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Fujitsu Limited v. Tellabs Operations, Inc.

United States District Court, N.D. Illinois, Eastern Division

April 18, 2014

FUJITSU LIMITED, Plaintiff/Counter-Defendant,
v.
TELLABS OPERATIONS, INC., TELLABS, INC., AND TELLABS NORTH AMERICA, INC. Defendants/Counter-Claimants. TELLABS OPERATIONS, INC. TELLABS, INC., AND TELLABS NORTH AMERICA, INC. Third-Party Plaintiffs,
v.
FUJITSU NETWORK COMMUNICATIONS, INC. Third-Party Defendant.

MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge.

On January 6, 2014, Tellabs Operations, Inc., Tellabs, Inc., and Tellabs North America, Inc. (collectively, "Tellabs") moved this court for judgment on the pleadings (Dkt. No. 140) and filed a memorandum in support (Dkt. No. 141, "Tellabs Mem."). In its motion, Tellabs seeks a judgment dismissing Fujitsu Limited ("Fujitsu") and Fujitsu Network Communications, Inc.'s ("FNC") statute of limitations defenses against Tellabs' counterclaims. ( Id. ) According to Tellabs, the defenses pled by Fujitsu and FNC (collectively, "Fujitsu Parties") must fail because based on the parties' pleadings, the Illinois savings clause, 735 ILCS 5/13-207 (West 2014), permits Tellabs to assert counterclaims and third-party claims that may have otherwise been time-barred under applicable statute of limitations. (Tellabs Mem. at 1.) For the reasons set forth below, Tellabs' motion for judgment on the pleadings is granted.

BACKGROUND

Because the facts underlying this on-going, multi-patent, multi-case dispute were discussed in this court's January 30, 2013 order addressing Tellabs' motion to dismiss (Dkt. No. 18), the court will limit its discussion to the facts necessary to decide the current motion.

On April 30, 2012, Fujitsu sued Tellabs alleging patent infringement of four U.S. Patents. (Dkt. No. 1.) After Fujitsu and Tellabs briefed Tellabs' motion to dismiss (Dkt. No. 9), the court, in the January 30, 2013 order (Dkt. No. 18), dismissed Fujitsu's claims, to the extent Fujitsu's claims were based on patents and products litigated in prior cases. ( Id. at 1-2.) However, where Fujitsu's infringement contentions covered new products, the court denied Tellabs' motion to dismiss. ( Id. )

On May 9, 2013, with the benefit of the court's prior order, Tellabs answered Fujitsu's complaint, and asserted counterclaims. (Dkt. No. 54, at 22-66, "Tellabs Ans.") Among these counterclaims are the alleged state law business tort counterclaims at issue here, including alleged misappropriation of trade secrets, business disparagement and defamation and unfair competition. ( Id. at 35-61.) On June 18, 2013, the Fujitsu Parties answered Tellabs' counterclaims and third-party claims, asserting statute of limitations defenses, among others. (Dkt. No. 72, at 22.)

As stated earlier, Tellabs seeks in its motion for judgment on the pleadings, dismissal of the Fujitsu Parties' statute of limitations defenses. The Illinois savings clause, 735 ILCS 5/13-207 (West 2014), on which Tellabs bases its motion, states in pertinent part:

A defendant may plead a set-off or counterclaim barred by the statute of limitation, while held and owned by him or her, to any action, the cause of which was owned by the plaintiff or person under whom he or she claims, before such set-off or counterclaim was so barred, and not otherwise.

Id. Tellabs argues that when Fujitsu filed its complaint (Dkt. No. 1) in this action on April 30, 2012, that filing triggered 735 ILCS 5/13-207 which overcomes as a matter of law the Fujitsu Parties' statute of limitations defenses. (Tellabs Mem. at 3-4.)

In response, Fujitsu argues that judgment on the pleadings is inappropriate because of the Illinois borrowing statute, 735 ILCS 5/13-210 (West 2014). That statute provides:

When a cause of action has arisen in a state or territory out of this State, or in a foreign country, and, by the laws thereof, an action thereon cannot be maintained by reason of lapse of time, an action thereon shall not be maintained.

Id. The Fujitsu Parties argue that the Illinois savings clause does not control unless Tellabs can demonstrate its business tort claims arose in Illinois. (Dkt. No. 149, at 5-7, "Fujitsu Resp.") If the claims arose in another state, the Fujitsu Parties argue the Illinois borrowing statute mandates incorporating that state's statute of limitations, which could potentially bar Tellabs' counterclaims. ( Id. ) Fujitsu contends that, because Tellabs has not ruled out this scenario, Tellabs cannot satisfy the standard for judgment on the pleadings, namely establishing beyond a doubt that the Fujitsu Parties' statute of limitations defense must fail. ( Id. )

Additionally, Fujitsu argues that even if the Illinois savings clause applies, Tellabs' pleadings do not establish the factual pre-requisites for applying that statute. (Fujitsu Resp. at 3.) In particular, the Illinois savings clause requires that a plaintiff's original claim arise before the defendant's counterclaim became barred by the applicable statute of limitations. Canada Life Assurance Co. v. Salwan, 353 Ill.App.3d 74, 80 (Ill.App.Ct. 1st Dist. 2004). Put another way, Fujitsu asserts that its patent infringement claims must have arisen before Tellabs' counterclaims became time-barred under the relevant statute of limitations. Id. In response, Tellabs argues that the pleadings have satisfied this requirement, because all Fujitsu's patent infringement claims date back to the 2005 Verizon bid, while Tellabs' counterclaims stem from conduct Fujitsu subsequently allegedly engaged in. (Dkt. No. 153, at 4-5, "Tellabs Reply".)

Finally, the Fujitsu Parties argue the Illinois savings clause cannot be applied to FNC specifically or its statute of limitations defenses because Tellabs' claims against FNC are third-party, not counterclaims, and the Illinois savings clause only operates to save counterclaims. (Fujitsu Resp. at 3-4.) Tellabs responds that the Illinois savings clause applies to its claims against FNC, regardless of FNC's third-party status here. (Tellabs Reply at 5-6.) Tellabs argues that this case is "inherently connected and is ...


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