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Peerless Industries, Inc. v. Crimson Av, LLC

United States District Court, Seventh Circuit

November 27, 2013

PEERLESS INDUSTRIES, INC., Plaintiff,
v.
CRIMSON AV, LLC, and VLADIMIR GLEYZER, Defendants.

OPINION AND ORDER

JOAN H. LEFKOW, District Judge.

Presently before the court is a motion for reconsideration filed by defendants, Crimson AV, LLC ("Crimson") and Vladimir Gleyzer ("Gleyzer, " together, "defendants"), asking the court to reconsider its ruling of October 2, 2013. (Dkt. 331.) In that ruling, the court reinstated Crimson's motion for partial summary judgment of invalidity but limited defendants to maintaining invalidity defenses that they timely disclosed. For the foregoing reasons, defendants' motion (dkt. 349) is denied.[1]

BACKGROUND

The court assumes the reader's familiarity with the background of this case, including earlier decisions, as well as the underlying litigation and will set out facts only as necessary for disposition of the remaining issues.[2]

Peerless brought suit against defendants based on their manufacture and sale of television mounts, seeking damages for patent infringement of United States Patent 7, 823, 850 ("the '850 patent"), trade dress infringement, and various violations of Illinois statutory and common law. (Dkt. 55, Third Am. Compl.) On February 28, 2013, Peerless moved for summary judgment on the issues of infringement and validity. (Dkt. 170.) Crimson moved for summary judgment on the issue of noninfringment on January 18, 2013 (dkt. 134), and on April 5, 2013, of invalidity. (Dkt. 193.) On April 11, 2013 the court denied Crimson's motion for partial summary judgment as to invalidity without prejudice. (Dkt. 200.) On October 1, 2013, the court granted Peerless summary judgment as to infringement, held that Peerless's motion for summary judgment as to validity of the patent was moot, and denied Crimson's motion for summary judgment as to noninfringment. (Dkt. 330.)

The next day, on October 2, 2013, the court partially reinstated Crimson's summary judgment motion as to invalidity (the "October 2 Order"). (Dkt. 331.) In its original motion for summary judgment of invalidity that Crimson filed on April 5, 2013, Crimson argued the asserted claims were invalid based on (1) the on-sale bar doctrine; (2) failure to name an inventor; (3) failure to disclose the best mode; (4) obviousness; and (5) anticipation. (Dkt. 193.) When the court reinstated Crimson's invalidity motion in the October 2 Order, it limited Crimson to arguing invalidity on bases three through five. The court barred Crimson from asserting bases one and two because Crimson did not properly disclose those bases to Peerless in its invalidity contentions. (Dkt. 331; see also dkt. 349 ¶¶ 8-10.) The court explained that a party seeking to amend its final invalidity contentions may do so if it can demonstrate that it acted diligently and the patentee would suffer no prejudice. (Dkt. 331 at 2.) Crimson made no such showing of good cause for amendment in its April 5, 2013 motion. The court noted that Crimson had alleged the on-sale bar doctrine in its amended answer but found that did not save the defense because of Crimson's obligation to disclose the defense in its invalidity contentions pursuant to Northern District of Illinois Local Patent Rule 3.1.[3] The court further stated that, if anything, Crimson's inclusion of the on-sale bar doctrine as an invalidity basis in its amended answer "filed before it disclosed its invalidity contentions further militates against allowing Crimson to raise the defense at the present time" because that demonstrated Crimson was "undoubtedly aware of the defense." ( Id. at 3 n.3 (emphasis in original).) As for invalidity based on failure to name an inventor, the court explained that this basis did not appear in Crimson's initial or supplemental invalidity contentions. Nor did Crimson "offer[ ] any explanation as to why it did not timely raise [either of] these defenses." ( Id. at 3.) Because Crimson had put Peerless on notice of the other three invalidity bases (failure to disclose the best mode, obviousness, anticipation), however, the court determined in its October 2 Order that Crimson could proceed on those bases in its renewed motion for summary judgment. (Dkt. 331 at 3-4.)

Crimson has moved this court to reconsider its October 2 Order barring it from asserting the on-sale bar doctrine and failure to name an inventor as bases for invalidity of the '850 patent. Crimson argues that it could not have had all necessary information to bring these invalidity contentions because the contentions were due "prematurely and well before Plaintiff's (still anticipated) compliance with Local Patent Rule 2.1[, ] which requires Plaintiff to provide, with specificity, all documents which show public display or offers to sell products using the invention prior to the patent application." (Dkt. 349 ¶ 3.) It also argues that Peerless has been obstinate in its refusal to disclose certain documents in discovery that would have allowed Crimson to discover those bases. (Dkt. 349 ¶¶ 1-2.) Additionally, Crimson argues that it did not learn much of the information necessary to formulate these invalidity contentions until the deposition of Dr. Genady Plavnik (the patent inventor Peerless allegedly failed to name) on May 31, 2013. ( Id. ) Crimson notes that Peerless had initially subpoenaed this deposition to take place earlier but cancelled it after Plavnik issued his statement. ( Id. at ¶ 13.) Crimson now requests leave to supplement its invalidity contentions once it completes all necessary discovery (much of which it asserts Peerless has delayed in providing), and asserts that such leave is appropriate given various outstanding discovery requests. ( Id. at ¶ 35.) In the alternative, if the court does not grant Crimson leave to supplement its invalidity contentions, Crimson seeks to have Peerless barred from relying on any date of conception prior to the date of the provisional patent application that formed the basis of the '850 patent (October 14, 2005). ( Id. at ¶ 36.) It explains that this remedy would be appropriate because there "must be a consequence for Plaintiff's utter disregard for its discovery obligations and the obligation to supplement discovery responses." ( Id. )

LEGAL STANDARD

Federal Rule of Civil Procedure 54(b) states that a court may reconsider an interlocutory ruling "at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed.R.Civ.P. 54(b). Motions for reconsideration serve the limited purpose to correct manifest errors of law or fact or to present newly discovered evidence. See Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir. 1987). A motion to reconsider serves an important function where the "court has misunderstood a party, where the court has made a decision outside the adversarial issues presented to the court by the parties, where the court has made an error of apprehension (not of reasoning), where a significant change in the law has occurred, or where significant new facts have been discovered." Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011), overruled on other grounds, Hill v. Tangherlini, 724 F.3d 965 (7th Cir. 2013) (citing Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990)).

Local Patent Rule 3.1 provides that a party asserting invalidity of a claim must serve final invalidity contentions before the close of discovery. Local Patent Rule 3.4 governs the amendment of final invalidity contentions and provides that "[a] party may amend its Final... Invalidity Contentions only by order of the Court upon a showing of good cause and absence of unfair prejudice to opposing parties, made promptly upon discovery of the basis for the amendment." N.D.Ill. L.P.R. 3.4; see also O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366-67 (Fed. Cir. 2006); see generally Judge Matthew Kennelly & Edward D. Manzo, Northern District of Illinois Adopts Local Patent Rules, 9 J. MARSHALL REV. INTELL. PROP. L. 202, 216 (2010) ("Parties are not locked irrevocably into their final contentions. To amend them, however, a party must obtain leave of court on a showing of good cause and the absence of unfair prejudice to opposing parties."). Determining whether a party has satisfied the good cause requirement is within the court's discretion. See MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1380 n.5 (Fed. Cir. 2005); Speedtrack, Inc. v. Endeca Techs., Inc., Nos. 2012-1319, 2012-1402, 524 F.Appx. 651, 659 (Fed. Cir. Apr. 16, 2013) (Table) ("Decisions enforcing local rules in patent cases are reviewed for an abuse of discretion.").

The on-sale bar invalidity contention applies if a patent was "in public use or on sale in this country more than one year prior to the date the patent application is filed." See Leader Techs., Inc. v. Facebook, Inc., 678 F.3d 1300, 1305 (Fed. Cir. 2012) (quoting 35 U.S.C. § 102(b));[4] N.D.Ill. L.P. R. 2.3(b)(1) ("Prior art under 35 U.S.C. § 102(b) shall be identified by specifying the item offered for sale or publicly used or known, the date the offer or use took place or the information became known, and the identity of the person or entity which made the use or which made and received the offer, or the person or entity which made the information known or to whom it was made known.").

A patent may also be invalid for failure to name an inventor. See Pannu v. Iolab Corp., 155 F.3d 1344, 1349-50 (Fed. Cir. 1998); N.D.Ill. L.P.R. 2.3(b)(1) ("Prior art under 35 U.S.C. § 102(f) shall be identified by providing the name of the person(s) from whom and the circumstances under which the invention or any part of it was derived.").[5]

ANALYSIS

I. Motion to ...


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