by Dennis Crouch
The Federal Circuit’s recent decision in Arendi S.A.R.L. v. LG Electronics Inc., 21-1967, — F.4th — (Fed. Cir. Sept 7, 2022), upholds Judge Stark’s discovery penalty against the patentee Arendi with the result that the trial moves forward against only one product of the hundreds that were accused.
Arendi sued LG in 2012 for infringing its US7917843. As required by Delaware local rules, Arendi provided a set of infringement contentions to LG. The local rules require the patentee to first provide a list of accused products and patents alleged being infringed. Subsequently, the patentee must disclose a set of initial claim charts mapping showing how each accused product maps to each asserted claim.
In Delaware, these local rules are seen as discovery requirements that operate alongside other mandatory discovery found in FRCP 26. See D. Del. Default Standard for Discovery § 4. The local rule states that the required disclosures here are “initial” and that the parties “shall be permitted to supplement.”
In its disclosures, Arendi first provided a list of 200+ infringing products. But then when it came time to provide the claim charts, Arendi addressed only one product (the LG Rebel 4) and labelled it as “exemplary.” Later, Arendi and LG agreed on
eight representative products to stand-in for all accused products. The Rebel 4 was one of these eight. Despite the agreement on exemplary models, LG twice warned Arendi that it had not yet provided the claim charts as required by the local discovery rules. Arendi did not respond to those warnings.
Following the close of fact discovery, Arendi provided an expert report that spelled out its infringement contentions for five additional representative models. At that point, LG moved to strike those portions of the expert report based upon Arendi’s failure to timely disclose its infringement contentions as required by the local rule. Judge Stark was in charge (during his tenure as a district court judge) and granted the motion — holding that Arendi had “failed to fulfil its discovery obligations” and thus had lost its right to provide such disclosures at that point. In particular, the district court also noted the prejudicial impact since: “LG understood Arendi was accusing only the Rebel 4.”
At that point, Arendi simply filed a new lawsuit, still in the District of Delaware specifically alleging infringement of the excluded products from the expert report. That new case was also routed to Judge Stark who dismissed it with prejudice under the duplicative-litigation doctrine. On appeal, the Federal Circuit has affirmed.
Improper duplicative litigation typically involves a plaintiff bringing two different lawsuits that align along four axes: (1) same claims (2) against the same defendant (2) in the same court (4) at the same time. Walton v. Eaton Corp., 563 F.2d 66 (3d Cir. 1977) (en banc). In that scenario, the district court is given discretion to dismiss one of the cases as part of its “general power to administer its docket.”
On appeal, Arendi argued that its two cases did not involve the same claims once the district court granted LG’s motion to strike. In general, a patentee’s infringement assertion against one product is a different claim than its assertion of the same patent against a different product. On appeal though the Federal Circuit found that Arendi had mischaractered the district court’s order.
The court did not grant LG’s motion to strike parts of Arendi’s infringement expert report because Arendi failed to sufficiently accuse the non-Rebel 4 products. The court granted the motion to strike because Arendi “failed to fulfill its discovery obligations” with respect to those products, so Arendi’s infringement allegations in its expert report were procedurally untimely.
Slip Op. The distinction here is technical, but that is civil procedure. In Arendi I, the district court did not did not dismiss Arendi’s claims against non-Rebel products. Rather, the court but rather excluded the evidence necessary for Arendi to actually win on those claims. The difference is important because it meant that the same claims were still pending in both cases at the same time. “Left with the simple and obvious fact that the non-Rebel 4 products accused in Arendi II are identical to products accused in Arendi I, we determine that the district court did not err in dismissing the Arendi II complaint as improperly duplicative.” Id.
The Arendi I court indicated that it will consider allowing the amendment depending upon the outcome of this appeal. Of course, by now Judge Stark has moved to the Federal Circuit and the case is currently not assigned to any judge.
= = = =
Opinion by Judge Prost
Judges: Prost, Chen, Stoll
Kemper Diehl represented the plaintiff on appeal along with his team from Susman Godfrey; Andrew Schwentker from Fish & Richardson argued for the defendant.