Summer Infant (USA), Inc. v. TOMY International, Inc.

Filing 74

MEMORANDUM AND ORDER denying 65 Objection to Magistrate Judge Decision to District Court. Summer Infant's motion to amend its counterclaim is DENIED - So Ordered by District Judge Mary S. McElroy on 8/3/2020. (Urizandi, Nisshy)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

SUMMER INFANT (USA), INC.,
Plaintiff/Counter Defendant,
v.
TOMY INTERNATIONAL, INC.,
Defendant/Counter Claimant.

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No. 1:17-cv-549-MSM-PAS

MEMORANDUM AND ORDER
Plaintiff Summer Infant (USA), Inc. (“Summer Infant”) seeks to amend its
counterclaim against TOMY INTERNATIONAL, INC. (“TOMY”) by adding as Count
II a claim of bad faith patent infringement pursuant to R.I. Gen. Laws § 61-41-1, et

seq. (ECF No. 47). Section 61-41-1 was enacted in 2016 and has yet to be construed
by any state or federal court. TOMY objects to the amendment. (ECF No. 49).
Magistrate Judge Patricia A. Sullivan, to whom the motion was referred, issued an
Order denying leave to amend. (ECF No. 61).
As a preliminary matter, Summer Infant asserts, and TOMY seems to agree,
that the Magistrate Judge is empowered only to issue a Recommendation, which
would be reviewed de novo, because denial of leave to add Count II is dispositive
within Fed. R. Civ. P. 72(b). Denial of leave to amend would foreclose litigation of the
claim and therefore de novo review is appropriate. Caranci v. Blue Cross & Blue

Shield of Rhode Island, 194 F.R.FD. 27, 31 n. 1 (D.R.I. 2000) (denial of leave to amend
to add party plaintiff is dispositive, requiring de novo review of Magistrate Judge’s

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decision). Accord, Emissive Energy Corp. v. NovaTac, Inc., C.A. No. 09-13 S, 2010
WL 2991201 at *2 (D.R.I. July 28, 2010) (de novo review appropriate where denial of
leave to amend is dispositive of a defense).
In any event, whether using the more forgiving review standard of clearly
erroneous, or deciding the issue de novo under Rule 72(b), I agree with the Magistrate
Judge and therefore DENY Summer Infant’s motion to amend. There are two reasons
why this motion should be denied. First among them is that it would be futile, as
Summer Infant cannot meet a 12(b)(6) standard for pleading bad faith pursuant to
R.I.G.L. §6-41.1-3. When leave to amend is sought prior to the close of discovery and
the filing of motions for summary judgment, a “plausible claim” review is required.

Hatch v. Dept. for Children, Youth and Their Families, 274 F.3d 12, 19 (1st Cir.
2001).1 The second reason is that Summer Infant’s motion to amend comes too late
in the game, after undue delay.
Plausible Claim
Summer Infant seeks to pursue a claim that TOMY acted in bad faith when it
asserted infringement by Summer Infant of its (TOMY’s) patent for an infant
bathtub.

The Rhode Island statute entitled “Bad-faith assertions of patent

infringement” lists a number of factors which, while not exhaustive, are indicative of

1

Hatch identifies two standards. First is the familiar 12(b)(6) failure to state a

plausible claim, applicable when leave to amend “is not sought until after discovery
has closed and a summary judgment motion has been docketed, …” Id. at 19. The
second, more rigorous standard, is applicable when discovery has closed and a motion
for summary judgment has been filed. Id. In this case, fact discovery closed but no
motion for summary judgment has yet been filed. The Court applies, however, the
12(b)(6) standard, which is more generous with respect to Summer Infant.

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bad faith. R.I.G.L. § 6-41.1-3(b). Correlate to that is a list of factors which, again
while not exhaustive, are indicative of an absence of bad faith. R.I.G.L. § 41-1-3(c).
TOMY maintains that an examination of these two lists together reveal an intent in
the Rhode Island statute to permit lawsuits only against what are colloquially termed
“patent trolls” and that TOMY, not being a “patent troll,” is exempt from its reach. A
“patent troll” – also referred to as a “nonpracticing entity” -- is an entity that claims
patent infringement essentially as a vehicle to extort money from a legitimate patentholder. “Patent trolls are ‘nonpracticing entities’ who ‘do not manufacture products,
but instead hold … patents, which they license and enforce against alleged
infringers.” Amgen, Inc. v. F. Hoffman-LaRoche Ltd., 581 F.Supp.2d 160, 210 (D.
Mass. 2008). TOMY, as an inventor of its infant tub, contends that it is not a “patent
troll” and is therefore not subject to being sued under the Rhode Island statute.
Allowing Summer Infant to amend to assert a counterclaim against TOMY for bad
faith assertion, TOMY reasons, would therefore be futile. Summer Infant, for its part,
maintains that there is nothing in the Rhode Island statute that limits its use, and
that the Magistrate Judge was wrong to construe it as applicable only to “patent troll”
situations because the statute is not ambiguous and therefore allows no
interpretation.
Labels aside, it is clear that Summer Infant cannot meet any of the indicia
outlined in the statute as indicative of a bad faith patent infringement assertion, and
all the indicia against a conclusion of bad faith are present. I find on de novo review
that Summer Infant’s failure on the face of its pleading to come within the criteria of

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the statute means it fails the plausible claim test. It does not fail for a likely lack of
proof; it fails because it cannot surmount the threshold criteria defining a bad faith
infringement assertion. The Magistrate Judge’s Order goes through the statutory
criteria in detail, and I will not repeat those details here.2 It suffices to say that none
of the indicia identified in (b)(1) through (8) – indicating the presence of bad faith -are true here. While the Magistrate Judge noted that (b)(4) – TOMY’s requiring a
response “within an unreasonably short period of time” – might be arguable, I do not
find it so. TOMY’s Cease & Desist letter demanded a response within three (3) days,
but as Summer Infant did in fact respond within that time period, it would be hard
to argue it was unreasonably short. The other side of the coin – factors identified in
(c)(1) through (6) as indicative of an absence of bad faith – is equally compelling.
Because Summer Infant’s pleading does not permit an inference that it can prove any
of these criteria, it lacks plausibility and permitting the amended counterclaim would
be futile.
Undue Delay
With respect to undue delay, Summer Infant contends that it filed its motion
to amend as soon as discovery provided a factual basis for such a motion. The Court
agrees with the Magistrate Judge’s conclusion, however, that the Cease & Desist

The factors indicating bad faith have largely to do with defects in the Cease & Desist
letter, an absence of good faith diligence on the part of the sender in analyzing
whether its patent has actually been infringed, and previous bad faith attempts to
make the same claim. The factors indicating an absence of bad faith include the lack
of defects in the demand letter, a good faith attempt by the patent-holder to negotiate,
the status of the patent-holder as an inventor of the product, and the investment the
patent-holder has made in the product. R.I.G.L. §6-41.1-3 (b) and (c).
2

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letter (and its appended 13-page “claim chart”) itself underlies Summer Infant’s
purported bad faith claim, and Summer Infant points to no specific information
learned after fact discovery had closed that was necessary to formulate its bad faith
claim.3
Having concluded that the motion to amend should be denied both because of
undue delay and futility, I see no need to reach the preemption argument which
would also act as a bar to the proposed Count II.
Summer Infant’s motion to amend its counterclaim is DENIED.

IT IS SO ORDERED:

_______________________________
Mary S. McElroy,
United States District Judge
August 3, 2020

The information Summer Infant learned at the third deposition of a TOMY witness
relative to who conducted the analysis of products does not seem the kind of “make
or break” information necessary to flesh out the proposed Count II claim. Summer
Infant’s excuse, therefore, that it could not move to amend until after it learned that
information seems unreasonable.
3