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Funai Electric Company, Ltd. v. Daewoo Electronics America

October 22, 2010

FUNAI ELECTRIC COMPANY, LTD., PLAINTIFF,
v.
DAEWOO ELECTRONICS AMERICA, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Blanche M. Manning

MEMORANDUM AND ORDER

Before the court is the plaintiffs' motion for an extension of the temporary restraining order entered October 8, 2010. For the reasons stated, the motion is denied.

BACKGROUND

This dispute originated in a court in the Northern District of California, where plaintiff Funai Electric Company sued four related corporate entities-Daewoo Electronics Corporation of America, Inc., Daewood Electronics Company, Ltd., Daewoo Electronics America, Inc., and Daewoo Electronics Corporation-alleging the infringement of six patents dealing with video cassette recorders. Funai obtained a default judgment for infringement of all six patents against two of the Daewoo entities-Daewoo Electronics Corporation of America, Inc. and Daewoo Electronics Company Ltd.-in the amount of $6,956,187, plus interest and fees. The non-defaulting Daewoo entities filed a motion to reconsider the district court's entry of a final judgment against the defaulting Daewoo entities because of the possibility of inconsistent judgments, i.e., the default judgment was based upon the infringement of six patents, but the non-defaulting defendants hoped to prove at trial that none of the patents had been infringed. In response to the motion to reconsider, the district court amended the default judgment to include the following additional language:

To the extent that the default judgment may ultimately become inconsistent with a resolution on the merits, and that the non-defaulting parties are found to be either the successors in interest of or jointly and severally liable with the defaulting parties, the non-defaulting parties may file a motion to amend the judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure.

Order of Dec. 12, 2005, Funai Electric Co. v. Daewood Electronics Corp., Case No. 04 CV 1830 (N.D. Calif.).

The default judgment remains unpaid.

The non-defaulting Daewoo entities-Daewoo Electronics America, Inc. and Daewoo Electronics Corporation-proceeded with a motion for summary judgment, where the district court held that there had been no infringement of three of the six patents, and then to trial, where jurors found infringement of the remaining three patents. Jurors awarded damages in the amount of $7,216,698.

In the district court, Funai also attempted to obtain an order from the district court that the non-defaulting Daewoo entities were liable not only for the $7,216,698 judgment entered against them, but also for the $6,956,187 default judgment entered against the defaulting Daewoo entities under a theory of successor liability. However, the district court determined that no successor liability existed.

The non-defaulting Daewoo entities appealed the district court's judgment against them, arguing that no infringement had occurred. Funai filed a cross-appeal, arguing that the district court had erred in concluding that no successor liability existed. On September 1, 2010, the U.S. Court of Appeals for the Federal Circuit issued its opinion, affirming the judgment of infringement, but reversing the district court's determination of no successor liability. It remanded the case to the district court for appropriate proceedings as to the issue of successor liability. On October 1, 2010, the Daewoo entities filed a petition for rehearing with the Federal Circuit on the issue of successor liability. The Federal Circuit then ordered Funai to file a response to the petition for rehearing, which it has done. The Federal Circuit has not yet ruled on the petition for rehearing.

On October 8, 2010, Funai initiated the instant suit against one of the non-defaulting Daewoo entities, Daewoo Electronics America, Inc. In its complaint, Funai alleges that, based upon the Federal Circuit's order, Daewoo Electronics America, Inc. is liable as a successor for the $6,956,187 default judgment entered by the district court in California. Funai seeks a declaratory judgment that it therefore has a legal interest in the assets of Daewoo Electronics America, Inc. located in Illinois, including a bank account at Bank of America, N.A. (Count I). It also alleges a violation of Illinois' Uniform Fraudulent Transfer Act based upon its allegation that Daewoo Electronics America, Inc. is "actively transferring funds from its account at Bank of America, N.A., for the purpose of hindering, delaying or defrauding" Funai (Count II).

On the same day it filed suit, Funai filed an ex parte motion for a temporary restraining order to freeze all of the assets of Daewoo Electronics America, Inc. located in Illinois. Judge Norgle, acting in his capacity as the emergency judge, granted the motion, which expires today. The plaintiff now seeks an extension of the temporary restraining order, while the defendant asks that it be allowed to expire on its own accord. On October 21, 2010, the court asked the parties for additional briefing, which is now completed. The court also allowed the parties to present oral argument.

ANALYSIS

Standard for a Motion for a Temporary ...


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