United States: Southeast Litigation Update: September And October 2023

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

September 2023

In Taser International, Inc., v. Phazzer Electronics, Inc., No. 6:16-cv-00366-PGB-LHP (M.D. Fla. September 8, 2023), Judge Byron denied Non-Party Respondent Adam Stephenson's motion to stay an order compelling production of documents in response to Plaintiff Taser's subpoena in a patent infringement case. The court further overruled Stephenson's objections to the order.

The court likened Taser's subpoena as the "proverbial boulder" and Taser as the tragic Sisyphos, who was "forced to roll [the] immense boulder up a hill for all eternity only for it to roll back down every time" after Stephenson filed a motion to quash, motion to extend, motion for clarification, and various objections to the court's orders, "often advancing arguments that are untimely and thus waived."

Denial of Motion to Stay the Magistrate Judge's Order to Compel Production of Documents

Stephenson moved to stay a magistrate judge's order to produce non-privileged documents. The court found that under Rule 72(a) of the Federal Rules of Civil Procedure, the magistrate judge's order is a final order absent reversal by the district court, and any objection to such final order does not stay the order or relieve the party of the obligation to comply with the order. Here, Stephenson waited "until the very last minute to move for a stay of a final order," so the court found his motion to stay was already "a nullity" by the time it acted on his motion and denied the motion to stay since the compliance deadline had since passed.

Overruling Objections to the Magistrate Judge's Order

Stephenson also advanced various objections, including an objection based on attorney-client privilege. The court found that Stephenson failed to demonstrate that the magistrate judge's order, which rejected the attorney-client privilege objections, was clearly erroneous or contrary to law. The court found that it is "not enough" to generally allege that "several bases to the applicability of attorney-client privilege" were raised during a prior hearing, "incorporate the unspecified bases by reference," and then invite the court "to ferret out the most persuasive arguments" without even "furnish[ing] the transcript of the hearing." Thus, the court overruled Stephenson's objections, noting that "judges are not like pigs, hunting for truffles buried in briefs."

In Factory Direct Wholesale, LLC v. Office Kick, Inc., Judge Baker adopted in part and rejected in part the magistrate judge's report and recommendation in a patent infringement case regarding claim construction of Counterclaim Plaintiff Office Kick's U.S. Patent Nos. 11,134,773 ("'773 patent"), 11,134,774 ("'774 patent"), and 10,575,630 ("'630 patent"). The asserted patents relate to "standing desk converter units" that "allow users to either stand or sit while using the work surface."

Office Kick raised two objections to the magistrate judge's recommended construction of "a set of pivot arms," "two sets of arms," and "a set[s] of [pivot] arms that connect at a scissoring point[s] creating a scissoring motion."

First, Office Kick objected to construing the terms "a set of pivot arms" and "two sets of arms" as meaning "a pair of pivot arms" and "two pairs of arms," respectively. Office Kick argued that the plain and ordinary meaning of "set" is "a group of two or more" and that there was no "disavowal of the plain and ordinary meaning" of "set" to only a "pair" of two. The court agreed, finding the recommended construction was "inconsistent with other portions of the specification" and would "exclude three-arm designs expressly recited by [unasserted] claims" of the '774 patent. In particular, the court found that while the '774 patent referred to a desktop workspace that included "at least one set of two arms," the patent also described the desktop workspace as including "at least one set of arms," and thus it does not "uniformly require" a set of arms as being limited to two arms. The court further found that certain unasserted claims recited a desktop workspace with three arms and, thus, militated against adopting any construction that would limit the word "set" to "pair."

Second, Office Kick objected to construing "a set[s] of [pivot] arms that connect at a scissoring point[s] creating a scissoring motion" as requiring the location of the scissoring pivot point. The court rejected this objection because it was "wholly conclusory" without any explanation as to why the Magistrate Judge's construction was erroneous.

In Karmagreen, LLC v. United Wholesale & Distributor Inc., Case No. 1:22-cv-04023 (N.D. Ga. September 27, 2023), Judge Ross denied Defendant United Wholesale & Distributor's motion to dismiss Plaintiff Karamgreen's lawsuit for patent infringement.

Karmagreen alleged infringement of four related U.S. patents concerning methods for creating dietary supplements composed of various natural and synthetic ingredients. In response, United filed a Rule 12(b)(6) motion to dismiss, contending that the asserted patents are invalid under 35 U.S.C. § 101. Karmagreen countered that its patents were directed to patent-eligible subject matter because they involve the creation of compositions of matter that provide a "synergistic benefits" beyond what their constituent ingredients naturally provide alone or as part of a normal diet.

Accepting allegations in the complaint as true and drawing all reasonable inferences in the light most favorable to the plaintiff, the court determined that the claims are directed towards patent-eligible subject matter. The court found that the combination of two of the constituent ingredients plausibly achieved an effect that neither ingredient could produce alone. The court further found that the dietary supplements are to be taken in addition to a normal diet, and therefore use natural products in unnatural quantities to alter a patient's natural state. Because the court found that Karmagreen has "integrated" the ingredients into "something more," and thereby transforming them into a patent-eligible invention, the court did not proceed to step two of the Supreme Court's Alice inquiry and denied the motion to dismiss.

In Hi-Tech Pharms., Inc. v. IronMag Labs, LLC, No. 1:22-cv-02446-JPB (N.D. Ga. Sept. 28, 2023), Judge Boulee dismissed Plaintiff High Tech Pharmaceuticals' amended complaint in a breach of contract case as a "shotgun pleading."

Hi-Tech Pharmaceuticals and Defendant IronMag Lab previously entered into a licensing agreement, as part of a settlement, that granted IronMag a license to use certain intellectual property in the body building, diet, and health and fitness industries, and in exchange provided Hi-Tech royalties on IronMag's sales of products covered by the license agreement and its purchases of its ingredients from Hi-Tech. After IronMag started producing certain topical creams, Hi-Tech filed the instant suit, arguing IronMag breached its licensing agreement, both in failing to pay royalties for the topical creams and to purchase ingredients. IronMag moved to dismiss the original complaint, and Hi-Tech filed an amended complaint.

The court found that the amended complaint failed to meet the "short and plain statement" pleading requirement under Federal Rule of Civil Procedure 8(a)(2) and, instead, was a "quintessential" shotgun pleading. According to the court, a "shotgun pleading" fails "to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests" and includes the following characteristics:

• having multiple counts that adopt all allegations from the preceding counts;
• use of "conclusory, vague, or immaterial facts" that do not clearly connect to any cause of action;
• failing to separate causes of action into distinct counts; and
• combining multiple claims against multiple defendants without specifying any particular responsibility.

In granting Hi-Tech a final opportunity to amend, the court provided the following instructions regarding the amended complaint:

1. must contain a background section stating the facts relevant to all claims in a logical order, but this facts section should not contain facts that are not relevant to the claims;
2. must allege each cause of action under a separate count with the relevant facts applicable to that particular cause of action;
3. must explicitly request the relief sought and must provide an explaining why; and
4. must identify what precise conduct is attributable to each individual defendant separately in each count and in what capacity each claim is being brought against each defendant.

In BelAir Electronics, Inc., v. Twelve South, LLC, No. 2:22-cv-04443-BHH (D.S.C. September 29, 2023), Judge Hendricks denied in part and granted in part Defendant Twelve South's motion to dismiss two counts of patent infringement of U.S. Patent Nos. 7,941,195 ("'195 Patent") and 10,097,676 ("'676 Patent").

The patents cover cellphone cases, and central to all the independent patent claims is "a 'flange' or 'at least one retainer' limitation—or, more colloquially, a lip or rim on the case that keeps the phone from falling out."

Twelve South's motion raised three arguments: (1) the complaint failed to set forth any plausible claim for direct infringement, (2) Plaintiff BelAir cannot recover for damages under 35 U.S.C. § 287 because Twelve South obtained actual notice of infringement after the '676 patent had expired, and (3) the complaint failed to plead compliance with § 287(a). The court rejected the first two arguments and agreed with the last argument.

Related to the first argument, Twelve South asserted that "BelAir's complaint fails to set forth any plausible claim for direct infringement" for "simply 'parroting back' the language of the asserted claims." Twelve South further suggested that "a well-pleaded patent infringement complaint should contain a short and plain claim chart as part of the initial pleading." The court disagreed, noting that the complaint included "two photos of the accused products in violation and name[d] them in its claims" and defined the "Accused Products" as protective masks that "comprise a 'flange' or 'retainer' ... so that the mobile device will not fall out of the protective mask." While the court noted that "greater specificity [of a claim chart] may be aspirational," it was "not convinced that the level of granular particularity suggested by Twelve South is necessary to survive initial Rule 12(b)(6) scrutiny."

Related to the second argument, Twelve South asserted that any claim for infringement for "an expired patent" should be dismissed under § 287(a) because it did not receive notice of infringement before the '676 patent expired. The court disagreed, finding that argument "flawed in two critical respects." First, the court noted that § 287(a) is a marking provision that only applies "if the patentee practices the claim[ed] invention and fails to mark its product with the relevant patent number," and Twelve South did not allege any failure to comply with the marking requirement. Second, the court found that BelAir's complaint alleged that "[Twelve South] had notice ... at least as early as the filing date of this complaint" and did not allege "a definitive date on which Twelve South had notice."

Related to the third argument, Twelve South asserted that BelAir failed to adequately allege "constructive notice" or "actual notice" prior to expiration, so the pre-expiration damages should be dismissed. The court agreed, finding that BelAir's only support in the complaint for compliance with § 287(a) was the following statement:

Since the statement contained "no factual allegations to plausibly support" that the patents were marked or to plausibly suggest that the marking requirements do not apply, the court found the statement was inadequate to allege constructive notice. Further, the court found that, because the complaint only alleged Twelve South's notice as of the filing date of the complaint and included "no additional allegations ... pertaining to BelAir's actions to provide notice of infringement," the complaint also failed to plausibly allege actual notice.

In Evans v. Bearback, LLC, No. 1:20-cv-04857-VMC (N.D. Ga. Sept. 29, 2023), Judge Calvert granted cross-motions to exclude expert testimony in a design patent infringement and breach of contract case, but denied Defendants' motion for summary judgment of non-infringement.

Plaintiff Jeffrey L. Evans and Defendant James M. Duvall were former business partners of Duvall & Evans, Inc. ("D&E"), which was formed "to develop products, prototypes, videos and sales aids, all of which shall be patented or trademarked." According to the parties' agreement, their first product was a "Bareback Scratcher" that Duvall was to assign his expectant interest to D&E. D&E, however, never recorded Duvall's assignment with the United States Patent and Trademark Office ("USPTO").

Duvall later applied for a design patent for the backscratcher device, and unilaterally declared the parties' previous agreement and the D&E assignment "null and void" due to an alleged breach by Evans. Duvall then assigned his design patent to a limited liability company, the Boulevard Group, who then sold the design patent to Defendant Bearback LLC, a limited liability company Duvall's son owns. Both the Boulevard assignment and Bearback sale were duly recorded at the USPTO.

Local Patent Rules

Since this is a design patent infringement case, the N.D. Ga. Local Patent Rules were not applicable. The court ignored any arguments related to the Local Patent Rules because the court found those rules only apply to cases related to infringement of a utility patent.

Expert Witnesses

Both parties sought to exclude the other's expert testimony. The court noted that it is not settled whether expert testimony is appropriate in design patent cases because "the pictures provide the most compelling evidence ... under the ordinary observer test." Here, both parties' experts are registered patent attorneys. Finding that a patent attorney's testimony about "the legal standard in design patent cases and the ultimate issue [on infringement] ... is unnecessary and inadmissible under the Federal Rules of Evidence," the court excluded both experts' report and proposed testimony.

Summary Judgment

Bearback and Duvall also moved for summary judgment of non-infringement. The court denied the motion, finding an issue of material fact about: (1) whether Bearback was a bona-fide purchaser and (2) whether Bearback infringes the patent.

As to the bona-fide purchaser issue, 35 U.S.C. § 261 provides that, unless a prior assignment was recorded in the USPTO within three months from the assignment date or before the date of any subsequent purchase, that assignment is void against a subsequent purchaser, who purchased the patent for a valuable consideration, without notice. The court found that there is an issue of material fact as to whether Bearback had constructive notice of the original D&E assignment. Viewing the totality of the evidence, the court found that there is a reasonable inference that the sole member of Bearback could not be considered an innocent purchaser because he was Duvall's son, and Duvall "often shared his product ideas" with him. The court further found that Bearback could have constructive notice, even though Duvall was merely an independent contractor, because Duvall had a significant involvement in the creation of the company.

As to infringement, the court applied the "ordinary observer test" to assess the distinctions between the patented design and the accused product within the context of the prior art. To do so, the court employed a two-tiered evaluation. First, the court consider whether the accused product was plainly dissimilar to the patented design. Referencing a side-by-side comparison (reproduced below), the court concluded that, based on visual appearance alone, the designs were not "plainly dissimilar."

Second, because the two designs are not plainly dissimilar, the court next considered whether the ordinary observer would consider the two designs to be substantially the same by comparing them with the prior art. Since Bearback had the burden of production and cannot rely on Plaintiffs' failure to produce examples of prior art, the court found that there is an issue of material fact as to whether there are substantial similarities and thus infringement.

October 2023

In Natera, Inc. v. Neogenomics Labs., Inc., No. 1:23-cv-629-CCE-JLW (M.D.N.C. Oct. 10, 2023), Chief Judge Eagles denied Defendant NeoGenomics' motion to compel certain discovery requests. NeoGenomics moved to compel Plaintiff Natera to provide more specific answers to three of NeoGenomics' interrogatories. In denying the motion, the court took issue with both parties' discovery tactics, warned NeoGenomics that sanctions would be likely if it filed another motion to compel without first meeting and conferring, and warned Natera that it may initiate sanctions proceedings sua sponte if Natera does not satisfactorily supplement its interrogatory responses.

The court admonished NeoGenomics' motion as premature and failing to comply with both Federal Rule of Civil Procedure 37(a)(1) and Local Rule 37.1. The rules require that, to move to compel, a party must both make a good-faith effort to meet and confer and include a certification of such efforts in its motion. Here, the court found that NeoGenomics failed to follow either requirement. Moreover, the court took issue with NeoGenomics's time-hurried pressure to rectify the discovery dispute: "An attorney does not satisfy the requirement to meet and confer by sending an email that does nothing more than go through the motions, that makes unilateral demands and unilaterally imposes immediate deadlines, and that makes no real effort to invite discussion to resolve the dispute."

The court likewise admonished Natera's discovery practice. Specifically, the court previously ordered Natera to supplement its response to an interrogatory request regarding inventorship for the patent-in-suit. Despite finding Natera's subsequent efforts unsatisfactory, the court nonetheless found a second motion to compel superfluous since, "[the former] order has meaning and does not require a second 'no-I-really-mean-it' order to be effective." Instead, the court held that should NeoGenomics (or the court sua sponte) find Natera's continued efforts remain unsatisfactory, the proper protocol is to file a motion for sanctions. Likewise, the court disapproved of Natera missing the deadlines for its discovery obligations as well as its lack of clarity when corresponding with opposing counsel.

In Pegnatori v. Pure Sports Techs. LLC, No. 2:23-cv-1424-DCN (D.S.C. Oct. 11, 2023), Judge Norton denied Plaintiffs' Carl Pegnatori and Monsta Athletics LLC ("Pegnatori") motion for a preliminary injunction. The dispute arises out of softball bat technology, wherein Defendant Pure Sports had previously taken a license on the patented technology from 2019 to 2022 from Pegnatori. Pure Sports raised both a noninfringement defense and an invalidity defense based on anticipation and single-reference obviousness. In a decision replete with softball analogies, the court found that Pegnatori did not demonstrate a likelihood of success of prevailing as to infringement and therefore denied the motion.

Invalidity

Pure Sports asserted that a single prior art reference either anticipates or renders obvious the asserted claims. The court determined that Pure Sports swung and missed, finding that its arguments lacked substantial merit. Regarding anticipation, the court noted that Pure Sports's anticipation arguments were largely based on Pegnatori's infringement mapping, conceding that the prior-art reference did not otherwise meet a limitation of the claims. The court rejected this as an attempt to argue noninfringement through an invalidity argument. The court also found that the patent-in-suit specifically referenced and rejected the type of softball bat design disclosed in the prior art. Regarding obviousness, the court held that Pure Sports failed to carry its burden at this stage of the litigation based on lacking a suggestion to modify the prior art as proposed, as well as objective indicia of nonobviousness.

Infringement

Before assessing infringement, the court construed the term "foam." Pegnatori relied on expert testimony and an inventorship declaration for its proposed construction. In contrast, Pure Sports' proposed construction rested on a definition generated by ChatGPT. Noting that, "thus far, ChatGPT's batting average in legal briefs leaves something to be desired," the court declined Pure Sports' construction, reasoning that considering such a definition would "be taking its eye off the ball ... in its review of extrinsic evidence." Instead, the court reviewed Pegnatori's expert report, inventorship declaration as well as dictionary definitions to construe "foam" to mean "plastic material in which gas is dispersed."

Notwithstanding that the court largely agreed with Pegnatori's construction, the court found Pure Sports raised a substantial question as to infringement based on two limitations in the patent-in-suit that do not appear in Pure Sports' allegedly infringing softball bat. The first limitation concerned a "void gap" between the softball bat's inner and outer structure. While the parties disputed the presence of the void gap, the court found the claim language made clear the void gap must be at the "entire length of the insert and of constant width." The court found it "unclear" whether Pure Sports' softball bat included such a void gap.

The second limitation concerned the presence of a positioning sleeve within the softball bat's inner cylinder. Pure Sports' expert testified that Pure Sports' positioning sleeve differed because Pure Sports ensured the inner contents of the bat contained no gas in an effort to avoid delamination. Based on the court's construction of foam, the court agreed with Pure Sports, finding Pegnatori failed to provide evidence that would establish a likelihood of success for literal infringement. Finding Pure Sports raised a substantial question regarding infringement, the court denied Pegnatori's motion for a preliminary injunction.

In Lexmark Int'l Inc., v. Universal Imaging Inds., LLC, No. 8:18-cv-1047-WFJ-AEP (M.D. Fla. Oct. 12, 2023), Judge Jung granted-in-part and denied-in-part cross-motions for summary judgment. The patent litigation involves eight patents that center around Plaintiff Lexmark's microchip communication and authentication technology. While the court's order concerns numerous arguments and positions, both motions primarily concern invalidity and infringement of the patents-in-suit.

Invalidity

The court began by granting summary judgment of non-invalidity as to certain claims for which Defendant Universal did not present an invalidity case. For other claims, Universal presented both anticipation and obviousness arguments. The court first addressed what references constituted prior art. Universal claimed one prior art reference—certain third-party coding—qualified as prior art based on the "on-sale" bar pursuant to pre-AIA 35 U.S.C. § 102(b). Lexmark disagreed, arguing the on-sale bar only applies to patentee's products as a matter of keeping "patentees from commercializing their own inventions prior to patenting them." The court found this interpretation too narrow based on Federal Circuit caselaw, which provides the on-sale bar applies to sales beyond patentees themselves. As such, because products containing the third-party coding were on sale before the critical date, the coding constituted prior art regardless of whether the purchaser was aware of the coding or the fact that the sale was by a third party. Even so, the court denied summary judgment of anticipation in light of genuine issues of material fact based on expert reports disputing whether the prior art references disclose every limitation of the disputed claims.

Additionally, the court was unmoved by Universal's obviousness arguments. For one patent, Universal argued that a combination of prior art references rendered obvious certain claims directed to updating non-volatile memory modules. Despite an express motivation to combine the prior art references, the court found the combination failed to satisfy all limitations of the disputed claim. Without a teaching of particular limitations the prior art references, the court reasoned that it makes "little sense to suppose" an artisan would arrive at the method claimed. For another patent, Universal argued that the same prior art combination taught a method of updating specific bits in a memory module. However, the court found Universal's position inconsistent between its invalidity contentions and its infringement contentions. Ruling that the proper reading of the claim scope involved a specific update of certain bits, rather than a mere general copy of information, the court ruled Universal failed to meet its burden of showing clear and convincing evidence how the prior art rendered certain patents invalid as obvious. The court, therefore, denied summary judgment as to obviousness of these claims.

Infringement

The court's findings related to infringement rested on three distinct constructions for various sets of claims of the patents-in-suit:

Address Generator Limitation: The first dispute hinged on the scope of the court's claim construction for the term "address generator," which the court previously construed as "software or electronic circuitry implementing an algorithm to generate address values by performing the specified algorithm." The court found that the use of the term "generate" throughout the patents as well as dictionary definitions for "generate" supported a narrow construction. Because Universal's products only provide addresses, the court found no literal infringement. Lexmark's doctrine of equivalents arguments likewise failed to show a genuine dispute because, according to the court, they were conclusory and based on inadequate expert opinion. Accordingly, the court granted summary judgment of non-infringement against this set of claims.

Receiving a Command Limitation: The second dispute regarded how the court interpreted certain claims that provide for commands updating memory modules and whether the updates could be general updates (like copying and storing information) or more specific updates (such as bit-level updates to information). Finding the claims and written descriptions for these patents made clear that updates must be specific, the court held the commands must also be specific. According to the court, since Universal's products only involve general copying commands, it follows that no literal infringement occurs. The court thus granted summary judgment of no literal infringement for this set of claims.

Busy Condition Limitation: The third and final dispute regarded how the court interpreted claims that involved a busy condition, which the court previously construed as memory modules processing a previous command. Universal argued its products do not issue a command signal whereas Lexmark argues the products do. Because the dispute involves weighing expert opinions, the court found a genuine issue of material fact precluded entry of summary judgment for non-infringement as to this final set of claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.