whole – 10,985 in
total, and the report disclosed “the total staff cost for the Group”. (Id. Ex. G at
24.)
The annual report also reveals an overlap of substantive business functions
among Man Wah Holdings and its related entities. For example, the report
discusses the Group’s development strategy, North American market position,
product innovation, operation management, operating efficiency, leadership in
reclining sofa products at the recent High Point Furniture Show, and the Group’s
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“CHEERS” sofa brand2. (E.g., Id. at 9, 10, 16, 29.) The Group maintained a
steady revenue growth trend and seized on favorable market opportunities. (Id. at
14, 15.)
The report discloses “[s]ignificant investments and acquisitions” of the
Group, which invested approximately $44,413,000 (HK) “to increase the equity
ratio of its subsidiary Remaco . . . and as a result, the Group owns 90% of
Remaco3 . . . , a company responsible for R&D and production of metal mechanism
for recliners mainly for the Group.” (Id. at 24.)
Not only is the Group’s business operation and development described
collectively in the report, but its financial picture is also presented collectively.
Particularly relevant to the underlying action, the report notes that revenue from
furniture components rose 79.7% from the Last Corresponding Period, “primarily
from special metal frame for reclining sofas and related ancillary products of the
Group which were sold to business customers.” (Id. at 19.) Other examples within
the discussion of revenue and gross profit margins (id. at 18-24) include the
Group’s “centralized purchasing strategy” for raw materials, its commitment to
sound financial policy, and its improvement in operational efficiency. (Id. at 20,
22.) The report describes the Group’s “bank balances and cash”, “short-term
2
Ultra-Mek alleges that “products within [Man Wah’s] ‘Cheers’ branded products”,
among others, infringe on its patents. (Compl. ¶ 15 [Doc. #1].)
3
This information seems to describe a slightly different ownership structure of
Remaco from that illustrated in the ownership chart, supra at 8, in which Man Wah
Industrial Company, Ltd. is shown to own 90% of Remaco.
11
borrowings”, “primary source of working capital”, “cash flow”, “bank deposits”,
“net cash position”, “healthy financial position”, “gearing ratio”, “allowance for
inventories”, “[i]mpairment loss”, “pledged assets”, “material capital commitment”,
“contingent liabilities”, “exposure to currency risks”, among other financial
information. (Id. at 22, 23.)
Deloitte Touch Tohmatsu, which served as the independent auditor of the
consolidated financial statements of the Group, noted that the directors of Man
Wah Holdings were “responsible for the preparation of consolidated financial
statements” and reported that “the consolidated financial statements give a true
and fair view of the financial position of the Group . . . and of its financial
performance and cash flows . . . .” (Id. at 63-64; see also id. at 65-138 (reporting
detailed information on the Group’s consolidated financial statements).)
These are just some examples of the numerous substantive references to the
Group throughout Man Wah Holdings’ 2016 annual report. Applying these
references and other cited material to the factors of the practical-ability-to-obtain
test reveals that Man Wah, Man Wah Holdings, Man Wah Furniture, and Remaco
are sufficiently related such that Man Wah can be deemed to have control over
relevant documents those companies possess. Therefore, Man Wah is ordered to
produce documents responsive to Ultra-Mek’s discovery requests that are in the
possession of Man Wah Holdings, Man Wah Furniture, and Remaco.
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II.
Next, at the time Ultra-Mek filed its motion to compel, it argued that Man
Wah’s initial July 15, 2016 responses to Ultra-Mek’s discovery requests were “a
nearly-across-the-board failure on Defendant’s part to respond to Ultra-Mek’s
interrogatories and document requests.” (Ultra-Mek’s Br. in Supp. of Mot. to
Compel at 1.) Ultra-Mek argued that Man Wah only responded to three of eleven
interrogatories, those responses were “woefully inadequate”, and Man Wah
asserted “rote objections” to most of the interrogatories. (Id. at 12-13.) In
addition, Ultra-Mek argued that Man Wah produced documents in response to only
twenty-five of its eighty-two requests and many of the documents produced were
not relevant to this litigation. (Id. at 16-17.) Thereafter, Man Wah served its
revised discovery responses and argued that, as a result of its revised responses,
the only remaining issue is whether Man Wah must produce documents and
information in the possession of its affiliates. (See Gary L. Beaver Decl. ¶ 10 [Doc.
#51].) However, Ultra-Mek disagrees that this is the only remaining issue.
District courts within the Fourth Circuit have long held that the burden of
persuasion rests with the party opposing discovery. See Santiago v. S. Health
Partners, No. 15CV589, 2016 WL 4435229, at *2 (M.D.N.C. Aug. 19, 2016)
(citing Kinetic Concepts, Inc. v. ConvaTec Inc., 268 F.R.D. 226, 243-44 (M.D.N.C.
2010) and finding that the recent amendments to Rule 26 of the Federal Rules of
Civil Procedure do not shift the burden of persuasion). But, under the
circumstances of the instant motion, the Court does not even arrive at that issue,
13
because Ultra-Mek’s arguments are not specific enough for a determination as to
why precisely it contends Man Wah’s revised discovery responses are insufficient.
Ultra-Mek argues that “[t]here are many specific examples of how
Defendant’s new responses do not fully respond or comply, even when ignoring its
failure to provide information from its affiliates.” (Ultra-Mek’s Sur-Reply at 1.) Yet,
Ultra-Mek provides only five “examples” of Man Wah’s alleged deficient discovery
responses. (Id. at 1-2.)
Only one of the five examples is specific to a particular discovery request –
Ultra-Mek’s first interrogatory in which it requested specific information about each
“Accused Product” (id. at 2), but Ultra-Mek does not sufficiently explain how Man
Wah’s supplemental response to that interrogatory is deficient. Ultra-Mek
contends that in Man Wah’s revised response to this interrogatory, it merely
referenced “sales”, directed Ultra-Mek to five pages that did not provide the
requested information, and, otherwise, provided no responsive information. (Id.
(specifying the requests to which allegedly no response was given).) Man Wah’s
revised response to this interrogatory, starkly different than its initial response,
referred Ultra-Mek to eighteen pages “for designations of chairs with electric
reclining mechanism challenged by Ultra-Mek at issue (the ‘Mechanism’)”, the
same eighteen pages for “sales data”, and five pages “for information about
persons involved in sales of armchairs containing the Mechanism”, none of which
is before the Court. (See Def.’s Second Am. & Suppl. Objs. & Resps. [Doc. #51-4];
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compare id. with Def.’s Objs. & Resps. To Pl. Ultra-Mek’s First Set of Interrogs.,
Resp. No. 1 at 4 [Doc. #21-20].)
Because the documents cited in Man Wah’s revised response to
Interrogatory number one are not before the Court, without more information from
Ultra-Mek as to how specifically the cited pages in Man Wah’s revised response
fail to answer Interrogatory number one sufficiently, the Court cannot determine
what, if anything, to order Man Wah to do to comply further with the rules for
discovery.
The only other examples of deficient responses to interrogatories or requests
for production of documents4 do not direct the Court to any particular discovery
request. Instead, Ultra-Mek argues that (1) Man Wah failed to provide any
information or documents about its president or treasurer, (2) Man Wah has
provided almost no communications between it and “China-based personnel”
despite attesting that such personnel are “the ‘decision-makers,’ keep most of the
documents, and handle much of the sales transactions”, and (3) Man Wah
provided almost no documents from or to Stephen A. Barr, Man Wah’s president at
the time it purportedly first started selling the allegedly infringing product. (UltraMek’s Sur-Reply at 1-2.)
4
Included among the five examples is Man Wah’s alleged failure to revise its
invalidity contentions, but that is an issue treated separately from the alleged
insufficient responses to interrogatories and requests for production of documents
and things.
15
In support of each of these examples, Ultra-Mek cites to pages in its opening
brief that are actually part of its argument to compel Man Wah to produce
documents in the possession of its affiliates, an issue Ultra-Mek maintains is
separate from these other discovery failings. (Id.) In support of the second
example, Ultra-Mek also cites a paragraph from Ray’s declaration which seemingly
provides further support for compelling production of documents in the possession
of Man Wah’s affiliates. (Id. at 2.) Neither the cited pages in Ultra-Mek’s opening
brief, the cited paragraph in Ray’s declaration, nor Ultra-Mek’s sur-reply indicates
to which interrogatory and/or request for production of documents this information
would be responsive. Without more information, the Court cannot evaluate the
sufficiency of Man Wah’s responses to determine what, if anything, to order Man
Wah to do to comply with the rules for discovery.
Although Ultra-Mek argues that “[t]here are many more examples” of alleged
deficient discovery responses (id.), it has not provided the Court with any more
information other than that which is discussed above. Without more information
about these “many more examples”, the Court will not issue a blanket motion to
compel responses to interrogatories and requests for production of documents.
Therefore, Ultra-Mek’s motion to compel with respect to Man Wah’s revised
discovery responses is denied.
III.
Ultra-Mek also argues that Man Wah has “made no attempt to provide
revised invalidity contentions that comply with the Court’s Local Rules.” (Ultra16
Mek’s Sur-Reply at 2.) Specifically, Ultra-Mek contends that Man Wah’s Revised
Preliminary Patent Invalidity Contentions (“Invalidity Contentions”) [Doc. #21-24]
fail to comply with Local Patent Rules 103.3(b)(1) and 103.3(b)(2). (Ultra-Mek’s
Br. in Supp. of Mot. to Compel at 17-19.)
A.
Local Patent Rule 103.3(b)(1) requires that invalidity contentions “identify
each item of prior art that allegedly anticipates each asserted claim or renders it
obvious.” More specifically at issue, according to Ultra-Mek, is the requirement
that
[p]rior art under 35 U.S.C. § 102(b) shall be identified by specifying
the item offered for sale or publicly used or known, the date the offer
or use took place or the information became known, and the identity
of the person or entity which made the use or which made and
received the offer, or the person or entity which made the information
known or to whom it was made known.
L. Patent R. 103.3(b)(1). Ultra-Mek argues that Man Wah’s Invalidity Contentions
do nothing more than refer to the prior art as “Defendant’s Prior Art Chair”; “refer[]
to the item as ‘various’ models, numbers, and names”; say they were offered
sometime before November 24, 2007; and identify the persons and entities that
received the offer, sold, and made use of the product as “multiple persons”. (UltraMek’s Br. in Supp. of Mot. to Compel at 17-18 (citing Invalidity Contentions at
20).)
Man Wah responds that it disclosed, among other things, that Man Wah or
Remaco “and/or either’s predecessor in interest, and/or others, knew of, used,
17
used in public, offered for sale, sold, and used ‘Defendant’s Prior Art Chair’”; it
provided photographs of Defendant’s Prior Art Chair; and Ultra-Mek’s counsel
inspected an example of Defendant’s Prior Art Chair prior to filing the instant
motion to compel. (Man-Wah’s Opp’n to Mot. to Compel at 13-14 (citing Invalidity
Contentions at 20, 21-34).)
Man Wah argues that it is not required to identify the product number or
product name of Defendant’s Prior Art Chair and that it does not know precise
dates on which Defendant’s Prior Art Chair was sold or used or who offered or
used the device. (Id. at 14, 15.) It further argues that it is likely that Ultra-Mek is
“already quite familiar with the apparatus dubbed ‘Defendant’s Prior Art Chair’”
because it has been in the public domain for about two decades and Ultra-Mek
describes itself as “’well-known as a leading designer and manufacturer of highquality motion furniture components’ since 1983.” (Id. at 14.) According to Man
Wah, “Plaintiff having been in this industry since 1983, it is expected that all of
these facts are already known by Plaintiff”. (Id. at 15.)
No matter what information Ultra-Mek may already possess about the device
referred to as Defendant’s Prior Art Chair, Man Wah must comply with the Local
Patent Rules. In its Invalidity Contentions, it acknowledged as much when it
wrote, “Regarding LR 103.3(b)(1) as it requires for 35 U.S.C. § 102(b)” before
providing a chart with the very information Ultra-Mek challenges as insufficient.
These contentions do not fully comply with Local Patent Rule 103.3(b)(1). Man
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Wah is ordered to provide in full the information required in Local Patent Rule
103.3(b)(1) for prior art under 35 U.S.C. § 102(b).
B.
In addition to challenging Man Wah’s Invalidity Contentions pursuant to
Local Patent Rule 103.3(b)(1), Ultra-Mek argues that Man Wah has failed to abide
by Local Patent Rule 103.3(b)(2) which requires Man Wah to inform “[w]hether
each item of prior art anticipates each asserted claim or renders it obvious” and,
“[i]f a combination of items of prior art makes a claim obvious, each such
combination, and the motivation to combine such items, must be identified”.
Ultra-Mek argues that, instead of identifying “each such combination”, Man Wah
“simply provided lists of documents.” (Ultra-Mek’s Br. in Supp. of Mot. to Compel
at 18 (citing Invalidity Contentions at 80-94).) In addition, according to Ultra-Mek,
instead of identifying the motivation for each combination, Man Wah “merely
provided a list of potential motivations.” (Id. at 19.)
Man Wah responds that its contentions comply with the law as required in
KSR International Co. v Teleflex Inc., 550 U.S. 398 (2007) and “go into exquisite
detail about the prior art and the motivations to use that prior art to reach what
Plaintiff now claims is an invention.” (Man Wah’s Opp’n to Mot. to Compel at 1518.) By way of example, Man Wah argues that, as to Claim 1, it identified
eighteen primary references that disclosed a power actuating unit, an upright
position, a TV position, and a fully reclined position; identified ten additional
secondary references and seven of the primary references as secondary references,
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“which disclosed use of a power actuating unit”; and “identified which component
in the reference corresponded to the required power actuating unit claimed in Claim
1.” (Id. at 18.) According to Man Wah, “[i]n each instance, the combination of
any one of the primary references with any one of the secondary references would
render the claim obvious.” (Id. at 19.)
The Court subsequently asked the parties to clarify their positions with
respect to the required identification of combinations of prior art. (Letter to Counsel
Dec. 9, 2016 [Doc. #58].) Ultra-Mek responded by focusing on pages 90 to 94 of
the Invalidity Contentions listing the primary and secondary references for Claim 1,
by way of example, and using those pages to clarify its argument. (Letter to Ct.
Dec. 13, 2016 at 1-2 [Doc. #59].) Ultra-Mek also cited to page 94 of the
contentions as an example of the insufficient identification of the motivation to
combine prior art. (Id. at 2.) There, according to Ultra-Mek, Man Wah cited at
least twenty-six motivations. (Id.) In sum, “Ultra-Mek is left to guess the
identification of the relevant combinations and motivations from this incredibly
large body of possibilities.” (Id.) Man Wah responded by detailing its contentions
for Claim 1, as an example, and restating its argument that “any of those
seventeen secondary references, in combination with the first eighteen primary
references, would invalidate [the power actuating unit] element.” (Letter to Ct.
Dec. 19, 2016 at 1-2 [Doc. #61].) Further, Man Wah noted that it “cited multiple
motivations to make such a combination”. (Id. at 2.)
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The Court clearly understands Man Wah’s argument that, using Claim 1 as
an example, combining any one of the primary references with any one of the
secondary references renders the claim obvious. To test whether the application
of this argument sufficiently complies with the local rule to identify each
combination, the Court combined at random a primary reference (with its identified
components) with a secondary reference (with its identified power actuating unit
component). The Court then chose a motivation from among the list of potential
motivations.
Unfortunately, though, there are at least two of the primary and secondary
references and several of the motivations that the Court cannot test. For example,
two German patents are among the primary references and are re-listed as
secondary references (see Invalidity Contentions at 81, 83), but English
translations of those patents, as the parties understand them, are not before the
Court. Also as an example, Man Wah supports motivation “D” by describing it as
a “motivation observed by the USPTO during the prosecution of application serial
number 12/276,559, a ground of motivation that Plaintiff and/or Plaintiff’s
assignor(s) did not dispute in response but instead acquiesced to without protest.”
(Id. at 12.) Although the prosecution history of application number 12/276,559
happens to be an exhibit to Man Wah’s Opening Claim Construction Brief, the
Court cannot be expected to search among the document’s 166 pages to
determine if it says what Man Wahs asserts. (See Man Wah’s Opening Cl. Constr.
Br. Ex. H [Doc. #36-9].) Furthermore, it does not appear that any document in
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support of the statement “that Plaintiff and/or Plaintiff’s assignor(s) did not dispute
[this ground for motivation] in response but instead acquiesced to without protest”
is before the Court.
Because the Court cannot test Man Wah’s argument as to each of the
primary and secondary references and each of the potential motivations to ensure
that the Invalidity Contentions sufficiently comply with the local rule, it cannot
conclude that Man Wah’s identification of references and motivations are
sufficient. In other words, because the Court cannot determine that it should deny
Ultra-Mek’s motion to compel Man Wah to provide invalidity contentions that
comply with Local Patent Rule 103.3(b)(2), it is granted. Man Wah must submit
amended invalidity contentions that make clear each combination of primary and
secondary references that it contends makes a claim obvious and it must identify
the motivation(s) for each such combination, as Local Rule 103.3(b)(2) requires.
IV.
For the reasons stated herein, IT IS HEREBY ORDERED that Plaintiff UltraMek, Inc.’s Motion to Compel Defendant Man Wah (USA), Inc. [Doc. #19] is
GRANTED IN PART AND DENIED IN PART. The motion is granted with respect to
the production of documents in the possession of three of Man Wah (USA), Inc.’s
affiliates; it is denied with respect to Man Wah’s discovery responses; and it is
granted with respect to Man Wah’s Revised Preliminary Invalidity Contentions.
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IT IS FURTHER ORDERED that Man Wah (USA), Inc. has twenty-one days from the
entry of this Order to comply.
This the 28th day of December, 2016.
/s/ N. Carlton Tilley, Jr.
Senior United States District Judge
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