Minnesota Patent Litigation Wrap-Up — August 2017

This post continues our monthly summary of patent litigation in the District of Minnesota, including short summaries of substantive orders issued in pending cases.

In August 2017, there were three notable decisions for pending cases.

Cutsforth, Inc. v. LEMM Liquidating Co., LLC, No. 12-cv-1200 (August 4, 2017) (Nelson)

The Valspar Corp. v. PPG Indus., Inc., No. 16-cv-1429 (August 4, 2017) (Nelson)

• Motion to Dismiss/Transfer for Improper Venue: Granted

In two similar decisions, Judge Nelson granted motions to transfer venue of pending cases pursuant to the Supreme Court's recent TC Heartland decision. In both cases, the Defendants originally did not contest that venue was proper in the District of Minnesota. However, after TC Heartland, both Defendants argued that venue was now improper under the newly-espoused standard from the Supreme Court. The Plaintiffs in both cases argued that Defendants had waived any challenge to venue by failing to raise it earlier in the case and that TC Heartland did not amount to a change in the law sufficient to excuse the waiver.

Analyzing the Supreme Court's decision and the history of venue-related cases, Judge Nelson found that TC Heartland represented a change in the law of venue and not just a clarification of existing law laid out in the Supreme Court's prior Fourco decision. As such, Judge Nelson concluded that, although the Defendants conceded venue at an earlier stage of the case, they did not waive their new venue defense because such a defense was not "available to the party" at the time of the concession (citing F.R.C.P. 12(g)(2)). Explaining the decision, the Court noted that "it is simply too much to expect a defendant to either anticipate every possible change in the law when answering a complaint or risk being deemed to have waived the argument."

Having found Defendants did not waive their venue defenses, the Court ordered transfer to a new venue because in both cases it was undisputed that venue was improper in the District of Minnesota under the TC Heartland standard. Judge Nelson rejected Plaintiffs' suggestions that concerns of delay or prejudice be considered in the transfer analysis, explaining that "the law of venue exists for the convenience of defendants, not plaintiffs, [and] prejudice to the plaintiff is not a relevant consideration." As such, Judge Nelson ordered transfer to a new venue (the Western District of Pennsylvania in both cases) even though these cases had been pending for several years in the District of Minnesota.

Luminara Worldwide, LLC v. Liown Elecs. Co. Ltd., Nos. 14-cv-3103, 15-cv-3028 (August 28, 2017) (Noel)

• Motion to Compel; Granted
• Motion to Amend Invalidity Contentions: Denied

Liown and Luminara compete in the market for flameless candles, and Luminara accused Liown of infringement. As the case progressed, Liown sought to compel various third-party discovery to support its defenses to Luminara's claims for damages, but Judge Noel denied the requests.

In the first motion, Defendant sought to compel sales information from Darice, Inc., the sole distributor of Plaintiff Luminara's flames candles in the United States. Defendant argued that Darice's sales and financial information were relevant to Plaintiff's price erosion claims, but the Court disagreed. As Magistrate Noel explained, "Plaintiff, not Darice, seeks relief for price erosion" and thus the relevant pricing and sales information was what Plaintiff charged to Darice, not what Darice charged its own customers.

In the second motion, Defendant sought to compel financial and revenue information from Disney Entertainment, Inc. as related to the operation of the "Haunted Mansion" ride at Disney theme parks. One of the issues in the case was whether Plaintiff's flameless candles were in public use on the Haunted Mansion rides within the meaning of 35 U.S.C. § 102(b) during a two-week period in September of 2007. Defendant had already obtained discovery into the attendance and use of the Haunted Mansion during the relevant time period and inspected the ride, but now sought to obtain revenue and financial information for Disney's operation of the Haunted Mansion. Judge Noel denied the request, noting that "[b]road discovery into non-party Disney's revenues from its operation of the Haunted Mansion outside of the critical period is not germane to the public use, public accessibility inquiry nor proportional to the needs of the case."

Judge Noel also denied Defendant's motion to add a new prior art reference to its invalidity contentions, noting that Defendant had been aware of the reference since 2015, but did not request leave to add the reference until long after the deadline and failed to show good cause for the delay.