Fees Denied to K2 in Short Fat Ski Case

The case is Paul N. Nelson v. K2 Inc., Cause No. C07-1660RSL. My previous posts, explain that plaintiff Nelson lost his priority date claimed in U.S. Patent No. 5,603,522 on written description grounds, and then lost summary judgment on his invalidity defense based on allegedly "experimental sales." K2 moved for attorneys fees. In an order denying fees, Judge Lasnik reasoned as follows:

"Prior to commencing this litigation, plaintiff was under no obligation to accept defendant’s (or Volant’s) opinion regarding the validity of United States Patent No. 5,603,522 (the ‘522 patent). Plaintiff had successfully marketed and licensed the invention to a number of sophisticated entities, including K2, and had always maintained that the ‘522 patent was entitled to its earliest claimed priority date. Determining the correct priority date required the Court to evaluate the range and "blaze mark" cases and to consider the policy implications of requiring too much or too little specificity from an inventor. Plaintiff was entitled to a judicial determination of this important issue and was not required to abandon the ‘522 patent simply because his competitors challenged its validity. Because the lawsuit was not baseless or frivolous at its inception, plaintiff’s prosecution of his claims does not justify an award of attorney’s fees under 35 U.S.C. § 285."

Judge Lasnik went on to explain that "the closer question" was whether the prosecution of the case since the first SJ order on written description grounds, October 15, 2008, should be characterized as "exceptional." This issue arose because at oral argument, plaintiff’s counsel apparently stated "we’re out of here . . . we lose" if the Court granted K2's first SJ motion.

Attempting to explain these statements, plaintiffs presented evidence regarding settlement negotiations between the parties, arguing that the fees defendants incurred after the Court’s priority date ruling resulted from K2's own "strategic choices." This evidence was called into question by declarations submitted by K2.

Explaining that "[f]ee disputes should not devolve into mini-trials," Judge Lasnik denied K2's motion, noting that "[i]t is clear from either version of events that plaintiff took significant, albeit unsuccessful, steps to resolve this case in an appropriate and timely manner."

Indeed, plaintiff offered a "walk-away" settlement within days of receiving the Court’s priority date ruling. This was rejected by K2 because they believed the settlement should come with a payment of attorneys fees.

Noting further that plaintiff's experimental use defense was "not well supported," Judge Lasnik said that the weak defense could not serve as basis for fees where "defendants opted to continue the litigation" following the "walk away" proposal.

This is a reminder that continuing litigation purely for the recovery of attorneys fees is almost always a bad idea. The better route is to simply accept your hard-fought victory and move on. After all, this is America, where the default rule is that each party should bear their own attorneys fees, win, lose, or draw.nelsonK2FeeOrder.pdf

Potato Case Stays in Seattle

In the case Pace International LLC v. Industrial Ventilation, Inc., 08-1822-RSL, Judge Lasnik recently denied the Defendant's motion to transfer the case to the District of Idaho.

This case involves allegations of infringement of a patent owned by Xeda International, S.A., a French Corporation (also a plaintiff). Defendants in this case provide sprout-inhibiting products and services to potato growers and operators of potato storage facilities. Pace is based in Seattle and is the exclusive United States licensee of Xeda’s patent, U.S. 6,723,364. Defendants are all Idaho corporations. The allegedly infringing product is called Sprout Torch.

Neither party disputed jurisdiction or whether the action could properly be brought in either district (Washington or Idaho), so the Court's decision involved a classic application of the forum non conveniens doctrine.

In denying the motion, Judge Lasnik reasoned as follows:

1. Location of Relevant Events

The initial distribution of 1,4Group’s allegedly infringing product, Sprout Torch,
occurred in Idaho. IVI, a customer of 1,4Group, has offices in both Idaho and the Eastern District of Washington from which it has sold Sprout Torch. Defendants deny that they have ever sold products “that contain eugenol in Western Washington.” Motion at 2-3. Because the focus of this litigation is the allegedly infringing conduct of defendants, the “hub of activity” is where defendants performed the patented process. See Amazon.com v. Cendant Corp., 404 F. Supp.2d 1256, 1260 (W.D. Wash. 2005). In this case, both Idaho and the Eastern District of Washington saw accused activity, with a preponderance of the relevant events occurring in, or directed from, Idaho.

There are, however, other allegations and claims involved in this litigation which arose, at least in part, in the Western District of Washington. Plaintiffs allege that defendants’ conduct was willful because they gave notice of the alleged infringement more than three years before this suit was filed. Defendants, for their part, have asserted that one or more of the claims of Xeda’s patent are invalid under 35 U.S.C. §§ 102, 103, and/or 112. Although the exact nature of this challenge is unclear, some of the statutory counterclaims, such as the § 103(b) “on-sale” bar, would likely involve events that occurred in the Western District of Washington.
Overall, the Court finds that this factor weighs in favor of a transfer to Idaho, despite the fact that relevant events occurred in all three judicial districts under consideration.

2. Familiarity with Governing Law

Only federal claims are asserted in this litigation. This consideration is therefore
neutral.

3. Plaintiffs’ Choice of Forum

This factor is generally given great weight: there is a presumption that plaintiff’s
choice of forum will not be disturbed absent a strong showing that the convenience of the parties and/or the interests of justice warrant a transfer. Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1180 (9th Cir. 2006). Plaintiff Pace International has its principal place of business in this forum and a significant interest in having this dispute resolved here. Plaintiffs’ choice of forum is therefore entitled to significant weight and favors the Western District of Washington.

4. Parties’ Contacts with the Forum

Plaintiff Pace International, the exclusive licensee of Xeda’s patent in the United
States, is based in Seattle. Xeda is a French corporation and defendants are Idaho corporations. Although defendants have no offices in the Western District of Washington, their carefully crafted declarations imply that they sell goods and services to customers here. On the whole, the balance of contacts is fairly even: this consideration is neutral.

5. Contacts Relevant to this Dispute

For the reasons set forth in section 1, this factor weighs in favor of a transfer to
Idaho.

6. Cost of Litigation

The Court has no information regarding the comparative costs of litigation in
Idaho, the Eastern District of Washington, and the Western District of Washington. Defendants have failed to show that this consideration favors transfer.

7. Availability of Compulsory Process

Defendants have identified a number of witnesses in Idaho and the Eastern District
of Washington who would testify regarding the process used to inhibit sprout growth and possible damages. Motion at 6-7. Contrary to defendants’ unsupported assertion, some of these witnesses are subject to the subpoena power of this Court. Trial subpoenas may issue under Rule 45 to a party and a party’s officers, including Frank Bushman and Jerry Bartels. The Court also has discretion to compel the attendance of witnesses who reside, work, or regularly transact business in Washington, including IVI’s employees in Pasco, Washington. See Rule 45(c)(3)(A)(ii) and Rule 45(c)(3)(B)(iii). The Court is willing to assume that some of the Idaho witnesses do not regularly transact business in Washington and cannot, therefore, be compelled
to attend trial under Rule 45. Nevertheless, a transfer of venue to Idaho would simply change the group of witnesses over whom the court lacks subpoena power: witnesses in Seattle and Pasco fall outside the 100 mile reach of the federal courthouses in Boise, Couer d’Alene, Pocatello, and Moscow. This consideration is neutral.

8. Access to Sources of Proof

Convenience of witnesses is a key consideration in the § 1404(a) analysis. See,
e.g., 15 Charles Alan Wright, et al., Federal Practice and Procedure § 3851, at 415 (2d ed. 1986). Unfortunately, the witnesses in this case are spread across three judicial districts. The choice of one venue will necessarily inconvenience the witnesses in the other two. Because plaintiffs have not identified individuals who are likely to testify in this matter, the Court will assume that there are more witnesses in Idaho, the headquarters of both defendants, than there are in the Eastern District of Washington or the Western District of Washington. The documents that will be relevant to this litigation are concentrated in France, Seattle, Boise, and Pasco. Although the advent of electronic discovery has reduced the burdens associated with actually producing documents to an opposing party, the culling of the party’s files and, if warranted, the initial selection process are more easily accomplished where the documents are stored. Because two of the named parties are headquartered in Idaho and the focus of this litigation is defendants’ conduct, the Court assumes that more relevant documents will be found in the District of Idaho than in either of the Washington districts. This consideration weighs in favor of a transfer to Idaho.

9. Related Litigation

Neither party has identified pending litigation related to Xeda’s patent. This
consideration is neutral.

10. Relative Congestion

According to the most recent reports regarding the Judicial Business of the United
States Courts, during the twelve-month period ending September 30, 2008, the median time interval from filing a civil case to disposition was 7.1 months in the Western District of Washington, 8.1 months in the Eastern District of Washington, and 11.0 months in the District of Idaho. See http://www.uscourts.gov/judbus2008/contents.cfm, Table C-5. The Eastern District of Washington and the District of Idaho also have significantly higher percentages of cases pending for three years or more. See http://www.uscourts.gov/judbus2008/contents.cfm, Table C-6. To the extent that these statistics accurately measure congestion (which is debatable), this district has a clear advantage.

11. Public Interest in Local Adjudication

Both the District of Idaho and the Western District of Washington have an interest
in adjudicating the commercial rights and obligations of their corporate citizens. The Eastern District of Washington has very little interest in this dispute.

Thus, as is often the case, the convenience of defendants and their witnesses is illserved by plaintiffs’ choice of forum. Because defendants may not rely on their ties to both Idaho and the Eastern District of Washington as a counterweight to plaintiffs’ contacts with the Western District, the Court has not considered defendants’ presence in the Eastern District. (footnote omitted) Although the weight of relevant contacts favors a transfer to the District of Idaho, plaintiffs’
documents and witnesses are in this district and a transfer would simply shift, rather than eliminate, the inconvenience of litigation. Such a result would be inappropriate. See Decker Coal, 805 F.2d at 843. In addition, past performance suggests that this case will be resolved more quickly in this district. The motion to transfer is therefore DENIED.

Plaintiff Ordered to Produce More Specific Infringement Contentions

The Plaintiff in the case Gebr. Tigges Gmbh & Co. KG v. EYS Metal Sanayi Ltd. (C07-1673) (Lasnik, J.) was ordered to produce more specific infringement contentions in response to the Court's scheduling order calling for "preliminary infringement contentions."

The order states as follows:

The Local Rules for the Western District of Washington do not currently [NOTE: I think the key word from our Chief Judge here is "currently"] define requirements for preliminary infringement contentions. As a guideline, however, many courts, including this Court, look to the Patent Local Rules for the Northern District of California and case law interpreting the rules. See, e.g., McKesson Info. Solutions LLC v. Epic Sys. Corp., 242 F.R.D. 689, 695 n.1 (N.D. Ga. 2007) (stating that decisions of the U.S. District Court for the Northern District of California provide persuasive authority). These rules require PICs to identify “specifically where each element of each asserted claim is found within each Accused Instrumentality” and to declare whether the element “is claimed to be literally present or present under the doctrine of equivalents.” U.S. Dist. Ct. N.D. Cal. Patent LR 3-1(c-d). The courts in the Northern District of California have interpreted this rule as requiring that PICs: reflect “all facts known to [the plaintiff] including those discovered in their Fed. R. Civ. P. 11 pre-filing inquiry,” and contain sufficient detail regarding the plaintiff’s theory of infringement “‘to provide defendants with notice of infringement’ beyond the claim language itself.”

*** (citations omitted)

This Court follows this reasoning because specificity in disclosure responds to the objectives underlying preliminary infringement and invalidity contentions: to streamline discovery and to require both parties “to crystallize their theories of the case early in litigation.” O2 Micro Int’l, Ltd. v. Monolithic Power Sys. Inc., 467 F.3d 1355, 1364-1366 (Fed. Cir. 2006) (upholding under the Federal Rules of Civil Procedure the validity of the Northern District of California’s local patent rules’ requirement that “both the plaintiff and the defendant in patent cases . . . provide early notice of their infringement and invalidity contentions”).

So the take away point from this post is that the WDWA tends to follow practices from the ND of Cal. in terms of local patent practice and in particular, the disclosures and contentions required by the local rules from the ND of Cal., as incorporated into specific cases by judges in this district.
EYSPICorder.pdf
LasnikScheduleOrderPatentCase.pdf