The plaintiff Dodocase VR, Inc. filed a motion for a temporary restraining order or preliminary injunction against Defendants MerchSource, LLC (“MerchSource”) and ThreeSixty Brands Group LLC (“ThreeSixty”) (together, “Defendants”) requesting that the court order the Defendants to withdraw certain petitions filed with the Patent Trial and Appeal Board (“PTAB Petitions”).
As explained by the district court, MerchSource designs, sources, and distributes a wide-range of consumer goods, including toys, electronics, and home decor, to large retailers. The plaintiff alleged that MerchSources sells, manufactures, designs, and/or imports certain products under the brand name “Sharper Image” that infringe the Dodocase Patents. In June 2016, MerchSource contacted the plaintiff to obtain a license to the ‘075 Patent, and in October 2016, MerchSource and the plaintiff entered into a Master License Agreement regarding the Dodocase Patents (“MLA”). In June 2017, MerchSource contacted the plaintiff to express dissatisfaction with the MLA and told the plaintiff that MerchSource would “have no choice but to impute a zero percent royalty rate under the [MLA] in order to be similarly advantaged.” MerchSource also later told the plaintiff that it reviewed the claims in the patent application for what would later become the ‘184 Patent and determined that the relevant claims were invalid, so it would not pay any royalties on the products sold under that patent. The plaintiff responded that refusal to pay royalties despite its continued manufacture, use, sale, and/or offer for sale of products using the Dodocase Patents constituted a breach of the MLA.
Defendants then filed three separate PTAB Petitions, challenging each of the three Dodocase Patents, on January 15, 2018. Shortly thereafter, the defendants answered the complaint and filed a counterclaim that sought declaratory judgment that the patents-in-suit are invalid for the reasons set forth in the PTAB Petitions.