Articles Posted in Sanctions

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In a recent high-stakes patent litigation case, a protective order, filed on November 22, 2022, was put in place to safeguard confidential information during the course of the legal proceedings.  The defendant asserted that the plaintiff’s legal team had struggled to adhere to the protective order’s strict guidelines.

The first alleged violation involved a trial transcript containing sealed proceedings, which was sent from an associate at the plaintiff’s law firm, Williams & Connolly, to an associate at Morrison & Foerster, who is representing the plaintiff in separate IPR proceedings. This disclosure took place on July 18, 2023.

The second incident revolves around the plaintiff’s closing slide no. 298, which contained the defendants’ confidential Yesafili formulation. An associate at Williams & Connolly sent this slide to the plaintiff’s in-house counsel and to outside counsel in Canada. From there, the slide was disseminated to other members of the plaintiff’s in-house counsel team and to various international law firms.

The third and perhaps most concerning alleged violation involves the defendants’ BLA and other confidential information. The plaintiff’s in-house counsel sent this sensitive data to the Liad Whatstein firm in Israel, which handles patent litigation. Continue reading

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In a recent development in patent litigation, the district court has granted a motion to dismiss counterclaims in a case involving U.S. Patent No. 10,519,668 (“the ‘668 Patent”). The decision sheds light on the importance of adhering to meet and confer obligations, as well as the consequences of non-compliance.

Background:

The defendants in this case had asserted counterclaims, including declaratory judgments of invalidity and non-infringement of the ‘668 Patent, breach of contract, fraud, unjust enrichment, and constructive trust.  On October 31, 2023, the district court granted the defendants’ Motion for Summary Judgment of non-infringement of the ‘668 Patent, marking a significant milestone change in the proceedings.

Subsequent Events:

Following the district court’s decision, the defendants’ counsel sought to engage in a meet and confer with the plaintiff, Upstream, regarding the possible dismissal of the counterclaims without prejudice. Despite making multiple attempts to contact Upstream’s counsel between March 19 and 27th, no response was received. Consequently, the defendants proceeded to file a motion to dismiss their counterclaims on March 29, 2024. Continue reading

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In this patent infringement action, plaintiff Performance Chemical Company (“PCC”) filed a motion for sanctions based on defendant, True Chemical Solutions (“True Chem”) concealing of evidence until a few weeks before trial.

In analyzing the motion, the district court noted that the allegations of misconduct were largely undisputed:

What distinguishes this case from the more “routine” situation where the Court has to determine whether the allegations of misconduct are true, is that PCC’s contentions of True Chem’s misdeeds are largely undisputed. It is really not in serious dispute that (a) True Chem hid material evidence, (b) True Chem disregarded and disobeyed not just normal discovery practices but a specific mandate from the Court to provide a complete frac trailer for inspection, (c) True Chem failed to preserve evidence and may have destroyed evidence by dismantling a trailer for the specific purpose of hiding evidence of automation, (d) True Chem filed a declaratory judgment action alleging non-infringement without sufficiently reviewing its own documents and emails, and (e) True Chem’s employees — no other phrase encapsulates it — lied under oath when asked direct questions about automation. The Court is therefore forced to conclude that True Chem acted deliberately and in bad faith.

Based on these allegations, the district court was left with the question of what sanction to impose. PCC sought the death penalty sanction. Continue reading

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SIMO Holdings Inc. (“SIMO”) prevailed on its patent infringement claims against defendant Hong Kong uCloudlink Network Technology Limited (“uCloudlink”) at trial. SIMO asked the district court twice to use confidential uCloudlink documents produced in pretrial discovery in a trade secret misappropriation lawsuit in Shenzhen, China between SIMO subsidiary Skyroam Shenzhen and a uCloudlink subsidiary (the “Chinese lawsuit”).

As explained by the district court, when it made the request to disclose the confidential information in the Chinese lawsuit, SIMO informed the district court for the first time that “[i]n late November 2018” plaintiff’s counsel at K&L Gates LLP “made the . . . uCloudlink Confidential Documents available to the [King & Wood Mallesons] attorneys” who at that time represented Skyroam Shenzhen in a related Chinese patent infringement lawsuit and who now represent Skyroam Shenzhen in the Chinese lawsuit. Defendants not only opposed disclosure but also requested that the district court impose sanctions for the unauthorized disclosure to King & Wood Mallesons.

The district court found it significant that SIMO admitted that it shared the uCloudlink confidential documents with four King & Wood Mallesons attorneys in late November 2018. The district court noted that paragraph 5(c) of the Protective Order prohibits disclosure of confidential discovery material except to court personnel, stenographers, “counsel retained specifically for this action,” and those “retained by a party to serve as an expert witness or otherwise provide specialized advice to counsel in connection with this action.” Continue reading

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In this patent infringement action, Plaintiffs Brian Horowitz and Creative Outdoor Distributors USA Inc. (the “Plaintiffs”) filed a motion for sanctions against Defendant Yishun Chen (“Yishun”) and his counsel, David Lin (“Lin”) for alleged misconduct that took place during the depositions of defendants. The court had previously granted a motion to compel a further deposition, noting “that Lin and Yishun left the room while questions were pending, Lin improperly instructed Yishun not to answer questions, Lin made frequent speaking objections to coach Yishun, and that Lin was disrespectful and personally attacked opposing counsel.”

The court ordered the video transcripts filed so that it could review the depositions for itself. After reviewing the transcripts, the court determined that there were several instances of inappropriate behavior by the Defendants and their counsel. For example, the court explained that:

The court also found that an off-the-record conference between the attorney and Yishun was also troubling. The Court explained as follows: “Gibby asked Yishun when he gave Defendant Kevin Xia the right to protect his patents, to which Yishun replied, “2016, the end of the year, or perhaps it was at the beginning of 2015 when I first started working with him.” Gibby asked, “So, either the end of 2015 or the beginning of 2016,” prompting Lin to object, “I don’t think that’s what he said. I think he said the end of the year, 2016,” and Yishun to answer, “That’s what I remember.” Gibby then asked, “When you gave Kevin the right to protect your patents at the end of 2015 or the beginning of 2016, did you put the right for him to do that in writing at that time?” Lin objected, “I think that misstates his prior testimony. His prior testimony, I believe he said,” causing Gibby to protest that Lin was coaching. Continue reading

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After all parties agreed to settle the case, the parties jointly moved to vacate a sanctions order. The district court declined to vacate the sanctions order, even though plaintiff’s counsel had apparently complied with the order, because the order was entered by a prior judge in a detailed ruling.
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The district court briefly summarized this patent infringement action that it found frivolous as follows: “In the 1990’s, Segan invented a system for people to browse the Internet. Today, Zynga makes video games that people can play while on Facebook. People don’t browse the Internet while playing Zynga games on Facebook. But Segan sued Zynga for patent infringement. Segan lost at summary judgment, because no reasonable juror could conclude that Zynga’s games infringe Segan’s patent.”

The district court then asked two questions: (1) was “this an “exceptional case” within the meaning of 35 U.S.C. § 285, such that Segan should pay Zynga for its attorneys’ fees?” and (2) should the law firm representing Segan “be sanctioned under Rule 11 for filing and pursuing a frivolous lawsuit?”
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After trial, HTC Corporation and HTC America, Inc. (“HTC”) filed a motion seeking to recover attorney fees and costs from plaintiff’s attorneys as well as from plaintiff Intellect Wireless, Inc. (“IW”). IW withdrew its initial opposition and conceded that the case was exceptional within the meaning of the Patent Act. HTC also contended that a finding should also be made that the attorneys for IW are jointly and personally required to satisfy HTC’s attorney fees and costs because, among other things, IW’s attorneys unreasonably and vexatiously multiplied the proceedings within the meaning of 28 U.S.C. § 1927.
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In an earlier filed decision, the district court had previously found that Escort and its defense counsel had knowingly misled the plaintiff, Fleming, which warranted a sanction of attorney fees. As explained by the district court, “they falsely claimed that the source code identified as ESC17363 was the current operating source code for Escort’s commercially sold products and that it provided a complete defense to Fleming’s patent infringement charges.”

After awarding attorney’s fees, the district court turned to Fleming’s motion to compel the production of certain documents. “Fleming seeks discovery of a wide variety of documents and communications in an effort to determine if Escort fabricated ESC17363 and falsely represented that it was created in the normal course of product development.”
In response, Escort argued that all of the material sought by Fleming was protected by the work product doctrine and the attorney client privilege.
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In this patent infringement action, the plaintiff filed a motion for entry of a standard protective order after the defendant would not agree to sign a stipulated protective order. As explained by the district court, the plaintiffs sued defendants, alleging that they infringed on several patents.

After the lawsuit was filed, plaintiffs’ counsel requested that defendants’ counsel sign off on a stipulated protective order to protect certain confidential/proprietary materials that the parties were going to exchange in discovery. The district court explained that “[t]his is standard operating procedure in patent cases in federal court and the parties and the Court routinely sign off on them in these cases.”
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