BlackBerry Limited v. Typo Products LLC, No. 3:2014cv00023 - Document 87 (N.D. Cal. 2014)
Court Description: ORDER DENYING DEFENDANT'S MOTION FOR RELIEF PURSUANT TO FED. R. CIV. P. 60(b); ORDERING LIMITED DISCOVERY REGARDING PLAINTIFF'S MOTION FOR ORDER TO SHOW CAUSE WHY DEFENDANT SHOULD NOT BE HELD IN CONTEMPT by Judge William H. Orrick denyin g 70 Motion for Relief Pursuant to 60(b); granting in part and denying in part 73 Motion for Order to Show Cause. Blackberry is authorized to take discovery in connection with its motion for an order to show cause. Blackberry may re-notice its motion at its convenience once the discovery is completed. (jmdS, COURT STAFF) (Filed on 8/21/2014)
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 BLACKBERRY LIMITED, Case No. 14-cv-00023-WHO Plaintiff, 11 United States District Court Northern District of California v. 15 ORDER DENYING DEFENDANT’S MOTION FOR RELIEF PURSUANT TO FED. R. CIV. P. 60(b); ORDERING LIMITED DISCOVERY REGARDING PLAINTIFF’S MOTION FOR ORDER TO SHOW CAUSE WHY DEFENDANT SHOULD NOT BE HELD IN CONTEMPT 16 Re: Dkt. Nos. 70, 73 12 13 TYPO PRODUCTS LLC, Defendant. 14 INTRODUCTION 17 18 On March 28, 2014, I granted plaintiff Blackberry Limited’s motion for a preliminary 19 injunction barring defendant Typo Products LLC from selling its add-on keyboard for the iPhone 20 which, Blackberry alleges, violates Blackberry’s patents. The parties now seek ironically 21 divergent action on the preliminary injunction: Typo asks for relief from the preliminary 22 injunction under Federal Rule of Civil Procedure 60(b) because it has introduced a new keyboard 23 which, it contends, does not infringe. In contrast, Blackberry seeks an order to show cause why 24 Typo should not be held in contempt for violating the preliminary injunction by selling and 25 distributing the enjoined keyboard. 26 Typo’s motion is DENIED because its introduction of a new keyboard is not grounds for 27 lifting the preliminary injunction. The preliminary injunction remains in effect. Blackberry’s 28 motion is GRANTED IN PART. Typo has violated the preliminary injunction by providing 1 replacement keyboards under its warranty program. Blackberry has raised significant questions 2 suggesting that Typo’s sales to foreign retailers after the injunction went into effect and SMI 3 Investments’s sales to consumers after the injunction went into effect, also violated the 4 preliminary injunction. Blackberry is authorized to conduct additional discovery to determine 5 whether Typo has in fact violated the preliminary injunction on these grounds and, if so, the extent 6 of the violation. Blackberry’s request for an order to show cause is continued until the results of 7 this discovery can be presented to me. 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 BACKGROUND The preliminary injunction which I issued provided that: Upon the posting of a bond by Blackberry, Typo Products LLC and its officers, agents, affiliates, employees, and attorneys, and all those persons acting or attempting to act in concert or participation with them, ARE ENJOINED FROM: a. making, using, offering to sell, or selling within the United States, or importing into the United States, or marketing, promoting, or distributing Typo Products’s Typo Keyboard Case, which is depicted in BlackBerry’s moving papers, and any product that is no more than colorably different from these specified products and embodies any design contained in U.S. Design Patent No. D685,775; and b. making, using, offering to sell, or selling within the United States, or importing into the United States, or marketing, promoting, or distributing Typo Products’s Typo Keyboard Case, and any product that is no more than colorably different from the specified products and infringes U.S. Patent No. 7,629,964. 20 Dkt. No. 39 at 24. The preliminary injunction took effect when Blackberry posted the required 21 bond on April 15, 2014. See Dkt. No. 55. 22 On June 11, 2014, Typo filed a motion for relief from the preliminary injunction, 23 ostensibly pursuant to Federal Rule of Civil Procedure 60(b). Dkt. No. 70. Typo argues that relief 24 is appropriate because it has developed a new non-infringing keyboard. 25 On July 23, 2014, Blackberry filed a motion for an order to show cause why Typo should 26 not be held in contempt of the preliminary injunction order. Dkt. No. 73. Blackberry alleges that 27 Typo has continued to sell and distribute the enjoined Typo keyboard. 28 2 1 I. TYPO’S MOTION FOR RELIEF FROM THE PRELIMINARY INJUNCTION PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 60(b) Typo contends that it has developed a non-infringing design for its keyboard. It moves for 2 3 relief from the preliminary injunction “pursuant to Rule 60(b)(6) to permit Typo to sell its new 4 Typo keyboard.” Dkt. No. 70 at 4. Blackberry opposes the motion. Dkt. No. 71. Typo did not 5 file a reply brief. Typo’s motion is DENIED. Federal Rule of Civil Procedure 60(b)(6) provides that a court 6 may relieve a party from an order for “any other reason that justifies relief.” Fed. R. Civ. P. 8 60(b)(6). Typo’s redesign of its keyboard does not justify relief from the preliminary injunction. 9 The preliminary injunction covers Typo’s keyboard as it existed at the time “and any product that 10 is no more than colorably different” from that keyboard. Dkt. No. 39 at 24. Typo has presented 11 United States District Court Northern District of California 7 no arguments that the order was erroneous or should otherwise be vacated. To the extent that 12 Typo has designed a new keyboard which does not infringe the patents asserted by Blackberry, 13 that new keyboard is not subject to the preliminary injunction. But Typo’s design of a supposedly 14 non-infringing design is not grounds for relief from the preliminary injunction.1 The preliminary 15 injunction remains in effect. 16 II. 17 MOTION FOR AN ORDER TO SHOW CAUSE WHY TYPO SHOULD NOT BE HELD IN CONTEMPT OF THE PRELIMINARY INJUNCTION ORDER Blackberry contends that Typo has violated, or potentially violated, the preliminary 18 injunction in three ways: (i) Typo sold over 11,000 enjoined keyboards from the United States to 19 foreign retailers after the injunction went into effect, (ii) under its warranty replacement program, 20 Typo provided its customers with enjoined keyboards after the injunction went into effect; and 21 22 23 24 25 26 27 28 If Typo is seeking an opinion from this Court that its new design does not infringe Blackberry’s patents, Rule 60(b) is not the proper vehicle for doing so. To the extent that a case or controversy exists, a separate declaratory judgment action would be the proper vehicle for Typo to seek a declaration that its redesign does not infringe. See, e.g. Matthews Int'l Corp. v. Biosafe Eng'g, LLC, 695 F.3d 1322, 1328 (Fed. Cir. 2012) (“in determining whether a justiciable controversy is present, the analysis must be calibrated to the particular facts of each case, with the fundamental inquiry being 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”) (internal citation omitted). 1 3 1 (iii) on the day the Court issued the preliminary injunction (but before it took effect), Typo sold 2 over 4,000 enjoined keyboards to SMI Investments, an entity with which Typo may be acting in 3 concert. Typo concedes that these sales and replacements occurred, but it disputes that it violated 4 5 the preliminary injunction. Typo’s position notwithstanding, for the reasons stated below, the 6 sales and replacements raise significant question of whether Typo has violated the preliminary 7 injunction. Additional discovery is necessary to determine whether that is in fact the case and, if 8 so, the extent of the violation. See, e.g., California Dep't of Soc. Servs. v. Leavitt, 523 F.3d 1025, 9 1034 (9th Cir. 2008) (“If significant questions regarding noncompliance have been raised, 10 appropriate discovery should be granted.”). A. Typo’s sales to foreign retailers after the injunction went into effect United States District Court Northern District of California 11 Typo founder and CEO, Laurence Hallier, states in a declaration that “[s]ince April 15, 12 13 2014, Typo has shipped approximately 11,000 keyboards to independent foreign 14 retailers/distributors in Canada, the Middle East and Asia.” Hallier Decl. ¶ 27, Dkt. No. 81-1. 15 Typo has provided invoices indicating that it received over $800,000 for these sales. See Dkt. No. 16 81-5 (invoices). The preliminary injunction bars Typo from “making, using, offering to sell, or 17 selling [the enjoined keyboard] within the United States.” The question, then, is whether Typo’s 18 sales or offers to the “independent foreign retailers/distributors” were sales or offers to sell “within 19 the United States.” Typo contends that these sales do not violate the preliminary injunction because they were 20 21 “sold and delivered entirely outside of the United States” and were not or intended to be sold in 22 the United States. 2 Typo Opp. at 11. Typo appears to misunderstand the preliminary injunction: 23 what matters is whether the sales to the foreign retailers constitute sales or offers to sell within the 24 25 26 27 28 Hallier claims that “[t]hese Typo keyboards were sold and shipped to outside of the United States for sale outside of the United States and were never intended to be sold in the United States.” Hallier Decl. ¶ 29. Typo’s opposition brief states that “these sales from a warehouse in China to independent foreign retailer/distributors in Canada, the Middle East and Asia took place entirely outside the United States.” Opp. at 12. However, Hallier’s declaration does not state that the keyboards were sold from a warehouse in China and that all the negotiations took place outside the United States. 4 2 1 United States; it is beside the point where the foreign retailers ultimately sell the keyboards to 2 consumers. The fact that the enjoined keyboards were supposedly “delivered entirely outside of 3 the United States” does not mean that the sale or offer for sale did not occur in the United States. 4 See, e.g., MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1377 5 (Fed. Cir. 2005) (“simply because an article is delivered ‘free on board’ outside of the forum, a 6 ‘sale’ is not necessarily precluded from occurring in the forum”). 7 In determining whether a sale or offer to sale occurred “within the United States,” courts 8 consider various factors, including the location of the contemplated future sale, the location of 9 delivery, the location of performance, the location of the buyer, the location of the passage of legal title, the location of contracting; the location of the negotiation of the sales contract, and the 11 United States District Court Northern District of California 10 location of the execution of the sales contract. See, e.g., MediaTek Inc. v. Freescale 12 Semiconductor, Inc., 2014 WL 580836, at *2-3 (N.D. Cal. Feb. 13, 2014); Carnegie Mellon Univ. 13 v. Marvell Tech. Grp., Ltd., 986 F. Supp. 2d 574, 646 (W.D. Pa. 2013); MEMC Elec. Materials, 14 420 F.3d at 1377. There are some indicia in the record that the sales or offers to sell occurred 15 within the United States: the invoices indicate that the sale was consummated with the Typo entity 16 located in the United States; payment was directed to Typo at a Wells Fargo in the United States; 17 and some buyers apparently arranged to retrieve the enjoined keyboards directly from Typo. See 18 Dkt. No. 81-5 (invoices). Nonetheless, given the various factors relevant to the inquiry, additional 19 discovery is necessary to determine whether or the extent to which Typo’s sales or offers to sell to 20 the foreign retailers were within the United States. 21 22 B. Replacement keyboards provided pursuant to a warranty Hallier states that “[s]ince April 15th, to the extent that a customer has an issue with his or 23 her Typo case that is covered under Typo’s warranty program, Typo will send that customer a 24 replacement Typo case only if such Typo case has been purchased by the customer directly from 25 Typo and prior to April 15, 2014.” Hallier Decl. ¶ 38. The record does not reflect how many 26 replacement enjoined keyboards Typo has provided to its customers under its warranty program. 27 In its brief, Typo contended that providing replacement devices to its customers under the 28 warranty program does not violate the injunction because it does not constitute “distribution” and 5 1 because Typo is contractually required by the warranty to provide its customers a replacement 2 keyboard. Typo is mistaken: its warranty program does not give it license to provide enjoined 3 keyboards to its customers after the preliminary injunction took effect. Cf Aro Mfg. Co. v. 4 Convertible Top Replacement Co., 377 U.S. 476, 484 (1964) (“If the owner's use infringed, so also 5 did his repair of the top-structure, as by replacing the worn-out fabric component. Where use 6 infringes, repair does also, for it perpetuates the infringing use.”). At oral argument, counsel for 7 Typo stated that Typo misapprehended the relevant law and conceded that the warranty 8 replacements likely violated the preliminary injunction. Counsel argued that the violation was 9 minimal, however, as it involved fewer than 400 replacement keyboards. It is clear that Typo has violated the preliminary injunction. Additional discovery is 11 United States District Court Northern District of California 10 necessary to determine the extent of Typo’s distribution of enjoined keyboards under the warranty 12 program. 13 14 C. Typo’s relationship with SMI Investments Typo sold 4,008 enjoined keyboards to SMI Investments before the injunction took effect. 15 Hallier Decl. ¶ 16. Typo’s brief states that “Typo has no knowledge of to whom or where SMI 16 Investment has sold the Typo cases.” Opp. at 9. However, Hallier’s declaration does not contain 17 a similar statement regarding SMI Investments. 18 Blackberry contends that SMI Investments “is closely affiliated with Typo.” Reply at 1. 19 Blackberry has presented evidence that an officer of SMI Investments, Chris Yergensen, is also 20 Typo’s registered agent and is also general counsel of Show Media, a company founded and run 21 by Hallier. See Dkt. No. 83-3 (SMI Investment’s entity information from Nevada Secretary of 22 State); Dkt. No. 83-4 (“Team” webpage for Show Media identifying Yergensen). Blackberry 23 seeks discovery “to uncover the full extent of Typo’s relationship and dealings with SMI.” Reply 24 at 8. If SMI Investments is acting in concert with Typo, SMI Investments would be subject to the 25 preliminary injunction and its sales after the injunction went into effect would violate the 26 injunction. See Dkt. No. 39 at 24 (preliminary injunction applies to Typo “and its officers, agents, 27 affiliates, employees, and attorneys, and all those persons acting or attempting to act in concert or 28 participation with them”) (emphasis added). 6 The evidence presented by Blackberry is sufficient to raise significant questions regarding 1 2 Typo’s relationship with SMI Investments. Additional discovery is necessary to determine 3 whether SMI Investments is acting in concert or participation with Typo. Blackberry will also 4 need to discover SMI Investments’s sales records so that Blackberry can determine the extent of 5 the violation, if SMI Investments is indeed acting in concert or participation with Typo. 6 D. Contempt I am very concerned with what appears to be deliberate contempt of the preliminary 8 injunction by Typo. In its opposition to the motion for a preliminary injunction, Typo represented 9 that it sold its Typo keyboard exclusively through its website. Dkt. No. 25 at 24. Blackberry then 10 uncovered evidence that the keyboard was for sale at stores in various airports. Dkt. No. 51-3 at 1. 11 United States District Court Northern District of California 7 Then, on the day that the preliminary injunction order was issued (but before it took effect), Typo 12 sold 4,000 keyboards to SMI Investments, Hallier Decl. ¶ 16, with which Typo appears to be 13 closely affiliated. After the preliminary injunction took effect, Typo sold over 11,000 enjoined 14 keyboards and provided hundreds of enjoined keyboards to its customers under its warranty 15 program. With the exception of the warranty replacements, discovery will prove whether these 16 actions violated the preliminary injunction, i.e., if SMI Investments is acting in concert or 17 participation with Typo, and if Typo’s sales and offers to sell to the foreign retailers were within 18 the United States. But given the evidence in the record so far, those are significant questions. 19 Blackberry may renew its motion for an order to show cause at any time after receiving the 20 discovery discussed below. 21 E. Additional discovery Blackberry requests the following discovery in connection with determining Typo’s 22 23 24 compliance with the preliminary injunction: i. 28 Laurence Hallier, and iii. 26 a 30(b)(6) designee for Typo, ii. 25 27 Depositions of Chris Yergensen on topics relating to potential violations of the preliminary injunction order; Eight interrogatories relating to potential violation of the preliminary injunction order; 7 1 Document requests relating to potential violations of the preliminary injunction order. 2 These requests are appropriate in light of the serious questions raised regarding Typo’s possible 3 violations of the preliminary injunction. I authorize Blackberry to take this discovery, in addition 4 to the discovery otherwise allotted to Blackberry in this case. 5 Blackberry seeks expedited discovery, to be completed within 45 days. However, claim 6 construction is fast approaching and Typo has limited legal resources. It will be hard pressed to 7 respond to expedited discovery and briefing on this topic while preparing the claim construction 8 briefing and for the hearing. While I will not require expedited discovery, Typo shall respond to 9 the interrogatories and to the document requests with documents within thirty days of the date they are propounded. The depositions shall be set at the reasonable convenience of counsel and the 11 United States District Court Northern District of California 10 witnesses in recognition of both the amount of discovery that needs to be completed prior to the 12 close of fact discovery on December 9, 2014 and my desire to know the extent to which Typo has 13 violated the preliminary injunction. 14 CONCLUSION 15 Typo’s motion for relief from the preliminary injunction is DENIED. Dkt. No. 70. 16 Blackberry’s motion for order to show cause why Typo should not be held in contempt of the 17 preliminary injunction is GRANTED IN PART. Dkt. No. 73. Blackberry is authorized to take the 18 following discovery in connection with its motion for an order to show cause: 19 i. 23 24 25 Laurence Hallier, and iii. 21 a 30(b)(6) designee for Typo, ii. 20 22 Depositions of Chris Yergensen on topics relating to potential violations of the preliminary injunction order; Eight interrogatories relating to potential violations of the preliminary injunction order; Document requests relating to potential violations of the preliminary injunction order. This discovery is in addition to the discovery otherwise allotted to Blackberry in this case. 26 27 28 8 1 2 3 4 5 6 Blackberry may re-notice its motion at its convenience once the discovery is completed. IT IS SO ORDERED. Dated: August 21, 2014 ______________________________________ WILLIAM H. ORRICK United States District Judge 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9
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