Ucp International Company Limited et al v. Balsam Brands Inc. et al

MOTION to Dismiss for Lack of Jurisdiction

N.D. Cal.February 16, 2017

Redacted Version of Document Provisionally Filed Under Seal BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 MARC N. BERNSTEIN (SBN 145837) mbernstein@blgrp.com WILL B. FITTON (SBN 182818) wfitton@blgrp.com THE BUSINESS LITIGATION GROUP, P.C. 555 Montgomery Street, Suite 1650 San Francisco, CA 94111 Telephone: 415.765.6633 Facsimile: 415.283.4804 Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION UCP INTERNATIONAL COMPANY LIMITED and GLOBAL UNITED ENTERPRISES LIMITED, Plaintiffs, v. BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL UNLIMITED COMPANY, an Ireland unlimited company, Defendants. Case No. 3:16-cv-07255-WHO DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION Judge: Hon. William H. Orrick Courtroom: 2, 17th Floor Hearing Date: March 29, 2017 Time: 2:00 p.m. Redacted Version of Document Provisionally Filed Under Seal Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 1 of 18 Redacted Version of Document Provisionally Filed Under Seal BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 NOTICE OF MOTION AND MOTION TO EACH PARTY AND ATTORNEY OF RECORD IN THIS ACTION: PLEASE TAKE NOTICE that on March 29, 2017 at 2:00 p.m., or as soon thereafter as the matter may be heard, in courtroom 2 on the 17th floor at the United States District Court of the Northern District of California, 450 Golden Gate Avenue, San Francisco, Defendants Balsam Brands Inc. and Balsam International Unlimited Company will and hereby do move the Court under Federal Rule of Civil Procedure 12(b)(1) for an order dismissing this case with prejudice for lack of subject matter jurisdiction. This motion is based on this Notice of Motion and Motion, the accompanying memorandum of points and authorities, the accompanying declarations and exhibits, and such other papers as the Court deems necessary Defendants Balsam Brands, Inc. and Balsam International Unlimited Company (together, Balsam) move to dismiss the Complaint filed by plaintiffs UCP International Company Limited and Global United Enterprises Limited (together, UCP), for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 2 of 18 Redacted Version of Document Provisionally Filed Under Seal i BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 I. INTRODUCTION........................................................................................................ 1 II. BACKGROUND .......................................................................................................... 2 A. The Frontgate Litigation. ................................................................................ 2 B. UCP’s Complaint. ............................................................................................ 4 III. LEGAL STANDARDS ................................................................................................ 5 A. Declaratory-Judgment Plaintiffs Must Demonstrate an Immediate, Justiciable Case or Controversy .................................................................... 5 IV. ARGUMENT................................................................................................................ 7 A. Balsam Has Not Undertaken Any Affirmative Act Toward Plaintiffs Concerning Enforcement of the Flip Tree Patents ..................... 7 1. Balsam has not put UPC in fear of legal action, nor ever even spoken to UCP. ..................................................................... 7 2. UCP’s fear of diminished U.S. sales does not create case-or- controversy jurisdiction......................................................................... 8 3. Balsam’s prior lawsuit against one of UCP’s customers does not create case-or-controversy jurisdiction for UCP. ............... 9 B. UCP has not met its burden of showing that infringement is imminent..................................................................................................... 11 V. CONCLUSION .......................................................................................................... 12 Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 3 of 18 Redacted Version of Document Provisionally Filed Under Seal ii BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 Authorities Cases Adobe Systems Inc. v. Kelora Systems LLCE No. C 11-3938, 2011 WL 6101545 (N.D. Cal. Dec. 7, 2011) ...................................... 6, 10 Arris Group, Inc. v. British Telecommunications PLC 639 F.3d 1368 (Fed. Cir. 2011) .................................................................................. 6, 8, 10 Ass’n for Molecular Pathology v. Myriad Genetics, Inc. 133 S. Ct. 2107 (2013) ........................................................................................................... 5 Ass'n for Molecular Pathology v. United States PTO 689 F.3d 1303 (Fed. Cir. 2012) ........................................................................................ 5, 6 Balsam Brands Inc. v. Cinmar, LLC Case No. 3:15-cv-04829-WHO (N.D. Cal. Oct. 20, 2015) ................................................ 1 Cisco Systems, Inc. v. Alberta Telecommunications Research Centre 892 F. Supp. 2d 1226 (N.D. Cal. 2012) ......................................................................... 6, 11 Innovative Therapies, Inc. v. Kinetic Concepts, Inc. 599 F.3d 1377 (Fed. Cir. 2010) ........................................................................................... 7 Matthews Int'l Corp. v. Biosafe Eng'g, LLC 695 F.3d 1322 (Fed. Cir. 2012) ...................................................................................... 5, 12 MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118 (2007) ........................................................................................................... 5, 8 Microchip Tech. Inc. v. Chamberlain Group, Inc. 441 F.3d 936 (Fed. Cir. 2006) .......................................................................................... 6, 9 Organic Seed Growers & Trade Ass'n v. Monsanto Co. 718 F.3d 1350 (Fed. Cir. 2013) ................................................................................ 6, 11, 12 Ours Tech., Inc. v. Data Drive Thru, Inc. 645 F. Supp. 2d 830 (N.D. Cal. 2009) ................................................................. 6, 9, 11, 12 Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 4 of 18 Redacted Version of Document Provisionally Filed Under Seal iii BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 Prasco, LLC v. Medicis Pharm. Corp. 537 F.3d 1329 (Fed. Cir. 2008) ............................................................................................ 5 Proofpoint, Inc. v. Innova Patent Licensing, LLC No. 5:11-CV-02288-LHK, 2011 WL 4915847 (N.D. Cal. 2011) ..........................passim Statutes 35 U.S.C. 271(a) ...................................................................................................................... 11 Rules Fed. R. Civ. P. 12(b)(1) ............................................................................................................ 1 Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 5 of 18 Redacted Version of Document Provisionally Filed Under Seal 1 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 Defendants Balsam Brands, Inc. and Balsam International Unlimited Company (together, Balsam) move to dismiss the Complaint filed by plaintiffs UCP International Company Limited and Global United Enterprises Limited (together, UCP), for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). I. INTRODUCTION UCP manufactured the invertible Christmas trees accused of infringement in the dismissed lawsuit Balsam Brands Inc. v. Cinmar, LLC, Case No. 3:15-cv-04829- WHO (N.D. Cal. Oct. 20, 2015). Now it seeks to manufacture federal jurisdiction. There’s none to be had. UCP does not allege Balsam threatened it, sued it, wrote it a cease-and-desist letter, or otherwise took any direct step toward it, as required for case-or-controversy jurisdiction. See, e.g., Proofpoint, Inc. v. Innova Patent Licensing, LLC, No. 5:11-CV-02288-LHK, 2011 WL 4915847, at *2 - *3 (N.D. Cal. 2011). Nor could UCP allege any of those things. Balsam has never had any kind of contact with UCP. UCP’s sole theory for jurisdiction is that by bringing Balsam v. Cinmar against a UCP customer, Balsam “placed a cloud” over UCP’s ability to sell invertible artificial Christmas trees to other customers. (Compl., Dkt. Nos. 1, 7 ¶ 2.) Even assuming UCP could substantiate this claim, it would fail as a matter of law to create a case or controversy. This Court and the Federal Circuit alike have made clear that worry about lost sales from customers’ infringement fears does not create a justiciable controversy for the supplier. E.g., Proofpoint, 2011 WL 4915847, at *5 - *6 (“While the Court agrees that the [customer lawsuit] may negatively impact Proofpoint’s sales prospects, such ‘economic’ concerns do not establish an adverse legal interest sufficient to justify declaratory relief.”) The Complaint also fails to allege that UCP has meaningfully prepared to conduct potentially infringing activity, an independent jurisdictional defect. UCP has not alleged a justiciable controversy and its case must be dismissed. Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 6 of 18 Redacted Version of Document Provisionally Filed Under Seal 2 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 II. BACKGROUND A. The Frontgate Litigation. Balsam is a leading retailer of innovative, lifelike artificial Christmas trees, including its flagship product, an easy to set up and take down tree called the Flip Tree®. Balsam owns two U.S. patents on the Flip Tree (the Flip Tree Patents). (Declaration of Thomas Harman ISO Motion to Dismiss (Harman Decl.) ¶ 3.) In August 2015, Balsam learned that its closest competitor and a leading catalog retailer, Frontgate, was selling an “Inversion Tree” that appeared to Balsam to infringe its Flip Tree Patents. Frontgate and Balsam compete head to head in the market for high-end artificial Christmas trees, those typically sold for over $1,000. (Harman Decl. ¶ 4.) But while Balsam is a young and growing company, Frontgate is a large, well-established subsidiary of a $3.7 billion company, HSN, Inc., which also owns the Home Shopping Network television channel. Id. Faced with apparent infringement by such an important competitor, Balsam immediately took action. It obtained specimens of the Frontgate Inversion Tree, and had its patent lawyers study them. (Harman Decl. ¶ 5.) Following that investigation, on October 20, 2015, Balsam filed suit (the Frontgate Litigation). It named as defendants two HSN subsidiaries that conduct Frontgate’s business: Frontgate Marketing, Inc., and Cinmar, LLC, which does business under the Frontgate and Grandin Road brand names. (Bernstein Decl. ¶ 2 & Exh. A.) When Balsam filed its lawsuit, it knew that Frontgate’s source for the Inversion Trees was UCP. (Harman Decl. ¶ 6.) Balsam also learned soon after that UCP had applied for its own U.S. patent on a feature of its Inversion Tree. Id. But Balsam’s concern was with Frontgate, not UCP. Frontgate was Balsam’s biggest retail competitor, and it was selling what Balsam believed to be an infringing copy of Balsam’s flagship product. Accordingly, Balsam named only Frontgate in the lawsuit. Id. Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 7 of 18 Redacted Version of Document Provisionally Filed Under Seal 3 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 As the Frontgate Litigation continued through 2015 and into 2016, Balsam learned more about UCP’s relationship with Frontgate, and about its role in the litigation. s. (Bernstein Decl. ¶ 3 & Exh. B.) . (Bernstein Decl. ¶ 4 & Exh. C.) (Bernstein Decl. ¶ 5 & Exh. D.) UCP was paying a substantial portion of Frontgate’s litigation fees. (Bernstein Decl. ¶ 6 & Exh. E.) (Bernstein Decl. ¶¶ 5-6 & Exhs. D & E.) Separately, outside of the litigation, on October 26, 2016 UCP filed petitions with the U.S. Patent & Trademark Office seeking invalidation of Balsam’s asserted patent claims. (Bernstein Decl. ¶ 7 & Exh. F.) The Frontgate Litigation continued for over a year. After claim construction, LeClairRyan expressed increasing interest in seeking a summary judgment ruling that the Inversion Tree did not infringe Balsam’s patents. (E.g., Bernstein Decl. ¶ 8 & Exh. G.) Such a motion, if successful, would not only have exonerated Frontgate, but also cleared UCP for sale of its Inversion Tree in the United States. In December 2016, Balsam, r, settled the Frontgate Litigation. (Bernstein Decl. ¶ 9.) Id. On December 19, 2016, Balsam and Frontgate filed a Stipulation of Dismissal of the Frontgate Litigation with prejudice. (Bernstein Decl. ¶ 10.) This Court ordered the case dismissed the next day, December 20. (Id.) Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 8 of 18 Redacted Version of Document Provisionally Filed Under Seal 4 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 Several hours later, UCP filed this declaratory judgment action. (Id.) B. UCP’s Complaint. UCP’s Complaint alleges just one ground for a justiciable case or controversy: Balsam’s now-dismissed lawsuit against Frontgate, including the infringement allegations made in that suit. (Compl., Dkt. Nos. 1, 7 ¶ 17; see also ¶¶ 2, 12-15.) The Complaint alleges that that litigation and those allegations “have placed a cloud on [UCP’s] ability to sell invertible artificial Christmas trees.” (Id. ¶ 2.) It further alleges that the lawsuit and its allegations will “deter potential customers from buying [UCP’s] trees.” (Id. ¶ 13.) The Complaint does not allege UCP itself is fearful of legal action by Balsam. (Id. passim.) It does not allege any threats by Balsam against UCP. Id. It does not allege threats to others, such as actual or potential UCP customers. Id. The Complaint also does not allege past Balsam lawsuits against UCP or its customers, or against anyone else, other than Frontgate in the Frontgate Litigation. Id. There is no allegation that a lawsuit is imminent, against UCP or anyone else. Id. Although the Complaint asserts the possible fears of potential UCP customers, it does not identify any such customers. Id. It does not actually contend UCP presently has any customers for its invertible Christmas trees. Id. . (Bernstein Decl. ¶ 3 & Exh. B.) The Complaint also contains no allegations of potentially-infringing activity by UCP, nor of any steps toward such infringement. Other than the sales resolved by the Frontgate Litigation, the Complaint does not contend UCP has made any U.S. imports, offered or made any U.S. sales, solicited or received customer orders or inquiries, or conducted any other U.S. activities that would constitute infringement if the Inversion Trees are infringing. (See Dkt. Nos. 1, 7 passim.) Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 9 of 18 Redacted Version of Document Provisionally Filed Under Seal 5 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 III. LEGAL STANDARDS. A. Declaratory-Judgment Plaintiffs Must Demonstrate an Immediate, Justiciable Case or Controversy. The Declaratory Judgment Act does not create an independent basis for subject matter jurisdiction. Rather, it provides a remedy only if there exists an actual case or controversy between the parties. Matthews Int'l Corp. v. Biosafe Eng'g, LLC, 695 F.3d 1322, 1327-28 (Fed. Cir. 2012). Where, as here, the action is one for declaratory judgment concerning patent infringement, Federal Circuit law governs the existence of a case or controversy. Ass'n for Molecular Pathology v. United States PTO, 689 F.3d 1303, 1318 (Fed. Cir. 2012) (internal quotation marks and citation omitted), reversed-in-part on other grounds sub nom. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013). Whether a case satisfies Article III’s case-or-controversy requirement depends on whether “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007); accord Ass'n for Molecular Pathology, 689 F.3d at 1318 (quoting MedImmune). “Although MedImmune relaxed [the Federal Circuit]’s more restrictive reasonable apprehension of suit test for declaratory judgment jurisdiction, it did not alter the bedrock rule that a case or controversy must be based on a real and immediate injury or threat of future injury that is caused by the defendants[.]” Ass'n for Molecular Pathology, 689 F.3d at 1319 (emphasis in original) (internal citation and quotation marks omitted) (quoting Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008)). Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 10 of 18 Redacted Version of Document Provisionally Filed Under Seal 6 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 In the post-MedImmune world, declaratory-judgment plaintiffs must still show: (1) an affirmative act by the patentee related to the enforcement of his patent rights . . . and (2) meaningful preparation [by the declaratory-judgment plaintiff] to conduct potentially infringing activity. Id., 689 F.3d at 1318 (internal citations omitted); Proofpoint, Inc., 2011 WL 4915847, at *2 (quoting Ass'n for Molecular Pathology). For the first factor, a declaratory-judgment plaintiff must show that the required “affirmative acts” of the patentee were directed “at that plaintiff, not just broad and widespread enforcement activity.” Adobe Systems Inc. v. Kelora Systems LLCE, No. C 11-3938, 2011 WL 6101545, at *3-4 (N.D. Cal. Dec. 7, 2011) (emphasis added); accord Ass'n for Molecular Pathology, 689 F.3d at 1323 (reversing grant of jurisdiction for all plaintiffs except the one to whom the patentee specifically directed acts). For the second factor, a declaratory-judgment plaintiff “must allege significant, concrete steps to conduct infringing activity.” Organic Seed Growers & Trade Ass'n v. Monsanto Co., 718 F.3d 1350, 1359-60 (Fed. Cir. 2013) (internal quotation marks and citation omitted). Without such concrete steps “the dispute is neither ’immediate’ nor ’real’ and the requirements for justiciability have not been met.” Ours Tech., Inc. v. Data Drive Thru, Inc., 645 F. Supp. 2d 830, 836 (N.D. Cal. 2009). The harm declaratory-judgment plaintiffs must face is legal harm, such as the risk of its own infringement liability, rather than simply economic harm, such as a loss of business caused by customer fears. Arris Group, Inc. v. British Telecommunications PLC, 639 F.3d 1368, 1374 (Fed. Cir. 2011); Microchip Tech. Inc. v. Chamberlain Group, Inc., 441 F.3d 936, 942-44 (Fed. Cir. 2006)). Jurisdiction must exist when the complaint is filed. Cisco Systems, Inc. v. Alberta Telecommunications Research Centre, 892 F. Supp. 2d 1226, 1229-30 (N.D. Cal. 2012) (citing Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599 F.3d 1377, 1384 (Fed. Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 11 of 18 Redacted Version of Document Provisionally Filed Under Seal 7 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 Cir. 2010)). Actions taken by the plaintiff after filing the complaint cannot create jurisdiction. Id. The burden of showing that jurisdiction existed at the time of filing is on the party seeking relief. Id. IV. ARGUMENT Balsam has not directed any affirmative acts toward UCP, nor does UCP allege any. UCP has likewise not alleged any steps it has taken toward infringing activity. Each missing factor independently requires dismissal. A. Balsam Has Not Undertaken Any Affirmative Act Toward Plaintiffs Concerning Enforcement of the Flip Tree Patents. UCP does not allege that Balsam has sued, threatened, or accused UCP over the Flip Tree Patents. UCP rests its claim of jurisdiction solely on the now-dismissed lawsuit between Balsam and its competitor, Frontgate. As we now show, nothing in Balsam’s conduct, or in the Frontgate Litigation, establishes the required affirmative act by Balsam against UCP. 1. Balsam has not put UPC in fear of legal action, nor ever even spoken to UCP. Notably, UCP does not allege fear of suit by Balsam. And with good reason: Balsam has never threatened to file a lawsuit, nor ever even approached UCP, about the Flip Tree Patents. (Harman Decl. ¶ 7.) Balsam has never spoken with UCP at all. Id. Had Balsam wanted to sue UCP, it had ample opportunity in the Frontgate Litigation. As noted above, Balsam knew from before it brought suit that UCP was Frontgate’s source for the accused trees. (Harman Decl. ¶ 6.) If Balsam had been interested in pursuing UCP, it could simply have named it as an additional defendant then. But Balsam did not name UCP. Later in the litigation, Balsam learned UCP was funding some if not most of the case, a . (Bernstein Decl. ¶¶ 5-6 & Exhs. D & E.) UCP’s lawyers, wearing their hats as Frontgate’s counsel of record, nonetheless declined to produce any discovery Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 12 of 18 Redacted Version of Document Provisionally Filed Under Seal 8 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 documents held by UCP-such as design documents-contending Frontgate had no access to them. (Bernstein Decl. ¶ 11 & Exh. G.) Balsam could easily have broken this logjam simply by adding UCP to the case, then serving party discovery directly on UCP. Again it declined. Still later in the litigation, when Balsam subpoenaed documents from a UCP affiliate in the U.S., UCP moved to quash the subpoena on the ground, among others, that Balsam should have sent letters rogatory to Hong Kong for the documents. (Bernstein Decl. ¶ 12 & Exh. I.) Again, Balsam could have added UCP as a party and immediately resolved the problem. But again Balsam declined. Finally, when UCP filed an IPR attacking Balsam’s patents in the PTO, Balsam could have responded by naming UCP in its pending Frontgate Litigation. Balsam declined to do so. This is not the behavior of a company with its sights set on UCP. It’s the opposite: the acts of a company uninterested in UCP. Balsam’s concern was with Frontgate, a large, nationwide retailer and Balsam’s closest competitor. Now that Frontgate and Balsam have put these issues behind them, no dispute remains. All that remains is UCP’s wish for an advisory ruling it hopes will enhance U.S. sales. But that is not a controversy, let alone a “substantial” controversy with “sufficient immediacy and reality” to warrant a declaratory judgment. Cf. MedImmune, 549 U.S. 118 at 127. 2. UCP’s fear of diminished U.S. sales does not create case-or-controversy jurisdiction. UCP asks the Court to base jurisdiction on the “cloud” it says hangs over its invertible tree sales. (Compl., Dkt. Nos. 1, 7 ¶ 2.) But fear of diminished sales is an economic concern, not a legal one. Mere economic concern does not establish jurisdiction. Proofpoint, 2011 WL 4915847, at *5 - *6 (“While the Court agrees that the [customer lawsuit] may negatively impact Proofpoint’s sales prospects, such ‘economic’ concerns do not establish an adverse legal interest sufficient to justify declaratory relief.”); Arris Group, Inc., 639 F.3d at 1374 (“An ‘adverse legal interest’ Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 13 of 18 Redacted Version of Document Provisionally Filed Under Seal 9 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 requires a dispute as to a legal right-for example, an underlying legal cause of action that the declaratory defendant could have brought or threatened to bring. * * * [A] mere adverse economic interest is insufficient to create declaratory judgment jurisdiction.”). The Proofpoint plaintiff urged the precise jurisdictional argument UCP makes here: that a customer lawsuit filed by the patentee put other customers in fear, chilling sales. 2011 WL 4915847, at *2 - *3. The court agreed the customer lawsuit could “negatively impact Proofpoint’s sales prospects.” Id. at *5 - *6. But it nonetheless dismissed the case. Id. Maintaining sales levels was an economic interest, not a legal one. Id. Only the latter supported jurisdiction. Id; see also Microchip Tech. Inc, 441 F.3d at 943 (“At most, Microchip had only an economic interest in clarifying its customers' rights under Chamberlain's patents, which may have facilitated the sale of Microchip's products. Microchip perhaps would economically have benefited if its customers had no fear of suit by Chamberlain. Such an economic interest alone, however, cannot form the basis of an ‘actual controversy’ under the Declaratory Judgment Act.”); Ours Tech., Inc., 645 F. Supp. 2d at 840 (“Because [plaintiff’s] interest in indemnifying these U.S. retailers, as best the court can discern, is to preserve its customer base, [patentee] is correct that [plaintiff’s] interest in this action is largely-if not exclusively-economic.”). As these cases make clear, UCP’s lawsuit must be dismissed. At most, UCP seeks relief from possible economic, not legal, harm. 3. Balsam’s prior lawsuit against one of UCP’s customers does not create case-or-controversy jurisdiction for UCP. The dismissed Frontgate Litigation also does not create a case or controversy. Courts have been clear that the mere fact of suits against customers, without more, does not establish affirmative acts against the supplier. Also needed is some kind of specific threat or act directed to the supplier. Now dismissed, the Frontgate Litigation poses no threat to UCP. Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 14 of 18 Redacted Version of Document Provisionally Filed Under Seal 10 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 In Proofpoint, the patentee defendant had previously filed an infringement suit against three of the plaintiff’s customers. 2011 WL 4915847, at *1. That lawsuit’s infringement contentions called out the plaintiff’s products by name. Id. at *1, *4. The court nonetheless dismissed the declaratory judgment action for lack of a case or controversy. Id. at *3 - *6. In dismissing the lawsuit, the court emphasized the absence of any direct contact between the patentee and the plaintiff: the plaintiff there had not “asserted that it had any contact with [the patentee] prior to bringing suit.” Id. at *3. Nor had the patentee “claimed a right to a royalty from [plaintiff], sent [plaintiff] a cease-and-desist letter, or communicated with [plaintiff’s] employees.” Id. The patentee had thus not “engaged in any ‘affirmative act’ related to the enforcement of the ‘761 patent that was ‘directed’ at [the plaintiff].” Id. Just so here. Balsam has not had any contact whatsoever with UCP. Similarly, in Adobe Systems Inc., the patentee had previously sued at least one Adobe licensee and had written infringement letters to dozens of others. 2011 WL 6101545, at *1. The patentee’s infringement theory rested, at least in part, on Adobe technology. Id. at *1-*2. Adobe argued that the patentee’s claims exposed Adobe itself to claims of direct and indirect infringement, and also triggered a duty by Adobe to defend and indemnify the licensee. Id. at *3. But the court dismissed the action for lack of a case or controversy. Id. at *3 - *6. It noted that a “plaintiff seeking declaratory judgment must show that the patent holder took some affirmative acts directed at that plaintiff.” Id. at *4 (emphasis added). As in Proofpoint, the Adobe court emphasized that the patentee had never directly contacted or threatened Adobe. Id. Absent such direct contact or other specific basis on which Adobe itself faced infringement liability, the lawsuit against Adobe’s licensee was insufficient. Id. at *4 - *6. Cf. Arris, 639 F.3d at 1376-79 (justiciable controversy created where declaratory judgment plaintiff had been “directly and substantially involved in [patentee] infringement and licensing negotiations,” including “direct and repetitive” Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 15 of 18 Redacted Version of Document Provisionally Filed Under Seal 11 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 communications to plaintiff of patentee’s 118 pages of infringement contentions specifically naming plaintiff and its products). Finally, in Cisco Systems, Inc., the patentee brought infringement lawsuits against nine of Cisco’s customers, specifically identifying Cisco’s products but not naming Cisco itself as a defendant. 892 F. Supp. 2d. at 1228-29. Cisco sued for declaratory judgment of non-infringement and invalidity. Id. Once again, the court held that the fact that Cisco products were implicated in the customer lawsuits did not, by itself, create a real and immediate threat of liability for Cisco. Id. at 1233-34. In each of these cases, declaratory-judgment lawsuits were dismissed despite pending litigation and enforcement activity against customers of the declaratory- judgment plaintiff. Here, where the customer lawsuit has already been resolved and dismissed, the case is even easier. Even if the Frontgate Litigation could have created a case or controversy with UCP when it was pending, it has since been dismissed with prejudice. No case or controversy remains. B. UCP has not met its burden of showing that infringement is imminent. In addition to an affirmative act by the patentee, declaratory-judgment plaintiffs must also “allege significant, concrete steps to conduct infringing activity.” Organic Seed Growers & Trade Ass'n., 718 F.3d at 1359-60 (internal quotation marks and citation omitted); accord Ours Tech., Inc., 645 F. Supp. 2d at 836. Here, UCP has failed to allege the existence of any concrete steps toward infringing the Flip Tree Patents before filing this declaratory judgment action. UCP, which is headquartered in Hong Kong, does not allege that it is manufacturing inversion trees in the U.S., or offering to sell, selling, or importing them here. Cf. 35 U.S.C. 271(a) (listing acts qualifying as direct patent infringement). (Bernstein Decl. ¶ 3 & Exh. B.) s Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 16 of 18 Redacted Version of Document Provisionally Filed Under Seal 12 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 (Bernstein Decl. ¶ 9.) Under these circumstances, the Complaint must be dismissed. Ours Technology, Inc., 645 F. Supp. 2d at 836-37 (“Without any direct sales into the United States, . . . OTI does not come close enough to meeting the meaningful preparation standard so as to create a case or controversy necessary to establish declaratory judgment jurisdiction on this basis.”); Matthews Intern. Corp. v. Biosafe Eng’g, LLC, 695 F.3d 1322, 1328-30 (Fed. Cir. 2012) (no jurisdiction where declaratory-judgment plaintiff had not taken steps toward direct infringement when it filed its complaint); Organic Seed Growers & Trade Ass'n, 718 F.3d at 1360 (When it is “uncertain when, if ever, the declaratory plaintiff would engage in potentially infringing activity, the dispute [does] not present a case or controversy of sufficient immediacy to support a declaratory judgment.”) (internal quotation marks and citation omitted). V. CONCLUSION UCP’s complaint establishes at most a non-cognizable fear of future economic harm. Balsam has never taken any affirmative act toward UCP, or even spoken with UCP. UCP does not allege otherwise. Nor does UCP allege any concrete steps toward infringement. Each of these facts independently warrants dismissal. Balsam respectfully requests the Court dismiss this case with prejudice. Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 17 of 18 Redacted Version of Document Provisionally Filed Under Seal 13 BALSAM’S MOTION TO DISMISS Case No. 3:16-CV-07255-WHO 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 RESPECTFULLY SUBMITTED, DATED: February 16, 2017 THE BUSINESS LITIGATION GROUP, P.C. By: /s/ Marc N. Bernstein__ Marc N. Bernstein Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY Case 3:16-cv-07255-WHO Document 22 Filed 02/16/17 Page 18 of 18 Redacted version of document provisionally filed under seal Declaration of MNB ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 MARC N. BERNSTEIN (SBN 145837) mbernstein@blgrp.com WILL B. FITTON (SBN 182818) wfitton@blgrp.com THE BUSINESS LITIGATION GROUP, P.C. 555 Montgomery Street, Suite 1650 San Francisco, CA 94111 Telephone: 415.765.6633 Facsimile: 415.283.4804 Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION UCP INTERNATIONAL COMPANY LIMITED and GLOBAL UNITED ENTERPRISES LIMITED, Plaintiffs, v. BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL UNLIMITED COMPANY, an Ireland unlimited company, Defendants. Case No. 3:16-cv-07255-WHO DECLARATION OF MARC N. BERNSTEIN IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION Judge: Hon. William H. Orrick Courtroom: 2, 17th Floor Hearing Date: March 29, 2017 Time: 2:00 p.m. Case 3:16-cv-07255-WHO Document 22-1 Filed 02/16/17 Page 1 of 5 Redacted version of document provisionally filed under seal 1 Declaration of MNB ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 I, Marc N. Bernstein, declare as follows: 1. I am counsel for Balsam Brands Inc. and Balsam International Unlimited Company (together, Balsam), in the captioned case. I make this declaration in support of Balsam’s Motion to Dismiss Plaintiffs’ Complaint for Lack of Subject Matter Jurisdiction. Unless otherwise indicated, I have personal knowledge of the facts set forth in this declaration, and if called as a witness, could and would so testify. 2. Attached as Exhibit A to this declaration is a true and correct copy of excerpts of the original complaint Balsam filed in Balsam Brands Inc. v. Cinmar, LLC, Case No. 3:15-cv-04829-WHO (N.D. Cal. Oct. 20, 2015) (the Frontgate Litigation), naming as defendants two HSN, Inc. subsidiaries, Cinmar, LLC dba Frontgate and Grandin Road, and Frontgate Marketing, Inc. 3. Attached as Exhibit B to this declaration is a true and correct copy of excerpts on the December 1, 2016 deposition testimony of Erin P. Sullivan, Cinmar, LLC’s Vice President of Merchandising. At page 114 line 18 through page 115 line 10, and again on page 116 lines 6-9, Ms. Sullivan discusses 4. Attached as Exhibit C to this declaration is a true and correct copy of excerpts of product purchasing agreements between Cinmar and each UCP plaintiff, 5. Attached as Exhibit D to this declaration is a true and correct copy of a January 2016 e-mail chain between UCP and Cinmar (Frontgate), showing Case 3:16-cv-07255-WHO Document 22-1 Filed 02/16/17 Page 2 of 5 Redacted version of document provisionally filed under seal 2 Declaration of MNB ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 6. Attached as Exhibit E to this declaration is a true and correct copy of interrogatory responses served by Frontgate in the Frontgate Litigation. Frontgate’s response to the first interrogatory of this set, which asked who was funding the Frontgate Litigation, was UCP International Co., Ltd. and Frontgate. In light of this answer and the facts that (1) UCP appeared to Balsam to be directing LeClairRyan’s activities in the Frontgate Litigation and (2) LeClairRyan was by far doing most of the work in the litigation, as compared with Frontgate’s other counsel of record, Baker & Hostetler, it appeared to Balsam that UCP was paying a substantial portion of Frontgate’s litigation fees. 7. Attached as Exhibit F to this declaration are true and correct copies of the first few pages of two petitions UCP filed in the U.S. Patent and Trademark Office for inter partes review, one for each patent-in-suit in the Frontgate Litigation, seeking to invalidate a host of claims of those patents, including all claims Balsam asserted against Frontgate in the Frontgate Litigation. Case 3:16-cv-07255-WHO Document 22-1 Filed 02/16/17 Page 3 of 5 Redacted version of document provisionally filed under seal 3 Declaration of MNB ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 8. After claim construction in the Frontgate Litigation, counsel at LeClairRyan expressed with increasing interest its client’s desire to bring a summary judgment motion for a determination of non-infringement. Counsel at LeClairRyan mentioned its client’s interest in such a motion in conversations with Balsam counsel; in a telephonic hearing the Court conducted on November 1, 2016 about Balsam’s request for a 45-day extension of the close of discovery; and in an opposition to Balsam’s extension request, a true and correct copy of which is attached to this declaration as Exhibit G. LeClairRyan mentions the importance of the summary judgment at page 5 of that opposition, at lines 19 to 22. 9. In December, Balsam and its counsel reached a settlement with Frontgate and its counsel of the Frontgate Litigation. 10. On December 19, 2016, Balsam and Frontgate filed a Stipulation of Dismissal of the Frontgate Litigation, with prejudice. The Court ordered the case dismissed the next day, December 20, 2016. About four-and-a-half hours later, UCP filed the present declaratory judgment action. 11. As illustrated by LeClairRyan’s statements in Exhibit G attached to this declaration, authenticated at paragraph 8 above, LeClairRyan took the position that documents relating to the trees accused in the Frontgate Litigation, such as design documents, were “not in Frontgate’s control” because they were “in the possession of” the third party (i.e. UCP) that made the trees. Exh. G. at 3: 7-11. 12. Attached as Exhibit I to this declaration is a true and correct copy of a motion to quash that LeClairRyan filed in the Southern District of New York as Case 3:16-cv-07255-WHO Document 22-1 Filed 02/16/17 Page 4 of 5 Redacted version of document provisionally filed under seal 4 Declaration of MNB ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 counsel of record for a U.S. UCP affiliate, arguing, at page 4, that Balsam was required to use letters rogatory to Hong Kong to get discovery from UCP. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed at San Francisco, CA. DATED: February 16, 2017 ______ __/s/____ Marc N. Bernstein Case 3:16-cv-07255-WHO Document 22-1 Filed 02/16/17 Page 5 of 5 Exh. A Case 3:16-cv-07255-WHO Document 22-2 Filed 02/16/17 Page 1 of 4 COMPLAINT FOR PATENT INFRINGEMENT, FALSE MARKING, FALSE ADVERTISING & UNFAIR COMPETITION 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 MARC N. BERNSTEIN (SBN 145837) mbernstein@blgrp.com WILL B. FITTON (SBN 182818) wfitton@blgrp.com THE BUSINESS LITIGATION GROUP, P.C. 555 Montgomery Street, Suite 1650 San Francisco, CA 94111 Telephone: 415.765.6633 Facsimile: 415.283.4804 Attorneys for Plaintiffs BALSAM BRANDS INC. and BALSAM INTERNATIONAL LIMITED UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL LIMITED, an Ireland limited company, Plaintiffs, v. CINMAR, LLC d/b/a FRONTGATE and GRANDIN ROAD, a Delaware limited liability company, and FRONTGATE MARKETING, INC., a Delaware corporation, Defendants. Case No. COMPLAINT FOR 1. PATENT INFRINGEMENT; 2. FALSE MARKING; 3. FALSE ADVERTISING; 4. CALFORNIA UNFAIR COMPETITION; AND 5. CALIFORNIA FALSE ADVERTISING DEMAND FOR JURY TRIAL Case 3:15-cv-04829 Document 1 Filed 10/20/15 Page 1 of 62Case 3:16-cv-07255-WHO Document 22-2 Filed 02/16/17 Page of 4 3 COMPLAINT FOR PATENT INFRINGEMENT, FALSE MARKING, FALSE ADVERTISING & UNFAIR COMPETITION 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 JURISDICTION, VENUE AND INTRADISTRICT ASSIGNMENT 12. This action arises under the patent laws of the United States of America, including 35 U.S.C. §§ 271 et seq. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 & 1338(a). 13. Venue is proper in this District under 28 U.S.C. § 1391(b) & (c). On information and belief, Frontgate is subject to this Court’s personal jurisdiction because the acts and transactions complained of include the offer to sell and the sale of the identified infringing goods in the State of California and specifically in this District. Furthermore, Frontgate’s sales transactions are initiated nationwide through catalogs, which are delivered in the State of California and this District, and through the Internet, which targets sales to the State of California and this District, thereby purposefully availing itself of the benefits of the state. 14. Under Civil L.R. 3-2(c), this is an intellectual property action that is not subject to otherwise-applicable intradistrict assignment rules. Balsam awaits the Court’s decision on assignment to a division. PARTIES 15. Balsam Brands Inc. is a corporation organized under the laws of the State of Delaware with corporate offices in Redwood City, CA. 16. Balsam International Limited is a limited company organized under the laws of Ireland with its corporate offices in Dublin, Ireland. 17. Cinmar, LLC is a limited liability company organized under the laws of Delaware with its principal place of business is in West Chester, Ohio. 18. Frontgate Marketing, Inc. is a corporation organized under the laws of Delaware also with its principal place of business in West Chester, Ohio. 19. On information and belief, Cinmar, LLC and/or Frontgate Marketing, Inc. do business as Frontgate and Grandin Road, including through catalogs and the websites www.frontgate.com and www.grandinroad.com. The term “Frontgate” Case 3:15-cv-04829 Document 1 Filed 10/20/15 Page 4 of 62Case 3:16-cv-07255-WHO Document 22-2 Filed 02/16/17 Page 3 of 4 4 COMPLAINT FOR PATENT INFRINGEMENT, FALSE MARKING, FALSE ADVERTISING & UNFAIR COMPETITION 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 will be used here to refer collectively to Cinmar, LLC, Frontgate Marketing, Inc., and the Frontgate and Grandin Road brands. GENERAL ALLEGATIONS 20. Balsam International Limited is the owner, by assignment, of U.S. Patent No. 8,062,718 B2 (the ‘718 Patent), entitled “Invertible Christmas Tree,” which was duly and legally issued on November 22, 2011 by the United States Patent and Trademark Office. Balsam International Limited has granted Balsam Brands Inc. an exclusive license to the ‘718 Patent. A copy of the ’718 Patent is attached as Exhibit A. 21. Balsam International Limited is the owner, by assignment, of U.S. Patent No. 8,993,077 B2 (the ‘077 Patent), entitled “Invertible Christmas Tree,” which was duly and legally issued on March 31, 2015 by the United States Patent and Trademark Office. Balsam International Limited granted Balsam Brands Inc. an exclusive license to the ‘077 Patent. A copy of the ’077 Patent is attached as Exhibit B. 22. Frontgate imports, offers to sell and sells invertible artificial Christmas trees under its Frontgate brand, including the “Grand Balsam Inversion Artificial Christmas Tree,” the “Grand Fraser Fir Inversion Artificial Christmas Tree,” and the “Grand Noble Inversion Artificial Christmas Tree.” Frontgate also imports, offers to sell and sells under its Grandin Road brand the “Grand Fir One-Step Inversion Artificial Christmas Tree.” Collectively, these Christmas tree models, including the Grandin Road Grand Fir One-Step Inversion tree, will be referred to as the “Inversion Trees.” 23. Frontgate’s Grand Balsam, Grand Fraser Fir, and Grand Noble Inversion Artificial Christmas Trees infringe the claims of the ‘718 and ‘077 Patents, including but not limited to claims 1 and 4 of the ‘718 Patent and claims 11 and 14 of the ‘077 Patent. On information and belief, Frontgate’s Grand Fir One-Step Inversion Artificial Christmas Tree also infringes at least the same claims of the ‘718 and ‘077 Patents. Case 3:15-cv-04829 Document 1 Filed 10/20/15 Page 5 of 62Case 3:16-cv-07255-WHO Document 22-2 Filed 02/16/17 Page 4 of 4 Exh. B Document Provisionally Filed Under Seal In Its Entirety Case 3:16-cv-07255-WHO Document 22-3 Filed 02/16/17 Page 1 of 1 Exh. C Document Provisionally Filed Under Seal In Its Entirety Case 3:16-cv-07255-WHO Document 22-4 Filed 02/16/17 Page 1 of 1 Exh. D Document Provisionally Filed Under Seal In Its Entirety Case 3:16-cv-07255-WHO Document 22-5 Filed 02/16/17 Page 1 of 1 Exh. E Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 1 of 10 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 1 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 PATRICIA L. PEDEN (State Bar No. 206440) Patricia.Peden@leclairryan.com LECLAIRRYAN LLP 44 Montgomery Street, Suite 3100 San Francisco, CA 94104 Telephone: 415.913.4932 Facsimile: 415.391.8766 Kevin W. Kirsch (SBN 166184) kkirsch@bakerlaw.com BAKER & HOSTETLER LLP 312 Walnut Street, Suite 3200 Cincinnati, OH 45202-4074 Tel: (513) 929-3499 Fax: (513) 929-0303 Attorneys for Defendants FRONTGATE MARKETING, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL LIMITED, an Ireland limited company, Plaintiffs, v. CINMAR, LLC d/b/a FRONTGATE and GRANDIN ROAD, a Delaware limited liability company, and FRONTGATE MARKETING, INC., a Delaware corporation, Defendants. AND RELATED COUNTERCLAIMS Civil Action No. 15-cv-04829-WHO DEFENDANT FRONTGATE MARKETING, INC.’S RESPONSES TO PLAINTIFF BALSAM INTERNATIONAL UNLIMITED COMPANY’S FIRST SET OF INTERROGATORIES TO DEFENDANT FRONTGATE MARKETING, INC. Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 2 of 10 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 2 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 Pursuant to Rules 26 and 33 of the Federal Rules of Civil Procedure, Defendant Frontgate Marketing, Inc. (“Frontgate”), by its undersigned counsel, makes the following responses to Plaintiff Balsam International Unlimited Company’s (“Balsam International”) First Set of Interrogatories (“Interrogatories”) to Defendant Frontgate Marketing, Inc. served on October 28, 2016. GENERAL RESPONSES Frontgate’s responses to Balsam International’s Interrogatories are made to the best of Frontgate’s present knowledge, information and belief. Frontgate’s responses are at all times subject to such additional or different information that discovery or further investigation may disclose and, while based on the present state of Frontgate’s recollection, are subject to such refreshing of recollection, and such additional knowledge of facts, as may result from Frontgate’s further discovery or investigation. Frontgate reserves all objections or other questions as to the competency, relevance, privilege, or admissibility as evidence in any subsequent proceeding in or trial of this or any other action for any purpose whatsoever of Frontgate’s responses herein and any document or thing identified or provide in response to Balsam International’s Interrogatories. GENERAL OBJECTIONS The General Objections below are incorporated by reference into each response to each of the Interrogatories. The stating of a specific objection or response shall not be construed as a waiver of these General Objections, and all responses should be understood to be subject to these General Objections. A. Frontgate objects generally to all definitions and instructions provided in Balsam International’s Interrogatories. Specifically: The definition of “Inversion Tree” includes the term “invertible” which is too vague and ambiguous to guess at the meaning. Frontgate objects to Balsam International’s definition of UCP International Co, Ltd., to the extent that it includes “any other entity that controls, is controlled by, or is under common control with any of those companies,” as it calls for information that is not within Frontgate’s Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 3 of 10 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 3 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 possession, custody, or control. B. Frontgate objects to all Interrogatories to the extent they would impose obligations beyond those required by the Federal Rules of Civil Procedure, the Local Rules of the United States District Court for the Northern District of California, or any other applicable law, rule, or doctrine. C. Frontgate objects to all Interrogatories to the extent they require disclosures of information protected by the attorney-client privilege, work-product doctrine, or any other applicable privilege or doctrine as to that request or as to any future request. D. Frontgate objects to all Interrogatories to the extent they call for a legal conclusion. E. Frontgate objects to each of the Interrogatories to the extent they are overly broad and unduly burdensome or seek admissions that are not relevant to the claims or defenses of any party. F. Frontgate objects to Balsam International’s Interrogatories that include vague, ambiguous or undefined words. Frontgate cannot know Balsam International’s meaning of undefined terms and therefore cannot know what facts it is being asked to provide. G. Frontgate objects to Balsam International’s Interrogatories to the extent they contain compound and complex statements seeking the multiple facts. H. Frontgate objects to the Interrogatories to the extent they seek information that is not within its possession, custody or control or that requires it to guess as to information in the possession of third-parties. I. Frontgate objects to the extent that the Interrogatories are argumentative or assume facts not set forth in the request. J. The applicable foregoing General Objections are incorporated into each of the responses that follow. The stating of a specific objection or response shall not be construed as a waiver of these General Objections, and all responses should be understood to be subject to these General Objections. Pursuant to Rule 26(e) of the Federal Rules of Civil Procedure, Frontgate expressly Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 4 of 10 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 4 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 reserves the right to supplement or modify the following responses as appropriate. Subject to, and without waiving, the foregoing General Objections, Frontgate responds to Balsam International’s First Set of Interrogatories as follows: RESPONSES AND SPECIFIC OBJECTIONS The following Responses are expressly made subject to and without waiving the general objections and general statements. 1. IDENTIFY each person (whether an entity or a natural person) that is responsible to pay FRONTGATE defense costs for this litigation. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is compound. Subject to and without waiving its general and specific objections, Frontgate responds that the following entities are responsible to pay Frontgate defense costs for this litigation: UCP International Co., Ltd and Frontgate. 2. IDENTIFY each person (whether an entity or a natural person) that has paid any FRONTGATE defense costs in this litigation. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is compound. Subject to and without waiving its general and specific objections, Frontgate responds: UCP International Co., Ltd and Frontgate. 3. IDENTIFY any lawyers representing UCP that FRONTGATE or its counsel has worked with in defending this litigation. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 5 of 10 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 5 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 compound. Frontgate objects to the definition of UCP as set forth above. Subject to and without waiving its general and specific objections, Frontgate responds as follows: LeClairRyan LLP. 4. IDENTIFY any lawyers representing UCP that FRONTGATE or its counsel has worked with on the October 26, 2016 petitions for Inter Partes Review filed by UCP. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to the definition of UCP as set forth above. Subject to and without waiving its general and specific objections, Frontgate responds as follows: None. 5. At a level of generality that protects privilege and work product, DETAIL the role UCP is playing or has played in this litigation, including any input, control, rights or obligations that UCP has. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to the definition of UCP as set forth above. Frontgate objects to this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrase “detail.” Frontgate objects to the interrogatory to the extent it require disclosures of information protected by the attorney-client privilege, work-product doctrine, or any other applicable privilege or doctrine. Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Pursuant to Fed. R. Civ. P 33(d), the answer to this interrogatory may be determined by examining records to be produced in this case, including document production numbers FG0005853-FG0005865, and the burden of deriving or ascertaining the answer is substantially the same for Balsam as it is for Frontgate. 6. At a level of generality that protects privilege and work product, DETAIL any role FRONTGATE has played or is playing in the October 26, 2016 petitions for Inter Partes Review filed by UCP. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to the definition of UCP as set forth above. Frontgate objects to Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 6 of 10 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 6 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrase “detail.” Frontgate objects to the interrogatory to the extent it require disclosures of information protected by the attorney-client privilege, work-product doctrine, or any other applicable privilege or doctrine. Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: None. 7. DETAIL FRONTGATE’s sales ( in dollars and units) of INVERSION TREES, including any rebates, returns, discounts or other data necessary to fully describe the difference between gross and net sales data. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects to the term “Inversion Trees” as set forth above. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrases “detail” and “any rebates, returns, discounts, or other data necessary.” Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Pursuant to Fed. R. Civ. P 33(d), the answer to this interrogatory may be determined by examining records produced in this case, and the burden of deriving or ascertaining the answer is substantially the same for Balsam as it is for Frontgate. 8. DETAIL, by each model sold and by date, the prices charged by FRONTGATE for INVERSION TREES, including any information on rebates, volume discounts, or any other practices that bear on the difference between normal retail prices and the actual prices to consumers. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects to the term “Inversion Trees” as set forth above. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrases “detail” and “other practices.” Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Pursuant to Fed. R. Civ. P 33(d), the answer to this interrogatory may be determined by examining records produced in this case, Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 7 of 10 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 7 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 and the burden of deriving or ascertaining the answer is substantially the same for Balsam as it is for Frontgate. 9. IDENTIFY all INVERSION TREES sold, offered for sale, made, or used in the United States, or imported into the United States by FRONTGATE. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects to the term “Inversion Trees” as set forth above. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to this interrogatory as overbroad, unduly burdensome, vague, and ambiguous. Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Pursuant to Fed. R. Civ. P 33(d), the answer to this interrogatory may be determined by examining records produced in this case, and the burden of deriving or ascertaining the answer is substantially the same for Balsam as it is for Frontgate. 10. DETAIL when each INVERSION TREE identified in response to Interrogatory 8 was sold, offered for sale, made, or used in the United States, or imported into the United States. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects to the term “Inversion Trees” as set forth above. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrase “detail.” Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Pursuant to Fed. R. Civ. P 33(d), the answer to this interrogatory may be determined by examining records produced in this case, and the burden of deriving or ascertaining the answer is substantially the same for Balsam as it is for Frontgate. 11. DETAIL the inversion mechanism of all INVERSION TREES sold, offered for sale, made, or used in the United States, or imported into the United States by FRONTGATE. RESPONSE: Frontgate objects that the interrogatory seeks information that is not relevant to any claim or defense in the case. Frontgate objects to the term “Inversion Trees” as set forth above. Frontgate objects that the definition of “Frontgate” is compound. Frontgate objects to Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 8 of 10 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 8 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 this interrogatory as overbroad, unduly burdensome, vague, and ambiguous, including without limitation the phrase “detail.” Frontgate objects to the use of the undefined term “inversion mechanism” which renders the interrogatory vague and ambiguous. Subject to and without waving its foregoing general and specific objections, Frontgate responds as follows: Frontgate cannot ascertain the meaning of the term inversion mechanism rendering the interrogatory unintelligible. Frontgate is willing to meet and confer with Balsam to address the objections stated herein. Dated: November 29, 2016 Respectfully Submitted, /s/ Patricia L. Peden Patricia L. Peden (CA Bar No. 206440) LECLAIRRYAN LLP 44 Montgomery Street, Suite 3100 San Francisco, California 94104 Tel: (415)391-7111 Fax: (415) 391-8766 Email: patricia.peden@leclairryan.com Bryan Smith (Admitted Pro Hac Vice) LECLAIRRYAN LLP 70 Linden Oaks, Suite 210 Rochester, NY 14625 Tel: 585.270.2100 Fax: 585.270.2179 Email: Bryan.Smith@leclairryan.com Kevin W. Kirsch (SBN 166184) BAKER & HOSTETLER LLP 312 Walnut Street, Suite 3200 Cincinnati, OH 45202-4074 Tel: (513) 929-3499 Fax: (513) 929-0303 Email: kkirsch@bakerlaw.com Attorney for the Defendants FRONTGATE MARKETING, INC. Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 9 of 10 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 9 FRONTGATE’S RESPONSES TO BALSAM INTERNATIONAL’S FIRST SET OF INTERROGATORIES CASE NO. 15-CV-04829-WHO 19491049.1 CERTIFICATE OF SERVICE I certify that on November 29, 2016, the foregoing DEFENDANT FRONTGATE MARKETING, INC.’S RESPONSES TO PLAINTIFF BALSAM INTERNATIONAL UNLIMITED COMPANY’S FIRST SET OF INTERROGATORIES TO DEFENDANT FRONTGATE MARKETING, INC. was served via e-mail to all counsel for of record. /s/ Adriana L. Lawrence Adriana L. Lawrence Case 3:16-cv-07255-WHO Document 22-6 Filed 02/16/17 Page 10 of 10 Exh. F Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 1 of 23 Inter Partes Review U. S. Patent No. 8,062,718 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 2 of 23 19372906.1 Filed on behalf of: UCP International Co., Ltd. and Paper No. 1 Global United Enterprises Limited, Petitioner By: Charles C. Yang, Reg. 62,059 (Lead Counsel) Date: October 26, 2016 cyang@ntellectlaw.com I-Chang John Yang, Reg. 60,384 (Back-up Counsel) jyang@ntellectlaw.com UNITED STATES PATENT AND TRADEMARK OFFICE _________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD _________________ UCP INTERNATIONAL CO., LTD AND GLOBAL UNITED ENTERPRISES LIMITED Petitioners v. BALSAM INTERNATIONAL LIMITED Patent Owner _________________ Inter Partes Review Case No. IPR2017-00110 U.S. Patent No. 8,062,718 _________________ Petition for Inter Partes Review Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 3 of 23 i Table of Contents Table of Contents……………………………………………………………..….....i Filed on behalf of: UCP International Co., Ltd. and ......................... Paper No. 1 i Global United Enterprises Limited, Petitioner ....................................................... i Petition for Inter Partes Review ................................................................................. i I. MANDATORY NOTICES ................................................................................. 1 A. Real Party-in-Interest .................................................................................... 1 B. Related Matters .............................................................................................. 1 C. Lead and Back-up Counsel ........................................................................... 2 D. Service Information ....................................................................................... 3 E. Word Count ................................................................................................... 3 II. GROUNDS FOR STANDING ........................................................................... 4 III. STATEMENT OF THE PRECISE RELIEF REQUESTED ........................... 4 IV. STATEMENT OF THE REASONS FOR THE RELIEF REQUESTED ....... 5 A. Introduction ................................................................................................... 5 B. Description of the ’718 Patent ....................................................................... 6 1. Claims of the ’718 Patent .............................................................................. 6 2. ’718 Patent Specification .............................................................................. 6 3. ’718 Patent Prosecution History .................................................................... 6 C. Description of the Identified Prior Art .......................................................... 7 1. U.S. Patent No. 3,900,637 to Byrd (“Byrd”, Ex. 1111) ................................ 7 2. U.S. Patent No. 4,606, 366 to Collet (“Collet”, Ex. 1112) ........................... 8 3. U.S. Patent No. 4,451,510 to Boisvert (“Boisvert”, Ex. 1113) ..................... 9 4. U.S. Patent No. 5,490,599 to Tohidi (“Tohidi”, Ex. 1114).........................10 D. Claim Construction ...........................................................................................10 1. Claim 1 ........................................................................................................16 2. Claim 2 ........................................................................................................27 3. Claim 3 ........................................................................................................27 4. Claim 4 .......................................................................................................30 5. Conclusion ...................................................................................................31 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 4 of 23 ii G. Ground 2: Inter Partes Review of Claim 10 of the ’718 Patent Should Be Ordered Based on the Reasonable Likelihood That One or More of These Claims Will Be Found Obvious over Byrd in Combination with Collet and Boisvert ....31 1. Claim 10 ......................................................................................................31 H. Ground 3: Inter Partes Review of Claims 1, 2 and 4 of the ’718 Patent Should Be Ordered Based on the Reasonable Likelihood That One or More of These Claims Will Be Found Anticipated by Tohidi ...........................................35 1. Claim 1 ........................................................................................................35 2. Claim 2 ........................................................................................................40 3. Claim 4 ........................................................................................................41 4. Conclusion ...................................................................................................43 V. THERE IS A REASONABLE LIKELIHOOD THAT PETITIONER WOULD PREVAIL WITH RESPECT TO AT LEAST ONE OF THE .............43 VI. CONCLUSION ...........................................................................................44 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 5 of 23 iii TABLE OF AUTHORITIES Cases Catalina Mktg. Int’l v. Coolsavings.com, Inc., 289 F.3d 801, 808-09 (Fed. Cir. 2002) .....................................................................................................................35 Facebook, Inc. v. Pragmatus AV, LLC, 582 F. App'x 864, 869 (Fed. Cir. 2014) ...11 Howmedica Osteonics Corp. v. Zimmer, Inc., 640 F. App'x 951, 956 (Fed. Cir. 2016) .....................................................................................................................36 KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 415 (2007) .......................................21 Rowe v. Dror, 112 F.3d 473, 478 (Fed.Cir.1997). ...................................................36 Statutes 35 U.S.C. § 102 ........................................................................................................39 35 U.S.C. § 102 (b) .................................................................................................... 9 35 U.S.C. § 102(b) ............................................................................................ 4, 7, 8 35 U.S.C. § 103 ............................................................................................. 4, 28, 31 35 U.S.C. §§ 102, 103 ................................................................................................ 5 35 U.S.C. §§ 311-318................................................................................................. 4 37 C.F.R. § 42.10(b) .................................................................................................. 2 37 C.F.R. § 42.100(b) ..............................................................................................10 37 C.F.R. § 42.104(a) ................................................................................................. 3 37 C.F.R. § 42.104(b) ................................................................................................ 4 37 C.F.R. § 42.105(a) ................................................................................................. 1 37 C.F.R. § 42.24(a)(1) .............................................................................................. 3 37 C.F.R. § 42.6(c) ..................................................................................................... 3 37 C.F.R. § 42.63(e) ................................................................................................... 2 37 C.F.R. § 42.8(b)(1) ................................................................................................ 1 37 C.F.R. § 42.8(b)(2) ................................................................................................ 1 37 C.F.R. § 42.8(b)(3) ................................................................................................ 2 37 C.F.R. § 42.8(b)(4) ................................................................................................ 3 37 C.F.R. §§ 42.100-42.123 ....................................................................................... 4 37 C.F.R. § 42.8 ......................................................................................................... 3 AIA 35 U.S.C. § 112 .................................................................................................. 6 Rules MPEP at §2143 ........................................................................................................20 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 6 of 23 1 I. MANDATORY NOTICES A. Real Party-in-Interest Pursuant to 37 C.F.R. § 42.8(b)(1), UCP International Co., Ltd., located at 3 rd Floor, Block C, Hunghom, 21 Ma Tau Wai Road, Hong Kong and Global United Enterprises Limited, located at Block C, 6/F., Eldex Industrial Building, 21 Ma Tau Wai Road, Hunghom, Hong Kong, (Collectively “Petitioner”) are the real parties-in-interest. B. Related Matters Pursuant to 37 C.F.R. § 42.8(b)(2), records of the U.S. Patent and Trademark Office (“PTO”) indicate U.S. Patent No. 8,062,718 (“the ’718 Patent” or “’718 Pat.”, Ex. 1101) issued November 22, 2011 from U.S. Patent Application SN 12/798,496 (“the ’496 Application”, Ex. 1102) filed April 5, 2010. According to the Patent Office PAIR records, the `718 patent is a continuation-in-part of and claims priority from PCT/US2008/001358 filed December 10, 2008 and published August 14, 2008 as WO 2008/097468 A2 (“WO ’468”, Ex. 1103). Note that the patent owner filed a certificate of correction to the ‘718 patent on February 23, 2016 requesting correction to the parent PCT application to PCT/US2008/001358 (“Request for Certificate of Correction”, EX. 1104). The certificate of correction was approved and issued on May 17, 2016 (“Certificate of Correction approval”, EX. 1105). U.S. Patent No. 8,993,077 (the “`077 Patent” or “`077 Pat.”, Ex. Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 7 of 23 2 1106) issued March 31, 2015 from Application No. 13/302,873 filed November 22, 2011 is a continuation of the `873 application and according to the Patent Office PAIR records also claims priority to WO `468 (Ex. 1103). Application SN 14/720,037 (“the ’037 Application”, Ex. 1107) filed May 22, 2015, is a continuation and claims the benefit of the ’873 Application, currently pending. U.S. Patent No. 9,040,130 (“the ’130 Patent” or “’130 Pat.”, Ex. 1108) issued May 26, 2015 from U.S. Patent Application SN 13/545,283 filed July 10, 2012, is a continuation-in-part and claims the benefit of the ’873 Application and claims priority to provisional application SN 61/629,957 (“Ex. 1109”) filed November 30, 2011. Application SN PCT/US12/00569 (the “`569 PCT”, Ex. 1110”) filed November 30, 2012, also claims the benefit of the `873 Application. A petition for inter partes review of the ’077 Patent is being filed concurrently by Petitioner under IPR2017-00111. The ’718 Patent is the subject of litigation by Balsam Brands Inc. and Balsam International Limited (collectively, “Balsam”), styled Balsam Brands Inc. and Balsam International Limited v Cinmar, LLC d/b/a Frontgate and Grandin Road and Frontgate Marketing, Inc., Case No. 15-cv-04829-WHO in the United States District Court for the Northern District of California (“Balsam Litigation”). C. Lead and Back-up Counsel Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 8 of 23 3 Pursuant to 37 C.F.R. § 42.8(b)(3), Petitioner identifies the following Lead and Back-up Counsel. Lead Counsel Back-up Counsel Charles C. Yang Registration No. 62059 Postal and Hand Delivery Address: Ntellect Law, P.C. 980 9 th St., Suite 2380 Sacramento, CA 95814 Telephone: 916-228-4775 E-mail: cyang@ntellectlaw.com I-Chang John Yang Registration No. 60,384 Postal and Hand Delivery Address: Ntellect Law, P.C. 980 9 th St., Suite 2380 Sacramento, CA 95814 Telephone: 916-228-4775 E-mail: jyang@ntellectlaw.com Pursuant to 37 C.F.R. § 42.10(b) and 37 C.F.R. § 42.63(e), a Power of Attorney and an Exhibit List accompany this Petition. The required fee is paid via online credit card payment. The PTO is authorized to charge fee deficiencies and credit overpayments to Deposit Account No. 50-6658 (Customer ID No. 120663). Pursuant to 37 C.F.R. § 42.6(c), copies of the references are filed herewith. D. Service Information Pursuant to 37 C.F.R. § 42.8(b)(4), service information (by e-mail, postal mailing or hand delivery) for Petitioner is provided in the designation of Lead and Back-up Counsel above. Petitioner consents to electronic service by mail. E. Word Count Pursuant to 37 C.F.R. § 42.24(d), Petitioner certifies that the word count is 10,195, excluding Table of Contents, Table of Authorities, mandatory notices Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 9 of 23 4 under §42.8, a certificate of service or word count, or appendix of exhibits or claim listing. The word count is machine generated via Microsoft® Word® II. GROUNDS FOR STANDING Pursuant to 37 C.F.R. § 42.104(a), Petitioner hereby certifies that the ’718 Patent is available for inter partes review and that Petitioner is not barred or estopped from requesting an inter partes review challenging the patent claims on the grounds identified in the petition. The ’718 Patent issued on November 22, 2011. No maintenance fees are due at this time. The 4th year maintenance fee was posted June 15, 2015; and consequently, it appears that all claims of the ’718 Patent remain subsisting at this time. III. STATEMENT OF THE PRECISE RELIEF REQUESTED Pursuant to 37 C.F.R. § 42.104(b), Petitioner respectfully requests inter partes review, under 35 U.S.C. §§ 311-318 and 37 C.F.R. §§ 42.100-42.123, for the following grounds of unpatentability: Ground 1: claims 1-4 of the ’718 Patent are unpatentable over U.S. Patent No. 3,900,637 to Byrd (“Byrd”, Ex. 1111) in view of U.S. Patent No. 4,606,366 to Collet (“Collet”, Ex. 1112) under pre-AIA 35 U.S.C. § 103; Ground 2: claim 10 of the ’718 Patent is unpatentable over Byrd in view of Collet and U.S. Patent No. 4,451,510 to Boisvert (“Boisvert”, Ex. 1113) under pre- AIA 35 U.S.C. § 103; and Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 10 of 23 5 Ground 3: claims 1, 2 and 4 of the ’718 Patent are anticipated by U.S. Patent No. 5,490,599 to Tohidi (“Tohidi”, Ex. 1114) pre-AIA 35 U.S.C. § 102(b). IV. STATEMENT OF THE REASONS FOR THE RELIEF REQUESTED A. Introduction Petitioner has identified 4 prior art references- Byrd, Collet, Boisvert, and Tohidi-that overcome any supposed deficiencies of the prior art applied against the claims during original prosecution of the ’496 Application, which issued as the ’718 Patent. The claims of the ’718 Patent generally recite a collapsible artificial tree. All of the claimed features of the claimed artificial collapsible trees, however, were exhibited by the prior art. Byrd, Collet, Boisvert and Tohidi were not applied by the PTO in any rejection of the ’496 Application claims under pre-AIA 35 U.S.C. §§ 102, 103, even though, as will be documented herein, these references when properly and fully considered together teach all the claim limitations. As discussed more fully infra and in the O’Reilly Declaration (Ex. 1115), the claims of the ’718 Patent are obvious over the combination of Byrd, Collet, and Boisvert, and anticipated by Tohidi. Had the examiner possessed the information set forth herein during prosecution of the ’496 Application, these claims would have been rejected. Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 11 of 23 Inter Partes Review U.S. Patent No. 8,993,077 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 12 of 23 19372906.1 Filed on behalf of: UCP International Co., Ltd. and Paper No. 1 Global United Enterprises Limited, Petitioner By: Charles C. Yang, Reg. 62,059 (Lead Counsel) Date: October 26, 2016 cyang@ntellectlaw.com I-Chang John Yang, Reg. 60,384 (Back-up Counsel) jyang@ntellectlaw.com UNITED STATES PATENT AND TRADEMARK OFFICE _________________ BEFORE THE PATENT TRIAL AND APPEAL BOARD _________________ UCP INTERNATIONAL CO., LTD AND GLOBAL UNITED ENTERPRISES LIMITED Petitioners v. BALSAM INTERNATIONAL LIMITED Patent Owner _________________ Inter Partes Review Case No. IPR2017-00111 U.S. Patent No. 8,993,077 _________________ Petition for Inter Partes Review Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 13 of 23 i Table of Contents Table of Contents…………………………………………………………………...i TABLE OF AUTHORITIES …………………………………………………...…iv I. MANDATORY NOTICES ................................................................................. 1 A. Real Party-in-Interest .................................................................................... 1 B. Related Matters .............................................................................................. 1 C. Lead and Back-up Counsel ........................................................................... 3 D. Service Information ....................................................................................... 3 E. Word Count ................................................................................................... 4 II. GROUNDS FOR STANDING ........................................................................... 4 III. STATEMENT OF THE PRECISE RELIEF REQUESTED ........................... 4 IV. STATEMENT OF THE REASONS FOR THE RELIEF REQUESTED ....... 5 A. Introduction ................................................................................................... 5 B. Description of the ’077 Patent ....................................................................... 6 1. Claims of the ’077 Patent .............................................................................. 6 2. ’077 Patent Specification .............................................................................. 6 3. ’077 Patent Prosecution History .................................................................... 7 C. Description of the Identified Prior Art .......................................................... 9 1. U.S. Patent No. 3,900,637 to Byrd (“Byrd”, EX. 1004) ............................... 9 2. U.S. Patent No. 4,606,366 to Collet (“Collet”, EX. 1005) .........................10 3. U.S. Patent No. 4,451,510 to Boisvert (“Boisvert”, EX. 1006) ..................11 4. U.S. Patent No. 5,490,599 to Tohidi (“Tohidi”, EX. 1007) ........................11 D. Claim Construction ......................................................................................12 E. Person Of Skill In The Art & State Of The Art ..........................................13 F. Ground 1: Inter Partes Review of Claims 1-3, 6, 11-14, 17-19, 22, and 24 of the ’077 Patent Should Be Ordered Based on the Reasonable Likelihood That One or More of These Claims Will Be Found Obvious over Byrd in Combination with Collet ......................................................................................13 1. Claim 1 ........................................................................................................17 2. Claim 2 ........................................................................................................26 3. Claim 3 ........................................................................................................27 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 14 of 23 ii 4. Claim 6 ........................................................................................................29 5. Claim 11 ......................................................................................................34 6. Claim 12 ......................................................................................................36 7. Claim 13 ......................................................................................................38 8. Claim 14 ......................................................................................................39 9. Claim 17 ......................................................................................................40 10. Claim 18 ...................................................................................................44 11. Claim 19 ...................................................................................................44 12. Claim 22 ...................................................................................................45 13. Claim 24 ...................................................................................................47 14. Conclusion ................................................................................................47 G. Ground 2: Inter Partes Review of Claim 5 of the ’077 Patent Should Be Ordered Based on the Reasonable Likelihood That One or More of These Claims Will Be Found Obvious over Byrd in Combination with Collet and Boisvert ....47 1. Claim 5 ........................................................................................................48 2. Conclusion ...................................................................................................51 H. Ground 3: Inter Partes Review of Claims 1, 2, 6, 11-13, 17-19, 22, and 24 of the ’077 Patent Should Be Ordered Based on the Reasonable Likelihood That One or More of These Claims Will Be Found Anticipated by Tohidi .................51 1. Claim 1 ........................................................................................................51 2. Claim 2 ........................................................................................................56 3. Claim 6 ........................................................................................................57 4. Claim 11 ......................................................................................................60 5. Claim 12 ......................................................................................................63 6. Claim 13 ......................................................................................................64 7. Claim 17 ......................................................................................................64 8. Claim 18 ......................................................................................................67 9. Claim 19 ......................................................................................................68 10. Claim 22 ...................................................................................................68 11. Claim 24 ...................................................................................................69 12. Conclusion ................................................................................................69 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 15 of 23 iii V. THERE IS A REASONABLE LIKELIHOOD THAT PETITIONER WOULD PREVAIL WITH RESPECT TO AT LEAST ONE OF THE .................................69 VI. CONCLUSION ..............................................................................................70 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 16 of 23 iv TABLE OF AUTHORITIES Cases ” Rowe v. Dror, 112 F.3d 473, 478 (Fed.Cir.1997) ................................................52 Catalina Mktg. Int’l v. Coolsavings.com, Inc., 289 F.3d 801, 808-09 (Fed. Cir. 2002). ....................................................................................................................52 Howmedica Osteonics Corp. v. Zimmer, Inc., 640 F. App'x 951, 956 (Fed. Cir. 2016) .....................................................................................................................52 KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 415 (2007) .......................................22 Statutes 35 U.S.C. § 102 ........................................................................................................68 35 U.S.C. § 102 (b) ..................................................................................................12 35 U.S.C. § 102(b) .................................................................................... 6, 8, 10, 11 35 U.S.C. § 102(b). .................................................................................................... 6 35 U.S.C. § 103 ............................................................................................. 6, 47, 50 35 U.S.C. § 103; ......................................................................................................... 6 35 U.S.C. § 112 .......................................................................................................... 8 35 U.S.C. §§ 102, 103 ................................................................................................ 7 35 U.S.C. §§ 311-31................................................................................................... 6 37 C.F.R. § 42.10(b) .................................................................................................. 4 37 C.F.R. § 42.100(b) ..............................................................................................13 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 17 of 23 v 37 C.F.R. § 42.104(a) ................................................................................................. 5 37 C.F.R. § 42.104(b) ................................................................................................ 6 37 C.F.R. § 42.105(a) ................................................................................................. 1 37 C.F.R. § 42.24(a)(1) .............................................................................................. 5 37 C.F.R. § 42.6(c) ..................................................................................................... 5 37 C.F.R. § 42.63(e) ................................................................................................... 4 37 C.F.R. § 42.8(b)(1) ................................................................................................ 3 37 C.F.R. § 42.8(b)(2) ................................................................................................ 3 37 C.F.R. § 42.8(b)(3 ................................................................................................. 4 37 C.F.R. § 42.8(b)(4) ................................................................................................ 5 37 C.F.R. §§ 42.100-42.123 ....................................................................................... 6 Rules MPEP at §2143…………………………………………………………………………………22 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 18 of 23 I. MANDATORY NOTICES A. Real Party-in-Interest Pursuant to 37 C.F.R. § 42.8(b)(1), UCP International Co., Ltd., located at 3rd Floor, Block C, Hunghom, 21 Ma Tau Wai Road, Hong Kong and Global United Enterprises Limited, located at Block C, 6/F., Eldex Industrial Building, 21 Ma Tau Wai Road, Hunghom, Hong Kong, (Collectively “Petitioner”) are the real parties-in-interest. B. Related Matters Pursuant to 37 C.F.R. § 42.8(b)(2), records of the U.S. Patent and Trademark Office (“PTO”) indicate that U.S. Patent No. 8,993,077 (“the ’077 Patent”, EX. 1001) issued March 31, 2015, from U.S. Patent Application Serial No. (“SN”) 13/302,873 (“the ’873 Application”, EX. 1002), filed November 22, 2011. The ’873 Application is a continuation of U.S. Patent Application SN 12/798,496 (“the ’496 Application”, EX. 1016) filed April 5, 2010 and issued November 22, 2011 as U.S. Patent No. 8,062,718 (“the ’718 Patent” or “’718 Pat.”, EX. 1017). Per the Patent Office PAIR records, the `718 patent is a continuation-in-part of and claims priority from PCT/US2008/001358 filed December 10, 2008 and published August 14, 2008 as WO 2008/097468 A2 (“001358 PCT”, Ex. 1003). Note that the patent owner filed a certificate of correction to the ‘077 patent on February 23, 2016 Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 19 of 23 2 requesting correction to the parent PCT application to PCT/US2008/001358 (“Request for Certificate of Correction”, EX. 1014). The certificate of correction was approved and issued on October 4, 2016 (“Certificate of Correction approval”, EX. 1013). U.S. Patent No. 9,040,130 (“the ’130 Patent” or “’130 Pat.”, EX. 1022) issued May 26, 2015 from U.S. Patent Application SN 13/545,283 filed July 10, 2012, is a continuation-in-part and claims the benefit of the ’873 Application and claims priority to provisional application SN 61/629,957 (“EX 1021”) filed November 30, 2011. Application SN PCT/US12/00569 (the “`569 PCT”, EX. 1020”) filed November 30, 2012, also claims the benefit of the `873 Application. U.S. Patent Application SN 14/720,037 (“the ’037 Application”, EX. 1019) filed May 22, 2015, is a continuation and claims the benefit of the ’873 Application, currently pending. A petition for inter partes review of the ’718 Patent is concurrently filed by Petitioner under IPR2017-00110. The ’077 Patent is the subject of litigation by Balsam Brands Inc. and Balsam International Limited (collectively, “Balsam”), styled Balsam Brands Inc. and Balsam International Limited v Cinmar, LLC d/b/a Frontgate and Grandin Road and Frontgate Marketing, Inc., Case No. 15-cv-04829-WHO in the United States District Court for the Northern District of California (“Balsam Litigation”). Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 20 of 23 3 C. Lead and Back-up Counsel Pursuant to 37 C.F.R. § 42.8(b)(3), Petitioner identifies the following Lead and Back-up Counsel. Lead Counsel Back-up Counsel Charles C. Yang Registration No. 62059 Postal and Hand Delivery Address: Ntellect Law, P.C. 980 9th St., Suite 2380 Sacramento, CA 95814 Telephone: 916-228-4775 E-mail: cyang@ntellectlaw.com I-Chang John Yang Registration No. 60,384 Postal and Hand Delivery Address: Ntellect Law, P.C. 980 9th St., Suite 2380 Sacramento, CA 95814 Telephone: 916-228-4775 E-mail: jyang@ntellectlaw.com Pursuant to 37 C.F.R. § 42.10(b) and 37 C.F.R. § 42.63(e), a Power of Attorney and an Exhibit List accompany this Petition. The required fee is paid via online credit card payment. The PTO is authorized to charge fee deficiencies and credit overpayments to Deposit Account No. 50-6658 (Customer ID No. 120663). Pursuant to 37 C.F.R. § 42.6(c), copies of the references are filed herewith. D. Service Information Pursuant to 37 C.F.R. § 42.8(b)(4), service information (by e-mail, postal mailing or hand delivery) for Petitioner is provided in the designation of Lead and Back-up Counsel above. Petitioner consents to electronic service by mail. Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 21 of 23 4 E. Word Count Pursuant to 37 C.F.R. § 42.24(d), Petitioner certifies that the word count is 13,965, excluding Table of Contents, Table of Authorities, mandatory notices under §42.8, a certificate of service or word count, or appendix of exhibits or claim listing. The word count is machine generated via Microsoft® Word®. II. GROUNDS FOR STANDING Pursuant to 37 C.F.R. § 42.104(a), Petitioner hereby certifies that the ’077 Patent is available for inter partes review and that Petitioner is not barred or estopped from requesting an inter partes review challenging the patent claims on the grounds identified in the petition. The ’077 Patent issued on March 31, 2015. No maintenance fees are due at this time. The 4th year maintenance fee window opens March 31, 2018; and consequently, it appears that all claims of the ’077 Patent remain subsisting at this time. III. STATEMENT OF THE PRECISE RELIEF REQUESTED Pursuant to 37 C.F.R. § 42.104(b), Petitioner respectfully requests inter partes review, under 35 U.S.C. §§ 311-318 and 37 C.F.R. §§ 42.100-42.123, for the following grounds of unpatentability: Ground 1: claims 1-3, 6, 11-14, 17-19, 22, and 24 of the ’077 Patent are unpatentable over U.S. Patent No. 3,900,637 to Byrd (“Byrd”, EX. 1004) in view Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 22 of 23 5 of U.S. Patent No. 4,606,366 to Collet (“Collet”, EX. 1005) under pre-AIA 35 U.S.C. § 103; Ground 2: claim 5 of the ’077 Patent is unpatentable over Byrd in view of Collet and U.S. Patent No. 4,451,510 to Boisvert (“Boisvert”, EX. 1006) under pre-AIA 35 U.S.C. § 103; and Ground 3: claims 1, 2, 6, 11-13, 17-19, 22, and 24 of the ’077 Patent are anticipated by U.S. Patent No. 5,490,599 to Tohidi (“Tohidi”, EX. 1007) pre-AIA 35 U.S.C. § 102(b). IV. STATEMENT OF THE REASONS FOR THE RELIEF REQUESTED A. Introduction Petitioner has identified 4 prior art references- Byrd, Collet, Boisvert, and Tohidi-that overcome any supposed deficiencies of the prior art applied against the claims during original prosecution of the ’873 Application, which issued as the ’077 Patent. The claims of the ’077 Patent generally recite a collapsible artificial tree. All the claimed features of the claimed artificial collapsible trees, however, were exhibited by the prior art. Byrd, Collet, Boisvert and Tohidi were not applied by the PTO in any rejection of the ’873 Application claims under pre-AIA 35 U.S.C. §§ 102, 103, Case 3:16-cv-07255-WHO Document 22-7 Filed 02/16/17 Page 23 of 23 Exh. G Case 3:16-cv-07255-WHO Document 22-8 Filed 02/16/17 Page 1 of 8 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 PATRICIA L. PEDEN (State Bar No. 206440) Patricia.Peden@leclairryan.com LECLAIRRYAN LLP 44 Montgomery Street, Suite 3100 San Francisco, CA 94104 Telephone: 415.913.4932 Facsimile: 415.391.8766 Kevin W. Kirsch (SBN 166184) kkirsch@bakerlaw.com BAKER & HOSTETLER LLP 312 Walnut Street, Suite 3200 Cincinnati, OH 45202-4074 Tel: (513) 929-3499 Fax: (513) 929-0303 Attorneys for Defendants CINMAR, LLC d/b/a FRONTGATE AND GRANDIN ROAD and FRONTGATE MARKETING, INC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL LIMITED, an Ireland limited company, Plaintiffs, v. CINMAR, LLC d/b/a FRONTGATE and GRANDIN ROAD, a Delaware limited liability company, and FRONTGATE MARKETING, INC., a Delaware corporation, Defendants. AND RELATED COUNTERCLAIMS Civil Action No. 15-cv-04829-WHO DEFENDANTS’ RESPONSE IN OPPOSITION TO PLAINTIFFS’ ADMINISTRATIVE MOTION TO EXTEND TIME TO COMPLETE DISCOVERY Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 1 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 2 f 8 1 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 I. Introduction: This is a small case with very little damages at issue. Balsam claims lost profits on 1,662 Flip trees that went unsold during the 2015 Christmas season. Alternatively, Balsam seeks a reasonable royalty that, under controlling Federal Circuit law, must be apportioned to cover only the “pivot joint” of the patents. As such, this is the size of case the Federal Rules were amended to address, wherein considerations of proportionality must take center stage to ensure the costs of litigation do not exceed any reasonable expectation of damages. Fed. R. Civ. P. 16 addresses the proportionality concerns by safeguarding the case schedule so it is not protracted for lack of good case management. To that end, Rule 16 requires “good cause” to extend case deadlines. Balsam’s motion does not address Rule 16, and makes no real attempt to show “good cause,” arguing instead that it “simply needs more time.” Mot. at 2:20. This case does not merit more time, it merits prompt resolution. Importantly, Balsam has done little to nothing over the last ten months to seek the discovery it claims is hampering its ability to move forward. Consequently, Balsam cannot satisfy Rule 16’s good cause requirement. On the other hand, an extension is prejudicial to Frontgate who has acted with diligence to obtain its discovery and, having prevailed at claim construction, is eager to get this case resolved on summary judgment. While Balsam seeks delay, Frontgate must make business decisions that are currently cloaked in uncertainty. As this case stretches on, Frontgate faces increased litigation costs as a result of Balsam’s failure to comply with disclosure obligations and to meet case deadlines. Frontgate must also deal with Balsam’s public accusations that it is a patent infringer from whom customers should not buy trees. Balsam’s plea for more time cannot not trump Frontgate’s legitimate need for an efficient resolution of this case so as to prevent the ongoing prejudice to its business. II. Relevant Legal Standard: Rule 16(b) requires the court to enter a scheduling order that limits the time to complete discovery. To meet the goals of efficient case management, and so not to reward parties failing to act with diligence, Rule 16(b)(4) requires “good cause” to amend a scheduling order. 1 See Su v. Siemens 1 “The objectives of Rule 16(b) include: (i) expediting the disposition of the action; (ii) establishing early and continuing control so that the case will not be protracted because lack of management; (iii) discouraging wasteful pretrial activity; (iv) improving the quality of the trial through more thorough preparation; and (v) facilitating the settlement of the case.” Spencer v. AT&T Digital Life, Inc, No. 2:14- cv-01136-APG (PAL), 2016 WL 544476, at *3 (D. Nev. Feb. 10, 2016). Because of heavy case loads, trial courts enter scheduling orders “to establish deadlines to foster the efficient treatment and resolution Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 2 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 3 f 8 2 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 Indus., Inc., No. 12-CV-03743-JST, 2015 WL 798562, at *1 (N.D. Cal. Feb. 23, 2015), citing Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir.2000). The Court considers the diligence of the parties in deciding a motion to extend case deadlines. Id. If the party seeking a modification of the Court’s Scheduling Order has not been diligent, “the inquiry should end.” Id., citing Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). The prejudice to the party opposing modification may supply additional reasons to deny a motion. Su, 2015 WL 798562, at *1. III. Legal Argument: In support of its motion, Balsam cites (1) allegations of Frontgate’s delay, (2) Balsam’s own delay in producing documents, and (3) the unavailability of a third-party witness, Bruce Schooley, as reasons to extend the case schedule. None of these excuses demonstrate the “good cause” required by Rule 16. See Coleman, 232 F.3d at 1294 (Rule 16’s good cause standard “primarily considers the diligence of the party seeking the amendment.”). A. Balsam’s Manufactured Complaints Do Not Demonstrate Good Cause Balsam is correct in telling the Court it served written discovery on May 18, 2016, but Balsam omits that its first discovery was served nearly four months after the parties filed their Joint Case Management Statement. See Dkt. No. 61. 2 Frontgate responded on July 6, 2016, yet Balsam said nothing about Frontgate’s responses until another three months passed. Dkt. No. 121, Ex. B. On October 1 st , Balsam wrote for the first time about Frontgate’s interrogatory responses, demanding a response by October 4 th . Id. Similarly, Balsam waited until October 4 th to raise concerns with Frontgate’s document production, demanding a response two days later on October 6 th . Id. at Ex. D. Frontgate promptly evaluated Balsam’s concerns and, where warranted, Frontgate produced additional documents. Frontgate served supplemental RFP responses on October 17 th . Grier Decl. at ¶2. Frontgate also provided supplemental interrogatory responses on October 24 th . Id. Frontgate has completed its document collection and anticipates that all remaining documents will be produced to Balsam by the end of this week. Id. at ¶3. Frontgate has provided full responses to all outstanding interrogatories. Id. at ¶4. After the last documents are produced in the next few days, there will be no outstanding of cases.” Id., citing Wong v. Regents of the University of California, 410 F.3d 1052, 1060 (9th Cir. 2005). “A trial court’s case management efforts ‘will be successful only if the deadlines are taken seriously by the parties, and the best way to encourage that is to enforce the deadlines.’” Id. 2 In contrast, Frontgate has acted with diligence. See Dkt. No. 121, Exhibits G-J and M. Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 3 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 4 f 8 3 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 discovery owed by Frontgate to Balsam. Balsam argues it is prejudiced in its ability to take depositions. Balsam offers mere speculation that it may need to file a motion to compel to find documents it speculates might be missing from Frontgate’s production. If Balsam had conferred with Frontgate, it would have learned Frontgate’s policy is to preserve certain categories of responsive documents for two years or less. Id. at ¶5. When this case was filed, a litigation hold notice was put in place but certain responsive documents not retained prior to the notice are no longer available. Id. at ¶6. Moreover, Frontgate does not make the accused trees. Frontgate buys trees from a third-party and resells them through its catalog, website, and other marketing channels. Many of the documents Balsam seeks, including those about the design of the accused trees, are not in Frontgate’s control, and instead, are in the possession of a third party for whom Balsam has yet to issue a deposition subpoena. Likewise, Balsam wrongly argues that Frontgate’s interrogatory responses were deficient. But, even if Balsam’s allegation had merit (it does not), there is nothing about the interrogatory responses hampering depositions. Balsam’s interrogatories were boiler-plate requests for information unrelated to any fact witness. For example, Balsam’s interrogatory No. 4 asks about the relationship between the Defendants, despite the fact that Balsam has had that information since the TRO hearing. Compare Grier Decl. Ex. A to Dkt. Nos. 13.5-13.8. Balsam is manufacturing potential discovery disputes that do not exist. Tellingly, Balsam has not conducted an in-person conference for any alleged discovery deficiency, let alone filed a motion to compel. Balsam’s hollow statements about hypothetical motion practice are self-serving speculation; they are not sufficient to demonstrate the good cause. Finally, Balsam does not tell the Court it asked to depose Frontgate’s witnesses after Thanksgiving, giving Balsam more than ample time to prepare for those depositions. Nor does Balsam explain that of the “18” depositions Balsam says must be taken, only five are of Frontgate witnesses (three fact witnesses and two corporate depositions). Balsam will suffer no hardship if its five lawyers are forced to take five Frontgate depositions over the next five weeks. The truth is that, through its motion, Balsam hopes to expand, rather than merely complete, discovery. In the last few weeks, Balsam frantically served third party deposition subpoenas it could have served at any time in the last ten months. It is likely Balsam “just needs more time” to seek third party depositions for which it made no effort to schedule until this month. Nonetheless, its third party subpoenas are fatally defective for a Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 4 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 5 f 8 4 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 myriad of reasons and are likely to be quashed. The remaining depositions are of Balsams’ own witnesses who are local and who have no connection to Frontgate’s document production or interrogatory responses. Balsam can complete depositions before the close of fact discovery; it need only notice and take the Frontgate depositions in late November as requested. B. Balsam’s Document Production Backlog is A Problem of Its Own Making, And Does Not Demonstrate Good Cause for Balsam’s Requested Extension Balsam argues its struggle to produce documents provides a reason to delay these proceedings. The reason Balsam is collecting and producing documents now is because it violated Patent L. R. 2-2. In response to document requests Frontgate served in February, Balsam refused to produce documents until it obtained a protective order more to its liking. Frontgate initially opposed Balsam’s request because it would withhold documents from Frontgate’s in-house counsel. In a compromise aimed to get the documents it needed for depositions without moving the case schedule, Frontgate agreed to a more restrictive protective order. Once Balsam’s protective order was signed by the Court, Balsam should have produced the documents it presumably collected but was withholding awaiting a restrictive protective order. Apparently, Balsam had not collected documents and was left scrambling when Frontgate demanded a complete production upon entry of the protective order. Balsam’s late production will require Frontgate’s counsel to put in late hours, but they are willing to do that to keep the current case schedule. Balsam’s own delay in producing documents, in contrast, is not “good cause” for the modification Balsam seeks. See Johnson, 975 F.2d 609 (If the party seeking a modification of the Court’s Scheduling Order has not been diligent, the inquiry should end.). C. Mr. Schooley’s Illness Is Not Good Cause For Balsam to Amend the Scheduling Order Balsam has been working with the inventor of the patents-in-suit, Bruce Schooley, since before filing this case. See Dkt. No. 15. Balsam has had full access to Mr. Schooley for over a year. On the other hand, Frontgate has been seeking to depose Mr. Schooley for months. There have been several hurdles to his deposition, including Mr. Schooley’s need for additional time to produce documents, his travel schedule, and now his medical condition. Frontgate’s counsel has been working cooperatively with Mr. Schooley’s counsel to set a date for his deposition. The parties previously agreed to set Mr. Schooley’s deposition for October 28, 2016. Thereafter, Mr. Schooley’s counsel informed Frontgate that Mr. Schooley had suffered a heart attack and would likely have to reschedule his deposition but, at Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 5 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 6 f 8 5 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 that time, Mr. Schooley’s counsel did not know how long of a delay would be required. Frontgate agreed to reset the deposition until November 7 th until additional information could be obtained about Mr. Schooley’s condition. When Mr. Schooley’s physician recommended he not be deposed for several more weeks, Frontgate began working with Mr. Schooley’s counsel to set a new date for his deposition, which will likely be shortly after Christmas. Frontgate expects to obtain a stipulation that Frontgate can take Mr. Schooley’s deposition after the close of fact discovery. That Frontgate must wait to depose a single witness that it (not Balsam) has subpoenaed for testimony is good cause for Frontgate to extend the fact discovery deadline for the sole purpose of deposing Mr. Schooley. It is not, however, good cause for Balsam to extend the discovery deadline for any deposition it seeks, let alone extend all case deadlines. Balsam is hoping that by mentioning a serious medical condition it can find the excuse for delay it has been looking for. But, Mr. Schooley’s condition impacts Frontgate (not Balsam) and Frontgate is not seeking a modification of the Scheduling Order. D. Frontgate Will Be Prejudiced If This Case is Delayed Frontgate will be prejudiced if this case is protracted as a result of Balsam’s dilatory conduct. First, Frontgate will be prejudiced through increased litigation expenses. It is telling that Balsam is not seeking to extend the discovery deadline for one or two witnesses, but is instead seeking a wholesale extension of all deadlines that would allow it to serve new written discovery and seek to depose third parties Balsam has not yet served with a subpoena. Second, delay means that Frontgate must wait to bring its meritorious summary judgment motion. The summary judgement deadline is important to Frontgate. Frontgate believes the Court’s claim construction precludes a finding of infringement, and as the case drags on Frontgate must make business decisions about purchasing and selling trees. Keeping the current schedule means Frontgate may have resolution before it must make important decisions about next year’s tree sales. Delay means Frontgate must continue to operate its business under a cloud of uncertainty. Finally, delay hurts Frontgate because Balsam is using this case to unfairly compete in the market. While Balsam asks for delay, it posts accusations that Frontgate is stealing its patented tree, and imploring customers to purchase from Balsam in light of Frontgate’s alleged infringement. See Grier Decl., Ex. B. Balsam cannot be heard to complain when Frontgate seeks the fastest path to prove Balsam’s allegations false when Balsam is impugning its reputation in the marketplace. Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 6 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 7 f 8 6 DEFS OBJECTIONS OT PLTFS ADMIN MOTION Case No. 3:15-cv-04829-WHO TO EXTEND TIME TO COMPLETE DISCOVERY 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 Dated: October 25, 2016 /s/ Patricia L. Peden Patricia L. Peden (SBN 206440) LeClairRyan LLP 44 Montgomery Street, Thirty First Floor San Francisco, CA 94104 Telephone: 415-391-7111 Facsimile: 415-391-8766 patricia.peden@leclairryan.com Kevin W. Kirsch (SBN 166184) kkirsch@bakerlaw.com BAKER & HOSTETLER LLP 312 Walnut Street, Suite 3200 Cincinnati, OH 45202-4074 Telephone: (513) 929-3499 Facsimile: (513) 929-0303 Attorney for Defendants CINMAR, LLC d/b/a FRONTGATE, GRANDIN ROAD, and FRONTGATE MARKETING, INC., CERTIFICATE OF SERVICE The undersigned certifies that on this 25th day of October, 2016, the foregoing DEFENDANTS’ RESPONSE IN OPPOSITION TO PLAINTIFFS’ ADMINISTRATIVE MOTION TO EXTEND TIME TO COMPLETE DISCOVERY was served to all counsel and/or pro se parties of record electronically or by another manner authorized by Federal Rule of Civil Procedure 5(b)(2). /s/ Adriana L. Lawrence Adriana L. Lawrence Case 3:15-cv-04829-WHO Document 127 Filed 10/25/16 Page 7 of 7s : 6-cv- 7255- c t 2 -8 il 02/16/ 7 8 f 8 Exh. H Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 1 of 18 IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK BALSAM BRANDS INC. and BALSAM INTERNATIONAL LIMITED, i MEMORANDUM OF LAW IN SUPPORT OF MOTION TO QUASH DEPOSITION SUBPOENA Plaintiff, v. Dated: November 7,201 6 Case No. LECLAIRRYAN, A Professional Corporation Andrew P. Zappia Nicole A. SuIlivan 885 Third Avenue, Sixteenth Floor New York, New York 10022 Tel,: 2 12,697.6555 Fax: 212,986,3509 Nicole.Sullivan@,lecls~inya~~.coin CINMAR, LLC d/b/a FRONTGATE, GRANDIN ROAD, and FRONTGATE MARKETING, INC., Defendants. and Patricia L. Peden (SBN 206440), of counsel LeClairRyail LLP 44 Montgomery Street, Suite 3 100 San Francisco, CA 94104 Telephone: 415.391.71 1 1 Facsimile: 41 5.391.8766 Patricia.Peden~1eclairrvan.coin Attorneys for UCP (USA) International, Inc. . I , _ i i ti A W. ,,' ““‘\. -'3? rm. _ . I 13.7: , , g , , § 'a...« I , L ts. A I : , i l . l iva .: . . . . 509 i l llivan@lec1aim/an.com Andrew.Zannia@,lec1airrvan.com t f n t 11 i ricia.Peden@1ec1air1* an.com tt r t i l‘ . Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 2 of 18 TABLE OF CONTENTS Page . . TABLE OF AUTHORITIES ........................................................................................................ 11 I . Preliminary Statement .......................................................................................................... 1 .......................................................................................................................... I1 . Background 1 ..................................................................................................... I11 . Relevant Legal Authority 3 IV . Argument ............................................................................................................................. 4 A . The Subpoena Seeks Irrelevant Inforination That Is Not Proportional To The Needs of the California Action ................................................................................ 4 B . The Testimony Sought in the Subpoena Is Available froin UCP Hong Kong and ......................................................................................... the Frontgate Defendants 8 C . The Subpoena Subjects UCP (USA) To An Undue Burden .................................. 10 D . Because Balsam Violated Fed . R . Civ . P . 45(d)(l), UCP (USA) Should be ........................................................................................ Awarded Costs and Fees 11 . ......................................................................................................................... V Conclusion 12 TABL OF CONTE Page TABL OF AUT RITI ........................................................................................................ .. ii 1. Preliminary Statement ........................................................................................................ ..I II. Background ........................................................................................................................ ..l III. Relevant Legal Authority ................................................................................................... ..3 IV. Ar u ent ......... ......... .......... .......... ... ..4 A. Th Subpoena Seeks Irr l vant Inf rm ti That Is Not Proportional To T Needs of the Calif r i Acti .............................................................................. ..4 B. T Testi ony Sought in the Subpo na I A il l fr m U H g K and the Front t Def nt ....................................................................................... ..8 C. T Subp Subj t U ( A) T U B r ................................ .. O D. B c B l Vi l t d Fed. R. i . P. 45( )(1), U ( ) Shoul be r Co t and Fe s ...................................................................................... .. V. oncl si ....................................................................................................................... .. i l9497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 3 of 18 TABLE OF AUTHORITIES Page CASES Ain. Protein Corp. v. AB Volvo, 844 F.2d 56 (2d Cis. 1988) ................................................................................................... 5 Anlvor 17. Foir:field G~*een~ l i c l~ Ltd., 297 F.R.D. 223 (S.D.N.Y. 2013) ......................................................................................... 3 Aristocr.ot Leistrre Ltd v. Dezrtsche Bank Trzut Co. An~ericas, 262 F.R.D. 293 (S.D.N.Y. 2009) ..................................................................................... 3 , 4 Avogo Tecl~s. U.S., Inc. v. IPtronics Inc., 309 F.R.D. 294 (E.D. Pa. 2005) ............................... .... ........................................ 3, 4, 6 , 7 , 9 C ~ O M ~ ~ I Cent. Petrolezrm Corp. v. Cosmopolitan Sl~ipping Co., 602 F.2d 474, 476 (2d Cir. 1979) ......................................................................................... 5 Halo Elecs. v. Ptrlse Elecs., 136 S. Ct. 1923 (2016) ......................................................................................................... 9 Hzrntoir., Inc. v. Clin~atecrcrft, Inc., 254 F.R.D. 677 (N.D. Okla. 2008) ................................................................................. 12 Luke/. Ai1.11)ajl Ltd. v. Poi7 Ainericm7 WOI-ld Airwcrys, 607 F . Supp. 324 (S.D.N.Y 1985) ....................................................................................... 9 Linde 17. Arab Bonk, PLC, 262 F.R.D. 136 (E.D.N.Y. 2009) ....................................................................................... 10 Micro Motion, Inc, v. Kc~ne Steel Co., IIIC, ...................................................................... 894 F.2d 1318 (Fed. Cir. 1990) 4, 5, 8, 9, 12 Philip Morris Inc, v. Otonledia, No. 02-civ-7575(GEL)(KNF), 2004 W L 1348987 (S.D.N.Y. June 15, 2004) .................. 10 Sensyti~ol Corp. 17. Radio Corp. ofAit7., 1 8 F.R.D. 279 (S.D.N.Y. 1955) ................................................................................... 6, 7 Soto v. Castlerock Forming & Ti.m7sp., Inc., 282 F.R.D. 492 (E.D. Cal. 2012) ....................................................................................... 1 1 IE m. p. vo, r. ) ...... ...... ...... ...... ...... ...... .. wa v. airfie reenwich . . .Y. ) ......... ......... ........ ....... t cra u t . uts us . mericas, . . .Y. ) ...... ...... ...... ...... ..... .. , a chs. .S., . i . . . . ) ... ...... ....... ... , , , , rown t. tr l u . l hip ing ., , . ) ....... ....... ........ ........ . . uls , . . 16) ....... ........ ....... ........ ....... .. u ai , . . matecraft, . . l . ) ............. ............. .... .. a r irway . an m ri an orld ays, . ) ..... ..... ..... ..... ..... ...... . v a , . . .N.Y. ) ..... ..... ..... .... .... ..... ..... .. , . ane l ., nc, ed. r. ) ..... ...... ..... .......... .. , , , , i . . am , -civ-757 ( )(KNF), . .Y. , ) ..... . 1O ytrol p. v. p. f m., . . .Y. ) ..... ..... ..... ..... ...... ..... . , a ransp., ., . . . . ) ....... ....... ....... ....... ....... ..11 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 4 of 18 RULES Fed . R . Civ . P . 11 ........................................................................................................................... 12 Fed . R . Civ . P . 26 ........................................................................................................................... 5 Fed . R . Civ . P . 26(g) ...................................................................................................................... 12 Fed . R . Civ . P . 37 ........................................................................................................................... 12 Fed . R . Civ . P . 45 ............................................................................................................. l y 3¶ loy 11 Fed . R . Civ . P . 45(c) .............................. .. .................................................................................. 3 Fed . R . Civ . P . 45(d)(l) ............ .. ....................................................................................... 1 Fed . R . Civ . P . 45(d)(3) .................................................................................................................... 1 Fed . R . Civ . P . 45(d)(3)(A) .............................................................................................................. 3 Fed . R . Civ . P . 45(d)(3)(A)(iv) ........................................................................................................ 4 . . . . . . . . . . . . 19497927 3 . F“ P“ W?°?°?° . . ........ ........ ........ ........ ........ .. 2 .................... .................... .. ......... ......... ........ ........ ......... . 2 3 ........... ........... .......... ........... .. 2 ...... ...... ...... ...... ...... ...... ...... 1, ,1 ,1 ..... ....... .. .. ...... ..... ...... ...... ...... .. 45(d)(1 .... .... .. ... ... ... .... .... ... ... ... ... .... .... 11 ...... ....... ...... ...... ...... ....... ...... .1 ....... ...... ....... ....... ....... ...... .. )( )( ....... ....... ....... ....... ....... ...... . i Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 5 of 18 I. Preliminary Statement UCP (USA) International, Inc. ("UCP (USA)") respectfully submits this lnernorandunl of law in support of its Motion to Quash a Rule 45 deposition subpoena (the "Subpoena") served by Balsam Brands Inc. and Balsam International, Unlimited Co ("Balsan~") in a litigation matter pending in the United States District Court for the Northern District of New York. The Subpoena is improper and calls for compliance in this District, so pursuant to Rule 45(d)(3), UCP(USA) seeks an Order from this Court quashing the Subpoena. In support of this Motion to Quash, UCP (USA) submits the Declarations of Eric Alper and Patricia L. Peden. 11. Background On October 20, 201 5, Balsam brought patent, trademark and false advertising clai~ns in the Northern District of California against Defendants Cinlnar LLC and Frontgate Marketing (collectively "Frontgate"). See Case No. 3: 15-cv-04829-WHO (N.D. Cal.) ("the California Action"). In the California Action, Balsam alleges that Frontgate is selling artificial Christmas trees that infringe Balsam's "Flip Tree" trademark and its patent claims to a "pivot joint" used to couple tree trunks in a manner allowing the trees to move around a fixed point for deployment. See Declaration of Patricia L. Peden at Exh. A ("Peden Decl.") (California Complaint). At the outset of the case, Balsam moved for a telnporary restraining order, which the California Court denied. During the TRO proceedings, Balsam learned that the accused trees were manufactured by UCP International Co. Ltd., a Hong Kong company ("UCP Hong Kong"). See Peden Decl. at Exh. B (Frontgate's Opposition to TRO). The California Action has been pending for more than a year and has progressed through claim construction. Fact discovery was set to close on November 30, 2016 but, on Balsam's motion, the California Court recently moved the fact discovery deadline to January 16, 2017. See Peden Decl. at 7 3. Balsam served initial disclosures identifying UCP Hong Kong as a non-party witness with relevant information. UCP Hong Kong is not a defendant in the California Action. See Peden Decl. at Exh. C (Balsam's Initial Disclosures). To date, Balsam has made no effort to depose UCP Hong Kong. Id. at 7 4. To the contrary, Balsam expressly decided not to depose 1 l , . “ ” ctf ll t m m m t i “ na”) . ite “ m”) itig t . ia c t, , a. t l t . . II. , ls laims f l i m t t “ t ”). 5-cv-04829- . “ l ” l i le t t l ifi ist a ring ’ “ ” t s “ t” l i t. t i . . “ l.” r ia t). , m t i , t l . . “ ” . ’ i ). l i . t i , ’ , l r i tl r , . . ll . l s res t i itnes r io . i t li i ti . . . ’ is los re . t , l ff rt t . . 11 . , l l i t t s 1 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 6 of 18 UCP Hong Kong. Balsam's lead counsel told the California Court that Balsam decided it would be too time consunling and cumbersolne to depose UCP Hong Kong. Id, at 7 5 . Less than a non nth before t l ~ e original fact discovery deadline, however, Balsam decided it would seek testimony from UCP Hong Kong by serving deposition subpoenas to UCP (USA). According to Balsam, because UCP (USA) and UCP Hong Kong have a similar name and a common shareholder, it call depose UCP (USA) to ask questions about UCP Hong Kong's manufacture of the accused products. Balsam's position ignores the bedrock principle of corporate separateness. UCP (USA) is not legally related to UCP Hong Kong and it cannot be con~pelled to testify for UCP Hong Kong irrespective of whether the two companies have a common name or shareholder. UCP (USA) has no legal relationship to UCP Hong Kong. See Declaration of Eric Alper at 7 4 ("Alper Decl."). UCP (USA) is a stand alone con~pany--it is not a parent, subsidiary or sister company of any other company, including UCP Hong Kong. Id. UCP (USA), at one time, performed warranty work for products made by UCP Hong Kong. Id. at 7 5 . However, UCP (USA) has conducted no business related to the Christmas trees Balsam has accused of infringement. Id. UCP (USA) does not make or sell any trees, let alone the trees at issue in the California Action. Id. 111 fact, UCP (USA) has done no business in the last three years, which covers the entire time period relevant to the California Action. Id. 7 6; Dkt. No. 11 at 7: 17-1 8 (relevant damages period starts January 1, 20 14 ). Although Balsam knows UCP (USA) is not UCP Hong Kong, Balsam served two deposition subpoenas to UCP (USA) seeking information regarding UCP Hong Kong. The first deposition subpoena was served to UCP (USA). See Peden Exh. D. The second subpoena was served to no less than four separate legal entities; (1) Global United Enterprises, Limited, (2) UCP Hong Kong; (3) United China Plastics Products Co., Limited, and (4) Grand China Floral Craft Manufacturing Co., Ltd. See Peden Exh. E ("Multi-Party Subpoena"). The Rule 30(b)(6) topics in both subpoenas seek information known by the Frontgate defendants and UCP Hong Kong. During meet and confer, UCP (USA)'s counsel was successful in convincing Balsam to ’ l i l m m . . 1] . es t mont he l , ti r i as ). t l , n s ’ f ’ i r t t ess. ) l mpelled ti r r. i l t ‘ll “ r l ” mpany» i , i i t r . . , t i , . . fll . , ist as ringe e t. . l , t t i i t l i . . In , es t r , i l io . . 1] ; t. . 1 t : - r , . lt i , l r t i . fir t i ). . . ie ; it is i ited, ( ) ., i ite , ( ) r i l r l ., t . . “ ulti- rt ”). l ( )( ) t r t t f t and ong . , ’ l f l i c vi ci Balsa to 2 194979273 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 7 of 18 withdraw the Multi-Party Subpoena, and that subpoena is not before the Court. Balsam, however, refused to withdraw the equally objectionable deposition subpoena issued to UCP (USA), necessitating this Motion to Quash. UCP (USA) asked Balsam for an explanation for subpoenaing UCP (USA) when that entity is not legally related to UCP Hong Kong, does not make or sell the accused trees, and has done no business during the tinle period relevant to the California Action. Peden Decl. Exh. F (meet and confer correspondence). Balsam responded: "[wle seek testimony from UCP (USA) regarding who owns, runs, and manages UCP (USA). We also seek testimony regarding the relationship between UCP International (USA) Inc., UCP International Co., Ltd., and related entities." See id. In other words, Balsam is engaged in a fishing expedition. By and through this motion, UCP (USA) asks the Court to quash the deposition Subpoena served to UCP (USA) on October 24,2016. See Peden Exh. D. UCP (USA) also seeks to recover its costs and attorney's fees in filing this motion because Balsam had advanced notice that its Subpoena was directed to an improper party, and it insisted on pressing forward with its Subpoena, even though it could not articulate why the information it seeks from UCP (USA) is relevant to any of the claims or defenses in the California Action. 111. Relevant Legal Authority Under Rule 45 of the Federal Rules of Civil Procedure, the Court is required, on timely motion, to quash or modify a subpoena that: (i) fails to allow a reasonable time to comply; (ii) requires a person to comply beyond the geographical limits specified in Rule 45(c); (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to an undue burden. See Fed. R. Civ. P. 45(d)(3)(A). Courts are mindful that discovery sought from a non party is subject to broader restrictions to prevent a non party from suffering harassment or inconvenience. See Avngo Tecl7s. U.S., Inc. v. IPt1'017ics I I~c . , 309 F.R.D. 294,297 (E.D. Pa. 2005). Whether to quash a third-party deposition is a matter left to the Court's discretion. See Ai71,clnr. v. Fni1:field Greei~~vich Ltd., 297 F.R.D. 223, 226 (S.D.N.Y. 2013), citing Ai.istoc14nt t i- , . l , t ll i ), sit ti . ) t t ti l l , m l i . . . . “ ] ) s, . i t l ., ., t ., l t ti .” . is . t i i , 2 . . ) l t ’ filin t , t i t lat l i . III. f , i ire , ti l i ls i t l ; (ii) r it i i l ; iii) r ir ile lies; r i . . . . ). t r i f l t t t i i t r t rt fr f ie c . a hs. S, I . . 1 Ir0nics Inc., . . . , . . i i tt r l ft t t rt’s discretion. See nwar ail;/ie eenwich . , ( . . . . ), citing ristocrat 3 194979273 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 8 of 18 Leisz11.e Ltd. v. Dezrtsche Bank Tl.trst Co. Ainei.icas, 262 F.R.D. 293, 299 (S.D.N.Y. 2009). The Court undertakes a balancing test to determine whether undue burden exists because a subpoena is unreasonable. Id. (internal citation omitted). The Court must "balance the interests served by demanding compliance with the subpoena against the interests furthered by quashing it." Id. (internal citation omitted). The Court also "consider[s] whether the information is necessary and whether it is available from any other source." Id. IV. Argument Balsam's Subpoena subjects UCP (USA) to undue burden and is therefore improper under Fed. R. Civ. P. 45(d)(3)(A)(iv). First, none of the information sought in the Subpoena is relevant to, necessary for, or proportional to the needs of the California Action. Second, the deposition testimony Balsam seeks is that of UCP Hong Kong or the Frontgate defendants, not UCP (USA). It is unreasonable to expect UCP (USA) to provide a witness or witnesses for a corporate deposition and answer questions about what was known or done by other legally separate con~panies. Third, the subpoena is an obvious end-run around the Hague Convention. Balsam could have served Letters Rogatory, but instead decided to try to force UCP (USA) to give testimony for UCP Hong Kong. It is improper for Balsam decide not to seek a deposition of UCP Hong Kong through proper channels, but instead subpoena the legally separate UCP (USA) to serve as a proxy for UCP Hong Kong when USP (USA) is not a parent or subsidiary of that company. A. The Subpoena Seeks Irrelevant Information That Is Not Proportional To The Needs of the California Action In a patent case, such as the California Action, a determination of relevance implicates substantive patent law and therefore this Court must look to the Federal Circuit law to assess relevance. See Avago T e c l ~ . , 309 F.R.D. at 297. Discovery in patent cases is not permitted where no need is shown or compliance would be unduly burdensome or where the harm in providing the discovery outweighs its relevance. Id., citing Micro Motion, Inc. v. Kane Steel Co., Inc, 894 F.2d 13 18, 1326 n.8 (Fed. Cir. 1990). In the California Action, the only parties i ure . uts rus . m ricas, . , . . . ts . . t . “ it i t r t r i terests t i ” I . tt . “ r[ ] r i r l .” . . ’ ts . . ). , i , l io . , i t t t f ts, t . l itnes itness f i t l ll mpanies. i . t rc ) t ti i i f , t l ll t ) i i i t t rele io i l l i l l i licates l t t l i it l t chs, . . i t t i t r itt ia c l r r r t r i s it l . I ., iti i r ti , Inc. v. teel ., , . . i . ). I t lif r i ti , the only parties l9497927.3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 9 of 18 accused of infringement are Frontgate and Cinmar. UCP Hang Kong is not a party to the California Action, but it is the manufacturer of the accused trees that are sold by Frontgate. The separate and distinct UCP (USA), a Delaware Corporation, does not make or sell the accused trees. Under controlling patent law, Balsam cannot show the required need for, or the relevance of, any of the testimony it seeks from UCP (USA), nor can it show the discovery proportional to the needs of the California Action as required by Fed. R. Civ. P. 26. All topics listed in the Subpoena are improper and irrelevant as addressed to UCP (USA) because it is a separate and distinct legal entity with no legal relationship to UCP Hong Kong or Frontgate, the real targets of Balsam's Subpoena. This issue is dispositive. See Micro Motion, 894 F.2d at 1323 (non party discovery may not be had regarding a matter which is not relevant to the subject matter involved in the pending action). A corporation is an entity created by law and endowed with a separate and distinct existence from that of its owners. Because a principal purpose for organizing a corporation is to permit its owners to limit their liability, there is a presumption of separateness between a corporation and its owners, see, e.g., C~O\,I)II C e ~ t . Petroleuin C o y . v. Cos i~~opo l i t a~ Sl~ipping Co., 602 F.2d 474, 476 (2d Cir. 1979), which is entitled to substantial weight. An?. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988). UCP (USA) is a separate company, with no legal ties to UCP Hong Kong, and it is entitled in these proceedings to the benefit of its corporate separateness. UCP (USA) is not UCP Hong Kong, and Balsam's Subpoena aimed at deposing a UCP Hong Kong corporate representative through UCP (USA) should be quashed. Moreover, each of the noticed topics is directed to testimony that is not relevant when applied to UCP (USA), and in many cases, is not relevant to any claim or defense in the California Action. Topics 1-2 seek testimony known to UCP Hong Kong and the Frontgate Defendants, as each specifically asks about any consideration by UCP Hang Kong and Frontgate about the patent infringement and invalidity issues in the California Action. These topics improperly seek attorney-client privileged and work product testimony, even if Balsam had served the right party. These topics are also irrelevant as applied to UCP (USA) because it ringe t . o t l i , t ate. , , l t . t l i , , f t , t th l i . . . . i r l ti t , ’ . ive. i i , 3 i i . ti t rs. s i i t rs i t , es t rs, , ., rown ent. t m rp. smop litan hip ing ., , r. ), i ti t ti l . m. . . l , , ir. ). , i i i l i f t t es . ) i ’ r t t ti ti , s i t l i i . cs ti t t t cifi l o r t t ringe l i i t lif i ti . es t i ile t t ti , if l had li t ( ) c s it 5 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 10 of 18 cannot provide a corporate witness to testify on behalf of UCP Hong Kong or Frontgate. UCP (USA) has nothing to say about those companies' thoughts, actions or beliefs. Topic 3 asks UCP (USA) to testify about the value of the patents asserted in the California Action. But, UCP (USA) has never been asked to buy the patents, and has had no reason to perform a valuation of patents it has not been accused of infringing. Although not directly stated in the topic, the testimony actually sought is that of UCP Hong Kong andlor Frontgate. Any testimony by UCP (USA) about some lack of valuation of patents not asserted against it is irrelevant and seeking such testimony is improper. Topics 4 and 11 similarly ask about trees that UCP (USA) does not make or sell, patents it has not been accused of infringing, and patent applications it has not filed. The reference in this topic to the "UCP Applications" shows this topic is directed to UCP Hong Kong, who has filed a pending patent application to cover the new tree it invented. Clearly, this topic is meant for UCP Hong Kong and only it can provide sworn testimony about its patent application. The topic does not seek relevant testimony from UCP (USA). Topics 5-8 ask about the Flip Tree Balsam sells and patents that Frontgate is accused of infringing, but UCP (USA) does not make or sell any accused trees and is not accused of infringing any patent. Because there is no allegation that UCP (USA) infringes, the testimony Balsam seeks is irrelevant. See Avngo Tecl7s., 309 F.R.D. at 299. Topic 9 asks about attempts to "design around" the asserted patents, but UCP (USA) does not design trees. This topic expressly seeks information known to Frontgate and UCP Hong Kong. It is not properly answerable by UCP (USA). Because UCP (USA) is not alleged to infringe the asserted patents, this topic is not relevant as applied to UCP (USA). Id. Topics 10, 12, and 14 seek testimony about the design and development of the accused trees made by UCP Hong Kong and sold by the Frontgate defendants. This information is not relevant to any issue in the California Action. "The steps by which defendant's products have been developed are quite immaterial on the question whether those products infringe. That question is to be determined by a consideration of the products tl~emselves." Se17sytrol Cory. v. itnes ti lf t ate. ’ t , s ti l i io . , ringing. lt tl ti l f t t . ti ti r r. i ) l , rin in , ions filed. “ ” , le l e te . , s t t ion. t ). s rin in , l in i . ) ringe ti r a l1s., . . “ i ” t , . l r i t t . rl . ring r ). . , , ti l t t t t f ts. i i f r ti is t l i . “ t i f t’ r t t t i t r t i fringe. t t i i f t r t themselves.” nsytrol orp. v. 6 194979273 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 11 of 18 Radio Coy. ofAm., 18 F.R.D. 279,28 1 (S.D.N.Y. 1955). But even if the topics sought relevant information, UCP (USA) is not the proper party to answer Balsam's questions. Again, UCP (USA) does not design or sell the accused trees. It cannot answer for discussions, actions, thoughts and decisions made by UCP Hong Kong and Frontgate. Because UCP (USA) is not accused of infringement, this topic is irrelevant with respect to UCP (USA). See Avago Techs., 309 F.R.D. at 299. Topic 13 seeks testimony about contracts between UCP (presumably, Hong Kong) and Frontgate about trees UCP Hong Kong does not make or sell. UCP (USA) has nothing to say on this topic. Balsam must depose the parties to those alleged contracts-UCP Hong Kong and Frontgate. Here, the topic seeks irrelevant information because there is no nexus between the deposition topic and UCP (USA). See e.g. id. at 299-300. Topic 15 asks about a relationship with Bruce Schooley (the inventor of the asserted patents) and UCP Hong Kong. UCP (USA) has had no relationship with Bruce Schooley, and this topic is clearly directed to UCP Hong Kong. The testimony sought is not relevant to UCP (US A). Id. Topics 16-1 8 seek testimony about "UCP's" organization, structure, inter-corporate relationships, corporate affiliates, agents, and records and document production. This topic seeks irrelevant information because UCP (USA) is not a defendant in the California Action and it is not required to produce documents or make corporate disclosures. Id. Finally, the deposition topics expressly seek information outside the time period relevant to the California Action. In the California Action, Balsam alleges it bought the patents and started selling artificial trees in 2014 and that Frontgate started selling alleged infringing trees in August of 201 5. The relevant time period for all issues in the California Action cannot reach further back than 2014. Yet, the deposition topics in the Subpoena have no date restrictions. To the extent that Balsam seeks information before the alleged date of first infringement, it is irrelevant to the California Action. This is rather beside the point, however, because UCP (USA) orp. 0 . . , 1 . ). the r i , ’ s. i l . t t t . f ringe t, . ., . t ts l l . t -UCP r i . . . . . , rl t . . -1 ti “ ’s” , re, , liate , . is s l r ia r t losures. . l i l r l l i le l rtifi t t l i f . l i , i t i i . t ir i fringe e t, it i l i . 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 12 of 18 has no relevant information to provide to Balsam for any date. UCP (USA) itself has done no business for the entire time period relevant to the California Action. Finally, that Balsam seeks irrelevant information from UCP (USA) is clear from the parties' meet and confer correspondence. Although UCP (USA)'s counsel made every attempt to get Balsam's counsel to articulate its position regarding the relevance of the deposition topics, all Balsam could say is that it wanted to ask UCP (USA) questions about who owns, runs, and manages the company-none of which have an ounce of relevance to the California Action. See Peden Decl. at 7 6 and Exh. F (meet and confer correspondence). Balsam cannot depose UCP (USA) on the basis of suspicion or speculation that Balsam might turn up some connection sufficient for the Subpoena it already served. See Micro Motior?, 894 F.2d at 1326. The Federal Circuit has rejected such efforts, finding "[a] litigant may not engage in merely speculative enquires in the guise of relevant discovery." Id. at 1328. As the Federal Court noted when overruling a district court's refusal to quash a subpoena under circumstances similar to those present here, a mere statement that the information is relevant is not sufficient; "[tlhe doors of the discovery process may not be so easily opened." Id. at 1325. Balsam's admitted attempts to engage in a fishing expedition means its Subpoena must be quashed. See id at 1327. B. The Testimony Sought in the Subpoena Is Available from UCP Hong Kong and the Frontgate Defendants Taken as a whole, the Subpoena seeks testimony from UCP Hong Kong and Frontgate about the design of the trees accused of infringement in the California Action. There is no need for Balsam to take deposition testimony about the accused products. Patent infringement is determined by comparing the claims of the asserted patents to the features of the accused products. All Balsam needs to try to prove its infringement claims is the accused products. Balsam has the accused products in its possession, and has had them for over a year. Balsam brought samples of the accused trees to the TRO hearing in October of 201 5. See Peden Decl. at 7 7. Moreover, during the TRO proceedings, the Defendants produced UCP Hong Kong's pending patent application, detailing the design of the accused trees. See Peden Decl. at Exh. G lf l io . l r r ) ’ . lth ’ ’ t i i ics, l s , , y - --none l r ia io . . ll . r ). i l ti f i . i r n, . t fi i “ tig l e s f r .” . . ’ rcu stance l icie t; “ t] il .” . . ’ ts i t . i . . t l t t i f ringe l r i io . i i ti ts. ringe i r res t . t i ringe l i s i t r t . t i t f r r. l f t t ri i t r f 5. ee eden ecl. at 1] . t f ts r ’s l , t i t i t tr . ee eden cl. at Exh. l9497927.3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 13 of 18 (UCP International Co. Ltd.'s patent application). The accused trees are on sale and available to the public, including Balsam. There is nothing more Balsam needs for its infringement case, another reason justifying quashing its Subpoena. See Micro Motion, 894 F.2d at 1327 (rejecting argument that serving party needed discovery about products that were available on the public market.). Balsam has all the information it needs to do its infringement analysis, which it has already completed as required by the California Court's Patent Local Rules. See Peden Decl. at Exh. H (Balsam's Infringement Contentions). To the extent Balsam argues it needs additional information about the accused products, it must seek that information from Frontgate or UCP Hong Kong. Avngo Techs., 309 F.R.D. at 299. Balsam admits it has not sought to depose UCP Hong Kong. Balsam cannot escape the requirements of the Hague Convention by serving a burdensome subpoena to UCP (USA). A party's failure to use the Hague Convention is "more than a mere technicality," it is an "an improper abuse of the subpoena power." Lnker Airway Ltd. v. Pan Anlericn~ World Air~lays, 607 F. Supp. 324, 327 (S.D.N.Y 1985). The Hague Convention places important restrictions on foreign discovery out of respect for the sovereignty of foreign nations. Balsam's use of the California Court's subpoena power to try to depose a foreign entity through service to a legally separate domestic company, while at the same time admitting it knew it was required to use the Hague Convention procedures to secure foreign testimony, is an abuse of the subpoena power entrusted to it by the California Court. See id. Finally, there is no claim or defense in the California Action that would require testimony from UCP (USA). All other disputed issues in the California Action require evidence of the Frontgate's state of mind or actions. For example, the question of willful infringement depends on Frontgate's subjective belief about whether it was infringing the asserted patents. See Hnlo Elecs. v. Ptrlse Elecs., 136 S. Ct. 1923 (2016). UCP (USA)'s testimony is irrelevant to any of those issues because UCP (USA) is not accused of infringement-its state of mind is immaterial. Nor does UCP (USA) indirectly have anything to say about Frontgate's state of mind as it has never done any business with Frontgate. Alper Decl. at 7 5. 9 l . ’ l le l . t ringe , ti . i r i 7 r l l r t). l t ring is, l ’ le . . . ’ ringe i r i t , . a . t . t f ). ’ l re “ i alit ,” i “ r.” a r ia’. merica irways, . , ). t t i ’ l i ’ i t l ll i i t t , i t l . , s l i t t l i t ti . i l i i i i f t ’ s. ring ’ li f i in i t t t t . al ecs. uls ., . . 3 . ’ ti i i r l t i i fringement--its t t f i is i t ri l. i t t r t t ’ st t f i as it has t t . l l. t ii . 194979273 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 14 of 18 C. The Subpoena Subjects UCP (USA) To An Undue Burden UCP (USA) cannot be expected to prepare for and give, under oath, corporate testimony speaking to topics related to patents, products, actions, and beliefs for Frontgate or UCP Hong Kong, companies it does not own or control. UCP (USA) is not legally related to UCP Hong Kong and that is dispositive here-the subpoena served to UCP (USA) seeks testimony about the legally separate UCP Hong Kong and should be quashed. Balsam has gone beyond any reasonable grounds in issuing the Subpoena to UCP (USA). To illustrate how inappropriate the Subpoena is, it is worth noting that even in the context of a legally created subsidiary-parent relationship (which is missing in this case) that legal relationship, by itself, is insufficient to demonstrate the control required by Rule 45. Even if UCP (USA) were a subsidiary of UCP Hong Kong (it is not), Balsam would also still have to show that UCP (USA) and UCP Hong Kong share company resources and information in the regular course of their business, including such things as sharing a computer system, sharing employees, financial dependance of the subsidiary on the foreign parent, and that the subsidiary did not maintain separate books, records, tax returns or otherwise observe corporate formalities. See Linde 17. A~wb Barlk, PLC, 262 F.R.D. 136, 143-44 (E.D.N.Y. 2009). None of those facts is present here, so Balsam's Subpoena to UCP (USA) is wholly inappropriate. UCP (USA) does not have a computer system, it does not have employees, it does not have office space, and it maintains its own records, books, files its own tax returns, it follows all corporate formalities, and is not financially dependent on UCP Hong Kong. Alper Decl. at 7 7. That UCP (USA) and UCP Hong Kong have common shareholders is not enough to require UCP (USA) to be deposed for UCP Hong Kong. See Linde, 262 F.R.D. at 143-44; Pl~ilip Morris Inc. v. Oinmedin, No. 02- civ-7575(GEL)(KNF), 2004 WL 1348987, at *4 (S.D.N.Y. June 15,2004). Ful-ther, even if the facts required were present here, since there is no parent-subsidiary relationship, Balsam simply cannot seek to depose UCP Hong Kong by issuing the Subpoena to UCP (USA). The Court . e , , r t t t t , . l i --the l . s ). llustrate ll i - , f . i i i r i i , e fi i i i i is r te ities. i v. rab n , . , . . . t ’ l , ee , ice , t files t m lo s r t ities, i l . l . 1[ . rs ) i . ; hilip i . . ta a, . , . . , ). ither, t i i r , l i l t t ). rt 10 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 15 of 18 needs look no further than the indisputable fact of a lack of legal connection to quash Balsanl's subpoena. Not only is the Subpoena improper and burdensome, it is pointless. UCP (USA) cannot testify, under oath, about UCP Hong Kong or Frontgate's impressions, thoughts and actions for use in the California Action. If the deposition were to proceed, the transcript would be riddled with legitimate and valid foundation and speculation objections. Balsam cannot offer at trial testimony from UCP (USA) as admissions by Frontgate and UCP Hong Kong. If a deposition of UCP (USA) were allowed, it would be a waste of time. Thus, the burden to UCP (USA) outweighs any benefit to Balsam in taking the deposition. Balsam can seek testimony about UCP Hong Kong and Frontgate's believes, conduct and actions from those entities. Frontgate is a defendant in the California Action, and Balsam need only notice its deposition, but Balsam has taken Frontgate's deposition off calendar. Balsam can also seek deposition testimony from UCP Hong Kong, which it refuses to do. Balsam should seek testimony first from the parties to and with a connection to the California Action, without unreasonably burdening non-party UCP (USA). See Soto v. Castlerock Farming & Trnnsp., Inc., 282 F.R.D. 492, 505 (E.D. Cal. 2012) (party must seek information from opposing party first or show that it cannot before burdening third party.). Rule 45 does not allow Balsam to burden UCP (USA) because Balsam decided it was preferable to subpoena a legally separate domestic company rather than be bothered with complying with the Hague Convention. D. Because Balsam Violated Fed. R. Civ. P. 45(d)(l), UCP (USA) Should be Awarded Costs and Fees A party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena. The Rule instructs courts they "must" enforce this duty and impose an appropriate sanction on a party or attorney who fails to comply. See Fed. R. Civ. P. 45(d)(l). Rule 45 makes explicit the principle of accountability applicable to discovery and imposes obligations in addition to those found in needs look no further than the indisputable fact f a l ck f l l cti t l m’ subpoena. Not only is the Subpoena i proper and burdenso e, it is i tl . ( t testify, under oath, about UCP Hong ong or rontgate’s i r i , t t n cti f use in the California Action. If the deposition ere to proceed, t tr scri t l b ri l with legitimate and valid foundation and speculation j cti s. l c nnot ff r at tri l testimony from UCP (USA) as ad issions by Frontgate and . If a depositi f UCP (USA) were allowed, it ould be a waste f ti . T s, th bur n to ( A) outweighs any benefit to Balsa in taking the deposition. Balsam can seek testi ony about U H ng K and Front te’s beli , conduct and actions from those entities. Frontgate is a defendant in the Calif r i Acti , and Balsam need only notice its deposition, but Balsam has taken Frontgate’s deposition off calendar. Balsam can also seek deposition testimony fro U P Hong Kong, which it ref s to do. Balsam should seek testimony first from the parties to and with a connection to the Calif r i Action, without unreasonably burdening non-party UCP (USA). See Soto v. Castlerock Farming & T/‘cmsp., Inc., 282 F.R.D. 492, 505 (E.D. Cal. 2012) (party must s ek inf r ati n fro opposing party first or show that it cannot before burdening third party.). Rule 45 does not allow Balsam to burden UCP (USA) because Balsam decided it was preferable to subpoena a legally separate domestic company rather than be bothered with complying with the Hague Convention. D. Because Balsam Violated Fed. R. Civ. P. 45(d)(1), UCP (USA) Should be Awarded Costs and Fees A party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena. The Rule instructs courts they “must” enforce this duty and impose an a propriate sanction on a party or attorney who fails to comply. See Fed. R. Civ. P. 45(d)(l). Rule 45 makes explicit the principle of accountability applicable to discovery and imposes obligations in a d tion to those found in l 1 19497927 3 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 16 of 18 other Federal Rules such as Rule 26(g), 37 and Rule 11. See id., see also Htn?tair, IHC. v. C1imatec1-crft, Inc., 254 F.R.D. 677, 679 (N.D. Okla. 2008). Balsam failed to take reasonable measures to avoid imposing undue, and unnecessary, burden and expense to UCP (USA). See Micro Motion, 894 F.2d at 1323 (the party seeking discovery must certify they made a reasonable inquiry that the discovery request is warranted.) Balsam and its counsel knew before it served the Subpoena that UCP (USA) was not legally related to UCP Hong Kong, and thus violated the rules in serving the Subpoena. Peden Decl. at 7 8. Balsam persisted in enforcing the Subpoena, even after UCP (USA)'s counsel conferred with Balsam's counsel and insisted the Subpoena was improper given that UCP (USA) is not legally related to UCP Hong Kong, and further explained the Subpoena to UCP (USA) was overly burdensome. See Peden Decl. at Exh. F. Still, Balsam has refused to withdraw the Subpoena. Id. Consequently, if the Court grants UCP (USA)'s Motion to Quash, UCP (USA) requests that the Court allow UCP (USA) to submit a bill of costs and a statement of attorney's fees for the Court's review for purposes of sanctions. V. Conclusion For all the forgoing reasons, UCP International (USA), Inc. requests that the Court quash the Subpoena issued by Balsam International Limited and Balsam Brands, Inc., which is attached to the acco~npanying Peden Declaration as Exhibit D. Dated: November 7, 20 1 6 LECLAIRRYAN, A Professional Corporation Nicole A. Sullivan 885 Third Avenue, Sixteenth Floor New York, New York 10022 Tel.: 212.697.6555 Fax: 212.986.3509 Nicole .S~~l l ivan~lec la i r r~a~~.com - Andrew.Zappia@,leclairryan.con~ . ., untair, nc. . li raft, ., . , . l . ). , . 3 rti t l l l a. . 1] . , ’ ’ ) l t ) l, t e a. . t , ’ , ) l ’ ’ . l l ), . i ite , mpanying . i i By J‘bl Andrew . iva e te t 2 .: icole.Sullivan@leclairrvan.com dr w.Za pia(cDleclai ryan m 19497927.} Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 17 of 18 Patricia L. Peden (SBN 206440), of counsel LeClairRyan LLP 44 Montgomery Street, Suite 3 100 San Francisco, CA 94 104 Telephone: 415.391.71 11 Facsimile: 41 5.391.8766 Patricia.Peden@,leclairryan.com - Attorneys for UCP (USA) International, Inc. 19497927 3 and t . , l r , t 0 s , 4 : . 11 i l : . ia. 1 lair1'v tt r ) I . 13 Case 3:16-cv-07255-WHO Document 22-9 Filed 02/16/17 Page 18 of 18 Harman Decl. ISO Plaintiffs’ Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 MARC N. BERNSTEIN (SBN 145837) mbernstein@blgrp.com WILL B. FITTON (SBN 182818) wfitton@blgrp.com THE BUSINESS LITIGATION GROUP, P.C. 555 Montgomery Street, Suite 1650 San Francisco, CA 94111 Telephone: 415.765.6633 Facsimile: 415.283.4804 Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION UCP INTERNATIONAL COMPANY LIMITED and GLOBAL UNITED ENTERPRISES LIMITED, Plaintiffs, v. BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL UNLIMITED COMPANY, an Ireland unlimited company, Defendants. Case No. 3:16-cv-07255-WHO DECLARATION OF THOMAS HARMAN IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION Judge: Hon. William H. Orrick Courtroom: 2, 17th Floor Hearing Date: March 29, 2017 Time: 2:00 p.m. Case 3:16-cv-07255-WHO Document 22-10 Filed 02/16/17 Page 1 of 4 1 Declaration of Thomas Harman ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 I, Thomas Harman, declare as follows: 1. Unless otherwise indicated, I have personal knowledge of the facts set forth in this declaration, and if called as a witness, could and would so testify. 2. I am the CEO and founder of Balsam Brands Inc., and am a Director of Balsam International Unlimited Company (together, Balsam). 3. Balsam is a leading retailer of innovative, lifelike artificial Christmas trees, including its flagship product, an easy to set up and take down tree called the Flip Tree®. Balsam owns two U.S. patents on the Flip Tree (the Flip Tree Patents). 4. On August 18, 2015, Balsam learned that its closest competitor and leading catalog retailer, Frontgate, was selling an “Inversion Tree” that appeared to Balsam to infringe its Flip Tree Patents. Frontgate and Balsam compete head to head in the market for high-end artificial Christmas trees, those typically sold for over $1,000. But while Balsam is a young and growing company, Frontgate is a large, well-established subsidiary of a $3.7 billion company, HSN, Inc., which also owns the Home Shopping Network television channel. 5. Faced with apparent infringement by such an important competitor, Balsam immediately took action. It obtained specimens of the Frontgate Inversion Tree, and had its patent lawyers study them. 6. When Balsam filed its lawsuit, it knew that Frontgate’s source for the Inversion Trees was UCP International Company Limited of Hong Kong or one of its affiliates (together, UCP). Balsam also learned soon after that UCP had applied for its own U.S. patent on a feature of its Inversion Tree. But Balsam’s concern was with Frontgate, not UCP. Frontgate was Balsam’s biggest retail competitor, and it was selling what Balsam believed to be an infringing copy of Balsam’s flagship product. Accordingly, Balsam named only Frontgate in the lawsuit. 7. Balsam has never threatened to file a lawsuit, nor ever even approached UCP, about the Flip Tree Patents. To my knowledge, no one at Balsam has ever spoken with UCP at all. Case 3:16-cv-07255-WHO Document 22-10 Filed 02/16/17 Page 2 of 4 2 Declaration of Thomas Harman ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed at Redwood City, CA. DATED: February 16, 2017 By: __ Thomas Harman___ Thomas Harman Case 3:16-cv-07255-WHO Document 22-10 Filed 02/16/17 Page 3 of 4 3 Declaration of Thomas Harman ISO Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 ATTESTATION OF CONCURRENCE IN FILING In accordance with Civil Local Rule 5-1(i)(3), I attest the concurrence in the filing of this document has been obtained from Thomas Harman. RESPECTFULLY SUBMITTED, DATED: February 16, 2017 THE BUSINESS LITIGATION GROUP, P.C. By: ___/s/Marc N. Bernstein Marc N. Bernstein Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY Case 3:16-cv-07255-WHO Document 22-10 Filed 02/16/17 Page 4 of 4 [Proposed] Order Granting Defs’ Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 MARC N. BERNSTEIN (SBN 145837) mbernstein@blgrp.com WILL B. FITTON (SBN 182818) wfitton@blgrp.com THE BUSINESS LITIGATION GROUP, P.C. 555 Montgomery Street, Suite 1650 San Francisco, CA 94111 Telephone: 415.765.6633 Facsimile: 415.283.4804 Attorneys for Defendants BALSAM BRANDS INC. and BALSAM INTERNATIONAL UNLIMITED COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION UCP INTERNATIONAL COMPANY LIMITED and GLOBAL UNITED ENTERPRISES LIMITED, Plaintiffs, v. BALSAM BRANDS INC., a Delaware corporation, and BALSAM INTERNATIONAL UNLIMITED COMPANY, an Ireland unlimited company, Defendants. Case No. 3:16-cv-07255-WHO [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION Judge: Hon. William H. Orrick Courtroom: 2, 17th Floor Hearing Date: March 29, 2017 Time: 2:00 p.m. Case 3:16-cv-07255-WHO Document 22-11 Filed 02/16/17 Page 1 of 2 1 [Proposed] Order Granting Defs’ Motion to Dismiss Case No. 3:16-CV-07255-WHO 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 Upon consideration of Defendants’ Motion for Dismiss Complaint for Lack of Subject Matter Jurisdiction, any response thereto, and for good cause shown, it is hereby ORDERED that the motion is GRANTED and that the Complaint is DISMISSED WITH PREJUDICE. IT IS SO ORDERED. DATED: ___ ___ ________ Hon. William H. Orrick United States District Judge Case 3:16-cv-07255-WHO Document 22-11 Filed 02/16/17 Page 2 of 2