This is the first in a series of articles discussing recent orders of interest issued in IP cases by the United States District Courts in the Southeast.

In Bee Warehouse, LLC v. Blazer, No. 1:22-cv-1623-CLM (N.D. Ala. May 3, 2023), Judge Corey L. Maze denied Plaintiff Bee Warehouse's motion for a preliminary injunction seeking to prohibit Defendant Brian Blazer from claiming patent infringement and to order Blazer to retract any past claims of infringement.

The case is atypical in that Bee Warehouse sought to restrict Blazer from reporting and thus removing allegedly infringing products from Amazon based solely on Blazer's notice of infringement. The Court found that each of the preliminary injunction factors—(1) a substantial likelihood of success on merits; (2) a substantial threat of irreparable injury; (3) that the injury to the movant outweighs the harm on injunction to the non-movant; and (4) that an injunction would not disserve the public interest—weighed in favor of granting the preliminary injunction.

The Court found, however, that a preliminary injunction would also restrict and compel speech by Blazer, raising First Amendment issues. The Court noted that such "an injunction against communication is strong medicine that must be used with care and only in exceptional circumstances" and "'requires a showing of bad faith' before a party can be barred from communicating about his patent rights." Bad faith in this context has both an objective and subjective component. On the threshold issue of objective bad faith, the Court found that Blazer's infringement claims were not objectively baseless. The Court listed three reasons, including that Blazer based his infringement claims on the Federal Circuit's construction of a claim term in his patent, knew of the financial risk from Amazon for making false claims, and relied on advice of counsel when bringing his claims. Having found no objective bad faith, the Court did not address subjective bad faith. Thus, despite finding that Bee Warehouse met its burden on all four preliminary injunction factors, the Court nonetheless denied the motion because it could not grant the requested relief.

In CoachComm, LLC v. Westcom Wireless, Inc., No. 3:21-cv-743-RAH (M.D. Ala. May 2, 2023), Judge R. Austin Huffaker, Jr. granted Defendant's Rule 12(b)(2) motion to dismiss Plaintiff's patent enforcement-related claims for lack of personal jurisdiction.

Westcom, a Pennsylvania-based company, and CoachComm, an Alabama-based company, both market, advertise, and make competing headset communication devices that each company sells to football coaching staffs throughout the country. Westcom also engaged in extensive marketing of its ProCom line of headsets throughout the country, including Alabama. After Westcom sent a cease-and-desist letter to CoachComm, accusing CoachComm of infringing a patent directed to Westcom's headset technology, CoachComm filed a declaratory judgment action seeking declaratory judgments of noninfringement and invalidity under the Patent Act, Title 35 U.S.C. § 1 et seq. and of bad faith patent assertion in violation of Ala. Code § 8-12A-1, et seq. Westcom moved to dismiss for lack of personal jurisdiction.

The Court found that, generally, "a single letter asserting patent rights is insufficient to establish specific personal jurisdiction" and noted that other additional activities in conjunction with a letter campaign were required, such as "enforcement or defense efforts related to the patent":

  1. hiring an attorney or patent agent in the forum state to prosecute a patent application that leads to the asserted patent;
  2. physically entering the forum state to demonstrate the technology underlying the patent to the eventual plaintiff, or to discuss infringement contentions with the eventual plaintiff;
  3. the presence of an exclusive licensee doing business in the forum state; and
  4. extra-judicial patent enforcement targeting business activities in the forum state.

The Court further noted that a patentee's own commercialization efforts are not to be considered for establishing specific personal jurisdiction in a declaratory judgment action against it. As such, the Court found that Westcom's marketing efforts in Alabama were merely commercialization efforts to sell its product and cannot be used to support any finding of jurisdiction over the patent enforcement claims. Because there was no evidence of any other enforcement activities other than the single cease-and-desist letter, the Court found the principles of fair play and substantial justice afford some latitude for Westcom to inform others of its patent rights without subjecting itself to the Court's jurisdiction. Thus, the Court concluded that it does not have personal jurisdiction over the patent enforcement-related claims and dismissed those claims.

In Interactive Content Engines, LLC v. Rumble USA, Inc., No. 8:22-cv-1949-KKM-AEP, 2023 WL 3304813 (M.D. Fla. May 8, 2023), Judge Kathryn Kimball Mizelle denied Plaintiff Interactive Content Engines ("ICE")'s motion to strike Defendant Rumble's affirmative defenses and motion to dismiss Rumble's counterclaims.

ICE sued Rumble for patent infringement, alleging that Rumble used ICE's patented technology in its video streaming framework. Rumble filed an answer asserting eight affirmative defenses and two counterclaims. ICE moved to strike four of Rumble's affirmative defenses (i.e., estoppel, laches, third-party infringement, and "nonoperation of an online video platform") as immaterial or insufficiently pleaded and moved to dismiss both counterclaims as insufficiently pleaded.

ICE's motion to strike the affirmative defenses was based on Federal Rule of Civil Procedure 12(f), which allows a court to strike "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The Court noted that motions to strike are "generally disfavored" in courts in the Eleventh Circuit and that affirmative defenses are only stricken if it is "clear" that the defense is "insufficient as a matter of law." While there is disagreement among courts in the Eleventh Circuit on the pleading requirement for affirmative defenses, the Court stated its view that affirmative defenses "need not meet Rule 8(a)(2)'s pleading requirement" of "a short and plain statement of the claim showing that the pleader is entitled to relief." The Court, therefore, would only strike an affirmative defense if it was "patently frivolous on its face or clearly invalid as a matter of law."

Estoppel

On Rumble's affirmative defense of estoppel, the Court determined that ICE's alleged failure to respond to Rumble's letter denying infringement and waiting ten months to sue was "not patently frivolous" and that Rumble was not required to provide elaborate factual detail at the pleadings stage.

Laches

On the affirmative defense of laches, the Court recognized that under the Supreme Court's SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC decision, laches was not an available defense to damages for patent infringement incurred within the Patent Act's six-year limitations period. The Court declined, however, to strike the affirmative defense of laches, reasoning that ICE "may have known or should have known about the infringement more than six years ago and unreasonably delayed in filing suit."

Third-Party Actions

Rumble's affirmative defenses of third-party infringement and "nonoperation of an online video platform" were both based on their position that they did not control the entities that allegedly infringed ICE's patents and that one of the Rumble defendants did not even operate an online video platform. The Court determined that these affirmative defenses were really "specific denials" of ICE's allegations rather than affirmative defenses. But rather than striking the defenses, the Court decided to treat them as specific denials.

Counterclaims of Noninfringement and Invalidity

On Rumble's counterclaims of noninfringement and invalidity, the Court applied the Iqbal/Twombly pleading standard requiring only that the claims recite enough facts to state a claim for relief that is plausible on its face when construed in the light most favorable to the pleader. The Court denied ICE's motion to dismiss both of Rumble's counterclaims over ICE's arguments that they were "vague," "conclusory," and "merely regurgitate[d] the statutory language," finding instead that the counterclaims met the pleading standards and provided ICE with fair notice.

In Junk Food Custom Arcades v. Hit Box, Case No. 2:21-cv-262-RWS (N.D. Ga. May 9, 2023), Judge Richard W. Story issued a discovery order requiring Plaintiff Junk Food Custom Arcades ("JFCA") to respond to Defendant Hit Box's discovery request in a meaningful way and ordering the production of certain financial information.

First, Hit Box requested a list of the "names and job responsibilities of JFCA's current and former employees with knowledge regarding the design, development, manufacturing, marketing, testing, promotion, or sale of the accused products." The Court explained that while a party is not required to disclose the names and job responsibilities of all its employees, it is nevertheless required to respond to "legitimate discovery request in a meaningful way," particularly when JFCA is a small company with only approximately 14 employees and "some of these employees likely have discoverable information." Thus, the Court ordered JFCA to either identify "all of its current and former employees and their job responsibilities" or identify "specific individuals who are or were responsible for the topics identified" (e.g., product design, development, manufacturing, marketing, testing, promotion, and sales) and "their job responsibilities."

Second, Hit Box requested information about the profits of the accused products or a detailed bill of materials for the accused products. The Court found that Hit Box is entitled to certain profitability information to calculate a reasonable royalty. Because JFCA does not calculate profit on a per product basis, the Court ordered JFCA to either "provide the information relative to the accused products or provide general financial information, such as lists of materials and costs for each of the accused products, that will allow Hit Box to make reasonable calculations as to royalty."

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