Pitt appeals from the order of Judge Schwab dismissing its complaint without prejudice instead of allowing it to file an amended complaint alleging its standing to sue.  The case was just back to the district court after the Federal Circuit ruled for Pitt in 2008-1441 that the district court erred in dismissing with prejudice.  You can read our coverage of Judge Schwab’s earlier decision, and Dennis Crouch at Patently-O covered the first CAFC decision here.

Underlying both dismissals is the fact that Pitt was not the sole owner of the patent when it first filed the complaint, but a co-owner with Carnegie-Mellon.  Because Carnegie-Mellon was not a party, the action violated the rule that all co-owners of the patent must join in the suit.  Isr. Bio-Eng’g Project v. Amgen Inc., 475 F.3d 1256, 1264–65 (Fed. Cir. 2007).   Since then, however, Pitt acquired Carnegie-Mellon’s interest and is now the sole owner.

The Federal Circuit wrote in the first appeal:

Pitt also asserts that the district court further erred when it designated its dismissal as a dismissal “with prejudice.” We find that argument persuasive. Namely, we hold that even if Carnegie Mellon is a necessary party, and even if dismissal is a proper consequence for Pitt’s failure to join Carnegie Mellon, the dismissal should have been without prejudice.

Following the CAFC’s mandate, Judge Schwab amended the judgment to dismiss Pitt’s case without prejudice.

But because Pitt is now the sole owner and can sue by itself, it moved the court for leave to amend its complaint to add the allegations that it is the sole owner.  The court declined, finding that the Federal Circuit’s mandate did not allow for it:

After careful consideration of plaintiff’s motion and brief in support, defendant Varian Medical Systems Inc.’s response and brief in opposition, and the Opinion and Mandate of the Court of Appeals for the Federal Circuit, the Court agrees with defendant that plaintiff’s motion must be dismissed. Although plaintiff’s legal position with respect to the effect of a dismissal without prejudice is not without appeal, in the abstract, the Court deems the Opinion and Mandate of the Court of Appeals to foreclose the relief plaintiff requests in this case.

Opinion, p. 2.

PATracer Note: It appears to me that the court could have allowed Pitt to amend.  While standing to sue is normally based on the facts that existed at the time of filing and cannot be retroactively cured or fixed, Paradise Creations v. UV Sales, 315 F.3d 1304, 1309 (Fed. Cir. 2003), requiring all patentees to join in the suit is not a constitutional requirement, but a prudential one.  Unlike constitutional standing issues, problems with prudential standing can be cured post-filing.

Also, it is not clear from these materials why Pitt didn’t just file a new complaint?  Perhaps the 6 year limitation on damages comes into play.  If so, maybe they should have filed a new action when it first became the sole owner.

2010-1157 Order

Defendants GraphOn et al appeal from the order of Judge Gerald Bruce Lee striking their motion for attorneys’ fees under § 285 for being late:  the motion was filed on December 10, 2009—15 days after the Clerk entered the order of dismissal.

Fed. R. Civ. P. 54(d)(2)(B)(i) provides that a motion for attorneys’ fees must “be filed no later than 14 days after entry of judgment” unless a statute or court order provides otherwise.

Because the filing of motion for attorneys’ fees is an act required to be done “within a specified amount of time,” the Court found that Fed. R. Civ. P. 6(b)(1) applies:

When an act may or must be done
within a specified time, the court may, for good
cause, extend the time:

(A) with or without motion or notice if the court
acts, or if a request is made, before the
original time or its extension expires; or

(B) on motion made after the time has expired if
the party failed to act because of excusable
neglect.

Because defendants did not timely request more time under part (A)–which only would require a showing of “good cause,”, Judge Lee ruled that the late filing could only be accepted if defendants could show “excusable neglect.”

Defendants argued that such neglect occurred because (1)they miscounted by skipping over Thanksgiving Day and (2) they were somehow confused because the dismissal entry did not say “with prejudice.”

“Excusable neglect,” sayeth Judge Lee, is:

an equitable concept, and courts will consider “the relevant circumstances surrounding the party’s omission” to determine whether an extension is warranted under Rule 6(b)(2).  Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993). However, “inadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute excusable neglect.”  Id. at 392.

Based on this, Judge Lee found no excusable neglect.  Opinion, pp. 3-4.

Defendants argue that their delay was due to a miscalculation given the intervening Thanksgiving holiday and the fact that the Court’s Order did not state that dismissal was “with prejudice.” The Court finds Defendants’ reasons insufficient to establish excusable neglect. Federal Rule of Civil Procedure 6 makes clear that intervening holidays are included in the fourteen days allowed for a Rule 54(d) (2) (B) motion. Defendants’ miscalculation does not constitute excusable neglect.

. . .

[and] to the extent that Defendants were unclear about whether the Court’s Order dismissing the case for lack of jurisdiction constituted a dismissal with prejudice, Defendants could have moved for clarification.

2010-1143 Order

Pantentee Sorensen (sometimes also spelled “Sorenson”) attempts to appeal from the Order of Judge Barry Moskowitz granting defendants’ motion to stay the case pending reexamination of patent no. 4,935,184.  The Court did deny defendants’ motions to dismiss or to transfer in favor of the first-filed declaratory judgment action in the Eastern District of Pennsylvania.

Stay: Orders granting motions to stay pending reexamination are not generally considered “final” and are therefore not generally appealable.  See, e.g., Gould v. Control Laser Corp., 705 F.2d 1340 (Fed. Cir. 1983); Soliami v. Kennametal, 2008-1345 (Fed. Cir. 2008).  Indeed, Dorman has filed a motion to dismiss the appeal.

“Generally,” I write, because an exception exists where the stay “effectively could put one of the appellants out of court” or if some “patent issue would escape review by a federal court if the case is stayed.”  See, e.g., Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1340 (Fed. Cir. 1998).  There is nothing in the record to indicate whether any facts supporting the exception exists here, so the appeal may not stick around.

Dismiss/Transfer: Although not being appealed, the decision is interesting in that it explains that the “first to file rule” is not really a rule but a guide.  The Court declined to dismiss or transfer in favor of the earlier case because, in part, the Court has 30 other cases involving the ’184 patent, and therefore judicial economy, etc. favor keeping the case.  Order, pp. 4-5.

Failure to State a Claim: The Court also rejected defendants’ argument that the Complaint was too vague and unspecific to state a patent infringement claim under the “heightened” pleading requirements from the Supreme Court’s decisions in Twombly and Iqbal.  Judge Moskowitz wrote:

The Federal Circuit, in a post-Twombly decision, stated that the following allegations were sufficient to state a cause of action for patent infringement: “(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that defendant has been infringing the patent by making, selling, and using [the device] embodying the patent; (4) a statement that the plaintiff has given the defendant notice of its infringement; and (5) a demand for an injunction and damages.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1356–57 (Fed. Cir. 2007). Plaintiff has pled facts supporting each of these elements, and has identified two specific products—the “Ergo Stripper” and the “Crimper”—that allegedly infringe on Plaintiff’s ‘184 Patent. The alleged facts are plausible, sufficiently specific, and form an adequate basis for Plaintiff’s infringement claim. See Bender v. Broadcom Corp., No. 09cv1147 MHP, 2009 WL 3571286, at *4 (N.D. Cal. Oct. 30, 2009) (denying motion to dismiss under Twombly and Iqbal standard even where complaint listed virtually all defendant’s products because list could include infringing products).

Order, p. 2.

2010-1142 Order

2008-1564 Avocent Redmond v. Rose Electronics

Plaintiff Avocent Redmond appeals from the order of Judge Marsha Pechman denying its motion to stay or modify the protective order.

Avocent sued Rose and others for infringing 5,884,096; 6,112,264; and 7,113,978, all related to a computerized switching system for coupling a workstation to a remotely located computer.  The patents are currently in reexamination by the PTO.

Avocent sued Rose for infringement of the 3 patents and, in late 2007, Rose sought reexamination of those patents with the PTO.  Rose also moved to stay the litigation pending reexamination which, over Avocent’s objection, was granted.

Months later, Avocent brought the instant motion to lift the stay–however the court, noting no new facts or circumstances, deemed it a tardy motion for reconsideration but considered the relevant factors anyway:

1. whether continuation of the stay poses an undue hardship on plaintiff;
2. whether the results of the reexamination are likely to simplify this action; and
3. whether discovery in this action has proceeded beyond a point where a stay is reasonable.

The court concluded that the stay should continue.  No new facts on hardship were presented, and there was apparently some long delay by Avocent in bringing action (at least concerning its earlier patent).

Avocent had likewise conceded that the reexamination might simplify the action, or at least that it might render much of the court’s activity moot if proceedings were not stayed.

Finally, discovery had barely started when the stay was issued, with only a single, 3.5 hour deposition in the books.  In sum, the factors all supported continuing the stay.

As for the protective order, Avocent wanted to provide to the PTO documents it received in the litigation that were covered by the Protective Order.  The court denied this request, writing:

Plaintiff cannot use the litigation forum to acquire evidence for use in an administrative proceeding when the evidence would not otherwise be available in that forum.

Notes: PATracer didn’t do any research, but I wonder whether this order is appealable.  It certainly is interlocutory, but doesn’t seem to fit under any of the provisions of 28 U.S.C. § 1292 (unless a stay is considered an injunction).

More reading:

Opinion

I ask Michael if I could re-publish it as a post so that everyone could get the benefit of his insight.  He agreed, and it is provided below.

Kyle,

Thanks for the opportunity to comment.  The "under seal" procedure in the ED Tex has a interesting history.  It all started several years ago when the local rules committee that I chair looked at the question of whether you should or shouldn’t need leave to file something under seal (this is all pre-e-filing).  There was no rule either way and the question came up almost daily since there are numerous filings that require attaching copies of confidential documents.  We opted for recommending getting court permission, and the judges agreed, and so the rule came into being.

With the advent of the patent docket, the clerk’s office could not keep up with the volume of filings under seal in paper, so shortly after e-filing of public documents became mandatory, filing documents under seal required submitting the documents on a CD so the clerk didn’t have to rescan them.  That became impossible to keep up with as well, and the clerk’s office pushed to get the capacity for attorneys to file under seal directly.  There were initially some steps attorneys had to follow, i.e. getting permission in the system to file under seal, but those have been worked out so the system for filing documents under seal is now fairly straightforward.

The language in the post is not current, by the way, even though it may be on something currently on the website.  You don’t file using CD-ROMs, even in nonpatent cases, nor do you need to contact the clerk’s office for permission, as was originally the case.

The rules on getting permission to file under seal have changed frequently however, as we have searched for the most efficient way of getting the permission to file under seal.  The current structure is still that you have to have permission to file under seal, but that permission can be granted en masse (usually in a protective order) for any filings that contain confidential documents.  Our intent was to try to eliminate as much motion practice as possible that the judges had to oversee just to get a document that contained confidential information on file, and I don’t recall there ever being any concern raised about parties filing under seal when a confidential document was attached or discussed (the system cannot parse out a filing so that part of it is sealed, and part is not).  I’m not saying that isn’t a valid issue – just that it wasn’t something that has been discussed, at least in the local rules committee.

Now the question of whether too much is being filed under seal is a valid one – I’ve seen a couple of cases recently where it seemed everything was under seal, and it wasn’t immediately apparent that anything confidential was involved.  But that is definitely the exception in my experience.  I would be interested to hear what people think about the filings under seal issue.  Where confidential documents are attached or discussed, there’s not much choice, and the protective orders always provide a mechanism for the opposing party to challenge an overbroad designation, although in practice it’s rarely a concern, unless documents are set at a higher level that doesn’t prevent examination by, say, in house counsel or client representatives.  But I can say that our principal concern, at least on the ED Tex’s rules committee when the issue has come up, was coming up with a mechanism to make filing under seal as easy as possible where the reason for the filing was that confidential documents were attached.

I don’t believe any issues with overuse of the filing under seal procedures have been brought up to us.  If there is an issue with too much being sealed, nows a good time to bring it up – I’d be happy to bring it up to the rules committee and see if a proposal to our judges to change the rules would be a good idea.  But at present, I haven’t heard any complaints from practitioners.  I understand that’s not everyone, so if anyone else has comments, please feel free to speak up.

Again, thanks for bringing the issue up.

Since starting PATracer and reading a lot of case dockets, I see that most patent cases don’t have any sealed filings or transcripts, or maybe just a couple–usually an exhibit of some obvious business plan or technical trade secret.  The general nature of the sealed information is readily apparent from the docket and I can still easily review what the parties, and court, did.

However, a few cases are so congested with restricted filings that I thought "Sealed" was one of the parties.  Wholesale filings under lock and key with no explanation as to what or why it is sealed.   

More than one such case has been venued in the Eastern District of Texas–so I thought I would take a look into the process of sealing documents down in that part of the Republic.

The process in the Eastern District of Texas appears to generally let the parties decide what to file under seal and when–there is no direct or express oversight or judicial review of the filing.

In order to file under seal, the District’s website advises that a party must first obtain permission from the court to file under seal:

Sensitive or Confidential Information

The clerk’s office will not file a document under seal unless you obtain an
order from a judge directing that the document be filed under seal. Documents
requested or authorized to be filed under seal or filed ex parte shall
be filed in electronic form. In non-patent cases, unless otherwise
directed by the clerk’s office, such documents shall be submitted on a
CD-ROM. In patent cases, parties shall contact the clerk’s office to
obtain permission to file documents under seal using the court’s CM/ECF
system. All sealed documents filed with the court must comply with the
file size and other form requirements of Local Rules CV-5(a) and CV-7.
Counsel is responsible for serving documents under seal.  [Emphasis added]

However, in November 2006 the District’s Clerk issued a Memorandum further describing the procedure.  This Memo stated, in part, that a judge could give the parties a blanket authorization to file under seal as part of the protective order :

1. If the court already has granted authorization to seal the document(s) in your case, include the written certification following your certificate of service per Local Rule CV-5(c), and proceed to step 4 below. [Note: a previously signed protective order constitutes authorization to file document(s) under seal that were designated as confidential by the protective order].

An example of such authorization can be seen in the Protective Order from a previous post on Blackboard v. Desire2Learn:

FILING UNDER SEAL

11. All documents of any nature, including briefs, containing information that is Confidential Material, which are filed with the Court, may be filed under seal using the Court’s CM/ECF system. Documents filed under seal must comply with the requirements of Eastern District Local Rules CV-5(a), CV-5(a)7, and CV-5(a)(9). The parties are not required to file additional Motions to Seal Documents, and sealed e-filings of Confidential Material in this case are hereby authorized without necessity of further motion or leave of Court. There shall be, attached to the Confidential Material filed under seal, a cover sheet including the caption of the case, the signature of counsel of record for the party filing the document, and the following titles:

CONFIDENTIAL INFORMATION ENCLOSED – FILED UNDER SEAL

This process certainly makes it easy on the parties and the court (a not insignificant consideration).  The parties self-designate what is "Confidential" under a Protective Order, and then file under seal anything that any of them has so designated–no judicial oversight or review is needed or imposed.  No wonder so much is sealed.

While I doubt the district is unique, the ED Texas is undeniably now one of the leading venues for patent cases, and its rules and practices might influence other districts just as have those from the ND California.   

I can see arguments both for against the ED Texas process, and wonder whether the procedure has been challenged.  It would be interesting to hear from others, particularly Michael Smith at EDTexasblog (and a Marshall attorney), and from a journalist covering patent cases, Joe Mullin at IP Law & Business and The Prior Art.

Meanwhile, keep an eye out for a few follow-up posts looking at the law related to sealing court documents–the PATracer coin-flip will have Josh defending the ED Texas procedure while I will go the other way.

2008-1387 R.M.F. Global v. Cattan

Declaratory judgment plaintiff Innovative Designs appeals from Judge Arthur Schwab’s order confirming the Italian Arbitration Association’s ("IAA" or, when in Italy, "AIA") award to Eliotex/Cattan of approximately $4.1 million plus over €200,000 in arbitration and attorney’s fees.

Plaintiffs were the exclusive agents for defendants with rights to defendants’ patent, 6,083,999, and trademark, ELIOTEX, for a lightweight, insulated material for performance athletic wear, etc.  A dispute arose, and plaintiffs filed an April 2004 action seeking a declaration that (i) they did not infringe the ’999 patent; (ii) the ’999 patent was invalid and unenforceable; and (iii) they did not infringe on the Eliotex trademark.  They also asked the court for damages and to enjoin Cattan from interfering with their business and contractual relations and from engaging in unfair competition.

Shortly thereafter, and on Cattan’s motion, the court stayed the case based on an arbitration clause in the "exclusive agency, distribution and marketing agreement" between the parties:

In the event of a dispute between the parties as to the terms and conditions of this Agreement, and in the event that such dispute does not prove susceptible to amicable resolution, the parties hereto agree to accept binding arbitration in accordance with the rules of the Italian Arbitration Association in order to promptly and efficiently effectuate a resolution of said dispute.

Although the court believed that the patent and trademark claims were likely not within the scope of the arbitration clause, the tortuous interference and unfair competitions claims were covered.  Because at least 1 claim was covered, the Federal Arbitration Act, 9 U.S.C. § 1-14 required the judicial action be stayed pending the arbitration.

The IAA proceedings then commenced, but–and for reasons not set forth in the record–R.M.F. and Innovative Designs decided not to participate.  The IAA ultimately awarded Cattan/Eliotex over $4.1 million plus fees.

Cattan returned to district court to confirm the award and enter judgment, but Innovative Designs opposed, arguing:

1. they were denied meaningful participation in the IAA proceedings because they received insufficient notice;
2. Cattan’s motion to "confirm" the arbitration clause was not procedurally correct;
3. there were irregularities in the IAA proceedings;
4. that agreement to arbitrate was invalid; and
5. enforcement of the award is contrary to U.S. public policy.

The court easily rejected all of these arguments, applying the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1959 (see 9 U.S.C. § 201-208).  First, Innovative Designs plainly knew about the appointment of the arbitrator in Italy and the proceedings–indeed, it referenced notices for such in 2004 court filings.  The court concluded:

it is simply incredible for plaintiffs to claim that they did not have notice of the [IAA] Proceedings, in the face of the overwhelming record evidence to the contrary.  [Emphasis in original]

The court also rejected the "confirm v. compel" argument.  While noting that such motions were normally labeled to "compel" arbitration, the motion was clearly a timely request to arbitrate the matter under the parties’ agreement.

The court also rejected challenges to the agreement, noting that the validity of an agreement containing an arbitration clause was a matter for the arbitrator to decide (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204 (2006)).  Lastly, the court held that the award did not violate public policy. 

The court concluded:

Plaintiffs were undoubtedly aware of the IAA Proceedings, and had every
opportunity to participate in those Proceedings. They chose not to participate, and now they must accept the consequences of that choice. This Court will not now disregard the Award entered in the IAA Proceedings or reward plaintiffs’ refusal to litigate in the forum in which they were contractually bound to litigate. For the foregoing reasons, the Court will grant defendants’ motion to confirm the arbitration award (Document No. 35).

Notes and Comments: The appeal on the order to confirm the IAA award was filed in 2006 with the Third Circuit (Case No. 2006-2203).  Although it took awhile, the Third Circuit ordered the appeal transferred to the Federal Circuit on 08 May 2008.

More reading:

Order Confirming IAA Award

2008-1374 McZeal v. Sprint/Nextel

Alfred McZeal appeals from Judge Lynn Hughes’s Order dismissing his Complaint against Sprint/Nextel.  McZeal’s Complaint had been previously dismissed, but that was reversed and remanded by the CAFC.

McZeal acts pro se and has, well, a zeal for filing lawsuits.  He has filed numerous (at least 19) lawsuits and bankruptcies in the SD/TX, all of which have failed quickly.  He is now subject to an Order requiring that any new filings be vetted by the Chief Judge.

McZeal’s action against Sprint asserted over 30 different legal theories, including one for patent infringement of 6,763,226, which is directed to:

World-Wide-Walkie-Talkie, a high speed multifunction interstellar
wireless computer/instant messenger communicator, Personal Digital
Assistant (PDA), coupled with a resilient, robust, VoIP data network
and internet server method, deploying multiple wireless networks and
protocols such as Voice Over IP, GPRS, WAP, Bluetooth, PCS, I-Mode,
comprising a high speed Intel Pentium 4 Mobile or compatible Processor,
to formulate a internet gateway system (99) and network bridge (150)
for establishing instant low cost, real time global communications to
the Public Switched Telephone Network via the internet (54).  [Emphasis by PATracer.]

[I would include claim 1, but with 64 limitations ((a)-(mmm)), it is quite long.]  His Complaint alleged that the ’226 is infringed by Sprint’s Motorola i930 cellular telephone.

The court, mindful of the latitude given to pro se litigants, held a hearing to determine whether there were any actual facts or basis for the Complaint.  Finding none, the court dismissed.

The CAFC reversed, finding that the Complaint contained a statement of jurisdiction, identified McZeal as the owner of a patent, alleged that Sprint’s product infringed that patent, and prayed for relief.  For a pro se plaintiff, apparently no other pleading requirements exist and courts should not dismiss because of form.  See Patently-O here for more on the first appeal’s decision.

After remand, the court seemed exasperated with the Federal Circuit’s review:

The court then conducted another hearing and gave McZeal 30 days to articulate a theory for his case, ordered the parties to work together and McZeal to produce documents.  McZeal failed to do anything and then failed to appear for the follow-up hearing–he did, however, file a motion to recuse the court for bias against pro se litigants.

When McZeal did appear, he was still unable to articulate how he had a case.  The court then dismissed for failure to state a claim and for want of prosecution.  The court concluded:

His motion to recuse will be denied.  Just as evil conspiracies are the only reason his businesses are not ruminative, irrational hostility is the only reason his lawsuits do not succeed.  Enough.

More Reading:

Second Order Dismissing Case

2008-1345 Sollami Co. v. Kennametal

Plaintiff Sollami appeals from Judge Arthur Schwab’s order staying the case pending completion of the reissue proceedings involving one of the patents-in-suit.

Sollami sued Kennametal in January 2006 on 6,371,567; 6,585,326 and 6,585,327, generally directed to bit holders and blocks for road milling, mining and trenching equipment.  Just prior to this action Sollami filed a reissue application at the PTO with respect to the ’326 patent.

Kennametal apparently knew about the reissue in early 2006, but raised no issue then.  Discovery was had, the court conducted a Markman hearing and claims construction, and cross-motions for summary judgment decided.

With respect to summary judgment, the court adopted a special master’s recommendations and found that Kennametal’s accused products didn’t infringe the ’567 or ’327 patents.  As to the ’326, the court also found that one of the accused products didn’t infringe, but issues of fact precluded summary judgment as to the other product.

Following summary judgment, Sollami sought a Rule 54(b) judgment as to the decided claims so that an immediate appeal could be pursued.  Kennametal opposed the motion, and sought to stay the case pending the ’326 reissue.  The court, without any substantive explanation, denied the Rule 54(b) motion and granted the motion to stay.

Documents:

2008-1345_Sollami_Opp_to_Stay.pdf

2008-1345_SJ RandRr.pdf

2008-1345_Order_on_RandR.pdf