1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURT’S FINAL JUDGMENT
Case No. C-07-05612 JSW
Christopher Kao, Bar No. 237716
CKao@perkinscoie.com
PERKINS COIE LLP
3150 Porter Drive
Palo Alto, CA 94304-1212
Telephone: 650.838.4300
Facsimile: 650.838.4350
David J. Tsai, Bar No. 244479
DTsai@perkinscoie.com
PERKINS COIE LLP
Four Embarcadero Center, Suite 2400
San Francisco, CA 94111-4131
Telephone: 415.344.7000
Facsimile: 415.344.7050
Attorneys for Plaintiff
Shoom, Inc.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SHOOM, INC.,
Plaintiff,
v.
ELECTRONIC IMAGING SYSTEMS OF
AMERICA, INC.,
Defendant.
Case No. C-07-05612 JSW
PLAINTIFF SHOOM, INC.’S MOTION TO
ENFORCE THE COURT’S FINAL
JUDGMENT; MEMORANDUM OF
POINTS AND AUTHORITIES IN
SUPPORT THEREOF
Date: September 2, 2011
Time: 9:00 a.m.
Courtroom: 11, 19th Floor
Judge: Hon. Jeffrey S. White
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page1 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
TABLE OF CONTENTS
Page
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURT’S FINAL JUDGMENT,
Case No. C-07-05612 JSW
-i-
NOTICE OF MOTION AND MOTION TO ENFORCE THE COURT’S FINAL
JUDGMENT ....................................................................................................................... 1
MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1
STATEMENT OF FACTS ............................................................................................................. 3
A. Shoom’s Business ....................................................................................... 3
B. eISA Threats Against Shoom and Its Customers........................................ 4
C. The Present Action...................................................................................... 5
D. eISA’s Assignment of the Patents-in-Suit to Source 3 ............................... 6
E. Source 3’s Action Against USA TODAY International Corporation
and Continued Threats Against Shoom’s Customers.................................. 7
F. Reexamination of the ’837 Patent ............................................................... 8
ARGUMENT .................................................................................................................................. 8
I. ThE Court Has THE Authority to Enforce Its FINAL Judgment BY
Entering a permanent injunction ............................................................................. 8
II. THE COURT SHOULD ENTER A PERMANENT INJUNCTION
BARRING RE-LITIGATION OF SHOOM’S AND ITS CUSTOMERS’
ALLEGED INFRINGEMENT OF THE PATENTS-IN-SUIT ............................ 10
A. The Kessler Doctrine Supports Entry of Permanent Injunction................ 10
B. Res Judicata Principles Also Support Entry Of A Permanent
Injunction .................................................................................................. 12
III. THE COURT CAN EXTEND A PERMANENT INJUNCTION TO ANY
ASSIGNEES OF THE PATENTS-IN-SUIT........................................................ 14
IV. THE EBAY FACTORS FOR ENTRY OF A PERMANENT
INJUNCTION ARE SATISFIED IN THIS CASE............................................... 15
CONCLUSION............................................................................................................................. 16
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page2 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURT’S FINAL JUDGMENT,
Case No. C-07-05612 JSW
-ii-
TABLE OF AUTHORITIES
Page(s)
CASES
Am. Express Travel Related Servs. Co., Inc. v. D & A Corp.,
2007 WL 2462080 (E.D. Cal. Aug. 28, 2007) ........................................................................ 13
Aspex Eyewear, Inc., et al., v. Marchon Eyewear Inc., et. al.,
2010 WL 4553642, *4 (S.D. Fla. Nov. 3, 2010) .................................................................... 12
Bradberry v. T-Mobile USA, Inc.,
2007 WL 2221076 (N.D. Cal. Aug. 2, 2007).......................................................................... 16
Carey v. U.S.,
2010 WL 1904841 (E.D. Cal. May 7, 2010)........................................................................... 13
Center for Food Safety v. Vilsack,
2011 WL 996343 (N.D. Cal. March 17, 2011) ....................................................................... 16
Credit Bureau Connection, Inc. v. Pardini,
726 F. Supp. 2d 1107 (E.D. Cal. 2010)................................................................................... 15
E. & J. Gallo Winery v. Gallo Cattle Co.,
967 F.2d 1280 (9th Cir.1992).................................................................................................. 15
eBay Inc. v. Mercexchange, L.L.C.,
547 U.S. 388 (2006) ................................................................................................................ 15
eISA v. Gannett Co., Inc, et al,
Civil Action No: 07-CV-791..................................................................................................... 5
eISA v. MerlinOne, Inc. et al.,
Case No. 07-CV-1490............................................................................................................... 8
Federated Dep’t Stores, Inc. v. Moitie,
452 U.S. 394 (1981) ................................................................................................................ 14
Golden State Bottling Co., Inc. v. Nat'l Labor Relations Bd.,
414 U.S. 168 (1973) .......................................................................................................... 14, 15
Headwaters Inc. v. U.S. Forest Service,
399 F.3d 1047 (9th Cir. 2005)................................................................................................. 13
Heartland By-Products, Inc. v. U.S.,
424 F.3d 1244 (Fed. Cir. 2005)................................................................................................. 9
Hoffman v. Wisner Classic Mfg. Co., Inc.,
927 F. Supp. 67 (E.D.N.Y. 1996) ........................................................................................... 12
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page3 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-iii-
In re Garcia,
313 B.R. 307 (9th Cir. BAP 2004).......................................................................................... 13
In re Mfrs. Life Ins. Co. Litig.,
2008 WL 4950939 (S.D. Cal. Nov. 18, 2008) .......................................................................... 9
Kessler v. Eldred,
206 U.S. 285 (1907) ......................................................................................................... passim
Kloster Speedsteel AB v. Crucible Inc.,
793 F.2d 1565 (Fed. Cir. 1986), overruled on other grounds, Knorr-Bremse Systeme
Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed Cir. 2004) .......................... 15
Leishman v. Radio Condenser Co.,
167 F.2d 890 (9th Cir. 1948)................................................................................................... 10
Leon v. IDX Sys. Corp.,
464 F.3d 951 (9th Cir. 2006)..................................................................................................... 9
MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118 (2007) .................................................................................................................. 4
Meyer Mfg. Co. v. Miller Mfg. Co.,
24 F.2d 505 (7th Cir. 1928)..................................................................................................... 13
MGA, Inc. v. Gen. Motors Corp.,
827 F.2d 729 (Fed. Cir. 1987)................................................................................................. 10
MGM Studios v. Grokster, Ltd.,
518 F.Supp.2d 1197 (2007)..................................................................................................... 16
Morris v. Jones,
329 U.S. 545 (1947) ................................................................................................................ 13
Powell v. McCormack,
395 U.S. 486 (1969) .................................................................................................................. 9
Providence Health Plan v. McDowell,
385 F.3d 1168 (9th Cir. 2004)................................................................................................. 12
Regal Knitwear Co. v. NLRB,
324 U.S. 9 (1945) .................................................................................................................... 15
Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.,
944 F.2d 597 (9th Cir. 1991)................................................................................................... 15
Shoom v. eISA,
Case No. 05-CV-3434 (Jenkins, J.) (“Shoom v. eISA I”).......................................................... 4
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page4 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-iv-
Taylor v. Sturgell,
553 U.S. 880 (2008) ................................................................................................................ 13
Tech. Licensing Corp. v. Thomson, Inc.,
738 F. Supp.2d 1096 (E.D. Cal. 2010).................................................................................... 12
Trs. of IL WU-PMA Pension Plan v. Peters,
660 F. Supp. 2d 1118 (N.D. Cal. 2009) (White, J.) .................................................................. 9
U.S. Galvanizing & Plating Equip. Corp. v. Hanson-Van Winkle-Munning Co.,
104 F.2d 856 (4th Cir. 1939)............................................................................................... 9, 10
U.S. v. Hanover Ins. Co.,
82 F.3d 1052 (Fed. Cir. 1996)................................................................................................... 9
Unitronics Ltd. v. Gharb,
532 F. Supp.2d 25 (D.D.C. 2008) ........................................................................................... 10
Vermont Structural Slate Co., Inc. v. Tatko Bros. Slate Co., Inc.,
253 F.2d 29 (2d Cir. 1958).................................................................................................. 9, 14
Whitley v. Swayne,
74 U.S. 685 (1868) .................................................................................................................. 13
Worley v. Tobacco Co.,
104 U.S. 340 (1881) ................................................................................................................ 13
STATUTES
28 U.S.C. § 2201(a) ...................................................................................................................... 13
28 U.S.C.§ 2202...................................................................................................................... 1, 3, 9
28 U.S.C. § 2202 (2) ....................................................................................................................... 8
35 U.S.C. § 305............................................................................................................................. 12
All Writs Act, 28 U.S.C. § 1651(a), and (3) ................................................................................... 8
All Writs Act, 28 U.S.C. § 1651(a)......................................................................................... 1, 3, 9
an Act of Congress .......................................................................................................................... 9
OTHER AUTHORITIES
18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and
Procedure § 4442 (2d ed. 2002) ............................................................................................. 13
Rule 65(d) of the Federal Rules of Civil Procedure................................................................ 14, 15
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page5 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-v-
Restatement (Second) of Judgments § 43 (1982) ......................................................................... 13
San Francisco Chronicle ............................................................................................................. 2, 3
San Jose Mercury News.............................................................................................................. 2, 3
U.S. Patent Nos. 7,099,837 .................................................................................................... passim
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page6 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURT’S FINAL JUDGMENT,
Case No. C-07-05612 JSW
-1-
NOTICE OF MOTION AND MOTION TO ENFORCE
THE COURT’S FINAL JUDGMENT
PLEASE TAKE NOTICE that on September 2, 2011, at 9:00 a.m., or as soon thereafter as
this matter may be heard, in Courtroom 11 of the United States District Court for the Northern
District of California, San Francisco Division, the Honorable Jeffrey S. White presiding, Plaintiff
Shoom, Inc. (“Shoom”), by and through its attorneys, will and hereby moves pursuant to 28
U.S.C.§ 2202, the All Writs Act, 28 U.S.C. § 1651(a), and the Court’s inherent power for an
order enforcing the Court’s April 25, 2008 Judgment (Dkt. 23). In further support of this Notice
of Motion and Motion, Shoom submits the accompanying Memorandum of Points and
Authorities filed herewith, and further bases its motion on all pleadings and papers filed in this
action, accompanying Declarations of William J. Freschi, Jr. (“Freschi Decl.”) and David J. Tsai
(“Tsai Decl.”), and upon such other matters as may be presented to the Court at the time of the
hearing.
MEMORANDUM OF POINTS AND AUTHORITIES
INTRODUCTION
Plaintiff Shoom, Inc. (“Shoom”) returns to this Court to seek an end to Defendant
Electronic Imaging Systems of America, Inc.’s (“eISA”) seemingly never-ending scourge of
litigation against and harassment of Shoom and its customers. Shoom believed that the issue had
been concluded once and for all when this Court entered its Final Judgment in this action on April
25, 2008, declaring that Shoom “does not and has not infringed United States Patent Nos.
7,099,837 and 6,505,173.” Now more than three years later, however, a new entity, Source 3
Systems, LLC (“Source 3”), has surfaced and resumed eISA’s baseless assertions of infringement
against Shoom’s customers, including filing a new action against USA TODAY International
Corporation, an affiliate of Shoom’s customer USA TODAY. eISA and its privy Source 3 should
be barred from re-litigating claims and issues already decided in this Court years ago.
Shoom originally commenced this action on November 5, 2007, seeking, among other
things, a declaration that Shoom’s products did not infringe the two patents then owned by
Defendant eISA, U.S. Patent Nos. 7,099,837 (“the ’837 Patent”) and 6,505,173 (“the ’173
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page7 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-2-
Patent”) (collectively, “the patents-in-suit”). Shoom is a leading provider of on-line
advertisement tracking and invoicing solutions to the newspaper and magazine industries, and its
customers include many of the country’s largest print publications including USA TODAY, and
in this district, the San Francisco Chronicle and the San Jose Mercury News.
Shoom brought suit because eISA—and in particular eISA’s President John G. Metsig,
one of the named inventors of the patents-in-suit, and eISA’s outside attorney Edward Manzo—
had been engaged in a campaign of threats and litigation against Shoom’s customers and potential
customers, claiming that the use of Shoom’s services infringed the ’837 and’173 Patents and
demanding that the customers pay licensing fees to eISA.
Despite having been properly served in this case, eISA knowingly and purposefully
defaulted. The Clerk of the Court entered default against eISA on December 12, 2007, and
Shoom moved for entry of a Final Judgment in the case promptly thereafter on December 27,
2007. In response to Shoom’s motion, Mr. Metsig sent an e-mail to Shoom, acknowledging that
he was aware of the suit and expressing eISA’s intent to default. This Court accordingly entered
its Final Judgment on April 25, 2008.
Unbeknownst to Shoom and the Court at the time, however, in January 2008—facing the
impending judgment—eISA assigned the ’837 and’173 Patents to one of its investors, Randall
Helfrich, who in turn assigned the two patents to a new entity controlled by him, Source 3. Like
eISA before it, Source 3 is led by Mr. Metsig.
Through this new entity, Source 3, Mr. Metsig and Mr. Manzo—now representing Source
3—have decided to pick up where they left off in 2007. Mr. Manzo has sent threatening letters
on behalf of Source 3 to Shoom’s customers, and on June 15, 2011, Source 3 commenced suit
against USA TODAY International Corporation in the U.S. District Court for the Northern
District of Illinois, Case No. 11-CV-4081 (Holderman, C.J.).
Shoom brings the instant motion to request that the Court enforce its prior judgment in
this case by (1) enjoining eISA and any current or future assignees of the patents-in-suit,
including Source 3, from continuing to assert that Shoom’s services—and its customers’ use of
those services—infringe the patents-in-suit, and (2) directing Source 3 to dismiss the action it
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page8 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-3-
filed against USA TODAY International Corporation. Enforcement of the final judgment in this
case is necessary because the assignees of the patents-in-suit continue to interfere with Shoom’s
relationships with its customers and potential customers, and to cause harm to Shoom’s business.
This Court has the authority to enforce its own judgment under 28 U.S.C.§ 2202, the All
Writs Act, 28 U.S.C. § 1651(a), and its inherent power. See Section I infra. This extends to the
entry of a permanent injunction barring further enforcement of the patents-in-suit. Under the so-
called Kessler doctrine, first enunciated by the Supreme Court in Kessler v. Eldred, 206 U.S. 285
(1907), a patent owner may be enjoined from asserting infringement against a customer of a seller
who has previously prevailed against the patentee because of non-infringement. See Section II
infra.
The fact that eISA, the original owner of the patents-in-suit, has assigned the patents to
another entity (managed by the same person, Mr. Metsig) does not alter this result. Like any
successive owner of property, Source 3 is in privity with eISA and therefore must be bound by
the judgment and the injunction as well. See Section III infra. eISA should not be able to avoid
the consequences of the Court’s judgment against it in this case it by simply transferring the
patents-in-suit to another entity, particularly one that is under common control. If that were
allowed, no judgment regarding the infringement or validity of a patent would ever be final.
Patent owners would be able to avoid a negative ruling simply by assigning their patents to
another entity and then re-litigating claims that had already been adjudicated—an untenable
result.
STATEMENT OF FACTS
A. Shoom’s Business.
Shoom, which began operations in 1996, is a leading provider of on-line advertisement
tracking and invoicing solutions to the newspaper and magazine industries, and its customers
include many of the country’s largest print publications including USA TODAY, the San
Francisco Chronicle and the San Jose Mercury News, among others. See Freschi Decl. ¶ 4.
Shoom’s business involves hosting digitized versions of publications, advertisements
placed in the publications, and invoices for the advertisements. Complaint (Dkt. 1) ¶ 18. Shoom
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page9 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-4-
makes all of these materials easily accessibly on-line to publishers, advertisers and advertising-
placement agencies. See id.
The primary products that Shoom offers its customers are its “electronic tearsheets” and
“electronic invoice” systems. Compl. ¶¶ 18-19. These were the products that Shoom offered in
2007 when this suit was originally commenced and that were placed at issue by this litigation.
See id. Shoom’s systems today remain the same as they were in 2007. Freschi Decl. ¶ 6.
B. eISA Threats Against Shoom and Its Customers.
On December 3, 2004, Mr. Metsig on behalf of eISA sent a letter to Shoom inviting
Shoom to license the ’173 Patent. Freschi Decl. ¶ 7, Ex. A.
On or about June 24, 2005, Mr. Metsig sent letters to a number of Shoom’s existing and
potential customers advising them of the ’173 Patent and suggesting that they required a license
to utilize any electronic tearsheets or electronic invoice system. Compl. ¶ 21; Freschi Decl. ¶ 8,
Ex. B.
Faced with the uncertainty in the marketplace caused by eISA’s threats, on August 24,
2005, Shoom filed an action seeking a declaratory judgment that its products did not infringe the
’173 Patent and that the ’173 Patent was invalid, Shoom v. eISA, Case No. 05-CV-3434 (Jenkins,
J.) (“Shoom v. eISA I”). Compl. ¶ 24.
eISA successfully moved to dismiss that action—which was decided prior to the Supreme
Court’s ruling in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), which altered the
standard for evaluating declaratory judgment jurisdiction—on the ground that the Court did not
have jurisdiction to hear the suit because eISA had not made any explicit threats of litigation prior
to Shoom filing suit. Compl. ¶ 24. In that suit, eISA’s President John G. Metsig submitted a
declaration on March 1, 2006 to the Court stating that eISA had no intention of bringing an action
against Shoom in connection with Shoom’s electronic tearsheets and electronic invoice systems.
Id.
Notwithstanding Mr. Metsig’s sworn declaration to the contrary submitted to the Court in
Shoom v. eISA I, however, eISA proceeded to file suit against Shoom and one of Shoom’s
customers, Gannett Co., Inc. (“Gannett”), on February 9, 2007 in the U.S. District Court for the
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page10 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-5-
Northern District of Illinois, eISA v. Gannett Co., Inc, et al, Civil Action No: 07-CV-791. Compl.
¶ 25. In that suit, eISA alleged that Shoom and its customer Gannett infringed the ’837 Patent—a
continuation of the previously-asserted ’173 Patent.
Shortly after filing the complaint in the eISA v. Gannett action, eISA’s counsel Edward
Manzo (who is now counsel for Source 3) sent a copy of the complaint to Gannett on February
12, 2007. Compl. ¶ 26. In the letter, Mr. Manzo cited a Shoom press release announcing that
USA TODAY, a newspaper owned by a subsidiary of Gannett, would be using Shoom’s
electronic tearsheets and electronic invoice services, and stated that USA TODAY’s use of these
systems infringed the ’837 Patent. Compl. ¶26 & Ex. 5.
On February 15, 2007, Gannett informed Shoom that it would not enter into a contract
with Shoom until the issues regarding eISA’s claims could be resolved. Compl. ¶ 27. After
damaging Shoom’s business relationship with Gannett, and with other customers and potential
customers by filing the suit, eISA ultimately dismissed the suit against Shoom and Gannett
without prejudice on April 13, 2007. Compl. ¶ 28.
C. The Present Action.
Given the continued threat of litigation by eISA against Shoom and its customers, and the
looming cloud of uncertainty created by the ’837 and ’173 Patents, Shoom filed this declaratory
judgment action against eISA on November 5, 2007.
In its Complaint in this action, Shoom sought declaratory judgment of non-infringement
of the ’837 and ’173 Patents. In particular, The Complaint requested “the Court enter judgment
in [Shoom’s] favor and against eISA on their Complaint as follows:”
A. Declaring that Shoom’s processes do not infringe, and have not
infringed, any claim of the patents-in-suit;
B. Enjoining eISA, their officers, agents, successors and assigns,
employees, representatives, counsel and all parties acting in concert
with them, permanently from directly or indirectly asserting or
charging that Shoom processes infringe the patents-in-suit;
C. Declaring this an exceptional case, under 35 U.S.C. § 285, and
rendering an award to Shoom of its reasonable attorneys fees,
expenses and costs in this action; and
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page11 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-6-
D. Granting Shoom such other and further relief as this Court
deems just and proper.
Although Defendant eISA’s agent for service of process was properly served on
November 9, 2007 (Dkt. 6), eISA failed to answer the Complaint. The Clerk of the Court entered
default against eISA on December 12, 2007 (Dkt. 12), and Shoom promptly thereafter on
December 27, 2007, moved for entry of a Final Judgment in the case (Dkt. 13). In response to
Shoom’s motion, Mr. Metsig sent an e-mail to Shoom on January 9, 2008 acknowledging that he
was aware of the suit and expressing eISA’s intent to default. Tsai Decl. ¶ 3, Ex. 1.
On April 8, 2008, Magistrate Judge Spero entered a Report and Recommendation
regarding Shoom’s motion for a Final Judgment. In his Report and Recommendation, Judge
Spero advised this Court to enter “a declaratory judgment that Shoom’s processes do not and have
not infringed any claim of the ‘173 or the ‘837 patents.” (Dkt. 19 at p. 10.)
On April 25, 2008, this Court adopted Judge Spero’s Report and Recommendation (Dkt.
22), and entered a Final Judgment against eISA declaring that “Plaintiff does not and has not
infringed United States Patent Nos. 7,099,837 and 6,505,173.” (Dkt 23.)
Shoom and its customers, including USA TODAY, have since relied upon this Court’s
Final Judgment and continued to utilize Shoom’s electronic tearsheets and electronic invoice
systems without fear of further litigation related to the’837 and ’173 Patents.
D. eISA’s Assignment of the Patents-in-Suit to Source 3.
Unbeknownst to Shoom and the Court at the time, shortly after the Clerk of the Court
entered default against eISA and Shoom moved for entry of a Final Judgment in this case—and
only two weeks after eISA’s President Mr. Metsig stated eISA’s intent to default in this case on
January 9, 2008—eISA assigned the two patents-in-suit to another owner.
On January 28, 2008, eISA assigned the ’837 and ’173 Patents to one of its investors,
Randall Helfrich, who in turn immediately assigned the two patents to a new entity controlled by
him, Source 3 Systems, LLC (“Source 3”), Tsai Decl. ¶ 4, Ex. 2. Source 3 was incorporated in
Arizona on or about December 28, 2007, the day after Shoom filed its motion for a Final
Judgment. Tsai Decl. ¶ 5, Ex. 3.
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page12 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-7-
Source 3’s registered agent for service of process is Mr. Helfrich. Id. Mr. Metsig, the
President of eISA at the time of the assignment of the patents to Source 3, is the Managing
Director of Source 3. Tsai Decl. ¶¶ 6-8, Exs. 4-6. Mr. Manzo, an attorney for eISA and the
attorney of record for eISA’s assignment of the patents-in-suit to Mr. Helfrich and Mr. Helfrich’s
assignment of the patents to Source 3 in January 2008, currently represents Source 3 with respect
to the enforcement of the patents. Tsai Decl. ¶¶ 4 & 9, Exs. 2 & 6; Freschi Decl. ¶ 9, Ex. C.
Shoom has served Source 3 and all three of these individuals with this motion.
Mr. Metsig was convicted in Illinois on January 19, 2011 of Financial Exploitation of an
Elderly Person, a Class 3 Felony, for defrauding two of his elderly relatives of approximately
$450,000, which he apparently used to invest in his companies. ¶¶ 10-13, Exs. 8-11. Mr. Metsig
was ordered to pay restitution of $300,000. See id.
E. Source 3’s Action Against USA TODAY International Corporation and
Continued Threats Against Shoom’s Customers.
Mr. Manzo—now writing on behalf of Source 3—has recently resumed sending letters to
Shoom’s customers asserting infringement of the ’837 Patent and threatening litigation. See
Freschi Decl. ¶ 9, Ex. C. For example, on February 18, 2011, Mr. Manzo sent demand letters to a
number of Shoom’s customers and potential customers in the publishing industry, including
Gannett, the ultimate parent company of both USA TODAY and USA TODAY International
Corporation. See id. Ex. C. In the letters, Source 3 suggested that the targeted publishers should
license the ’837 Patent from Source 3 to continue use of electronic tearsheets and electronic
invoice services. Id.
These letters, as did Mr. Manzo’s prior letter-writing campaign, are causing uncertainty
and doubt among Shoom’s existing and potential customers, and are damaging Shoom’s business.
See Freschi Decl. ¶ 10. In particular, potential Shoom customers have declined to enter contracts
for Shoom’s electronic tearsheets and electronic invoice systems as a result of these new threats.
See id. ¶ 11. Moreover, the National Association of Newspapers (“NAA”) an organization
representing nearly 2,000 newspapers, has received numerous inquiries from its members—all of
whom are either existing Shoom customers or potential customers— regarding Source 3’s threats.
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page13 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-8-
See id. As a result, the entire industry is on alert and virtually frozen until this threat is resolved.
See id.
On June 15, 2011, Source 3 filed an action against USA TODAY International
Corporation, an affiliate of Shoom’s customer USA TODAY, in the U.S. District Court for the
Northern District of Illinois, Case No. 11-CV-4081 (Holderman, C.J.), alleging infringement of
the ’837 Patent. Tsai Decl. ¶ 8, Ex. 6. USA TODAY International Corporation and its parent and
affiliates have sought indemnification and defense from Shoom with respect to Source 3’s action
against USA TODAY International Corporation. See Freschi Decl. ¶ 12.
F. Reexamination of the ’837 Patent.
Pursuant to a request by the defendants in an action eISA filed against MerlinOne, Inc.
and others (not Shoom customers) in the Northern District of Illinois, eISA v. MerlinOne, Inc. et
al., Case No. 07-CV-1490,1 the U.S. Patent and Trademark Office initiated an ex parte
reexamination of the ’837 Patent. The PTO issued its reexamination certificate on November 30,
2010. Claims 1-6 in the patent were canceled. Claim 7 was confirmed as patentable. Claim 8
subpart “h” was amended to delete the word “first” before the word “digital” and to add the word
“advertisement” between the words “digital” and “document.” Claim 9, dependent on
independent Claim 7, and Claims 10-12, all dependent on independent Claim 8, were added to the
’837 Patent.
ARGUMENT
I. THE COURT HAS THE AUTHORITY TO ENFORCE ITS FINAL JUDGMENT
BY ENTERING A PERMANENT INJUNCTION.
This Court has the power to grant the relief sought by Shoom in this motion pursuant to
(1) 28 U.S.C. § 2202, (2) the All Writs Act, 28 U.S.C. § 1651(a), and (3) the Court’s inherent
authority.
As an initial matter, the Declaratory Judgment Act authorizes this Court to grant “[f]urther
necessary or proper relief based on a declaratory judgment or decree . . . after reasonable notice
1 Mr. Manzo continued to represent eISA in the MerlinOne action even after the patents had been
assigned to Source 3. On March 5, 2008, Mr. Manzo appeared for eISA at a status conference in the case
and asked that the case be dismissed without prejudice. Tsai Decl. ¶ 14, Ex. 12. The court denied eISA’s
request and dismissed the action with prejudice.
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page14 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-9-
and hearing, against any adverse party whose rights have been determined by such judgment.” 28
U.S.C. § 2202. This includes the entry of a permanent injunction to enforce the Court’s prior
judgment in a case by barring subsequent litigation against the declaratory judgment plaintiff
and/or its customers. See, e.g., Powell v. McCormack, 395 U.S. 486, 499 (1969) (“A declaratory
judgment can then be used as a predicate to further relief, including an injunction.”) (citing 28
U.S.C. § 2202); Vermont Structural Slate Co., Inc. v. Tatko Bros. Slate Co., Inc., 253 F.2d 29, 29-
30 (2d Cir. 1958) (citing 28 U.S.C. § 2202 and affirming entry of permanent injunction against
patent holder); U.S. Galvanizing & Plating Equip. Corp. v. Hanson-Van Winkle-Munning Co.,
104 F.2d 856, 861 (4th Cir. 1939) (holding that 28 U.S.C. § 2202 authorizes a court to grant,
“upon the determination of non-infringement, . . . injunctive relief restraining the [patent holder]
from harassing [declaratory judgment plaintiff’s] customers with suits and notices of
infringement…”)
Likewise, the Court also has the authority to enforce its Final Judgment under the All
Writs Act, which provides in relevant part that “all courts established by an Act of Congress may
issue all writs necessary or appropriate in aid of their respective jurisdictions.” 28 U.S.C.
§ 1651(a). It is well-established that the All Writs Act “empowers a district court to issue
injunctions to enforce judgments and to reinforce the effects of the doctrines of res judicata and
collateral estoppel.” Leon v. IDX Sys. Corp., 464 F.3d 951, 961 (9th Cir. 2006) (quoting Charlton
v. Estate of Charlton, 841 F.2d 988, 989 (9th Cir. 1988)); see also Trs. of IL WU-PMA Pension
Plan v. Peters, 660 F. Supp. 2d 1118, 1144 -1145 (N.D. Cal. 2009) (“It is established that a
federal court has the power to enjoin proceedings in other federal courts, as well as in state courts,
under appropriate circumstances.”) (White, J.); In re Mfrs. Life Ins. Co. Litig., 2008 WL 4950939
(S.D. Cal. Nov. 18, 2008) (permanently enjoining a pending Alabama state action to the extent
the action involved claims released as part of a class action settlement).
Finally, this Court retains the “inherent power to determine the effect of its judgments and
issue injunctions to protect against attempts to attack or evade those judgments.” U.S. v. Hanover
Ins. Co., 82 F.3d 1052, 1054 (Fed. Cir. 1996); accord Heartland By-Products, Inc. v. U.S., 424
F.3d 1244, 1251-1252 (Fed. Cir. 2005).
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page15 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-10-
II. THE COURT SHOULD ENTER A PERMANENT INJUNCTION BARRING RE-
LITIGATION OF SHOOM’S AND ITS CUSTOMERS’ ALLEGED
INFRINGEMENT OF THE PATENTS-IN-SUIT.
A. The Kessler Doctrine Supports Entry of Permanent Injunction.
Under the Kessler doctrine, first set forth by the Supreme Court in Kessler v. Eldred, 206
U.S. 285 (1907), this Court should enjoin the owners of the ’837 and ’173 Patents from
continuing to assert any claims against either Shoom or any of its customers relating to the use of
Shoom’s electronic tearsheets and electronic invoice systems that were at issue in this action.
As the Federal Circuit has articulated it: “The Kessler doctrine bars a patent infringement
action against a customer of a seller who has previously prevailed against the patentee because of
invalidity or noninfringement of the patent; otherwise, the effect of the prior judgment would be
virtually destroyed.” MGA, Inc. v. Gen. Motors Corp., 827 F.2d 729, 734 (Fed. Cir. 1987).
Kessler grants “a limited trade right which is ‘the right to have that which [a court has
determined] it lawfully produces freely bought and sold without restraint or interference. It is a
right which attaches to its product—to a particular thing—as an article of lawful commerce....”
Id. (quoting Rubber Tire Wheel Co. v. Goodyear Tire and Rubber Co., 232 U.S. 413, 418-19
(1914)); see also Leishman v. Radio Condenser Co., 167 F.2d 890, 893 (9th Cir. 1948) (“It is well
settled that, where the owner of a patent and the manufacturer of a device litigate the question
whether the device infringes the patent, and the manufacturer obtains an adjudication that it does
not, the owner of the patent may be enjoined from asserting such infringement and from
prosecuting any action in which such infringement is asserted.”) (citing Kessler); U.S.
Galvanizing & Plating Equip. Corp. v. Hanson-Van Winkle Munning Co., 104 F.2d 856, 861 (4th
Cir. 1939) (“Upon the adjudication that the machine built by plaintiff did not infringe the patents
of defendant, and upon the finding, justified by the evidence, that defendant had been sending
notices of infringment [sic] to plaintiff's customers and threatening further litigation under the
patent, plaintiff was entitled to an injunction restraining defendant from instituting such suits or
sending such notices.”); Unitronics Ltd. v. Gharb, 532 F. Supp.2d 25, 27-28 (D.D.C. 2008)
(entering a permanent injunction where a patent holder continued to assert infringement against a
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page16 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-11-
manufacturer and its distributors after the manufacturer had previously prevailed in a declaratory
judgment action).
The Kessler case itself remains instructive. In that case, the patent owner initially filed an
action against the manufacturer of allegedly infringing electric cigar lighters. Kessler, 206 U.S. at
285. After the manufacturer prevailed in establishing that its product did not infringe the patent-
in-suit, the patent owner proceeded to commence a new action against one of the manufacturer’s
customers, alleging infringement of the same patent. Id. at 286. As a result of the patent owner’s
continuing attempts to improperly enforce its patent, the manufacturer’s “customers ceased to
send orders for lighters, and even refused to pay for those which had already been delivered.” Id.
Under these facts, the manufacturer then sought and obtained an injunction barring the patent
owner from prosecuting any suits against its customers based on their use of the manufacturer’s
lighters. Id.
In affirming the injunction granted by the district court, the Supreme Court held that, “it is
[the manufacturer’s] right that those customers should, in respect of the articles before the court
in the previous judgment, be let alone by [the patent holder], and it is [the patent holder’s] duty to
let them alone.” Id. at 289. Without such an injunction, the Court noted that customers would
fear the threat of litigation, which would “diminish [the manufacturer’s] opportunities for sale.
No one wishes to buy anything if with it he must buy a law suit.” Id. Moreover, even
unsuccessful suits would “impose upon [the manufacture] the expense of defending many suits in
order to maintain the right which, by judgment, has already been declared to exist.” Id.
The exact same reasoning applies here. This Court entered a Final Judgment in this action
that Shoom’s electronic tearsheets and electronic invoice systems do not infringe the patents-in-
suit. (Dkt. 23.) Accordingly, the Court should enjoin the owners of the patents-in-suit from
continuing to claim that any of Shoom’s customers infringe the patents by their use of Shoom’s
systems. eISA, and now Source 3, should not be able to continue fostering uncertainty and doubt
in the minds of Shoom’s customers and potential customers, and damage Shoom’s business.
Absent an injunction, Shoom might also be forced to defend a multiplicity of lawsuits against its
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page17 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-12-
customers involving the very same issues that were resolved in this Court. The Court should not
allow this injustice.
B. Res Judicata Principles Also Support Entry Of A Permanent Injunction.
An application of res judicata principles leads to the same conclusion as the application of
the Kessler doctrine. Indeed, the “[t]he Kessler doctrine appears to be nothing more than a
patent-specific application of res judicata between manufacturers of allegedly infringing products
and their customers in patent infringement suits against the customer,” Tech. Licensing Corp. v.
Thomson, Inc., 738 F. Supp.2d 1096, 1101-1102 (E.D. Cal. 2010).
Res judicata operates to bar re-litigation of claims when there is “(1) an identity of claims;
(2) a final judgment on the merits; and (3) identity or privity between parties.” Providence
Health Plan v. McDowell, 385 F.3d 1168, 1174 (9th Cir. 2004). Each of these elements is
satisfied here.
First, to the extent Source 3 is claiming that the use of Shoom’s electronic tearsheets and
electronic invoice systems (by USA TODAY or any other of Shoom’s customers) infringes the
patents-in-suit, this Court has already decided that issue, and there is an identity of claims. The
reexamination of the ’837 Patent does not change the analysis, because claims that issue on
reexamination are necessarily “narrower because section 305 [of the Patent Statute] bars claims
that enlarge the scope of original claims.”2 Hoffman v. Wisner Classic Mfg. Co., Inc., 927 F.
Supp. 67, 73 (E.D.N.Y. 1996) (applying res judicata to bar claims based on patent that reissued
after reexamination “because it has already been concluded that any prior action for infringement
of the original patent has been adjudicated in favor of the defendant, [the defendant] cannot now
be deemed guilty of infringing this new, narrower patent”); see also Aspex Eyewear, Inc., et al., v.
Marchon Eyewear Inc., et. al., Slip Copy 2010 WL 4553642, *4 (S.D. Fla. Nov. 3, 2010) (barring
the assertion of reissued claims after reexamination when they were substantially identical to the
previously issued claims and noting that the “reexamination of the ’545 Patent does not entitle
Plaintiffs to circumvent claim preclusion”).
2 “No proposed amended or new claim enlarging the scope of a claim of the patent will be permitted in a
reexamination.” 35 U.S.C. § 305.
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page18 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-13-
Second, this Court’s declaratory judgment is a final judgment on the merits. 28 U.S.C. §
2201(a) (“Any such declaration shall have the force and effect of a final judgment or decree and
shall be reviewable as such.”). That the Court’s Final Judgment was entered on a default is of no
moment. Default judgments are considered final judgments on the merits “and are thus effective
for the purposes of claim preclusion.” In re Garcia, 313 B.R. 307, 311-312 (9th Cir. BAP 2004)
(citing Howard v. Lewis, 905 F.2d 1318, 1323 (9th Cir. 1990)); see also Morris v. Jones, 329 U.S.
545, 550-551 (1947) (“A judgment of a court having jurisdiction of the parties and of the subject
matter operates as res judicata, in the absence of fraud or collusion, even if obtained upon a
default.”); Carey v. U.S., 2010 WL 1904841, at *6 (E.D. Cal. May 7, 2010) (“The doctrine of res
judicata applies even against a default judgment.”); Am. Express Travel Related Servs. Co., Inc. v.
D & A Corp., 2007 WL 2462080, at *5 (E.D. Cal. Aug. 28, 2007) (“There is no question that the
default judgment is a final judgment on the merits.”).3
Third, as the assignee of the patents-in-suit, Source 3 is in privity with eISA and therefore
must be bound by the Court’s Final Judgment as well.4 See, e.g., Taylor v. Sturgell, 553 U.S.
880, 894 (2008) (“nonparty preclusion may be justified based on a variety of pre-existing
‘substantive legal relationship[s]’ between the person to be bound and a party to the judgment …
includ[ing] … preceding and succeeding owners of property, . . . and assignee and assignor.”)
(emphasis added); see also Headwaters Inc. v. U.S. Forest Service, 399 F.3d 1047, 1053 (9th Cir.
2005) (“Privity, traditionally, arose from a limited number of legal relationships in which two
parties have identical or transferred rights with respect to a particular legal interest, chiefly: . . .
assignors and assignees.”); Restatement (Second) of Judgments § 43 (1982) (“A judgment in an
3 See also 18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice
and Procedure § 4442 (2d ed. 2002) (“Valid default judgments establish claim and defense preclusion in
the same way as litigated judgments, and are equally entitled to enforcement in other jurisdictions. This
consequence follows from the basic functions of default judgments. In one aspect, default judgments
afford an opportunity to surrender without incurring the costs of litigation, either because the claim is
thought valid or because the cost of litigation seems greater than the probability and rewards of success.
Plaintiffs could not afford to accept this surrender if the resulting judgment were not final.”).
4 “[T]he assignee of a patent right takes it subject to the legal consequences of the previous acts of the
patentee.” Worley v. Tobacco Co., 104 U.S. 340, 344 (1881). In other words, the assignee of a patent
stands in the “footsteps” of the assignor, and accordingly has “no better title.” Whitley v. Swayne, 74 U.S.
685, 687 (1868); see Meyer Mfg. Co. v. Miller Mfg. Co., 24 F.2d 505, 506 (7th Cir. 1928) (assignee’s
rights were “clearly no better or greater than the rights of its predecessors in title”).
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page19 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-14-
action that determines interest in real or personal property with respect to the property involved in
the action has preclusive effects upon a person who succeeds to the interest of a party to the same
extent as upon the party himself.”)
III. THE COURT CAN EXTEND A PERMANENT INJUNCTION TO ANY
ASSIGNEES OF THE PATENTS-IN-SUIT.
The fact that eISA, the original owner of the patents-in-suit, has assigned the patents to
Source 3 does not alter the effect of the Kessler doctrine. See Vermont Structural Slate Co., Inc.
v. Tatko Brothers Slate Co., Inc., 253 F.2d 29 (2d. Cir. 1958) (under the Kessler doctrine
“plaintiff was entitled as of course to an injunction restraining [the patent owner], and all persons
claiming under the patent, from bringing any action or otherwise threatening plaintiff on the
basis of claims that there is interference with said patent by use of [plaintiff’s process] . . .”)
(emphasis added); see also Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)
(“A final judgment on the merits of an action precludes the parties or their privies from
relitigating issues that were or could have been raised in that action.”) (emphasis added).
Indeed, it is well-settled under Rule 65(d) of the Federal Rules of Civil Procedure that an
injunction entered by the Court can extend to the successors and assignees of a party. In Golden
State Bottling Co., Inc. v. Nat'l Labor Relations Bd., 414 U.S. 168 (1973), the Supreme Court
expressly rejected an argument that Rule 65(d) is a bar to judicial enforcement of injunctions
against parties in privity with the original party to the action. The Court explained:
Rule 65(d) ‘is derived from the common-law doctrine that a decree
of injunction not only binds the defendants but also those identified
with them in interest, in ‘privity’ with them, represented by them or
subject to their control.’ Persons acquiring an interest in property
that is a subject of litigation are bound by, or entitled to the benefit
of, a subsequent judgment, despite a lack of knowledge[.]
Golden Gate Bottling Co., 414 U.S. 168, 179-80 (quoting Regal Knitwear Co. v. NLRB, 324 U.S.
9, 14 (1945)). Accordingly, the Court held that an injunction “may also, in appropriate
circumstances, be enforced against those to whom the business may have been transferred,
whether as a means of evading the judgment or for other reasons.” Id. at 178-79 (quoting Regal
Knitwear Co., 324 U.S. at 14-15) (emphasis added).
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page20 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-15-
The Federal Circuit has followed the Supreme Court’s Regal Knitwear and Golden State
Bottling cases in affirming injunctions applied to a patent infringer’s “successors in interest and
assigns.” E.g., Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1583 (Fed. Cir. 1986),
overruled on other grounds, Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp.,
383 F.3d 1337 (Fed Cir. 2004) (applying injunction to an entity that “was created immediately
after conclusion of the trial and long before judgment”). The Ninth Circuit has likewise held that
“successors” and “assignees” are among the “persons bound” by an injunctive order. E. & J.
Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1298 (9th Cir. 1992) (holding that if Rule 65(d)
did not apply to assignees, “the injunction theoretically might be defeated by assignment”).
Here, eISA assigned the patents-in-suit to Source 3, apparently for the purpose of avoiding
the effect of this Court’s Final Judgment declaring that Shoom does not infringe the patents.
Under these circumstances in particular, it is appropriate and necessary for this Court to enter a
permanent injunction that extends to Source 3 and any future assignees of the patents-in-suit.
Otherwise, the Court’s Final Judgment and any injunction entered by the Court to enforce that
judgment will be ineffective.
IV. THE EBAY FACTORS FOR ENTRY OF A PERMANENT INJUNCTION ARE
SATISFIED IN THIS CASE.
As a final matter, a permanent injunction is appropriate in this case under the Supreme
Court’s four-factor test set forth in eBay Inc. v. Merc Exchange, L.L.C., 547 U.S. 388, 391 (2006).
Source 3’s actions, if left unabated, are causing Shoom to suffer irreparable injury due to
lost business opportunities and harm to Shoom’s reputation in the industry. See id., see also
Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir.
1991) (“intangible injuries, such as damage to . . . goodwill qualify as irreparable harm.”); Credit
Bureau Connection, Inc. v. Pardini, 726 F. Supp. 2d 1107, 1123 (E.D. Cal. 2010) (finding
irreparable harm based on interference with existing customer contracts, as well as with the
ability to form new contracts).
Moreover, any “remedies available at law, such as monetary damages, are inadequate to
compensate for [Shoom’s] injury.” eBay, 547 U.S. at 391. In Kessler, as in the present case, re-
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page21 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-16-
litigation against the manufacturer’s customer impaired the manufacturer’s previously adjudicated
right, and so “it would be difficult to prove, in an action at law, the extent of the damage
inflicted.” Kessler, 206 U.S. at 290; see also MGM Studios v. Grokster, Ltd., 518 F.Supp.2d
1197, 1220 (2007) (no adequate legal remedy where the failure to enter an injunction would result
in a “multiplicity of suits” directed to the same issues).
The balance of the equities also weighs heavily in favor of an injunction, as Shoom has
already litigated these claims and prevailed, and has been seeking repose from eISA’s and Source
3’s campaign of harassment for more than six years now. For its part, eISA’s conduct has
bordered on outright fraud on the Court and should not be rewarded. Among other instances of
eISA’s bad faith, as discussed above, less than a year after eISA’s President Mr. Metsig submitted
a sworn declaration to this Court stating that eISA had no intention of bringing a suit against
Shoom, eISA filed an action against Shoom in the Northern District of Illinois. In addition,
shortly after the Clerk of the Court entered default against eISA in the present action and Shoom
moved for entry of a Final Judgment, eISA (without notice to Shoom or this Court) assigned the
patents-in-suit to an entity under common control and management, apparently for the purpose of
avoiding this Court’s Final Judgment.
A permanent injunction would serve the public interest by the conservation of judicial
resources and the elimination of duplicitous litigation. See Center for Food Safety v. Vilsack,
2011 WL 996343 at *8 (N.D. Cal. March 17, 2011) (“duplicative lawsuits unnecessarily waste
judicial resources and create the risk of inconsistent rulings”); Bradberry v. T-Mobile USA, Inc.,
2007 WL 2221076 at *4 (N.D. Cal. Aug. 2, 2007) (“the public interest lies in conservation of
judicial resources”).
CONCLUSION
For the foregoing reasons, this Court should enforce its April 24, 2008 Final Judgment in
this case, by (1) enjoining eISA and any current or future assignees of the patents-in-suit,
/ / /
/ / /
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page22 of 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PLAINTIFF SHOOM, INC’S MOTION TO
ENFORCE THE COURTS FINAL JUDGMENT,
Case No. C-07-05612 JSW
-17-
including Source 3, from continuing to assert that Shoom’s services—and its customers’ use of
those services—infringe the patents-in-suit, and (2) directing Source 3 to dismiss the action it
filed against USA TODAY International Corporation.
DATED: July 27, 2011
PERKINS COIE LLP
By: /s/ Christopher Kao
Christopher Kao
David J. Tsai
Attorneys for Plaintiff
Shoom, Inc.
Case3:07-cv-05612-JSW Document26 Filed07/27/11 Page23 of 23
