Outside the Box Innovations, LLC v. Travel Caddy, Inc.
Outside the Box Innovations, LLC v. Travel Caddy, Inc.
2007 WL 5155945 (N.D. Ga. 2008)
March 27, 2008
Evans, Orinda D., United States District Judge
Summary
Electronically stored information was discussed in the context of Union Rich et al.'s Motion to Compel and for Sanctions Regarding Travel Caddy/Rooster's Bulk Production. The Court found that Travel Caddy's electronic production was proper, although it included numerous non-working files as well as unresponsive and offensive content. The Court found that the presence of such files did not render its production improper.
OUTSIDE THE BOX INNOVATIONS, LLC, d/b/a Union Rich USA, Plaintiff,
v.
TRAVEL CADDY, INC., and Rooster Products, d/b/a The Rooster Group, Defendants.
Travel Caddy, Inc., Counter-Plaintiff,
v.
Outside The Box Innovations, LLC, d/b/a Union Rich USA; Union Rich Plastic Factory, Ltd.; Bonaka Plastic Manufacturing Co., Ltd.; Bonaka Limited, Counter-Defendants
v.
TRAVEL CADDY, INC., and Rooster Products, d/b/a The Rooster Group, Defendants.
Travel Caddy, Inc., Counter-Plaintiff,
v.
Outside The Box Innovations, LLC, d/b/a Union Rich USA; Union Rich Plastic Factory, Ltd.; Bonaka Plastic Manufacturing Co., Ltd.; Bonaka Limited, Counter-Defendants
Civil Action No. 1:05-CV-2482-ODE
United States District Court, N.D. Georgia, Atlanta Division
March 27, 2008
Counsel
Aimee B. Kolz, Jason S. Shull, Jon O. Nelson, Marc S. Cooperman, Scott A. Burow, Banner & Witcoff, Chicago, IL, George Melton Mobley, Jr., Lokey, Mobley & Doyle, LLP, Atlanta, GA, for Defendants.Joel D. Myers, Ashish D. Patel, Barry E. Kaplan, Robert M. Ward, Myers & Kaplan, Intellectual Property Law, LLC, Atlanta, GA, Plaintiff/Counter-Defendants.
Donald Ross Andersen, Ronald J. Stay, Jr., Ronald Scott Griffin, Stites & Harbison, Sumner Curtis Rosenberg, Needle & Rosenberg, Atlanta, GA, Jack A. Wheat, Stites & Harbison, Louisville, KY, James R. Michels, Stites & Harbison, PLLC, Nashville, TN, for Counter-Defendants.
Evans, Orinda D., United States District Judge
ORDER
*1 In this civil action, Outside the Box Innovations, LLC d/b/a Union Rich USA (“Union Rich”) is seeking a declaratory judgment that it has not infringed patents owned by Travel Caddy, Inc. (“Travel Caddy”). In response, Travel Caddy charges that Union Rich has infringed two of Travel Caddy's patents.
The case is before the Court on Defendants' Motion for Preliminary Injunction [# 42], Counter-Defendants' Motion for Joinder Under Fed.R.Civ.P. 19 [# 193], Counter-Defendants' Motion for Stay Pending Ruling on Counter-Defendants' Fed R. Civ. P. 19 Motion [# 194], Defendants' Motion to Compel the Completion of the 30(B)(6) Deposition of Outside the Box d/b/a Union Rich, USA and for Sanctions [# 196], Union Rich et al.'s Motion to Defer Damages and Related Discovery [# 286], Union Rich et. al's Renewed Motion to Compel and for Sanctions Regarding Travel Caddy/Rooster's Bulk Production [# 338], Union Rich et al.'s Motion to Retain Jurisdiction of All Matters [# 346], and Union Rich et al.'s Motion to Declare Waiver of Attorney-Client Privilege and/or Work Product Immunity and for Production of All Relevant Documents [# 352].
For the following reasons, Defendants' Motion for Preliminary Injunction [# 42] is DENIED, Counter-Defendants' Motion for Joinder [# 193] is DENIED, Counter-Defendants' Motion for Stay [# 194] is DISMISSED AS MOOT, Defendants' Motion to Compel [# 196] is DENIED, Union Rich's Motion to Defer Discovery [# 286] is GRANTED, Union Rich's Motion to Compel [# 338] is DENIED, Union Rich's Motion to Retain Jurisdiction [# 346] is DISMISSED, and Union Rich's Motion to Declare Waiver [# 352] is DENIED.
I. Background
The patent claims that form the basis of Travel Caddy's motion for preliminary injunction are Claims 19, 21, 23, and 26-28 of U.S. Patent No. 6,991,104 (“the ′104 Patent”). The ′104 Patent is a continuation of U.S. Patent No. 6,823,992 (“the ′992 Patent”), and it incorporates the ′992 Patent by reference. The patents cover cases used for transporting tools. Travel Caddy sells bags, through its exclusive distributor Rooster, under these patents called the Electrician's Bag and Plumber's Tote.
Union Rich sells rival bags, called the Electricians CarryAlls and the Heavy-Duty ProTool Bag. Travel Caddy alleges that these two products infringe the ′ 104 and ′992 Patents. Since the introduction of Union Rich's bags, sales for Travel Caddy's have declined. For example, Home Depot now purchases Union Rich's bags for sale in its stores, rather than Travel Caddy and Rooster's. In June 2004, Travel Caddy sent a cease and desist letter to Home Depot, informing Home Depot that it had applied for a patent that was likely to render Union Rich's products infringing. In November 2004, the patent application referenced in the letter to Home Depot issued as the ′992 Patent. Lawyers for Union Rich and Travel Caddy corresponded regarding the alleged infringement, and Union Rich repeatedly contended that its products were not infringing. Eventually, Travel Caddy informed Union Rich that it had applied for another patent, that would also be infringed by Union Rich's products. Union Rich requested that Travel Caddy stop advising Union Rich's customers that it was selling infringing products.
*2 On September 23, 2005, Union Rich filed a complaint in this Court, seeking a declaratory judgment that it did not infringe the ′992 Patent. Union Rich also claimed that Travel Caddy had violated federal unfair competition laws as well as Georgia laws against deceptive trade practices. In November 2005, Travel Caddy counterclaimed for infringement of the ′992 Patent. In January 2006, the ′104 Patent issued, and Travel Caddy amended its counterclaim to include a claim of infringement of the newly issued patent. Union Rich has also amended its complaint in order to seek a declaratory judgment of non-infringement, invalidity, and unenforceability of both the ′104 and ′992 Patents, as well as an additional claim of tortious interference with a business relationship.
Federal circuit law generally governs the issuance of preliminary injunctions under 35 U.S.C. § 283. Hybritech, Inc. v. Abbott Labs ., 849 F.2d 1446, 1451 n. 12 (Fed.Cir.1988). However, regional circuit law governs purely procedural questions involving the issuance of preliminary injunctions. Id.
As the moving party, Travel Caddy has the burden of showing entitlement to a preliminary injunction. Reebok Int'l v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed.Cir.1994). The Federal Circuit considers the following four factors to determine whether the moving party in a patent infringement case has proven its right to a preliminary injunction: “1) a reasonable likelihood of success on the merits; 2) irreparable harm; 3) the balance of hardships tipping in favor of the requesting party; and 4) that the issuance of an injunction is in the public interest.” Chrysler Motors Corp. v. Auto Body Panels, Inc., 908 F.2d 951, 953 (Fed.Cir.1990). No one factor is dispositive. Id. The grant of a preliminary injunction requires analysis of all four factors, but a court may deny a preliminary injunction based on the absence of one factor, especially one of the first two, without analysis of the others. Id.
“[A]t the preliminary injunction stage, because of the extraordinary nature of the relief, the patentee carries the burden of showing likelihood of success on the merits with respect to the patent's validity, enforceability, and infringement.” Nutrition 21 v. United States, 930 F.2d 867, 869 (Fed.Cir.1991). Specifically, the patentee must show, in light of the burdens applicable at trial, that the accused party likely infringes the patent and that the infringement claim will likely withstand challenges to the patent's validity and enforceability. Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364. If the accused party raises a defense of invalidity, unenforceability, or noninfringement that the movant cannot show lacks substantial merit, then a preliminary injunction is improper. Id.
1. Infringement
A likelihood of infringement analysis involves two steps. The first step is construing the scope and meaning of the patent claims. Oakley, Inc. v. Sunglass Hut Int'l, 316 F.3d 1331, 1339 (Fed.Cir.2003). The second step is comparing the construed patent claims to the allegedly infringing device. Id.
*3 Claim construction is decided by the Court as a matter of law. Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed.Cir.1995). On August 24, 2006, the Court held a Markman hearing on claim construction. The Court's Claim Construction Order was entered on September 18, 2006. [Doc. 261]. The claim constructions in that order will be applied in analyzing the motion for preliminary injunction.
Once the claims are construed and ready for comparison, infringement is an issue of fact. Southwall Techs. v. Cardinal IG Co., 54 F.3d 1570, 1575 (Fed.Cir.1995). Literal infringement requires that each and every element of the patent claim is present in the accused device. Id.
In its motion, Travel Caddy focuses on Claims 19, 21, 23 and 26-28 of the ′ 104 Patent. According to Travel Caddy, Union Rich's Heavy-Duty ProTool Bag infringes Claims 19, 21 and 23, and Union Rich's Electricians CarryAlls product infringes Claims 26-28. Furthermore, Travel Caddy argues that only the following four claim terms are material to its motion: (1) “between”; (2) “three sided, generally rigid fabric covered box”; (3) “continuous, closed loop binding extending over fabric covering the bottom panel and the flexible panels”; and (4) “flexible.” [Travel Caddy's Reply to Mot. for Prel. Inj., at 6]. The Court notes at the outset that Claims 21 and 23 depend from Claim 19, and Claims 27 and 28 depend from Claim 26. The dependent claims cannot be infringed if the independent claims are not infringed. Wahpeton Canvas Co., Inc. v. Frontier, Inc., 870 F.2d 1546, 1152 fn. 9 (Fed.Cir.1989). Furthermore, all four of the disputed claim terms are present in both of the independent claims presently at issue, so the claims may be addressed simultaneously. Because Travel Caddy does not argue infringement under the doctrine of equivalents in its pleadings, the Court will address only literal infringement in this Order.[1]
a. “Between”
The term “between” is used in conjunction with other terms to describe the locations of various panels in the claimed bags. On its own, the term “between” appears in claims 19 and 26 of the ′104 Patent in the following context:
a planar, generally rigid, fabric covered, rectangular perimeter shaped, bottom panel between the first and second end panels to form a generally three sided, generally rigid, fabric covered box with the first and second end panels extending upwardly from the bottom panel[.]
[′104, 8: 44-49] (emphasis added). “Joined between” appears in all of the independent claims and defines the location of the flexible front and back panels in relation to the end panels. The full context of “joined between” is:
a [first or second], flexible, fabric front [or back] panel having a top edge and joined between the front [or back] side edges of the first and second [end] panels.
[′104, 8: 51-53] (emphasis added).
The Court construed “between” as “[i]n the interval defined by two end points; here, the outer edge of the end panels of the case.” [Claim Construction Order, at 2]. The Court construed “joined between” as “[f]astened in and through the interval defined by two end points; here, the outer edge of the end panels of the case.” [Id.]. The Court rejected Travel Caddy's proposed construction that would allow “between” to incorporate a panel that goes beyond the outer edges of the defined interval. Specifically, the Court stated:
*4 The specification does not provide any conclusive intrinsic evidence that any of the panels that are said to be “between,” “connecting between,” or “joined between” extend beyond the outer edge of the end panels ... [N]owhere in the patent claims, specification, or prosecution history is there intrinsic evidence to support a construction that allows for “a bottom panel extending outwardly beyond the end panels.” Unlike the explicit claim language referring to the end panels “extending upwardly from the bottom panel,” the evidence does not support a construction that allows for the bottom panel to extend beyond the outer edges of the end panels.
[Id. at 12].
With respect to the Heavy-Duty ProTool Bag and Claim 19, the Court notes that the Claim discloses a “bottom panel between the first and second end panels,” as well as front and back panels “joined between” the front and back side edges of the end panels. [′104; 8:45-6, 51-6]. The bottom panel, as well as the front and back panels, of the Heavy-Duty ProTool Bag, all extend beyond the edges of the end panels. Accordingly, these panels do not satisfy the limitation of “between” or “joined between” as disclosed in Claim 19. Travel Caddy has not show a likelihood of success for proving that this element is present in the Heavy-Duty ProTool Bag.
With respect to the Electricians CarryAlls and Claim 26, the Claim also discloses a “bottom panel between the first and second end panels,” as well as front and back panels “joined between” the front and back side edges of the end panels. Unlike the Heavy-Duty ProTool Bag, however, the Electricians CarryAlls does not feature a bottom or front and back panels that extend beyond the edges of the end panels. In fact, Union Rich acknowledges that the Electricians CarryAlls contains these limitations. Accordingly, Travel Caddy has shown a likelihood of success for proving that this element is present in the Electricians CarryAlls.
This phrase appears in independent claims 19 and 26 of the ′104 Patent. The phrase describes the structure that is formed by the joining of the generally rigid bottom panel and the generally rigid end panels of the claimed cases. [′104, 8: 44-50]. The Court construed “three sided, generally rigid fabric covered box” as “[a] three sided fabric-covered U-shaped structure in which each side is, on the whole, essentially stiff or non-pliant.” [Claim Construction Order, at 3]. In adopting this construction, the Court concluded:
Given the intrinsic evidence of the claims, which indicates that it is the generally rigid bottom and side panels that form the claimed box, Travel Caddy cannot claim that the patent covers a three sided box wherein any of the three sides are flexible. Furthermore, Union Rich's inclusion of “U-shaped” is supported by the claim requirements that the two end panels be “parallel to” each other, and prevents any confusion about the possible shape of the box created by the panels.
*5 [Claim Construction Order, at 25].
With respect to the Heavy-Duty ProTool Bag and Claim 19, Union Rich argues that this limitation is not present because this bag “comprises a flexible U-shape structure formed by two flexible front and back panels and a rigid bottom panel.” [Union Rich Resp. to Mot. for Prel. Inj., at 19]. In other words, the only U-shaped structure present in this bag is formed by the bottom panel and the front and back panels, and because the front and back panels are flexible, the bag does not contain a “three-sided generally rigid fabric covered box.” However, as the Court noted in construing this claim, the intrinsic evidence “indicates that it is the generally rigid bottom and side panels that form the claimed box .” [Claim Construction order, at 25].
There is no further requirement that the bottom panel and end panels be covered with the same pieces of fabric, as occurs in Union Rich's bag. So long as the bag contains “[a] three sided fabric-covered U-shaped structure in which each side is, on the whole, essentially stiff or non-pliant,” where “the first and second end panels extend[ ] upwardly from the bottom panel,” [′104, 8: 47-9], then the accused product contains the limitation; such is the case in Union Rich's Heavy-Duty ProTool Bag. Accordingly, Travel Caddy has shown a likelihood of success for proving that this element is present in the Heavy-Duty ProTool Bag.
With respect to the Electricians CarryAlls and this limitation in Claim 26, Union Rich's sole argument is that the limitation “incorporates indefinite and ambiguous language” and therefore, “the claim is necessarily rendered invalid.” [Union Rich Resp. to Mot for Prel. Inj., at 18]. However, the Court has already construed the claim, and did not find the language to be indefinite and ambiguous such that the claim term is invalid. Instead, examining the Heavy-Duty ProTool Bag, the Court finds that it does contain generally rigid bottom and end panels arranged in “[a] three sided fabric-covered U-shaped structure in which each side is, on the whole, essentially stiff or non-pliant.” Accordingly, Travel Caddy has shown a likelihood of success for proving that this element is present in the Electricians CarryAlls.
This term appears in independent Claims 19 and 26 of the ′104 Patent and it is used to identify the manner in which panels of the tool case are joined together. [′104, 8: 57-61]. The Court construed “continuous, closed loop binding extending over fabric covering the bottom panel and the flexible panels” as:
A binding that is folded over and stretched to provide a means to join the fabric edges of component parts of the case in a closed loop; a “continuous” closed loop binding extends uninterrupted with no apparent beginning or ending point.
[Claim Construction Order, at 2].
*6 With respect to the Heavy-Duty ProTool Bag and Claim 19, Union Rich argues that this limitation is not present, because in this bag, “the fabric covering the rigid end panels is not joined within the single continuous closed loop binding that also binds the flexible fabric panels[.]” [Union Rich Resp. to Mot. for Prel. Inj., at 27]. This argument is related to Union Rich's proposed claim construction that would require the binding to join all the panels of the claimed case. [See Union Rich's Opening Claim Construction Br., at 5]. The Court rejected this construction in favor of Travel Caddy's proposed construction that requires a binding that joins “component” panels of the claimed case. [Claim Construction Order, at 18]. Claim 19, for example, discloses a “binding extending over fabric covering the bottom panel and the flexible panels,” with no mention of the rigid end panels. [′104, 8: 57-8]. Those three panels are the “component” panels that are covered by the continuous, closed loop binding of Claim 19. While Union Rich is correct that the binding on its Heavy-Duty ProTool Bag does not continuously cover all of the panels, it does contain a continuous closed loop binding over the bottom panel and the flexible front and back panels. Accordingly, Travel Caddy has shown a likelihood of success for proving that this element is present in the Heavy-Duty ProTool Bag.
With respect to the Electricians CarryAlls and this limitation in Claim 26, Union Rich argues that the limitation is not present because the bag does not contain “flexible front and back panels ..., but rather comprises an all rigid structure.” [Union Rich Resp. to Mot. for Prel. Inj., at 26]. According to Union Rich, because Claim 26 discloses, “a continuous, closed loop binding extending over fabric covering the bottom panel, the end panels and the flexible panels,” [′104, 10: 7-9], and its bag does not have any flexible panels, it cannot infringe this claim. However, Travel Caddy points out, and Union Rich does not dispute that there are two different versions of the accused Electricians CarryAlls. One of these bags contains flexible front and back panels, and was the bag that was sold by Union Rich prior to the time the ′992 Patent issued.[2] The other bag features reinforced boards placed in between the fabric of the front and back panels, and was developed after the initial allegation of potential infringement. [Union Rich Resp. to Mot. for Prel. Inj., Ex. C, ¶ 17].
Travel Caddy argues that the second version of the bag also contains this element. According to Travel Caddy, “[t]he inclusion of an additional element-the polypropylene board-does not avoid infringement, however, as the flexible panels are still present.” [Travel Caddy Reply to Mot. for Prel. Inj., at 12 fn. 10].
In support, Travel Caddy cites Scanner Techs. Corp. v. ICQS Vision Sys. Corp., 365 F.3d 1299 (Fed.Cir.2004). In Scanner, the Federal Circuit stated that “[t]he use of the transitional phrase ‘comprising’ itself indicates that the elements or steps following the transition may be supplement by additional elements or steps and still fall within the scope of the claim.” Id. at 1305. While it is correct that the claims in the ′104 Patent contain the transitional phrase “comprising,” the present claim is distinguishable from Scanner. At issue in Scanner was whether a claim that discloses “an” illumination source covered “one or more” illumination sources, or was limited to a single illumination source. Id. The Federal Circuit found that the use of the word “comprising” and the ordinary meaning of “an,” demonstrated that the claim covered more than one apparatus.
*7 In contrast, the ′104 Patent discloses a case “comprising” certain panels that are flexible and certain panels that are “generally rigid.”[3] In fact, the rigid panels are described as “fabric covered” while the flexible panels are described as “fabric ... panel[s].” In other words, the claims of the ′104 Patent themselves disclose that when a panel is comprised of fabric covering some other element that renders the panel itself rigid, the panel cannot be flexible. While Travel Caddy is correct that the use of “comprising” allows the disclosed elements to be supplemented by additional elements, it does not permit one element, in this case a “flexible” panel from also comprising another element, in this case a “generally rigid” panel. Because the current version of the Electricians CarryAlls does not contain flexible panels as disclosed in Claim 26, Travel Caddy has not shown a likelihood of success for proving that this element is present in the current bag.
d. “Flexible”
This phrase appears in claims 19 and 26 of the ′104 Patent. The phrase is used to describe the structure of the front and back panels of the claimed cases. [′104, 7: 14-16]. The Court construed “flexible” in the context of “flexible fabric ... panel” as “[a] panel made of a fabric that is capable of being bent or flexed.” [Claim Construction Order, at 2]. The Court's construction was intended in part to provide differentiation between the various types of panels claimed in the ′104 and ′992 Patents, including flexible, generally rigid, and generally semi-rigid. Because Travel Caddy acknowledged that it was claiming different panels under those terms, it was necessary to provide distinct definition for each type of panel.
With respect to the Heavy-Duty ProTool Bag and Claim 19, Union Rich admits that the bag has flexible front and back panels. Accordingly, Travel Caddy has shown a likelihood of success for proving this element is present in the Heavy-Duty ProTool Bag.
With respect to the Electricians CarryAlls and this limitation in Claim 26, Union Rich again argues that the current bag does not feature any flexible panels, and Travel Caddy, relying on Scanner, repeats its argument that the addition of the polypropylene board does not render the bag uninfringing. As explained above, the Court finds that the Electricians CarryAlls bag does not contain any flexible panels, and Travel Caddy has not shown a likelihood of success for proving this element is present in the current bag.
Ultimately, the Court finds that Travel Caddy is unlikely to succeed in proving the presence of at least one element of the asserted independent claims in each of the accused products. Because the Court finds that Travel Caddy is unlikely to succeed on its claim of infringement of either independent Claim 19 or 26, it is unlikely to succeed on its claim of infringement of dependent Claims 21, 23, 27, and 28.
*8 In light of the Court's finding that Travel Caddy is unlikely to succeed on its infringement claim, it is unnecessary to analyze Union Rich's invalidity contentions or the other three preliminary injunction factors. Chrysler, 908 F.2d at 953.
Accordingly, Defendant's Motion for Preliminary Injunction is DENIED.
III. Counter-Defendants' Motion for Joinder Under Fed.R.Civ.P. 19 and Counter-Defendants' Motion for Stay Pending Ruling on Counter-Defendants' Fed.R.Civ.P. 19 Motion
Union Rich has moved for joinder of Rooster Products d/b/a The Rooster Group (“Rooster”) as a Counter-Plaintiff in the present action. According to Union Rich, Rooster is a licensee of a divisible patent right in the patents-in-suit, and should therefore be joined as a party to Travel Caddy's counterclaim for patent infringement. In the alternative, Union Rich has requested that the Court enter an order prohibiting Rooster from asserting any rights under the patents-in-suit in the future. In response, Travel Caddy argues that its agreement with Rooster does not give Rooster a right to sue, because it has not been licensed a divisible patent right. Furthermore, Travel Caddy acknowledges that even if Rooster had a right to sue under the patent, it has waived any such right by failing to assert infringement after being named as a defendant in Union Rich's original complaint.
The agreement between Travel Caddy and Rooster does not appear to provide Rooster with a divisible patent right. [Ex. A, Travel Caddy's and Rooster's Opposition to Counter-Defendants' Motion for Joinder (Doc. 236) (hereinafter “the Agreement”) ]. Rooster purchases patented products from Travel Caddy and then resells the products. Notably, the Agreement covers patented and non-patented products and has a specific provision for products, such as the patented products at issue in the instant action, that are developed after the commencement of the case. That provision, paragraph 18c provides that, “[i]f Travelon independently develops a new product design with a patentable feature ... Travelon will own the intellectual property rights independently.” [Id. at ¶ 18c]. Only if Rooster “makes any design improvements that affect a patentable feature,” would Rooster have patent ownership over the new product. [Id.]. Of course, merely because Rooster is not an owner of the patents-in-suit, does not necessarily mean that it is not a licensee.
The Federal Circuit addressed a similar agreement in Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed.Cir.1995). The agreements in Rite-Hite were “exclusive sales agreements” that covered specific territories. Id. at 1553. The sales exclusivity was conditional on a determination by the patent owner that the distributors “were doing an ‘adequate job.’ “ Id. While the Agreement is not as limited as the agreement in Rite-Hite, the following analysis is relevant for disposition of Union Rich's motion:
*9 Most particularly, the [distributors] had no right under the agreements to exclude anyone from making, using, or selling the claimed invention. The [distributors] could not exclude from the their respective territories other [distributors], third parties, or even Rite-Hite itself. Any remedy [a distributor] might have had for violation of its rights would lie in a breach of contract action against Rite-Hite, if the agreement was breach, not in a patent infringement action against infringers. Rite-Hite had no obligation to file infringement suits at the request of [a distributor] and the [distributors] had no right to share in any recovery from litigation.
Id. The Agreement does limit Travel Caddy's right to sell its products. [Agreement, ¶ 4]. However, as the Court noted above, the Agreement covers products that are both patented and unpatented. [Id. at ¶ 2]. Therefore, any remedy Rooster “might have for violation of its rights would lie in a breach of contract action against” Travel Caddy. The Court finds that Rooster is not an exclusive licensee of a divisible patent right of the patents-in-suit.
Even assuming arguendo that Rooster did have a right to sue, the Court finds that it waived such a right by failing to assert infringement when named in Union Rich's original complaint. Under Federal Circuit precedent and the Federal Rules of Civil Procedure, “a claim for a declaration of noninfrginement makes a counterclaim for patent infringement compulsory.” Polymer Indus. Prods. Co. v. Bridgestone/Firestone, Inc., 347 F.3d 935, 938 (Fed.Cir.2003). Therefore, Union Rich's request for an alternative order prohibiting Rooster from bringing an infringement action at a later date is unnecessary.
Accordingly, Counter-Defendants' Motion for Joinder Under Fed.R.Civ.P. 19 is DENIED. Furthermore, because Counter-Defendants' Motion for Joinder is denied, Counter-Defendants' Motion for Stay Pending the Ruling on Counter-Defendants' Fed.R.Civ.P. 19 Motion is DISMISSED AS MOOT.
Travel Caddy alleges that Union Rich's designated Rule 30(b)(6) deponent was unprepared and that Union Rich improperly objected to the scope of the deposition. Specifically, Travel Caddy claims that it was improper for Union Rich to object to specific deposition topics at the commencement of the deposition and not provide any testimony of those topics. Travel Caddy has requested that Union Rich be compelled to complete a Rule 30(b)(6) deposition. Travel Caddy has also requested that Union Rich be sanctioned for its failure to produce a properly prepared deponent. In response, Union Rich argues that the unanswered deposition topics were not within the proper scope of a Rule 30(b)(6) deposition. Furthermore, Union Rich claims that Ure was properly prepared for the deposition.
While it may have been more professional for Union Rich to inform Travel Caddy prior to the deposition of its objections to the proposed topics, there is no requirement to do so. Furthermore, the Court finds that Travel Caddy attempted to do too much through its Rule 30(b)(6) deposition. For example, a number of the noticed subjects of testimony cover “[t]he complete factual basis for and identity of all evidence allegedly supporting” various legal claims asserted by Union Rich. [Defendants' Amended Notion of Deposition of Outside the Box Innovations, LLC, d/b/a Union Rich USA (Doc. 152), Ex. A, Topics 1-5]. Such testimony is not properly within the scope of a Rule 30(b)(6) deposition. Furthermore, the fact that Ure did not specifically recall or did not know the answer to numerous questions is not dispositive of his preparation for the deposition. Ure was deposed for a significant period of time, both in his capacity as a 30(b)(6) deponent and as an individual. It is undisputed that Travel Caddy received a great deal of information from his deposition testimony. The Court finds that it is unnecessary to permit further deposition of Ure at this time.
*10 Accordingly, Defendants' Motion to Compel the Completion of the 30(b)(6) Deposition of Outside the Box d/b/a Union Rich, USA and for Sanctions is DENIED. Travel Caddy's request for sanctions is also DENIED.
Union Rich argues that discovery on damages should be deferred in the instant action until the Court rules on the parties' summary judgment motions. According to Union Rich, the damages issues are too complex presently, and may be simplified greatly by rulings on summary judgment. In response, Travel Caddy argues that Union Rich should have requested bifurcation of damages from liability at an earlier point in the litigation. Furthermore, according to Travel Caddy, the evidence on damages is so intertwined with other issues before the Court that deferring discovery is unnecessary.
In light of the fact that the parties' summary judgment motions have been fully briefed, the Court anticipates that it will be able to provide a summary judgment ruling in the near future. A summary judgment ruling will undoubtedly clarify the issues for which damages evidence must be obtained. Accordingly, Union Rich et al.'s Motion to Defer Damages and Related Discovery is GRANTED. A discovery period for damages will be established after the Court enters its ruling on summary judgment.
Union Rich alleges that Travel Caddy improperly produced documents in response to its discovery requests. Specifically, Union Rich argues that Travel Caddy's non-electronic document production is an improper bulk production that is disorganized. Furthermore, according to Union Rich, Travel Caddy's electronic document production included numerous non-working files as well as unresponsive and offensive content. In response, Travel Caddy argues that its non-electronic documents were produced as they are kept in the ordinary course of business. Travel Caddy also argues that Union Rich's document requests were overly broad and that its complaints about bulk production are traceable to its own requests. Finally, Travel Caddy acknowledges that the offensive electronic files should not have been included in the production, but argue that the presence of such files does not render its production improper.
It is undisputed that Travel Caddy has produced a large number of documents in the present litigation. However, the Court does not find the production to be improper. Travel Caddy asserts that the nonelectronic documents were produced in accordance with the Federal Rules of Civil Procedure, in other words as they are maintained in the ordinary course of business. Union Rich argues that the documents were “unsegregated as to pertinence,” but it is not the duty of the document producer to organize the documents according to the document requests. A review of Union Rich's document requests reveals broad requests that would undoubtedly produce numerous documents, including requests for “[a]ll order forms, purchase orders, purchase requests, and the like ... for the use, purchase, and/or license of any and all of Defendants' products.” [Plaintiff's Second Request for Production of Documents and Things (Doc. 372, Ex. C, ¶ 41]. The Court finds that Travel Caddy's production of non-electronic files does not constitute improper bulk production.
*11 The Court also finds that Travel Caddy's electronic production was proper. Although it is unfortunate that Travel Caddy was not able to remove the offensive electronic files, the Court does not find their presence to indicate that Travel Caddy has not properly completed its document production. The 268 inappropriate files, along with the 1893 blank or inoperable files, represent a rather small percentage of the total documents that have been produced by Travel Caddy. With respect to the blank or inoperable files, it is likely that all electronic production carries some possibility of technical difficulties. Travel Caddy appears to have been diligent in attempting to minimize any such technical problems and to remove unresponsive documents from its production.
Accordingly, Union Rich et al.'s Motion to Compel and for Sanctions Regarding Travel Caddy/Rooster's Bulk Production is DENIED. Travel Caddy's request that the motion be stricken is DENIED.
Union Rich has requested that the Court retain jurisdiction over all matters in the instant action. This motion was filed in response to the Court's discussion with the parties about the possibility of appointing a Special Master to address a number of issues in the case. This discussion took place during a motions hearing held in chambers on December 14, 2006. Union Rich informed the Court that it opposed the appointment of a Special Master for a number of reasons. [Doc. 331]. The present motion represents a further recitation of Union Rich's opposition to the appointment of a Special Master.
At present, the Court has not appointed a Special Master, and has not delegated jurisdiction over any matters. However, Union Rich appears to misperceive the Court's jurisdiction. Specifically, the Court notes that pursuant to Fed.R.Civ.P. 53(a)(1)(C) the Court has discretion to appoint a Special Master to “address pretrial and post-trial matters that cannot be addressed effectively and timely by [the Court].” Given the numerous motions that continue to be filed in the instant action, the Court will not foreclose the possibility of the appointment of a Special Master. The present motion is unnecessary and premature. Accordingly, Union Rich et al.'s Motion to Retain Jurisdiction of All Matters is DISMISSED.
Union Rich claims that Travel Caddy has waived the attorney-client privilege by producing two e-mails that relate to Travel Caddy's litigation strategy. According to Union Rich, waiver is mandated by the Court's prior Order compelling the deposition testimony of Union Rich's opinion counsel, including some privileged issues [Doc. 278], and the Federal Circuit decision In re Echostar, 448 F.3d 1294 (Fed.Cir.2006). Union Rich has requested that the Court compel the production of “all attorney-client privileged and/or work product documents of Travel Caddy and Rooster on the subject of Travel Caddy/Rooster's (a) litigation strategy, and (b) licensing related activities....” [Union Rich Mot. to Declare Waiver, at 7]. In response, Travel Caddy argues that the two e-mails were inadvertently produced and that Union Rich should be ordered to return or destroy the e-mails. Travel Caddy also points out that the two emails that were produced were listed on its privilege log, as being withheld on the basis of the attorney-client privilege.
*12 At the outset, the Court notes that its previous Order related to Union Rich's opinion of counsel is inapposite to the present motion. That motion dealt with an issue squarely addressed by EchoStar, namely the scope of waiver of the attorney-client privilege when an accused patent infringer uses the advice of counsel defense. [Doc. 278]. The present motion deals with two privileged e-mails that were allegedly inadvertently produced, and Travel Caddy's production must be analyzed under the case law related to inadvertent production. The Court will therefore apply the balancing test that examines:
(a) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (b) the number of inadvertent disclosures; (c) the extent of the disclosure; (d) the delay and measures taken to rectify the disclosures; and (e) whether the overriding interest of justice would be served by relieving a party of its error.
In re Polypropylene Carpet Antitrust Litigation, 181 F.R.D. 680, 689 (N.D.Ga.1998).
Under the balancing test, the Court finds that Travel Caddy did not waive its privilege. With respect to the first factor, reasonableness of precautions, Travel Caddy spent many hours assembling the document production in this case, and removed “several thousand documents ... from the production because they were either non-responsive or contained attorney-client privileged information.” Travel Caddy's approach to production was reasonable. The second and third factors, number of inadvertent disclosures and extent of the disclosure, also favor Travel Caddy. The total production by Travel Caddy was over 30,000 electronic documents. Out of that production, two privileged e-mails were inadvertently produced. Such a small percentage weighs in favor of a finding of inadvertent disclosure.
Travel Caddy also did not unduly delay in attempting to rectify the disclosures, the fourth factor in the balancing test. Upon receiving Union Rich's Motion to Declare Waiver, Travel Caddy immediately requested return of the privileged documents. Union Rich argues that by waiting until four months after the initial production Travel Caddy unreasonably delayed in attempting to rectify the disclosures. However, Travel Caddy should not be required to continuously inspect its own document production after it has already taken sufficient initial measures to prevent inadvertent disclosure. The Court finds that Travel Caddy's response upon learning of its disclosures does not demonstrate delay.
Finally, the Court finds that the overriding interests of justice favor Travel Caddy. The case relied on by Union Rich, FDIC v. Marine Midland Realty Credit Corp., 138 F.R.D. 479 (E.D.Va.1991), is inapposite. In that case, the Court found that the document producer had produced somewhere between 15,000 and 50,000 documents but did so through the “efforts of two persons for one day.” Id. at 483. This “carelessness” on the part of the document producer, was central to the court's conclusion that it “would not be fair” to grant the protective order. Travel Caddy has not demonstrated the same kind of carelessness in its own production, and the Court finds that this final factor favors return of the documents.
*13 Union Rich's primary argument is that the relevant inadvertent disclosures are not the two privileged e-mails, but rather, the over 268 documents that it offered as evidence of Travel Caddy's improper bulk production. In light of the Court's denial of Union Rich's Motion to Compel related to Travel Caddy's allegedly deficient document production, the Court is unpersuaded by Union Rich's argument that Travel Caddy's production of two privileged documents is further evidence of Travel Caddy's recklessness and gross negligence.
Accordingly, Union Rich et al.'s Motion to Declare Waiver of Attorney-Client Privilege and/or Work Product Immunity and for Production of all Relevant Documents is DENIED. Union Rich is hereby ORDERED to return to Travel Caddy or destroy all copies of the privileged documents identified in Union Rich's motion, including all copies of the documents attached as Exhibit A and Exhibit B to Union Rich's motion, no later that seven (7) calendar days from the date of entry of this Order. Union Rich shall also file with this Court a written certification of its compliance with this Order within seven (7) calendar days from the date of entry of this order. Travel Caddy's request to strike Union Rich's Motion is DENIED.
IX. Conclusion
For the foregoing reasons, Defendants' Motion for Preliminary Injunction [# 42] is DENIED, Counter-Defendants' Motion for Joinder [# 193] is DENIED, Counter-Defendants' Motion for Stay [# 194] is DISMISSED AS MOOT, Defendants' Motion to Compel [# 196] is DENIED, Union Rich's Motion to Defer Discovery [# 286] is GRANTED, Union Rich's Motion to Compel [# 338] is DENIED, Union Rich's Motion to Retain Jurisdiction [# 346] is DISMISSED, and Union Rich's Motion to Declare Waiver [# 352] is DENIED.
SO ORDERED.
Footnotes
Travel Caddy has reserved the right to argue that there is infringement under the doctrine of equivalents, however it has not argued such infringement in the present motion.
It is undisputed that the first version of the Electricians CarryAlls features the disclosed binding of Claim 26. Travel Caddy has shown a likelihood of success for proving this element is present in that first bag. However, the relevant chronology of this case precludes a grant of a preliminary injunction on the basis of this claim. Travel Caddy's Motion for a Preliminary Injunction alleges that Union Rich's products are infringing the ′104 Patent only. Although Travel Caddy has alleged infringement of the ′992 Patent as well, it has not moved for a preliminary injunction on the basis of that Patent. [Travel Caddy Mot. for Prel. Inj., Doc. 41, at 2]. In a letter dated February 21, 2005, Union Rich acknowledged that they had already changed the design of the Electricians CarryAlls to the current design. [Union Rich Resp. to Mot. for Prel. Inj., Ex. A3].
The ′104 Patent did not issue until January 31, 2006, although the application for the ′104 Patent was filed on November 4, 2004. The evidence shows that Union Rich sold a total of 4,480 of the first bags, the last such sale occurring on November 26, 2004. [Union Rich Mot. for Summary Judgment, # 359, Decl. of Christopher Todd Ure, at 16]. Because Travel Caddy has not argued that it is entitled to a preliminary injunction on the basis of the ′992 Patent, and because all potentially infringing activity involving the first version of the Electricians CarryAlls pre-dates the issuance of the ′104 Patent, Travel Caddy is not entitled to a preliminary injunction based on its likelihood of proving the original Electricians CarryAlls bag contains all the claimed features of the ′104 Patent.
The ′992 Patent also discloses certain “generally semi-rigid” panels.