Home Gambling Network, Inc. v. Piche

• Decision Date: 30 September 2013
• Docket Number: 2:05-cv-00610-DAE-VCF
• Citation: Home Gambling Network, Inc. v. Piche, 2:05-cv-00610-DAE-VCF (D. Nev. Sep 30, 2013)
• Parties: HOME GAMBLING NETWORK, INC., et al., Plaintiffs, v. CHRIS PICHE, et al., Defendants.
• Court: U.S. District Court — District of Nevada

HOME GAMBLING NETWORK, INC., et al., Plaintiffs, v. CHRIS PICHE, et al., Defendants.

2:05-cv-00610-DAE-VCF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEVADA

DATED: September 30, 2013

ORDER: (1) GRANTING DEFENDANTS' MOTION FOR SUMMARY

JUDGMENT; (2) DENYING PLAINTIFFS' MOTION TO DEFER

Before the Court is the Motion for Summary Judgment (doc. # 312) brought by Defendants Inversiones VS Dos Mil, S.A. d/b/a casinowebcam.com ("CWC"), Chris Piche, and Eyeball Networks, Inc. (collectively, "Defendants") and the Motion to Defer or Deny Defendants' Motion for Summary Judgment (doc. # 323) brought by Plaintiffs Home Gambling Network, Inc. ("HGN") and Mel Molnick (collectively, "Plaintiffs"). After reviewing the motions and the supporting and opposing memoranda, the Court GRANTS Defendants' Motion for Summary Judgment and DENIES Plaintiffs' Motion to Defer.

BACKGROUND

I. Factual Background

On September 1, 1998, the United States Patent and Trademark Office issued Patent No. 5,800,268, entitled "Method of Participating in a Live Casino Game from a Remote Location" (the "Method Patent"), to inventor Mel Molnick, who subsequently assigned all rights in the Method Patent to HGN. (See Doc. # 98 ("FAC") ¶ 12.) In 2003, Molnick, the President of HGN, contacted CWC to license the Method Patent. (Id. ¶ 4.) On November 25, 2003, CWC entered into five license agreements with Plaintiffs, which were superseded by a patent license agreement (the "HGN Contract") on August 10, 2004. (Id. ¶¶ 24, 27.)

The HGN Contract granted Defendants a license to use the Method Patent and, in turn, to grant sublicenses to other companies. (Id. ¶¶ 29-34.) More specifically, the contract gives CWC "a perpetual, exclusive, royalty-free worldwide license to use the Licensed Technology" and the right "to grant sublicenses therein to CWC Resellers, CWC Licensees, and End Users." (Doc. # 111-3 ("HGN Contract") § 2.1.) The HGN Contract also expressly provided that "[n]o further approval or documentation" was "required" from Plaintiffs with respect to the granting of sublicenses. (Id.) The HGN Contract further defines "CWC Software" as "any software owned or licensed by CWC, which CWCmakes generally available to its customers, and which enables CWC and CWC Licensees to provide any games over computer networks to end users, excluding Bingo, Keno, Lottery and all sporting events." (Id. § 1.4 (emphasis added).)

Pursuant to the HGN Contract, CWC used the Method Patent in conjunction with online gambling operations. (See Doc. # 312-5 ("Piche Decl.") ¶ 3.) CWC ran a "live webcam casino" (the "Live Casino"), which functioned like any other casino except that it was outfitted with digital cameras to allow physically remote customers to view and interact with the casino, which was located in Costa Rica, through the internet. (Id.) Players could access the Live Casino through the website www.casinowebcam.com. (Id.) CWC also ran a related business that offered licences to third-party online gaming websites, allowing them to use CWC software to offer live webcam casino gaming without needing to operate their own "live" casinos. (Id.) At all relevant times, CWC's computer servers, which hosted the online games, and the employees of the Live Casino were located in Costa Rica. (Id.; see also FAC ¶¶ 5, 7 (admitting that Defendants are all foreign individuals or entities and that CWC was a Costa Rican business with its principal place of business in Costa Rica); Doc. # 274 ("Beall Decl.") Ex. 1 ¶ 1 (claiming servers recorded time in their local Costa Rica time).)

II. Procedural Background

On July 10, 2006, Plaintiffs filed a First Amended Complaint, alleging, among other things, that CWC infringed their Method Patent through CWC's operation of an online gambling website and its production and distribution of online gambling software, all of which permitted sports betting, lottery, keno, and bingo games. (FAC ¶¶ 88-89.) While recognizing that Defendants had the right to grant sublicenses under the HGN Contract, Plaintiffs assert that CWC improperly sublicensed its software without excluding bingo, keno, lottery, and sports betting. (Id. ¶¶ 112-14.)

On August 10, 2006, Defendants filed a Motion for Summary Judgment on all counts of the First Amended Complaint. (Doc. # 111.) On March 30, 2007, the Court issued an Order Granting in Part and Denying in Part Defendants' Motion for Summary Judgment. (Doc. # 143.) The Court granted Defendants summary judgment as to Count Two (Declaratory Judgment) and Count Seven (Conversion) of the First Amended Complaint. (Id.) The Court denied the motion as to Count One (Patent Infringement), Count Three (Preliminary and Permanent Injunction), Count Four (Accounting), Five (Breach of Contract), and Six (Intentional Interference with Contractual Relationships). (Id.)

Approximately six years later, on February 27, 2013, Defendants filed a second Motion for Summary Judgment, contending that "the record is ripe forsummary judgment on the remaining counts of the complaint." (Doc. # 312 at 2.) On April 12, 2013, Plaintiffs filed a Motion to Defer Defendants' Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56(d) to allow time to complete discovery. (Doc. # 323.) Plaintiffs also filed a Preliminary Response to Defendants' Motion for Summary Judgment Motion. (Doc. # 324.) On May 17, 2013, Defendants filed a reply in support of their Motion for Summary Judgment. (Doc. # 328.)

STANDARD OF REVIEW

Summary judgment is granted under Federal Rule of Civil Procedure 56 when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Porter v. Cal. Dep't of Corr., 419 F.3d 885, 891 (9th Cir. 2005); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). A main purpose of summary judgment is to dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

Summary judgment must be granted against a party that fails to demonstrate facts to establish what will be an essential element at trial. See id. at 323. A moving party without the ultimate burden of persuasion at trial—usually,but not always, the defendant—has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment. Nissan Fire & Marine Ins. Co. v. Fritz Co., 210 F.3d 1099, 1102 (9th Cir. 2000). The burden initially falls upon the moving party to identify for the court those "portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp., 477 U.S. at 323).

Once the moving party has carried its burden under Rule 56, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial" and may not rely on the mere allegations in the pleadings. Porter, 419 F.3d at 891 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)). In setting forth "specific facts," the nonmoving party may not meet its burden on a summary judgment motion by making general references to evidence without page or line numbers. S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003). "[A]t least some 'significant probative evidence'" must be produced. T.W. Elec. Serv., 809 F.2d at 630 (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 290 (1968)). "A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact." Addisu, 198 F.3d at 1134. Further, the Ninth Circuit has"refused to find a 'genuine issue' where the only evidence presented is 'uncorroborated and self-serving' testimony." Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002) (citing Kennedy v. Applause, Inc., 90 F.3d 1477, 1481 (9th Cir. 1996)). "Conclusory allegations unsupported by factual data cannot defeat summary judgment." Rivera v. Nat'l R.R. Passenger Corp., 331 F.3d 1074, 1078 (9th Cir. 2003).

When "direct evidence" produced by the moving party conflicts with "direct evidence" produced by the party opposing summary judgment, "the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact." T.W. Elec. Serv., 809 F.2d at 631. In other words, evidence and inferences must be construed in the light most favorable to the nonmoving party. Porter, 419 F.3d at 891. The court does not make credibility determinations or weigh conflicting evidence at the summary judgment stage. Id.; see also Nelson v. City of Davis, 571 F.3d 924 (9th Cir. 2009) ("[C]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.") (citations omitted). However, inferences may be drawn from underlying facts not in dispute, as well as from disputed facts that the judge is required to resolve in favor of the nonmoving party. T.W. Elec. Serv., 809 F.2d at 631.

DISCUSSION

I. Motion for Summary Judgment

A. Patent Infringement Claim

In their previous Motion for Summary Judgment (doc. # 111), Defendants argued that Plaintiffs' claim for patent infringement failed as a matter of law because CWC had a license to use the Method Patent. In its March 30, 2007 Order Granting in Part and Denying in Part Summary Judgment, the Court observed that, even if the license were a complete defense to use of the Method Patent, it would not necessarily preclude other theories of infringement—namely, infringement of the patentee's exclusive right to import, make, sell, or offer to sell the patented method and inducement of such infringement under 35 U.S.C. § 271(b). (Doc. # 143.) Noting that such infringement theories were novel, the Court left it to Plaintiff...