Transwitch Corp. v. Galazar Networks, Inc., No. CIV.A. 03-10228-NG.
| Decision Date | 01 March 2005 |
| Docket Number | No. CIV.A. 03-10228-NG. |
| Citation | 377 F.Supp.2d 284 |
| Parties | TRANSWITCH CORPORATION, Plaintiff, v. GALAZAR NETWORKS, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Counsel for Plaintiff TranSwitch Corporation is: John J. Cotter, Kirkpatrick & Lockhart Nicholson Graham, LLP, Boston.
Counsel for Defendant Galazar Networks, Inc. at the time of those Orders were: Stephen G. Rudisill, Gary E. Hood, Russell J. Genet, Jenkens & Gilchrist, Chicago, IL, U. Gwyn Williams, Goodwin Procter LLP, Exchange Place, Boston.
ORDER entered adopting Report and Recommendations re [docket number 59] on the dismissal of infringement claims [docket number 42] without prejudice. Transwitch, via a motion to amend seeks to eliminate all of the counts in the original complaint (patent infringement counts) and then to introduce new counts (False advertising and unfair competition). In addition, Transwitch has moved to dismiss Galazar's counterclaim for a declaratory judgment [docket number 42] that it is not infringing. While Magistrate Judges have the authority to decide motions to amend outright, Magistrate Judge Bowler appropriately treats the portion of Transwitch's motion to amend that seeks to drop the patent infringement claims as a motion to dismiss and therefore issues a Report and Recommendation on it, as well as on docket # 42, Transwitch's affirmative motion to dismiss Galazar's counterclaims which involve the same issue. As to the dispositive motion, the motion to dismiss patent infringement claims, I adopt the Report and Recommendation and enter an order dismissing these claims without prejudice. As to the non dispositive motion, the motion to amend, I conclude that the Magistrate Judge's order is neither clearly erroneous or contrary to law under Fed. R. Civ. Pro. 72(a).
BOWLER, United States Magostrate Judge.
Pending before this court are the above styled motions. After holding a hearing and directing the parties to conduct further discussions, the parties advised this court of their inability to resolve the matter between themselves. Accordingly, the motions (Docket Entry # 30, 40 & 42) are ripe for review.
On February 4, 2003, plaintiff Transwitch Corporation ("Transwitch"), a Delaware business that designs high speed semiconductor products for use by manufacturers of telecommunications equipment,2 filed a three count patent infringement action against defendant Galazar Networks, Inc. ("Galazar"), a Canadian corporation that develops semiconductor products for use in the telecommunications industry. One such semiconductor product is the MSF 250, described in advertisements as a "system-on-a-chip" framer that offers multiple voice, leased line and data service. (Docket Entry # 41, Ex. A(1) & A(2)). The complaint alleges that Galazar infringes each of the three patents in suit3 by making and selling communications components covered by the patents "including, but not limited to, the MSF 250." (Docket Entry # 1, ¶¶ 13, 19 & 25). The only infringing product that the complaint identifies is the MSF 250.
Galazar's original answer contained a counterclaim with two counts. Count I sought a declaratory judgment of noninfringement, invalidity and unenforceability of the patents in suit. Count II was an unfair competition claim.
At present, Transwitch seeks leave to amend the complaint to eliminate the patent infringement claims and bring a single count for false advertising and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) ("section 1125(a)"). (Docket Entry # 40). Indeed, Transwitch states, in no uncertain terms, that it ." (Docket Entry # 41, p. 4). Galazar, however, wishes to press forward with Count I of the counterclaim alleging noninfringement, invalidity and unenforceability and also seeks leave to file an amended answer adding a third counterclaim for sham litigation under the antitrust laws. (Docket Entry # 30). Transwitch, in turn, moves to dismiss Count I of the counterclaim as nonjusticiable. (Docket Entry # 42).
Transwitch based the allegations of infringement in the original complaint upon the description of the MSF 250 published on Galazar's website in January 2003. The website described the MSF 250 as, inter alia, "the world's first device to simultaneously support mixed High-Order (STS/VC paths) and Low-Order (VT/VC paths) Virtual Concatenation (VC) with Link Capacity Adjustment Scheme (LCAS)." (Docket Entry # 41, Ex. B). According to Transwitch, the statement, as well as others on the website, conveyed a reasonable belief that the MFS 250 product was capable of cross connecting signals at the virtual tributary level.
After Transwitch filed suit, Galazar's counsel declined Transwitch's entreaty to describe its noninfringement position with greater clarity than the description provided in an April 17, 2003 filing. The filing asserted noninfringement because the Galazar product, i.e., the MSF 250 product, "does not cross-connect any signals that contain any Al or A2 overhead bytes," which the patents in suit require and subsume within the definition of "`substantially SONET formatted signals.'" (Docket Entry # 9, pp. 1 & 5). Galazar accurately explained that the patents in suit uniformly define the key term, "substantially SONET formatted signals," as "a signal in SONET form having its virtual tributaries as well as at least the A1, A2, H1, H2, and H4 overhead bytes defined." (Docket Entry # 9, p. 5). Galazar stressed that the Galazar product did not fall within this definition because it did not cross connect "signals that contain any A1 or A2 overhead bytes." (Docket Entry # 9, p. 5).
In lieu of immediately dismissing the patent infringement claims, Transwitch served Galazar with discovery requests in the spring of 2003. On June 9, 2003, Transwitch provided Galazar with claim construction charts that only generally depicted the claim language and the corresponding features of the MSF 250 product. In September 2003, after raising initial objections, Galazar allowed Transwitch's technical consultant access to Galazar's confidential material. In October 2003, after the consultant reviewed the documents, Transwitch complained that the document production did not completely describe the MSF 250 product. In response, Galazar produced additional documentation in late November 2003 including, for the first time, the MSF 250 Datasheet, according to Transwitch.
Galazar submits that the relevant legal framework to review the portion of Transwitch's motion that seeks dismissal of the patent infringement counts is Rule 41(a)(2), Fed.R.Civ.P. ("Rule 41(a)(2)"). Transwitch contends that Rule 15(a), Fed.R.Civ.P. ("Rule 15(a)"), applies to the motion to amend.
Galazar further urges this court to dismiss the patent infringement counts with prejudice and urges that the dismissal should apply to "all accused Galazar products." With respect to the false advertising count, Galazar submits that the claim is futile and unduly prejudicial and that Transwitch unduly delayed bringing the claim and acted with an improper motive. This court addresses the arguments seriatim.
By its terms, Rule 41(a)(2) applies to the dismissal of "an action." Fed.R.Civ.P. 41(a)(2). Consequently, the weight of authority is that Rule 15(a), as opposed to Rule 41(a)(2), applies to an amendment which drops some but not all of the claims in an action. Addamax Corporation v. Open Software Foundation, Inc., 149 F.R.D. 3, 5 (D.Mass.1993) (); accord Gronholz v. Sears, Roebuck and Co., 836 F.2d 515, 517-518 (Fed.Cir.1987); Chavez v. Illinois State Police, 1999 WL 754681 at * 2 (N.D.Ill. Sept.9, 1999) (); Bragg v. Robertson, 54 F.Supp.2d 653, 660 (S.D.W.Va.1999) (); Bibbs v. Newman, 997 F.Supp. 1174, 1177 (S.D.Ind.1998) ().
In the case at bar, however, Transwitch seeks to drop all of the counts in the original complaint. Review is therefore properly gauged under Rule 41(a)(2).5
A decision under Rule 41(a)(2) is "committed to the discretion of the court." Holbrook v. Andersen Corporation, 130 F.R.D. 516, 519 (D.Me.1990) (discussing Rule 41(a)(2)). The "principal consideration is whether the dismissal would prejudice the defendant." Schwarz v. Folloder, 767 F.2d 125, 129 (5th Cir.1985) (). Stated otherwise, dismissal serves the "basic purpose" of Rule 41(a)(2) "so long as no other party will be prejudiced." Holbrook v. Andersen Corporation, 130 F.R.D. at 519.
Unfortunately for Galazar, "Neither the prospect of a second suit nor a technical advantage to the plaintiff should bar the dismissal." Puerto...
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