The Federal Circuit’s recent decision in Arendi S.A.R.L. v. LG Electronics Inc., 21-1967, — F.4th — (Fed. Cir. Sept 7, 2022), upholds Judge Stark’s discovery penalty against the patentee Arendi with the result that the trial moves forward against only one product of the hundreds that were accused.
Arendi sued LG in 2012 for infringing its US7917843. As required by Delaware local rules, Arendi provided a set of infringement contentions to LG. The local rules require the patentee to first provide a list of accused products and patents alleged being infringed. Subsequently, the patentee must disclose a set of initial claim charts mapping showing how each accused product maps to each asserted claim.
In Delaware, these local rules are seen as discovery requirements that operate alongside other mandatory discovery found in FRCP 26. See D. Del. Default Standard for Discovery § 4. The local rule states that the required disclosures here are “initial” and that the parties “shall be permitted to supplement.”
In its disclosures, Arendi first provided a list of 200+ infringing products. But then when it came time to provide the claim charts, Arendi addressed only one product (the LG Rebel 4) and labelled it as “exemplary.” Later, Arendi and LG agreed on
eight representative products to stand-in for all accused products. The Rebel 4 was one of these eight. Despite the agreement on exemplary models, LG twice warned Arendi that it had not yet provided the claim charts as required by the local discovery rules. Arendi did not respond to those warnings.
Following the close of fact discovery, Arendi provided an expert report that spelled out its infringement contentions for five additional representative models. At that point, LG moved to strike those portions of the expert report based upon Arendi’s failure to timely disclose its infringement contentions as required by the local rule. Judge Stark was in charge (during his tenure as a district court judge) and granted the motion — holding that Arendi had “failed to fulfil its discovery obligations” and thus had lost its right to provide such disclosures at that point. In particular, the district court also noted the prejudicial impact since: “LG understood Arendi was accusing only the Rebel 4.”
At that point, Arendi simply filed a new lawsuit, still in the District of Delaware specifically alleging infringement of the excluded products from the expert report. That new case was also routed to Judge Stark who dismissed it with prejudice under the duplicative-litigation doctrine. On appeal, the Federal Circuit has affirmed.
Improper duplicative litigation typically involves a plaintiff bringing two different lawsuits that align along four axes: (1) same claims (2) against the same defendant (2) in the same court (4) at the same time. Walton v. Eaton Corp., 563 F.2d 66 (3d Cir. 1977) (en banc). In that scenario, the district court is given discretion to dismiss one of the cases as part of its “general power to administer its docket.”
On appeal, Arendi argued that its two cases did not involve the same claims once the district court granted LG’s motion to strike. In general, a patentee’s infringement assertion against one product is a different claim than its assertion of the same patent against a different product. On appeal though the Federal Circuit found that Arendi had mischaractered the district court’s order.
The court did not grant LG’s motion to strike parts of Arendi’s infringement expert report because Arendi failed to sufficiently accuse the non-Rebel 4 products. The court granted the motion to strike because Arendi “failed to fulfill its discovery obligations” with respect to those products, so Arendi’s infringement allegations in its expert report were procedurally untimely.
Slip Op. The distinction here is technical, but that is civil procedure. In Arendi I, the district court did not did not dismiss Arendi’s claims against non-Rebel products. Rather, the court but rather excluded the evidence necessary for Arendi to actually win on those claims. The difference is important because it meant that the same claims were still pending in both cases at the same time. “Left with the simple and obvious fact that the non-Rebel 4 products accused in Arendi II are identical to products accused in Arendi I, we determine that the district court did not err in dismissing the Arendi II complaint as improperly duplicative.” Id.
The Arendi I court indicated that it will consider allowing the amendment depending upon the outcome of this appeal. Of course, by now Judge Stark has moved to the Federal Circuit and the case is currently not assigned to any judge.
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Opinion by Judge Prost
Judges: Prost, Chen, Stoll
Kemper Diehl represented the plaintiff on appeal along with his team from Susman Godfrey; Andrew Schwentker from Fish & Richardson argued for the defendant.
Apple Inc. v. Zipit Wireless, Inc., 30 F.4th 1368 (Fed. Cir. 2022).
This is a personal jurisdiction case. Apple filed a declaratory judgment action in N.D. Cal. against the patentee Zipit. The district court dismissed the case — finding that Zipit had insufficient contacts with the state of California. On appeal, however, the Federal Circuit reversed. The court instead concluded that Zipit had sufficient “minimum contacts” with the state and that the exercise of jurisdiction is not unreasonable. The crux of the decision is as follows:
[T]he district court read our precedent as applying a bright-line rule that patent infringement notice letters and related communications can never form the basis for personal jurisdiction. … [T]he district court erred in this regard.
Id. Personal jurisdiction doctrine has strong Federalism components. Even though patent cases are filed in Federal Court run by our National Government, those courts are limited in power by the particular State where they are located. For example, a Federal Court located in California only has power over parties with sufficient ‘minimum contacts’ with the state such that its exercise of jurisdiction would be reasonable and fair.
The Federal Circuit has repeatedly stated that exercise of personal jurisdiction over a patentee is improper when the company’s only related “contacts were for the purpose of warning against infringement or negotiating license agreements.” Breckenridge Pharm., Inc. v. Metabolite Laboratories, Inc., 444 F.3d 1356, 1364 (Fed. Cir. 2006); Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1353 (Fed. Cir. 2002); Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998) (three warning letters were insufficient). As the court explained in Red Wing, “[f]airness and reasonableness demand that a patentee be free to inform a party who happens to be located in a particular forum of suspected infringement without the risk of being subjected to a law suit in that forum.”
Zipit had been in repeated contact with Apple, but only in the context of informing Apple of its infringement and seeking to license the patent. The Zipit district court applied these cases to the facts at hand and concluded that, “all of Zipit’s contacts in California, including its in-person meetings, ‘were for the purpose of warning against infringement'” and Zipit had no binding contractual relationship in the form. “Accordingly, the Court lacks jurisdiction over Zipit.” Apple Inc. v. Zipit Wireless, Inc., 5:20-CV-04448-EJD (N.D. Cal. Feb. 12, 2021). The district court had particularly concluded that jurisdiction was reasonable under Burger King, but was barred by the Federal Circuit’s particular case law regarding warning letters and negotiations.
While Zipit was on appeal, the Federal Circuit decided Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147 (Fed. Cir. 2021). Trimble is important because of its approach of cabining-in the Red Wing Shoe line of cases. In truth, it effectively overruled Red Wing Shoe despite being decided by a three judge panel led by Judge Dyk. In particular, Trimble distinguished between the limited contacts in Red Wing Shoe that were simply “informing” as opposed to the more “extensive” contacts by the patentee in Trimble. Thus, under Trimble, the new rule of law is that “amplified” or “extensive” contacts with the forum can be sufficient, even if all the contacts are tied to informing a party of accused infringement and/or seeking a license.
In Zipit then, the appellate court followed Trimble‘s lead stating that “there is no general rule that demand letters can never create specific personal jurisdiction.” Zipit (quoting Trimble). The court further explains that the limitations in Red Wing Shoe should be seen as a factor in a court’s analysis of reasonableness under Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).
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Personal Jurisdiction as Not Patent Law Specific
The Federal Circuit has for many years applied its own law to personal jurisdiction questions even though the doctrine is procedural in nature. Unlike questions of inconvenient venue, the court has found that jurisdiction is “intimately involved with the substance of the patent laws.” On the other hand, for convenient venue questions the court applies the law of the regional circuit court of appeals.
In Trimble and now in Zipit, the court explains that since that time the Supreme Court has now made it clear that constitutional personal jurisdiction questions cannot be determined by appeal to “special patent policies.” In Particular, in its 2017 SCA Hygiene decision, the Supreme Court stated that “[p]atent law is governed by the same … procedural rules as other areas of civil litigation.”
In these pair of cases, the Federal Circuit has largely brought its doctrine back in line with that of other circuits with a holding that personal jurisdiction is not patent law specific. In Trimble though, the court continued to hoe the line that personal jurisdiction is a question of “Federal Circuit law” because the issue is “intimately involved with the substance of the patent laws.” Quoting Avocent (Fed. Cir. 2008). The Zipit court left that statement from its opinion.
