Amended Pleading (Rule 15(a)(1)) vs. Supplemental Pleading (Rule 15(d)) -- Are they different?

Yes.

MacNeil IP (an Illinois company) sent a cease and desist letter to Kramer America (a Florida company) informing Kramer of a number of patents owned by MacNeil and asserting that Kramer infringed one of those patents.  As is the risk whenever you send a letter accusing another of infringement, Kramer responding by filing a declaratory judgment lawsuit, asking the Court to declare that Kramer did not infringe the patent MacNeil had accused it of infringing.

MacNeil responded by doing two things.  First, it provided Kramer a covenant promising that it would not sue Kramer for the patent MacNeil previously accused Kramer of infringing.  This had the net effect of removing subject matter jurisdiction as no controversy existed between the parties related to that patent any longer.  (For a discussion on this approach, see my post on Super Sack.)  MacNeil also filed a patent infringement case in Illinois, charging Kramer with infringing some of MacNeil's other patents.

Kramer responded to the covenant not to sue by filing an Amended Complaint, pursuant to Fed. R. Civ. P. 15(a)(1), asking now for a declaration that it did not infringe the patents MacNeil sued over in Illinois.  MacNeil objected, and asked the Court to strike the "Amended Complaint" as not being an amended complaint at all.  Instead, MacNeil argued the "Amended Complaint" was a "Supplemental Complaint" pursuant to Rule 15(d), which Kramer needed leave of court to file.

Rule 15(a)(1) allows a party to file an amended pleading, without leave of court, within a 21-day time period (which Kramer was within).  Rule 15(d), on the other hand, allows a party to file a supplemental pleading setting out any transaction, occurrence, or event that happened after the original pleading was filed.  But a party must first receive permission from the Court to file such a supplemental pleading.

MacNeil further argued that the "Amended Complaint" could not supplement the original complaint under Rule 15(d) because, while there was subject matter jurisdiction for the original complaint as, at the time it was filed, there was a controversy between the parties related to the patent at issue therein, there was not subject matter jurisdiction at the time the original complaint was filed related to the other patents because they had not been asserted against Kramer.

The Court refused to strike the Amended Complaint, and instead invited MacNeil to file a motion to dismiss the Amended Complaint under this subject matter jurisdiction analysis.  MacNeil did precisely that.

MacNeil's cease and desist letter stated:

We ... are writing to you concerning the ... vehicle floor mat that you manufacture, sell, offer to sell and import.  MacNeil owns multiple patents directed to vehicle floor trays, including U.S. Patent Nos. 7,401,837; 7,316,847; 7686,370; 7607,713; 7,444,748; 7686,371; and 7,784,848. ....
It has come to our attention that your use, manufacture, sale, offers to sell and importing of the ... mats infringes at least one of the MacNeil IP LLC patents.  See U.S. Patent No. 7,401,837 attached hereto....

While MacNeil provided a covenant not to sue on the '837 patent, MacNeil did sue Kramer for infringement of the '370 and '819 patents.

The issues presented are different for the '370 patent and the '819 patent.  First, the '370 patent is identified in MacNeil's letter.  The '819 is not.  Second, the '819 patent is related to a mechanism for affixing a floor mat to a vehicle floor, and not to a floor tray itself.  Thus, the Court determined that subject matter properly exists for the declaratory judgment case related to the '370 patent.  But the declaratory judgment count concerning the '819 patent (and related trade dress and unfair competition issues) did not present a justiciable issue at the time the complaint was filed because they had not been asserted.

[NOTE: This presents an interesting timing issue to me.  Kramer has subject matter jurisdiction here in Florida on one patent claim.  The day after it filed its declaratory judgment case here, MacNeil filed a patent infringement case in Illinois asserting another patent (not previously identified in its letter).  But MacNeil's letter says that Kramer allegedly infringes "at least one of" MacNeil's patents.  So Kramer amends its complaint to name the two others MacNeil sued on in Illinois.  One of those cases can stick because that patent number happened to be mentioned in the cease and desist letter, but the other can't because it wasn't mentioned?  This seems to give MacNeil grounds to go back to Illinois -- the second filed jurisdiction -- and seek to proceed there on the second patent.  Thus, 2 different court will be addressing the same parties in similar patents at the same time.  Perhaps the next round of motions here will shake that issue out.  We'll see.]

Kramer America, Inc. v. MacNeil IP, LLC, Case No. 6:11-cv-1489, (M.D. Fla. Dec. 8, 2011 (motion to strike amended complaint) Feb. 3, 2012 (motion to dismiss amended complaint)) (J. Presnell)

Is A Patent Claim's Preamble Limiting? Following the Guideposts...

Enpat sued a number of entities (in separate cases) for infringing U.S. Patent No. 6,328,260, a patent related to a wing spar modification kit to be used for strengthening wings on certain amphibious airplanes.  Asking for claim construction, one defendant argued that the preamble of the first independent claim was limiting.  Enpat disagreed, arguing instead that the preamble merely recited an intended use.

The preamble of claim 1 reads:

A modification kit for retrofitting a wing spar on an amphibious airplane, said airplane having a root rib, and said wing spar comprising a wing-spar cap angle that is attached to a wing spar web, said wing spar web having an upper edge and a lower edge and an inboard end that attaches to said root rib, a first series of wing-attach bolt-holes that is provided in said upper edge and a second series of wing-attach bolt-holes that is provided in said lower edge of said wing spar web, wherein said root rib is angled relative to a vertical plane of said amphibious airplanes, and wherein said inboard end of said wing spar has an inboard-end angle that corresponds to an angle of said root rib, said modification kit comprising:

The Court recognized that no litmus test exists for determining whether or not a preamble is limiting.  Instead, a number of "guideposts" should be followed.  If the preamble merely describes "the use of an invention" while the body of the claim sets forth a "structurally complete invention," the preamble is not limiting.  But the preamble may be limiting if (1) the applicant clearly relies on it during prosecution as distinguishing the invention over the prior art; or (2) a particular disputed phrase within the preamble provides the antecedent basis for a limitation within the claim.

After laying out this law, the Court concluded that the '260 patent and its file history did not rely on the preamble language as a basis for distinguishing the invention from the prior art.  The defendant sought to capitalize on a scrivener's error in the claim body language.  The claim body referred to the limitation "said wing spar."  Defendant pointed to the preamble as the only antecedent basis for "wing spar."  While no qualm could be had with that statement, the Court saw through it:

While a cursory reading of claim 1 confirms [Defendant's] statement, a fair reading of claim 1 in the context of the entire Patent reveals that "said wing spar" in the body of claim 1 should read "said wing spar web."  Read without the scrivener's omission of "web," one need not resort to the preamble to find any antecedent basis for the "wing spar" referenced in the body of the claim.

Defendant's second approach was to point to limitations in dependent claim 10 that had their antecedent basis in the preamble.  Enpat agreed.  The Court thus found the preamble limiting only for claim 10 (and not the broader independent claim 1).

Enpat, Inc. v. Shannon, Case No. 6:11-cv-84 (M.D. Fla. Nov. 30, 2011) (J. Presnell)

Prevailing Party for bill of costs -- Look at the overall objective of the litigation

I've previously written about the Voter Verified v. Premier Election Solutions, Inc.  First, Judge Fawsett determined that you can't infringe a surrendered patent.   Later, she determined that one of the claims at issue was invalid for obviousness.

Since then, the parties briefed additional summary judgment issues regarding infringement.  The Court agreed with defendants that a finding of non-infringement of certain claims was appropriate at the summary judgment stage.  The Court also later dismissed one of the defendant's invalidity counterclaims, without prejudice.  The result was that final judgment was entered against the plaintiff finding there was no infringement concerning two of the patents at issue.  Final judgment was also entered against one of the defendants relating to its invalidity counterclaim.  Defendants next filed a Proposed Bill of Costs.

Fed. R. Civ. P. 54(d)(1) provides that a "prevailing party" shall recover its costs.  Allowable costs, per the statute, are:

(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salareis, fees, expenses, and costs of special interpretation services under section 1828 of this title.

Defendants sought costs relating to depositions.  Plaintiff objected, arguing that: (1) Defendants weren't "prevailing parties;" and (2) Defendants hadn't filed the depositions in the Court record, and thus they were not recoverable.  The Court was not persuaded.

Prevailing Party

Determining who is the prevailing party is not a calculation of which side won more of its claims than the other.  Rather, the Court must look at the "relation of the litigation result to the overall objective of the litigation."  The Court dispensed with this step quickly:

The overall objective of the present litigation was for [Plaintiff] to obtain a finding that the Defendants infringed the asserted patents.  While Defendants raised a number of different defenses to [Plaintiff's] allegations and several of those defenses failed, [Plaintiff] did not meet its objective.  In the end, Defendants were found not to have infringed any of the 149 patent claims asserted by [Plaintiff].  Accordingly, Defendants are "prevailing parties" within the meaning of Rule 54(d).

Depositions Need Not Be Filed With The Court To Be Recoverable Costs


A prevailing party need not file a deposition transcript with the Court in order to recover its costs.  Rather, the test is the test defined in the statute -- if the deposition transcript was "necessarily obtained for use in the case," it's recoverable.

Generally, deposition costs of a losing party's witnesses are recoverable.  To avoid the general rule, the losing party must demonstrate that the deposition was not related to an issue in the case at the time of the deposition:

When challenging whether costs are properly taxable, the burden lies with the losing party, unless the knowledge regarding the proposed cost is a matter within the exclusive knowledge of the prevailing party.

Plaintiff didn't carry that burden here, so the costs were recoverable.

Plaintiff's objections to Defendant's bill of costs Overruled.

Voter Verified, Inc. v. Premier Election Solutions, Inc., Case No. 6:09-cv-1968 (M.D. Fla. Oct. 24, 2011) (J. Fawsett)

Judge Lazzara Takes Senior Status -- No More Patent Cases

As many of you already know, Judge Lazzara took senior status on December 16, 2011. As part of this transition, he is no longer presiding over new patent cases.  See his standing order below.

Judge Lazzara Senior Status Standing Order - 811-mc-132-ral

Dear Trademark Owners, Don't Wait 4 Years to Assert Your Unfair Competition Claims

Franchisor Western Sizzlin had a franchisee in Kissimmee from 1995 through 2004.  The location was taken over by Pinnacle Business Partners ("PBP").  While PBP did make royalty payments to Western Sizzlin in 2005, the parties were unable to come to an agreement, and PBP declined to sign a franchise agreement.  Western Sizzlin demanded PBP remove its "Sizzlin Grill" signs at that time due to their similarity to Western Sizzlin's "Western Sizzlin" trademarks.  

Four years later, in November 2009, Western Sizzlin visited the Kissimmee location and saw the signs and decor were the same.  Western Sizzlin demanded royalties and that PBP cease its usage.  Western Sizzlin then sued for trademark infringement as well as unfair competition, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act.  PBP sought summary judgment of the unfair competition, unjust enrichment, and FDUTPA claims as time barred.  Specifically, each of those claims has a four-year statute of limitations, and Western Sizzlin did not sue until 2010 -- five years after it knew of the alleged violations.  Western Sizzlin responded by arguing that there was a dispute as to how much knowledge Western Sizzlin had as to PBP's alleged violations in 2006.  But Western Sizzlin did not offer evidence to support this argument.

As its second argument, Western Sizzlin explained that a PBP representative previously assured Western Sizzlin that PBP would change the signage, but Western Sizzlin did not discover until November 2009 that PBP hadn't.  Thus, PBP should be equitably estopped from asserting the statute of limitations.  The Court did not agree:

Under Florida law, equitable estoppel arises when one party lulls another party into a disadvantageous legal position.  Major League Baseball v. Morsani, 790 So. 2d 1071, 1076 (Fla.2001).  “Equitable estoppel presupposes a legal shortcoming in a party’s case that is directly attributable to the opposing party’s misconduct. The doctrine bars the wrongdoer from asserting that shortcoming and profiting from his or her own misconduct. Equitable estoppel thus functions as a shield, not a sword, and operates against the wrongdoer, not the victim.”  Id.

In this case, the “shortcoming” is that the Plaintiff waited more than four years after learning of the alleged violations before filing suit.  A simple assurance that the sign would be changed could in theory “lull” a party into delaying the filing of suit for the length of time needed to change – or at least remove – the sign, perhaps a few weeks in this scenario.  It would not be enough to lull a party into delaying for more than forty-eight months.  And there is no suggestion that the Defendant somehow prevented the Plaintiff from visiting the restaurant, or even just driving by it, to see if the sign had been changed.  WSC has failed to establish any grounds for the application of equitable estoppel here.

Motion for Summary Judgment granted.

Western Sizzlin Corp. v. Pinnacle Business Partners, LLC, slip op., Case No. 6:10-cv-1452 (M.D. Fla. Nov. 23, 2011) (J. Presnell)

Groupon's daily deals offer only a single price, and thus do not infringe a "plurality of customized price schedules" claim

I've written previously about the eWinWin v. Groupon patent infringement case pending in the Middle District. Essentially, eWinWin's patents (3 of them have been asserted) relate to volume pricing systems and methods in which the price of an item decreases as demand increases.  In other words, as the quantity of an item purchased increases, the price offered to all who have agreed to buy it decreases.  Exemplary of this system is Claim 1 from one of eWinWin's asserted patents (U.S. Patent No. 7,181,419):

A business transaction method, comprising:
     maintaining buyer profiles in a data storage device;
     deriving a plurality of customized price schedules for a product based on at least one buyer profile, each of the plurality of customized price schedules varying in accordance with a quantity of the product ordered from a plurality of deal rooms;
     electronically offering the product for sale in at least one of the plurality of deal rooms, the product being offered in each deal room in accordance with at least one of the plurality of price schedules; and
     displaying a listing of at least one of the plurality of deal rooms in which the product is offered when at least a subset of criteria indicated for a product search matches criteria describing the product.

The Court previously construed the underlined language to mean: 

creating two or more price schedules for a product based on information contained in at least one buyer's profile, each price schedule consisting of a list of two or more prices for the product that vary based on a quantity of the product ordered from two or more deal rooms.

Thus, to survive summary judgment, eWinWin had to offer evidence that Groupon's system created two or more price schedules for a product, and each price schedule had at least two prices.  

eWinWin looked to combine Groupon's daily deal with its Groupon Bucks to satisfy this limitation.  Groupon's daily deal provides a single discounted price for an item if a sufficient number of users sign up for the deal.  Groupon's Groupon Bucks provide users an incentive for referring new users to the Groupon system.  For instance, if you refer a user to Groupon, and that new user buys a Groupon deal, you may get 10 Groupon Bucks.  You could then use those Groupon Bucks to purchase a Groupon deal (including, perhaps, the same deal you referred your friend to).  eWinWin argued that this created 2 prices for the deal: the price your friend paid, and the price you paid (including the discount of your Groupon Bucks).  The Court was not convinced.  The price of the deal never changed -- only the method of payment did.  Furthermore, to the extent there was any price difference (which the Court concludes there was not), the difference was not related to an increase in the quantity of goods sold.  Had your friend purchased the deal without being referred by you, the same quantity of goods would have been sold, and you would have been charged the same amount as your friend.

Summary Judgment granted to Groupon on its non-infringement positions.  Only 1 claim remains -- Groupon's counterclaim that eWinWin infringes one of Groupon's patents.

eWinWin v. Groupon, slip op., Case No. 8:10-cv-2678 (M.D. Fla. Nov. 23, 2011) (J. Bucklew)

Noerr-Pennington Immunity and Trademark Registrations

PODS sued ABF Freight Systems on a number of trademark infringement theories.  PODS owns trademark registrations for the term "PODS", the PODS logo, and "PODS PORTABLE ON DEMAND."  In advertising its competing storage solutions, ABF uses the term "pods" throughout its website.  Additionally, ABF has purchased the "pods" keyword for advertising purposes with Google and other search engines.  In defense, ABF filed a number of counterclaims and affirmative defenses.   At issue here are some of ABF's counterclaims, and one affirmative defense.


Common Law Unfair Competition


ABF asserted as a counterclaim that PODS' lawsuit was unfair competition because PODS "has no objective or subjective basis for believing ... that consumers are likely to be confused by ABF's use of the term 'pod' or 'pods.'"  ABF relied on Ohio law for the proposition that "lawsuits implemented with the design to gain an unfair advantage over a competing business are a basis for a common law suit for unfair competition."  Problem is, as the Court recognized, Florida law requires an unfair competition claim to include two elements:
(1) deceptive or fraudulent conduct of a competitor; and
(2) likelihood of consumer confusion

ABF's reliance on Ohio law didn't cut it, so the Court dismissed this counterclaim (without prejudice, should ABF be able to assert the elements of a Florida common law unfair competition claim).

Sherman Act Violation & Noerr-Pennington Immunity


Next, ABF accused PODS of attempted monopolization in violation of the Sherman Act by registering trademarks for the "generic term" "pods" and asserting those trademarks against competitors.  PODS responded by relying on Noerr-Pennington immunity.

Generally, the First Amendment immunizes a party from liability for petitioning the governement for redress from an injury.  ThisNoerr-Pennington immunity (named after the two cases from which it derives) extends to litigation: "Engaging in litigation to seek an anticompetitive outcome from a court is First Amendment activity that is immune from antitrust liability."  Like most things in the law, there is an exception.  Namely, a sham pleading.  You are immune from liability if you file a lawsuit, except if that lawsuit is a sham pleading.  The test for whether the lawsuit is a sham pleading considers: (1) whether the pleading is objectively baseless; and (2) whether the plaintiff brought the lawsuit did so with a subjective motivation to interfere directly with the business relations of a competitor.

ABF's argument under the sham exception is generally that PODS should know the 'pods' mark is generic, and thus it shouldn't assert its registrations.  The law, however, does not see things that way.  The 'pods' trademark registrations themselves are evidence that the marks are not generic.  ABF may be able to come forward evidence that they have become generic, but until they, they are presumed otherwise.  Indeed, ABF is seeking to cancel PODS's registrations.  Until then, the lawsuit and cease-and-desist letters are not shams.  So Noerr-Pennington immunity applies, and the counterclaim must be dismissed.

Unclean Hands Affirmative Defense


PODS also asked the Court to strike ABF's affirmative defense of unclean hands.  The Court's reasoning for doing so:

In trademark infringement suits, the doctrine of unclean hands requires allegations "specifically related to the trademark which is at issue and not collateral to the trademark itself."  Immuno Vital, Inc. v. Golden Sun, Inc., 49 F. Supp. 2d 1344, 1361 (S.D. Fla. 1997); see also Coca-Cola Co. v. Howard Johnson Co., 386 F. Supp. 330, 335 (N.D. Ga. 1974) (a court in equity may "deny the enforcement of a trademark to one who has used the trademark, itself, as the vehicle of unlawful antitrust activities").  "Merely because a plaintiff has violated the antitrust laws ... does not result in 'unclean hands' on plaintiff's part."  Coca-Cola, 386 F. Supp. at 337
Taken as a whole, ABF's allegations in support of its affirmative defense of unclean hands are intertwined with the allegations in its counterclaims -- that PODS engaged in trademark misuse and violated unfair competition and antitrust laws by sending cease-and-desist letters and filing suit.  Because those activities are not specifically related to the trademark itself, ABF has not properly asserted an unclean hands defense.

Additionally, Noerr-Pennington immunity protected PODS against this affirmative defense.

Motion to dismiss counterclaims and strike affirmative defense granted.

PODS Enterprises, Inc. v. ABF Freight Systems, Inc., Case No. 8:11-cv-84 (M.D. Fla. Oct. 17, 2011) (J. Covington)