Patents: Court Rejects Attempt to Identify Anonymous Patent Challenger by Subpoenaing Law Firm Documents

In Diamond Services Management Co. v. Knobbe Martens Olson & Bear, LLP, No. 21-mc-36-TJK-ZMF (D.D.C. Nov. 5. 2021), the US District Court for the District of Columbia declined to enforce subpoenas directed to two law firms that had filed anonymous challenges to a patent. The petitioners sought to identify the law firms' anonymous client behind the patent challenges by subpoenaing documents from the firms.

The case stemmed from the petitioners' apparent suspicion that the law firms' client was C&C Jewelry Manufacturing, Inc. (C&C). Relevant here, C&C had years before settled a challenge it brought to the validity of the same patent. That settlement included an agreement by C&C that it would not challenge (or cause to be challenged) the patent. In 2019 and 2020, however, two law firms filed an anonymous Certificate of Correction and a Reexamination Request with the US Patent and Trademark Office. Suspecting C&C was behind these challenges, the petitioners (the exclusive license-holders of products sold pursuant to the patent) sued C&C in the Northern District of Illinois, and subpoenaed documents from the law firms to confirm the C&C connection. The petitioners then filed a motion to compel compliance with the subpoenas in the DC District Court. Although that court found the requested documents were relevant to identifying the anonymous client under even the heightened Davco standard, the court declined to compel production because the subpoenas placed an undue burden on the law firms. The court noted there were alternative, more convenient ways for petitioners to gain this information; that enforcing the subpoenas based on petitioners' hypothesis would amount to a fishing expedition; and that a protective order would not adequately protect the identity of the requestors, particularly with respect to future competition.

Class Action Fairness Act: Home-State Controversies Exception to CAFA Jurisdiction Precludes Removal

The US Court of Appeals for the Seventh Circuit held last month that based on the "home-state controversies" exception to the Class Action Fairness Act (CAFA), the district court properly remanded a case even though there was minimal diversity. In Railey v. Sunset Food Mart, Inc., 16 F.4th 234 (7th Cir. Oct. 15, 2021), a worker brought a putative class action against Sunset Food Mart alleging it had violated the Illinois Biometric Information Privacy Act by requiring employees to clock in and out of work with a biometric scanner.

Sunset removed the case on the grounds that the plaintiff's claims were preempted by the Labor Management Relations Act and the parties were diverse because the plaintiff had moved out of Illinois during the litigation. The district court remanded the case, finding both arguments untimely. The Seventh Circuit affirmed but clarified the reasoning. It found the district court correctly ruled that the 30-day clock for removal based on preemption started when Sunset became aware of the grounds for removal from the plaintiff's discovery responses indicating she was a union member. This clock had expired before Sunset removed. However, with regard to diversity grounds, the Seventh Circuit held that the 30-day removal clock started when Sunset discovered, through its own diligence, that the plaintiff's domicile had changed; Sunset did not have an affirmative duty to reevaluate citizenship at a given point. This 30-day clock had not expired before Sunset removed. Typically, under CAFA, this minimal diversity would render a case removable, but because the class was defined as Illinois citizens asserting a claim under Illinois law against an Illinois grocery store, the Seventh Circuit held that the "home-state controversies" exception to CAFA applied and that 28 U.S.C. § 1332(d)(4)(B) counseled remand.

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