I/P Engine, Inc. v. AOL, Inc. et al

Filing 190

Memorandum in Support re 189 MOTION for Sanctions for I/P Engine's Violation of May 2, 2012 Court Order filed by Google Inc., IAC Search & Media, Inc.. (Noona, Stephen)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION

I/P ENGINE, INC.
Plaintiff,
v.

Civil Action No. 2:11-cv-512

AOL, INC., et al.,
Defendants.

BRIEF IN SUPPORT OF GOOGLE INC. AND IAC SEARCH & MEDIA, INC.’S
MOTION FOR RULE 37 SANCTIONS FOR I/P ENGINE’S VIOLATION OF MAY 2,
2012 COURT ORDER
I.

INTRODUCTION
Defendants Google Inc. (“Google”) and IAC Search & Media, Inc. (“IAC Search”)

respectfully request that this Court preclude Plaintiff I/P Engine, Inc. (“Plaintiff”) from asserting
infringement claims against Google Search and IAC Search’s Ask Sponsored Listings service,
for failure to comply with this Court’s order requiring Plaintiff to provide supplemental
infringement contentions as to these services.
On May 2, 2012, this Court, upon Google and IAC Search’s motion, ordered Plaintiff to
supplement its infringement contentions by July 2, including “[a]t a minimum,” as to Google
Search and Ask Sponsored Listings. (Dkt. 156, 2.) Despite this unambiguous directive, Plaintiff
has wholly failed to comply and has provided no justification for its failure. Plaintiff’s
recalcitrance significantly prejudices Defendants, who are in the midst of preparing for expert
discovery and trial.

Because Plaintiff unjustifiably violated the Court’s Order, sanctions are warranted. At a
minimum, Plaintiff should be precluded from asserting any allegations of infringement regarding
Google Search and Ask Sponsored Listings in this case.
II.

FACTUAL BACKGROUND
A.

The Court’s May 2, 2012 Order Granting Google’s Motion to Compel
Supplemental Contentions.

As detailed in Defendants’ Motion to Compel, on November 4, 2011, the parties agreed
that Plaintiff would serve infringement contentions based on publicly available information on
November 7 (for Google) and November 11 (for all other defendants). The parties also agreed
that Defendants would produce technical documents related to the accused products from their
technical repositories by December 7 (for Google) and December 12 (for all other defendants).
(Declaration of Jennifer Ghaussy (“Ghaussy Decl.”), Ex. A, 1-2.) As agreed, on December 7,
Google produced 217,614 pages of technical documents from its technical repositories regarding
AdWords, Search and AdSense for Search. (Id. Ex. B, 1.) As of January 18, 2012, IAC Search
produced almost 20,000 pages of documents regarding Ask Sponsored Listings and IAC
Search’s use of AdSense for Search. (Ghaussy Decl., ¶ 4.) These Google and IAC Search
document productions included technical specifications, design requirements and other technical
documentation. (Id.) On May 11, Google produced the custodial documents of Bryan Horling,
who was listed in Google’s initial disclosures as a Google employee with knowledge of the
accused features of Google Search, and by May 31, Google had produced the documents of the
nine custodians agreed upon by the parties. (Id., ¶ 5.) By June 15, IAC Search had completed its
custodial production, including the documents of James Speer, listed in the initial disclosures as
a person with knowledge of the accused features of Ask Sponsored Listings. (Id., ¶ 6.)

01980.51928/4853662.6

2

After correspondence and several meet and confers, Plaintiff agreed to supplement its
November 2011 infringement contentions no later than February 17, 2012. (Id., ¶ 7.) On
February 17, Plaintiff served its supplemental infringement contentions. These contentions
included supplementations for Google AdWords and AdSense for Search, the other defendants’
use of AdSense for Search, and AOL Sponsored Listings. Plaintiff’s infringement contentions,
however, did not include a supplementation for Google Search or IAC Search’s Ask Sponsored
Listings as Plaintiff had agreed to provide. (Id.) After Plaintiff refused to provide such
supplemental contentions, Google and IAC Search moved to compel them. (Dkt. 88, 4-6, Dkt.
95, 8-9.)
On May 1, the Court held a hearing on Google’s motion to compel. In both its briefing
and at the hearing, Plaintiff insisted that its contentions were “more than adequate to provide
Defendants notice as to I/P Engine’s allegations regarding where each claim limitation is found
in each accused system.” (Dkt. 127, 2; see also Dkt. 165, 28.) The Court disagreed, finding that
the Plaintiff needed to supplement its contentions by July 2; “[a]t a minimum, I/P Engine shall
disclose its supplemental infringement contentions with respect to Google Search and Ask
Sponsored Listings …” (Dkt. 156, 2).
B.

Plaintiff Failed to Comply with the Court’s Order.

On July 2, Plaintiff served its “third preliminary” infringement contentions, but did not
provide any contentions with respect to Google Search or Ask Sponsored Listings. On July 5,
Defendants pointed out that Plaintiff had not complied with the Court’s Order. (Ghaussy Decl.,
Ex. C.) On that same day, the parties spoke by telephone about the issue. Defendants asked
whether Plaintiff believed that it was in compliance with the Order even though Plaintiff had
provided no supplementation at all as to Google Search or Ask Sponsored Listings. (Id. Ex. D,
3.) Plaintiff indicated it believed it was in compliance because Defendants had Plaintiff's
01980.51928/4853662.6

3

“current contentions on the products.” As Defendants indicated on the call, however, this is the
same argument that the Court rejected in granting the motion to compel. (Id.) Given Plaintiff’s
failure to supplement as ordered, Defendants then asked that Plaintiff confirm whether it would
drop its allegations against Google Search and Ask Sponsored Listings. Plaintiff agreed to
provide a response early in the week of July 9. (Id.)
Having heard no response by July 10, Defendants followed up and asked Plaintiff
whether it intended to respond as it had agreed to do. (Id., Ex. E). Plaintiff again did not
respond. As a result, Google and IAC Search were forced to file the instant motion.
III.

LEGAL STANDARD
Federal Rule of Civil Procedure 37 authorizes a district court to impose sanctions against

a party who “fails to obey an order to provide or permit discovery including an order under Rule
26(f), 35, or 37(a).” Fed. R. Civ. P. 37(b)(2)(A). A failure to obey the Court’s discovery order
warrants sanctions, including an order from the Court precluding the disobedient party from
relying on evidence it failed to produce in violation of court order, striking pleadings in whole or
in part, or dismissing the action or proceeding in whole or in part. Fed. R. Civ. P. 37(b)(2)(A)(iiv). Sanctions are appropriate where a plaintiff fails to supplement its infringement contentions
as required by a court order. See Nike, Inc. v. Wolverine World Wide, Inc., 43 F.3d 644, 648-49
(Fed. Cir. 1994) (approving sanction precluding plaintiff from asserting doctrine of equivalents
for failure to provide full infringement contentions); In re Papst Licensing GmbH & Co. KG
Litig., 273 F.R.D. 339, 343-44 (D. D.C. 2011) (barring plaintiff from advancing certain
infringement arguments where plaintiff failed to supplement infringement contentions with the
specificity required by court order).

01980.51928/4853662.6

4

Courts have “broad discretion” under Rule 37 to impose appropriate sanctions, Calkins v.
Pacel Corp., 2008 WL 149141, at *4 (W.D. Va. Jan. 11, 2008), and the Fourth Circuit’s review
of a sanctions determination “is a deferential one.” Young Again Prods., Inc. v. Acord, 459 Fed.
Appx. 294, 301 (4th Cir. 2011). In determining the type of sanction to impose, courts evaluate:
(1) the presence of bad faith on the part of the non-complying party; (2) the amount of prejudice
caused; (3) the need to deter the particular type of non-compliance; and (4) whether there are less
severe sanctions that would be effective. Belk v. Charlotte-Mecklenburg Bd. of Educ., 269 F.3d
305, 348 (4th Cir. 2001) (upholding district court’s award of sanctions for noncompliance with
court order). Here, these factors favor sanctions.
IV.

ARGUMENT
A.

Plaintiff’s Failure to Supplement its Infringement Contentions, as Directed
by the Court, Lacks Good Faith.

Plaintiff’s continued failure to supplement its contentions is inexcusable. The Court’s
Order clearly required Plaintiff to “disclose its supplemental infringement contentions with
respect to Google Search and Ask Sponsored Listings” by July 2. (Dkt. 156, 2.) In issuing this
Order, the Court rejected Plaintiff’s argument that its prior infringement contentions were
sufficient. Plaintiff’s refusal to provide supplemental contentions based upon this rejected
argument constitutes bad faith.
Plaintiff cannot credibly claim that its original contentions were adequate. These
contentions were based solely upon publicly available information and did not, as detailed in the
Motion to Compel, adequately put Google and IAC Search on notice as to how Google Search
and Ask Sponsored Listings infringed the patents-in-suit. Indeed, this issue has already been
litigated. In opposing the Motion to Compel, Plaintiff argued that its November contentions

01980.51928/4853662.6

5

were sufficient to put Google and IAC Search on notice. (Dkt. 127, 2.) The Court disagreed and
specifically ordered Plaintiff to provide supplemental contentions as to these services.
Nor can Plaintiff credibly claim that it was unable to provide supplemental contentions.
Plaintiff has had the extensive production of technical documents regarding Google Search and
Ask Sponsored Listings for months. It has also had the opportunity to take depositions on these
topics—yet it has declined to do so.1 The fact that Plaintiff has not provided contentions for
Google Search and Ask Sponsored Listings suggests that it simply has no valid infringement
theory against these services. In these circumstances, the responsible and appropriate thing to do
is to withdraw these allegations.
Plaintiff’s refusal to comply with the Court’s Order was in bad faith; it “clearly should
have understood [its] duty to the court but nonetheless deliberately disregarded it.” Plant v.
Merrifield Town Ctr. Ltd. P’ship, 2009 WL 6082878, at *6 (E.D. Va. Dec. 23, 2009) (internal
quotations omitted) (“Plaintiffs’ willful disregard of the federal rules and this court’s Order is the
sine qua non of bad faith”); see also Bowman v. Johnson, 2011 WL 4943991, at *2 (E.D. Va.
Oct. 17, 2011) (bad faith evidenced by party’s continued refusal to provide requested discovery
despite opposing party’s “good faith prodding”).

1

Notably, Plaintiff has not even sought deposition discovery regarding the functionality
of Google Search or Ask Sponsored Listings even though Plaintiff previously argued that it
“intends to supplement its infringement contentions” after taking 30(b)(6) depositions of
Defendants. (Dkt. 127, 8.) Neither Plaintiff’s “liability” notice to IAC Search nor its amended
notice, however, included any topic related to Ask Sponsored Listings. (Ghaussy Decl., Exs. F,
G.) Similarly, neither Plaintiff’s “liability” notice to Google nor its amended notice included any
topic specifically related to Google Search. (Id., Exs. H, I.) Although Defendants noted this
failure multiple times in advance of the depositions, including before Plaintiff amended its
deposition notices, Plaintiff failed to respond. (Dkt. 139, 8.) If Plaintiff intended to pursue its
theories regarding Google Search and Ask Sponsored Listings, then Plaintiff would presumably
have served topics specifically related to these services. Plaintiff did not do so.

01980.51928/4853662.6

6

B.

Plaintiff’s Violation Prejudices Google and IAC Search

Google and IAC Search have been significantly prejudiced by Plaintiff’s refusal to
supplement its infringement contentions as to Google Search and Ask Sponsored Listings, as
required by the Court’s Order. Such disregard of a court order compelling discovery is
prejudicial to a defendant because the defendant “could not defend against claims, facts, and
witnesses that [the plaintiff] refused to provide.” Plant, 2009 WL 6082878 at *6 (internal
quotations omitted) (granting sanctions). Failure to provide discovery in violation of a court
directive “significantly prejudice[s] [defendant’s] ability to prepare for the trial.” Bowman, 2011
WL 4943991 at *2 (dismissing claim).
This case is on a tight discovery schedule and trial is around the corner. Because
Plaintiff’s original contentions are inadequate, Plaintiff’s refusal to supplement them precludes
Google and IAC Search from adequately preparing for expert discovery and trial. Google and
IAC Search have thus been prejudiced by Plaintiff’s conduct. See In re Papst Licensing, 273
F.R.D at 346 (granting sanctions where plaintiff failed to supplement infringement contentions
with the specificity required by the court).
C.

Willful Violations Such as Plaintiff’s Must Be Deterred

The importance of deterring violations of court orders is well-established in the Fourth
Circuit. “If the court were to fail to enforce its Orders … it would send the wrong message to
recalcitrant parties and their counsel: that defiance goes unpunished. Thus, the need to deter this
type of behavior is great.” Plant, 2009 WL 6082878 at *6; see also Mut. Fed. Sav. and Loan
Ass’n v. Richards & Assocs., Inc., 872 F.2d 88, 93 (4th Cir. 1989) (“ignoring the direct orders of
the court … must obviously be deterred”); Belk, 269 F.3d at 348 (“[S]uch non-compliance with
the district court’s orders certainly needed to be deterred. The district court’s condonation of
[the party]’s bad faith … could have encouraged repetition of improper conduct.”). Here, the

01980.51928/4853662.6

7

Court issued a clear, unambiguous order. Rather than seek relief from the Order, which it should
have done if it truly believed that it could not comply, Plaintiff responded by simply failing to
follow it based upon an argument that the Court had already rejected. This is a willful violation
of the Court’s Order. Accordingly “there is a strong need to convey” to Plaintiff and to other
litigants that it “may not completely ignore … the Court’s orders with impunity.” Bowman,
2011 WL 4943991 at *2.
D.

Preclusion of Allegations Is the Least Severe Effective Remedy

Plaintiff should be precluded from asserting any allegations of infringement regarding
Google Search and Ask Sponsored Listings. This is an appropriate remedy for Plaintiff’s failure
to provide supplemental contentions in defiance of the Court’s Order. See Nike, Inc., 43 F.3d at
644 (approving sanction precluding plaintiff from asserting doctrine of equivalents for failure to
provide full infringement contentions); In re Papst, 273 F.R.D. 339 (barring plaintiff from
advancing certain infringement arguments where plaintiff failed to supplement infringement
contentions with the specificity required by court order). Google and IAC Search’s requested
remedy would ameliorate the specific prejudice to them arising from Plaintiff’s noncompliance
with the Court’s Order. Indeed, this remedy is not severe at all given that Plaintiff apparently
does not have a viable infringement theory against Google Search and Ask Sponsored Listings.
“The sanction of precluding the pursuit of an unsupported claim [is] clearly appropriate.” Nike,
Inc., 43 F.3d at 644. Preclusion will simply accomplish what Plaintiff would be duty bound to
do before trial under Rule 11: withdraw claims that have no basis in fact.

V.

CONCLUSION
For the foregoing reasons, Google and IAC Search respectfully request that Plaintiff be

precluded from asserting any allegations of infringement regarding Google Search and Ask

01980.51928/4853662.6

8

Sponsored Listings in this case. Google and IAC Search also request that the Court order
Plaintiff to pay all of Google and IAC’s reasonable fees and expenses incurred in connection
with this motion and its prior motion to compel. Fed. R. Civ. P. 37(b)(2)(C).

Dated: July 13, 2012

By: /s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
By: /s/ David A. Perlson
David A. Perlson
QUINN EMANUEL URQUHART &
SULLIVAN LLP
50 California Street, 22nd Floor
San Francisco, CA 94111
Telephone: [phone]
Facsimile: [phone]
Counsel for Defendants Google Inc., IAC Search &
Media, Inc.

01980.51928/4853662.6

9

CERTIFICATE OF CONSULTATION
In accordance with Local Rule 37(e), I certify that counsel conferred in good faith to
resolve this dispute prior to the filing of the present motion. Counsel’s meet-and-confer efforts
are set forth in Section II.B, and included a telephonic meet-and-confer on July 5, 2012.
/s/ David A. Perlson
David A. Perlson

01980.51928/4853662.6

10

CERTIFICATE OF SERVICE
I hereby certify that on July 13, 2012, I will electronically file the foregoing with the
Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to
the following:
Jeffrey K. Sherwood
Kenneth W. Brothers
DICKSTEIN SHAPIRO LLP
1825 Eye Street NW
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Donald C. Schultz
W. Ryan Snow
Steven Stancliff
CRENSHAW, WARE & MARTIN, P.L.C.
150 West Main Street, Suite 1500
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Counsel for Plaintiff, I/P Engine, Inc.

Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Counsel for AOL Inc., Google, Inc.,
Gannett Co., Inc., Target Corporation and
IAC Search & Media, Inc.

01980.51928/4853662.6

11

/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]

11804464v1

01980.51928/4853662.6

12