Olaf Sööt Design, LLC v. Daktronics, Inc.
| Decision Date | 17 July 2018 |
| Docket Number | 15 Civ. 5024 (RWS) |
| Citation | 325 F.Supp.3d 456 |
| Parties | OLAF SÖÖT DESIGN, LLC, Plaintiff, v. DAKTRONICS, INC. and Daktronics Hoist, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
TROUTMAN SANDERS LLP, 875 Third Avenue, New York, NY 10022, By: James M. Bollinger, Esq., Timothy P. Heaton, Esq., Phoenix S. Pak, Esq., Katherine Harihar, Esq., Attorneys for Plaintiff.
BLANK ROME LLP, 405 Lexington Ave, New York, NY 10174, By: Kenneth L. Bressler, Esq., BLANK ROME LLP, 717 Texas Avenue, Suite 1400, Houston, TX 77002, By: Russel T. Wong, Esq., Linh Bui, Esq., Attorneys for Defendants.
ROBERT W. SWEET, District JudgeDefendants Daktronics, Inc. and Daktronics Hoist, Inc. ("Daktronics" or the "Defendants") move for summary judgment on the issue of willful infringement, a claim that was brought by Plaintiff Olaf Sööt Design, LLC ("OSD" or the "Plaintiff"). Defendants also move for sanctions under 28 U.S.C. Section 1927 in response to Plaintiff’s Rule 37 motion for relief based on alleged discovery misconduct. For the reasons set forth below, Defendants' motion for summary judgment is granted. Plaintiff’s motion for Rule 37 sanctions is denied. Defendants' cross-motion for sanctions under 28 U.S.C. Section 1927 sanctions is denied.
The following factual background is set forth only as necessary to resolve the instant motions. A comprehensive factual background detailing the '485 Patent infringement claims, this Court’s claim constructions, and the denial of Defendants' summary judgment motion can be found in prior opinions of the Court. See Olaf Soot Design, LLC v. Daktronics, Inc., 220 F.Supp.3d 458, 462 (S.D.N.Y. 2016), reconsideration denied, No. 15 Civ. 5024 (RWS), 2017 WL 2191612 . Familiarity with these opinions, as well as the facts of this case, is assumed.
The '485 Patent covers a winch system designed to move large theatre scenes on and off stage quickly and efficiently, replacing the cumbersome counterweight systems that came before it. Olaf Soot Design, LLC v. Daktronics, Inc., 220 F.Supp.3d at 458.
On June 25, 2015, Plaintiff, an engineering and design company specializing in the performing arts, brought this action alleging patent infringement as to U.S. Patent No. 6,520,485 ("the '485 Patent") against Defendants, two corporations engaged in the manufacture and sale of theatre rigging equipment and winch systems.
On October 26, 2016, after hearing Plaintiff’s motion for claim construction and Defendants' motion for summary judgment, the Court construed twelve claim constructions on the '485 Patent and denied Defendants' summary judgment motion on the issue of non-infringement. Dkt. 72.
On May 17, 2017, Defendants' motion for reconsideration on this Court’s denial of summary judgment was denied. Dkt. 137.
On October 26, 2017, Plaintiff’s motion to amend its complaint to add the claim of willful infringement which is now before this Court was granted. Dkt. 176.
On January 30, 2018, Defendants moved for partial summary judgment on the basis that they had not willfully infringed on the '485 Patent. Dkt. 200. The same day, Plaintiff moved for relief under Rule 37, alleging non-compliance with discovery obligations.
On February 22, 2018, in response to Plaintiff’s Rule 37 motion, Defendants cross-moved this Court for sanctions under 28 U.S.C. § 1927, requesting "costs and attorney’s fees in responding to [Plaintiff’s] Motion for Relief under Fed. R. Civ. P. 37." Dkt. 223, at 1.
On March 14, 2018, Defendants' motions for partial summary judgment, Plaintiff’s motion for Rule 37 relief, and Defendants' motion for Section 1927 sanctions were heard and marked fully submitted.
Summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The relevant inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. 2505. A court is not charged with weighing the evidence and determining its truth at the summary judgment stage. Rather, it must determine whether there is a genuine issue for trial. Westinghouse Elec. Corp. v. N.Y.C. Transit Auth., 735 F.Supp. 1205, 1212 (S.D.N.Y. 1990) (quoting Anderson, 477 U.S. at 249, 106 S.Ct. 2505 ). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505 (emphasis in original).
Federal Rule of Civil Procedure 37(b) provides for penalties against parties that "fail to obey an order to provide or permit discovery." Fed. R. Civ. P. 37(b)(2)(A)(v). When such a finding is made, district courts have "broad discretion in fashioning an appropriate sanction" under Rule 37. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002) ; Fed. R. Civ. P. 37(b)(2)(A).
When discovery orders are disobeyed, courts may strike pleadings, stay proceedings, hold parties in contempt of court, render a default judgment, or draw an adverse factual designation against the disobeying party. Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii).
An adverse factual designation may be appropriate where a party knowingly fails to produce relevant evidence despite having control over that evidence, and an obligation to produce the same. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).
A court must "consider the extent to which the prevailing party has been prejudiced by the defaulting party’s noncompliance and must ensure that any sanction imposed is just and commensurate with the failure to comply." Doug’s Word Clocks.com Pty Ltd. v. Princess Int'l, Inc., 323 F.R.D. 167, 174 (S.D.N.Y. 2017) (internal citations and quotation marks omitted). However, dismissal can be "not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a sanction." Agiwal v. Mid Island Mortg. Corp., 555 F.3d 298, 303 (2d Cir. 2009) (quoting Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976) ).
Additionally, Rule 37 provides that, "[i]nstead of or in addition to the orders above, the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust." Fed. R. Civ. P. 37(b)(2)(C).
28 U.S.C. Section 1927 authorizes sanctions where "an attorney so multiplies proceedings and engages in vexatious conduct in bad faith." In re Auction Houses Antitrust Litig., 00 Civ. 0648 (LAK) (RLE), 2004 WL 2624896, at *5, 2004 U.S. Dist. LEXIS 23351, at *18 (S.D.N.Y. Nov. 17, 2004) ; 28 U.S.C. § 1927. A federal District Court has the authority, when an attorney’s conduct crosses the line from "misunderstanding, bad judgment, or well-intentioned zeal," to frivolousness and harassment, to assess costs, including attorneys' fees, against that attorney. Veneziano v. Long Island Pipe Fabrication & Supply Corp, 238 F.Supp.2d 683, 694 (D.N.J. 2002) ; 28 U.S.C. § 1927.
In order "to willfully infringe a patent, the patent must exist and the accused infringer must have knowledge of it." State Indus., Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236 ; see also Investment Technology Group, Inc. v. Liguidnet Holdings, Inc., 759 F.Supp.2d 387, 410 (S.D.N.Y. 2010). It is well-settled that knowledge of the non-infringer’s patent is a necessary element to a claim of willful infringement. See id.; see also Gustafson, Inc. v. Interstates Indus. Prods., Inc., 897 F.2d 508, 511 (Fed. Cir. 1990) () Stickle v. Heublein, Inc., 716 F.2d 1550, 1565 (Fed. Cir. 1983) (); Stryker Corp. v. Intermedics Orthopedics, Inc., 96 F.3d 1409, 1414 (Fed. Cir. 1996).
Knowledge must be shown "by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." Pecorino v. Vutec Corp., 934 F.Supp.2d 422, 450 (E.D.N.Y. Nov. 30, 2012) ; see also Halo Electronics v. Pulse Electronics 136 S.Ct. at 1926. ("A patent infringer’s subjective willfulness, whether intentional or knowing, may warrant enhanced damages[.]"). "Knowledge" is defined for this purpose as "knowledge of the allegedly infringed patent and its claims." Va. Innovation Scis., Inc. v. Samsung Elecs. Co., 983 F.Supp.2d 700, 706 (E.D. Va. 2013) ; Fuzzysharp Techs., Inc. v. Nvidia Corp., 2013 WL 4766877, at *2–3, 2013 U.S. Dist. LEXIS 126989, at *7 (N.D. Cal. Sept. 4, 2013) ; Rembrandt Soc. Media, LP v. Facebook, Inc., 950 F.Supp.2d 876, 882 (E.D. VA. 2013).
Where a judicial determination of willful infringement is made, federal courts have broad discretion to "increase the damages up to three times the amount found or assessed" under 35 U.S.C. 284. The Supreme Court has held that, while district courts are given such discretion "free from [ ] inelastic constraints," enhanced damages "should generally be...
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