In Re PAPST LICENSING GMBH & CO. KG LITIGATION , 273 F.R.D. 339 ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
IN RE PAPST LICENSING GMBH & CO. KG
LITIGATION
Misc. Action No. 07-493 (RMC)
MDL Docket No. 1880
This Document Relates To:
ALL CASES
MEMORANDUM OPINION ON CAMERA MANUFACTURERS’ MOTION FOR
SANCTIONS
In this Multi District Litigation (“MDL”),1 Papst Licensing GmbH & Co. (“Papst”)
has alleged that digital camera manufacturers that sell products in the United States have infringed
U.S. Patent Nos. 6,470,399 (“’399 Patent”) and 6,895,449 (“’449 Patent”) (collectively the
“Patents”). In opposition, the Camera Manufacturers seek a declaratory judgment of non-
infringement and/or patent invalidity.
1
This MDL currently consists of First and Second Wave Cases. The “First Wave Cases,”
currently are: Fujifilm Corp. v. Papst, 07-cv-1118; Matsushita Elec. Indus. Co., Ltd. v. Papst, 07-cv-
1222; Papst v. Olympus Corp., 07-cv-2086; Papst v. Samsung Techwin Co., 07-cv-2088; Hewlett
Packard Co. v. Papst, 08-cv-865; and Papst v. Nikon Corp., 08-cv-985. The “First Wave Camera
Manufacturers” include: Fujifilm Corporation; Fujifilm U.S.A., Inc.; Fujifilm Japan; Matsushita
Electric Industrial Co., Ltd.; Victor Company of Japan, Ltd.; Olympus Corporation; Olympus
Imaging America Inc.; Samsung Techwin Co.; Samsung Opto-Electronics America, Inc.; Panasonic
Corporation of North America; JVC Company of America; Hewlett-Packard Company; Nikon
Corporation; and Nikon, Inc. The “Second Wave Cases” currently are: Papst v. Canon, 08-cv-1406;
Papst v. Eastman Kodak, 08-cv-1407; Papst v. Sanyo, 09-cv-530. The “Second Wave Camera
Manufacturers” include: Canon, Inc.; Canon USA, Inc.; Eastman Kodak Company; Sanyo Electric
Co., Ltd; and Sanyo North America Corporation.
The Camera Manufacturers2 now move for sanctions and seek attorney’s fees due to
Papst’s filing its Final Asserted Claims and Infringement Contentions with complete disregard for
the requirements set by the Court at an August 31, 2010 hearing and in the Sixth Practice and
Procedure Order [Dkt. # 372]. See Revised Final Asserted Claims and Contentions [Dkt. # 416]
(“Final Contentions”) (revising prior version at Dkt. # 379). As explained below, the motion will
be granted in part and denied in part; Papst will be sanctioned, but the request for attorney’s fees will
be denied.
I. FACTS
At the onset of this case, the Court informed the parties that its plan for case
management included an early Markman hearing 3 for the purpose of defining and refining the issues
and narrowing the case. See, e.g., Second Practice & Procedure Order [Dkt. # 36]. On May 28,
2008, Papst filed its Asserted Claims and Infringement Contentions pursuant to the Second Practice
and Procedure Order [Dkt. # 36]. See Claims and Infringement Contentions [Dkt. # 110]. The Court
held a Markman hearing September 22 through 24, 2008, and rendered its final claims construction
opinion and order on November 24, 2009. See Modified Claims Construction Op. [Dkt. # 336];
Modified Order [Dkt. # 337].4
2
Even though the Second Wave Cases are currently stayed, the First and Second Wave
Camera Manufacturers join in this motion. See Seventh Practice and Procedure Order [Dkt. # 391].
3
Pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), the Court is
required to construe the contested claims of the patents before a jury can determine whether the
accused products infringe. Thus a claims construction hearing is often called a Markman hearing.
4
The Modified Claims Construction Opinion and Order were issued upon reconsideration
and replaced the original opinion and order filed on June 12, 2009. See Op. [Dkt. # 312]; Order
[Dkt. # 313]. Papst filed a second motion for reconsideration, but that motion was denied on January
29, 2010. See Order [Dkt. # 343].
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On July 30, 2010, the Court entered a Minute Order requiring the parties to “meet and
confer and jointly submit a focused discovery proposal and deadlines.” Minute Order entered July
30, 2010. The parties each filed their own proposal, although they put them in one document. See
Proposal [Dkt. # 367]. The Court and the parties discussed the proposals at a status conference on
August 31, 2010. At that conference, the Court noted that Papst had failed to propose focused
discovery as ordered by the Court and ordered Papst to bring its asserted claims and infringement
contentions up-to-date in light of the Modified Order on claims construction:
I said focused discovery and what I got was a shotgun shell. I mean,
everything. I do not consider that focused and I don’t think that it
fulfills my obligation to get this done quickly and with the least
expense possible under the circumstances. So what I think we need
to start with is the concept that Papst filed infringement contentions
. . . and hasn’t changed them, hasn’t indicated it wants to change
them, hasn’t indicated it plans or needs to change them but now says
[it] need[s] a ton of discovery. I’m not sure that all of your
contentions can stand in light of the claims construction decision
which I appreciate you don’t like, it’s okay. But nobody knows what
they’re fighting about now. Nobody can tell and you don’t want to
tell them, and we’re not going to do it that way. I mean, you’re the
plaintiff. You have allegations, you need to say what they are. So the
first thing is I’m going to direct Papst to refile its claims contentions,
its infringement contentions. . . . File that, then we’ll know what
we’re arguing about. Only then can we figure out what discovery is
really needed.
Camera Mfrs.’ Mot. for Sanctions [Dkt. # 388], Ex. A (Tr. of Aug. 31, 2010 Hearing) at 18-19. The
Court further directed, “you have got to bring your infringement contentions up to date. People have
to know what they’re litigating about. And only when you do can you then say okay, this is the
discovery we need for these reasons.” Id. at 32. The Court told Papst that its asserted claims and
infringement contentions needed to be specific:
First you have to decide what your infringement contentions are.
Only when you know what, what camera you’re asserting [infringes]
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what claim and for what reason[,] can you possibly figure out what
discovery you might need that you don’t already have.
Id. at 33-34.
As a result of the August 31, 2010 status conference, the Court issued its Sixth
Practice and Procedure Order. See Sixth Practice & Procedure Order [Dkt. # 372] (“Sixth PPO”).
That Order defined the specificity required for Papst’s Final Contentions as follows:
2. No later than October 13, 2010, Papst shall file its Final
Disclosure of Asserted Claims and Infringement Contentions.
Separately for each opposing party, this Final Disclosure shall contain
the following information:
a. Each claim of each patent in suit that is allegedly infringed by each
opposing party, including for each claim the applicable statutory subsections
of 35 U.S.C. § 271 asserted;
b. Separately for each asserted claim, each accused apparatus,
product, device, process, method, act or other instrumentality
(“Accused Instrumentality”) of each opposing party of which Papst
is aware. This identification shall be as specific as possible. Each
product, device, and apparatus shall be identified by name or model
number, if known. Each method or process shall be identified by
name, if known or by any product, device or apparatus which, when
used, allegedly results in the practice of the claimed method or
process;
c. A chart identifying specifically where each limitation of each
asserted claim is found within each Accused Instrumentality,
including for each limitation that such party contends is governed by
35 U.S.C. § 112(6), the identity of the structure(s), act(s), or
material(s) in the Accused Instrumentality that performs the claimed
function.
d. For each claim which is alleged to have been indirectly infringed,
an identification of any direct infringement and a description of the
acts of the alleged indirect infringer that contribute to or are inducing
that direct infringement. Insofar as alleged direct infringement is
based on joint acts of multiple parties, the role of each such party in
the direct infringement must be described.
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e. Whether each limitation of each asserted claim is alleged to be
literally present or present under the doctrine of equivalents in the
Accused Instrumentality; and
f. For any patent that claims priority to an earlier application, the
priority date to which each asserted claim allegedly is entitled.5
Id. ¶ 2.
Pursuant to the Sixth PPO, Papst filed its Final Contentions. Because those Final
Contentions fail to comply with the Sixth PPO and fail to satisfy the goals set out by the Court at the
August 31, 2010 status conference, the Camera Manufacturers move for sanctions.
II. LEGAL STANDARD
The Camera Manufacturers seek sanctions against Papst pursuant to Federal Rule of
Civil Procedure 16 and 37(b). Rule 37(b)(2)(A) provides:
If a party . . . fails to obey an order to provide or permit
discovery . . . the court where the action is pending may issue
further just orders. They may include the following:
(i) directing that the matters embraced in the order or other
designated facts be taken as established for purposes of the
action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or
opposing designated claims or defenses, or from introducing
designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceedings in whole or in part;
(vi) rendering a default judgment against the disobedient
5
See Rule 3-1 of the Local Rules of Practice for Patent Cases before the U.S. District Court
for the Northern District of California (“N.D. Calif. Patent Rules”).
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party; or
(vii) treating as contempt of court the failure to obey any
order except an order to submit to a physical or mental
examination.
Fed. R. Civ. P. 37(b)(2)(A). Rule 16(f)(1)(C) permits a court to enter “any just orders, including
those authorized by Rule 37(b)(2)(A)” if a party or its attorney fails to obey a scheduling or other
pretrial order. An order imposing sanctions under Rules 16(f) and 37(b) may be entered against a
party who fails to comply with court ordered requirements for the disclosure of infringement
contentions. O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1633 (Fed. Cir.
2006). A court may also require the disobedient party to pay the reasonable expenses, including
attorney’s fees, incurred by the opposing party due to the failure to comply with the court’s order.
Fed. R. Civ. P. 16(f)(2) & 37(b)(2)(C).
The Sixth PPO put in place standards substantially the same as those imposed by Rule
3-1 of the Local Rules of Practice for Patent Cases before the U.S. District Court for the Northern
District of California (“Northern District of California Patent Rules”). In the Northern District of
California, Rule 3-1 requires a plaintiff in a patent infringement case to “crystallize its theory of the
case and patent claims.”6 InterTrust Tech. Corp. v. Microsoft Corp., Civ. No. 01-1640, 2003 WL
23120174, at *3 (N.D. Cal. Dec. 1, 2003). “The overriding principle of the [Northern District of
California Patent Rules] is that they are designed [to] make the parties more efficient, to streamline
the litigation process, and to articulate with specificity the claims and theory of a plaintiff’s
infringement claims.” Bender v. Micrel, Civ. No. 09-1144, 2010 WL 520513, *2 (N.D. Cal. Feb. 6,
6
A plaintiff in the Northern District of California is expected to articulate its infringement
contentions no later than 14 days after the initial case management conference, a much earlier stage
than required in this MDL. N.D. Cal. Patent Rule 3-1. Papst was required to crystallize its theory
only after claims construction.
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2010). The purpose of Rule 3-1 is to “prevent the case stagger[ing] for months without clear
direction” by “focusing discovery on building precise final infringement or invalidity contentions and
narrowing issues for Markman, summary judgment trial, and beyond.” Connectel, LLC v. Cisco Sys.,
Inc., 391 F. Supp. 2d 526, 527 (E.D. Tex. 2005).
III. ANALYSIS
Papst’s Final Contentions were required to meet the express and detailed standards set
forth by the Court at the August 31, 2010 hearing and in the Sixth PPO. The Court directed Papst to
file Final Contentions because Papst had filed its original claims and contentions on May 28, 2008,
before claims construction, and Papst needed to amend its contentions to conform with the November
24, 2009 Modified Claims Construction Opinion and Order. See Modified Claims Construction Op.
[Dkt. # 336]; Modified Order [Dkt. # 337]. In addition to the need to bring the claims and contentions
up-to-date, the Court ordered Papst to be clear and precise in its Final Contentions so as to permit
focused discovery and ensure efficient resolution of this MDL with regard to the cost, time, and effort
expended by the parties and the Court. Papst has flouted the Court’s direct order. Its 314-page Final
Contentions filing simply fails to meet the standards directed by the Court. For this astounding and
brash failure to follow its orders, the Court will impose a reasonable sanction against Papst — Papst
will be required to live with its Final Contentions as they stand without further modification.
Instead of crystallizing its asserted claims and infringement contentions in this case,
Papst’s Final Contentions intentionally obfuscate Papst’s infringement theories. As this Court has
previously noted, Papst is in the business of litigation.
Papst is a German company that produces no products; it acquires
patents on products or methods allegedly invented by others and then
searches the world for patents it might challenge for infringement. At
one of the first status conferences of the MDL, when the Court queried
whether this was old-fashioned “claim-jumping,” counsel for Papst
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readily agreed that it had been called worse. Of course, this is a
perfectly lawful and respectable business. But it underscores that the
business of Papst is litigation, not invention or production. Litigation
is the business model whereby Papst, when successful, achieves
royalty payments from others. As is clear from this record, the threat
of litigation alone often achieves royalty payments.
Mem. Op. [Dkt. # 86]. While the threat of litigation alone often achieves royalty payments, the threat
of never-ending discovery can induce even larger royalty payments. Frankly, this appears to be
Papst’s strategy in this case. The Final Contentions are purposefully vague; they were drafted to
further Papst’s intention to engage in protracted and expensive litigation.
A few examples will suffice to illustrate Papst’s blatant disregard of the Court’s Order,
which permeates its entire document. First, instead of providing a “chart identifying specifically
where each limitation of each asserted claim is found within each Accused Instrumentality” as
required by the Sixth PPO ¶ 2(c), Papst filed three generic claims charts that reference a non-specific
narrative section of its filing that is full of ambiguous phrasing. See Final Contentions at 52-78. For
example, Papst’s chart for MSC Capable Devices sets forth the first portion of Claim One of the ’399
Patent:
An interface device for communication between a host device, which
comprises drivers for input/output devices customary in a host device
and a multi-purpose interface, and a data transmit/receive device, the
data transmit/receive device being arranged for providing analog data,
comprising:
Id. at 52 (citing ’399 Patent, col. 12:42-47). Rather than identify specifically where each limitation
of each asserted claim is found within each Accused Instrumentality, as required by the Sixth PPO,
Papst told the Court and the Camera Manufacturers that:
Papst incorporates Part A, “Preamble,”above, including the objections
to the construction of the terms in the preamble. The MSC Capable
Devices identified in the tables below include interface device portions
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for communication between a host device having a multipurpose USB
interface and data transmit receive devices addressed herein and
arranged for providing analog data.
Id. at 52. Papst refers to “Part A,” fourteen pages of argument, vague examples, and renewal of
Papst’s own claims constructions, already rejected by the Court. See Final Contentions at 5–18. The
allegations in Papst’s chart are replete with this lack of specificity — they utterly fail to identify
specifically where in the accused products the claims limitations are found. The Final Contentions
repeatedly make the bald assertion that “the accused device includes .” In fact, Papst was ordered to identify where each limitation of each asserted claim is found
on each accused camera. Papst ignored this direct order of the Court.
Second, the Final Contentions reference “the interface portion” and “interface device
portions.” The Patents claim an “interface device,” which the Court construed to mean a “stand alone
device.” Modified Claims Construction Order [Dkt. # 337] at 2; see also Modified Claims
Construction Op. [Dkt. 337] at 16-24. Papst’s Final Contentions do not identify what precisely the
alleged interface devices are, instead referring to “the interface portion of the accused products.”
Final Contentions at 10; see also id. at 52 (“The MSC Capable Devices identified in the tables below
include interface device portions for communication” between a computer and a data transmit/receive
device.)7 “Interface device portions” is a new phrase, invented by Papst to avoid the requirements
of the Court’s orders.
7
The Camera Manufacturers point out various claims that they allege are either baseless or
unlikely to hold up on summary judgment. One such claim is Papst’s theory that SD (Secure Digital)
Cards meet the “transmit/receive device” limitation, even though the ’399 Patent requires that the
transmit/receive device provide analog, not digital, data. Because infringement contentions are
intended to provide notice and not to provide a forum for litigating substantive issues, see
STMicroelectronics, Inc. v. Motorola, Inc., 308 F. Supp. 2d 754, 755 (E.D. Tex. 2004) (referring
to preliminary contentions), the Court does not address the substance of Papst’s Final Contentions
at this juncture.
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Third, the Final Contentions additionally lack the requisite specificity because they
repeatedly reiterate Papst’s version of previously rejected claims constructions and then advance
theories based on such rejected constructions. See, e.g., Final Contentions at 33 (asserting that
“second connecting device” means a device for interfacing and not “a physical plug or socket for
permitting a user readily to attach and detach . . .” as construed by the Court). In this same vein, Papst
also attempts to incorporate and reassert its original contentions filed May 28, 2008, before claims
construction. Id. at 2. Such an approach bespeaks a total lack of respect for Court orders and the
timely resolution of this case, but it is consistent with Papst’s approach from the beginning.8
By ignoring the Court’s claims constructions and asserting its own much broader
constructions, Papst would keep hundreds of accused products in this case, products that should no
longer be the subject of this litigation due to the Court’s claims constructions. Such would defeat the
purpose of claims construction and exponentially increase the time and expense this litigation
requires. The reassertion of old rejected claims muddles the Final Contentions and contravenes the
Court’s August 31, 2010 directions and the Sixth PPO, requiring up-to-date contentions that are clear
and precise. The commingling of Papst’s preferred constructions with the Court’s constructions
makes it almost impossible to decipher what Papst’s actual infringement theories are under the
Court’s constructions.
Papst argues that it was required to reassert its preferred claims constructions lest it
could be deemed to have waived these issues; that it should be permitted to take discovery that is
8
See, e.g., Mem. Op. [Dkt. # 82] (sanctioning Papst for failure to comply with a direct
discovery order), modified in part by Mem. Op. [Dkt. # 123]. Papst filed a petition for writ of
mandamus regarding this issue, see Dkt. # 167, and the Federal Circuit denied the petition. In re
Papst Licensing GmbH & Co. KG, Misc. No. 877, 314 Fed. Appx. 295, 2008 WL 5691048 (Fed. Cir.
Aug. 5, 2008).
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solely related to its preferred claims constructions; and that it should be permitted to present such
discovery as evidence at trial. See Papt’s Opp’n [Dkt. # 393] at 6-8. This is incorrect. Such an
approach would defeat the very purpose of the Markman hearing and ignore the principle that claims
construction is a legal issue for the Court, not a fact issue for a jury. See, e.g., Intervet, Inc. v. Merial
Ltd., 252 F.R.D. 47, 50 (D.D.C. 2008) (rejecting a request for discovery that was broader than claims
construction because it would defeat the purpose of claims construction, i.e., the narrowing of the
issues). “Limitations on the scope of discovery may be appropriate where the court already has
construed the patent claims. Regardless of the timing of the claim construction, however, the parties
should be prohibited from offering alternative constructions throughout the litigation and thereby
expanding the scope of discovery.” Manual for Complex Litigation 4th § 33.25.9 Papst knows this.
Its counsel are experienced. One must assume counsel’s job is to cause expense for opponents, not
resolution.10
Fourth, Papst’s Final Contentions are vague and nonspecific with regard to certain of
the accused products. Papst contends that Mass Storage Class (“MSC”) capable devices and Picture
Transfer Protocol (“PTP”) capable devices include “digital cameras, camcorders (which are digital
9
The First Practice and Procedure Order provided that “[t]he Court will be guided by the
Manual for Complex Litigation 4th, approved by the Judicial Conference of the United States, and
counsel are directed to familiarize themselves with that publication.” First Practice & Procedure
Order [Dkt. # 3] ¶ 15.
10
On appeal, if the Federal Circuit should modify or overturn this Court’s claims construction
and it becomes unclear whether an accused device infringes, that issue can be remanded for
discovery and summary judgment or trial. See, e.g., Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1324
(Fed. Cir. 2008); Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475, 1478-79 (Fed. Cir.
1998).
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cameras), MP3 players,11 voice recorders, and other MSC Capable and/or PTP Capable devices.”
Final Contentions at 4 (emphasis added). Papst also claims that it “reserves the right” to accuse even
more devices. Final Contentions at 78, 307-314. Such contentions violate the orders of the Court as
stated in the Sixth PPO and at the August 31, 2010 hearing because they are imprecise and without
limit. Further, the case against the First Wave Camera Manufacturers has focused on digital cameras
(and to a very limited extent some mention of camcorders and voice recorders). Papst looks to
expand this litigation to include cell phones and MP3 players. But Papst can only add new product
categories by moving to amend its Complaints and Counterclaims against the Camera Manufacturers,
for which it has not sought leave of Court. See Mem. Op. on HP’s Mot. to Strike [Dkt. # 426] at
10–14; Mem. Op. on Papst’s Mot. Amend Samsung Complaint [Dkt. # 424] at 6-8.
Finally, the Final Contentions also advance claims against the Second Wave Camera
Manufacturers, whose cases are stayed, and against entities that are not part of this litigation:
Samsung Electronics, Inc.; Samsung Electronics America Co. Ltd.; and Samsung
Telecommunications America, LLC. The Final Contentions will be stricken to the extent that they
make claims against these parties.
IV. CONCLUSION
In sanction for its blatant disregard of the Sixth PPO and the Court’s orders at the
August 31, 2010 hearing, the Court will grant in part and deny in part the Camera Manufacturers’
motion for sanctions [Dkt. # 388] as follows:
(1) Papst will be barred from modifying its Final Contentions;
11
MP3 players are digital audio players that support the MPEG Audio Layer 3 computer file
format for the compression and storage of digital audio files. See http://mw4.m-
w.com/dictionary/mp3 (last visited on Feb. 8, 2011).
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(2) Papst will be barred from advancing any arguments for infringement, or against the
Camera Manufacturers’ claims of noninfringement, that are not based solely on this Court’s
constructions of the Patents;
(3) Papst will be barred from advancing any arguments for infringement, or against the
Camera Manufacturers’ claims of noninfringement, that are not set forth specifically and
explicitly in the Final Contentions;
(4) Papst will be barred from making claims and contentions at this time against: the Second
Wave Camera Manufacturers; Samsung Electronics Co. Ltd.; Samsung Electronics America,
Inc.; and Samsung Telecommunications America, LLC;
(5) the Final Contentions will be stricken to the extent that they make claims against: the
Second Wave Camera Manufacturers; Samsung Electronics Co. Ltd.; Samsung Electronics
America, Inc.; and Samsung Telecommunications America, LLC.; and
(6) the Camera Manufacturers’ request for attorney’s fees will be denied.
A memorializing Order accompanies this Memorandum Opinion.12
Date: February 8, 2011 /s/
ROSEMARY M. COLLYER
United States District Judge
12
The Minute Order entered January 28, 2011 regarding the Camera Manufacturers’ motion
for sanctions [Dkt. # 388] will be vacated and replaced by the Order that accompanies this
Memorandum Opinion.
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