Maxill Inc. v. Loops, LLC et al

Filing 70

MINUTE ORDER denying Loops, LLC and Loops Flexbrush, LLC's 50 Motion for Protective Order and Stay; granting in part and denying in part Maxill-Canada and Maxill-Ohio's 46 Motion to Compel; reminding counsel of their obligation to pro vide working or courtesy copies of voluminous filings; granting Loops's 63 Motion to Seal: Dkt. 64 shall remain under seal; granting Maxill's 67 Motion to Seal: Dkt. 68 shall remain under seal; reminding counsel that motions to seal shall be noted for the third Friday after filing unless they are unopposed or stipulated. Authorized by Judge Thomas S. Zilly. (SWT)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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MAXILL INC., an Ohio corporation,
Plaintiff,

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v.
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LOOPS, LLC; and LOOPS
FLEXBRUSH, LLC,

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C17-1825 TSZ
(consolidated with C18-1026 TSZ)

Defendants.
LOOPS, L.L.C.; and LOOPS
FLEXBRUSH, L.L.C.,

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Plaintiffs,
MINUTE ORDER

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v.
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MAXILL INC., a Canadian corporation,
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Defendant.
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The following Minute Order is made by direction of the Court, the Honorable
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(1)
The motion for protective order and stay, docket no. 50, brought by Loops,
L.L.C. and Loops Flexbrush, L.L.C. (“Loops”) is DENIED. Loops contends that this
20 action should be stayed while the parties litigate in Canada concerning an alleged breach
of a settlement agreement executed in April 2014. The Court is not persuaded that a stay
21 is necessary. The settlement agreement at issue was between Loops and Maxill Inc., a
Canadian corporation (“Maxill-Canada”); Maxill Inc., an Ohio corporation (“Maxill22 Ohio”) was not a party to the settlement agreement. See Ex. A to Brechtel Decl. (docket
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MINUTE ORDER - 1

1 no. 52-1). Thus, even if the settlement agreement precludes Maxill-Canada from
“attacking the validity” of United States Patent No. 8,448,285 (the “’285 Patent”), it does
2 not prevent Maxill-Ohio from doing so. Moreover, the “no-challenge” clause contained
in the settlement agreement is unenforceable in this patent litigation with regard to the
3 ’285 Patent. 1 See Massillon-Cleveland-Akron Sign Co. v. Golden State Advert. Co., 444
F.2d 425, 427 (9th Cir. 1971); see also Rates Tech. Inc. v. Speakeasy, Inc., 685 F.3d 163
4 (2d Cir. 2012). The Canadian lawsuit that culminated in the settlement agreement and a
consent judgment involved only Canadian Patent No. 2,577,109, and the validity of the
5 ’285 Patent was not at issue in the prior proceedings. See Ex. E to Brechtel Decl. (docket
no. 50-3 at 7, ¶ 6); see also Ex. 1 to DiMeo Decl. (docket no. 60). Thus, with respect to
6 the ’285 Patent, the “no-challenge” clause constitutes an attempt to resolve a dispute
about patent validity prior to any litigation, which runs contrary to the “strong federal
7 policy favoring the full and free use of ideas in the public domain.” Lear, Inc. v. Adkins,
395 U.S. 653, 674 (1969); see also Rates Tech., 685 F.3d at 170-71; Massillon, 444 F.2d
8 at 427. In contrast to final judgments, consent decrees, and settlement agreements with
“no-challenge” clauses relating to patents actually “in suit,” see Flex-Foot, Inc. v. CRP,
9 Inc., 238 F.3d 1362, 1369 (Fed. Cir. 2001), pre-litigation settlements containing “nochallenge” clauses threaten to “muzzle” those who might be the only entities with
10 “enough economic incentive to challenge the patentability of an inventor’s discovery,”
and thereby force the public to continue to “pay tribute to would-be monopolists without
11 need or justification.” Lear, 395 U.S. at 670; see also Rates Tech., 685 F.3d at 172
(holding that “covenants barring future challenges to a patent’s validity entered into prior
12 to litigation are unenforceable, regardless of whether the agreements containing such
covenants are styled as settlements agreements or simply as license agreements”). The
13 Canadian proceedings do not warrant a stay of this action or provide a basis for Loops to
resist Maxill-Canada’s and Maxill-Ohio’s efforts to depose Steven Kayser.
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(2)
The motion to compel, docket no. 46, brought by Maxill-Canada and
Maxill-Ohio (collectively, “Maxill”), is GRANTED in part and DENIED in part as
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follows. Counsel shall meet and confer concerning a mutually convenient time to further
16 depose Steven Kayser individually and under Federal Rule of Civil Procedure 30(b)(6).
Such deposition shall occur before the fact discovery completion deadline of August 1,
17 2019. Maxill’s request for attorney’s fees in connection with its motion to compel is
DENIED.
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(3)
Counsel are REMINDED of their obligation to provide working or courtesy
19 copies of voluminous filings. See Local Civil Rule 10(e)(9).
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The Court makes no ruling concerning the preclusive effect of the settlement agreement with
respect to any other patents or the extent to which the settlement agreement is enforceable in
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MINUTE ORDER - 2

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(4)
Loops’s motion to seal, docket no. 63, is GRANTED as follows. The
unredacted version of Loops’s reply, docket no. 64, in support of its motion for protective
2 order and stay, shall remain under seal. Moreover, Loops’s unopposed request, see
Reply at 1 n.1 (docket no. 64 at 2), for extension of time is GRANTED, and Loops’s
3 reply, docket no. 64, will be considered timely filed.
(5)
Maxill’s motion to seal, docket no. 67, is GRANTED as follows. The
unredacted versions of the Declaration of Mudit Kakar and Exhibits A, B, and E thereto,
5 docket no. 68, shall remain under seal.
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(6)
Counsel are REMINDED that motions to seal should be noted for the third
Friday after filing unless they are unopposed or stipulated. Counsel shall meet and confer
7 in advance of filing motions to seal and, if possible, file a stipulation and proposed order
to seal, rather than a motion to seal.
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(7)
record.

The Clerk is directed to send a copy of this Minute Order to all counsel of

Dated this 9th day of July, 2019.
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William M. McCool
Clerk

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s/Karen Dews
Deputy Clerk

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