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Title: Etagz, Inc. v. Quiksilver

June 11, 2012

TITLE: ETAGZ, INC.
v.
QUIKSILVER, INC.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): DENYING MOTION TO DISMISS

Before the Court is a Motion to Dismiss Etagz' Patent Infringement Cause of Action That Relies Upon Patent Claims That Were Added During Reexamination For Lack of Subject Matter Jurisdiction filed by Defendant and Counter-Claimant Quiksilver, Inc. (Docket 71) (the "Motion").The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. After considering the moving, opposing, and replying papers, the Court DENIES the Motion.

I. BACKGROUND

Plaintiff and Counter-Claim Defendant Etagz, Inc. ("Plaintiff") filed suit against Defendant and Counter-Claimant Quiksilver, Inc. ("Defendant") asserting willful infringement of Plaintiff's United States Patent No. 6,298,332 ("332 Patent"), entitled "CD-Rom Product Label Apparatus and Method." According to the patent registration, the "primary object" of the 332 Patent is to "provide a compact disc product label providing a link back from the purchaser to the vendor." See Docket 56, Order Granting Motion to Lift Stay. Originally, Plaintiff alleged that Defendant infringed Claim 16 of Patent 332 when Defendant sold boardshorts that included, as a free giveaway, a surf DVD attached to the shorts. Id. Defendant stopped selling the allegedly infringing boardshorts in 2010 and represents that it has no plans to sell the boardshorts in the future. See Motion, 2; Milstein Decl., ¶ 2.

On November 22, 2010 this Court granted Defendant's Motion to Stay the Case pending the outcome of the PTO's reexamination of the 332 Patent. See Docket 56. During that reexamination, Claim 16 (as well as Claim 11) were rejected and Plaintiff has agreed never to assert those claims against See Docket 63, Rule 26(f) Report ("Rule 26(f) Report"), 2. On February 21, 2012, the stay was lifted and the case was returned to active status.

Plaintiff now asserts infringement of Claims 1 and 26, which have always been in the 332 Patent but were not originally asserted by Plaintiff, as well as Claims 29, 31, 37, and 47, which are new claims added to the 332 Patent during reexamination. See Finkelstein Decl, Exh. D, at p.5.; Motion, 2; Opposition, 8. Defendant brings the present motion seeking only to dismiss the newly added claims based on the doctrine of absolute intervening rights.

II. DISCUSSION

As an initial matter, the parties dispute the proper form of Defendant's present Motion. Plaintiff argues that Defendant's arguments should be pursued in the form of a motion for partial summary judgment, while Defendant asserts that it was correct in framing the issue as a motion to dismiss for lack of subject matter jurisdiction. The Court need not resolve this dispute because Defendant's Motion is premature regardless of whether it is framed as a motion to dismiss or a motion for partial summary judgment.*fn1

In terms of the substance of Defendant's argument, Defendant asserts that it has absolute intervening rights with respect to the claims added during reexamination. "Absolute intervening rights provide 'an accused infringer with the absolute right to use or sell a product that was made, used, or purchased before the grant of the reissue patent as long as this activity does not infringe a claim of the reissue patent that was in the original patent.'" Visto Corp. v. Sproqit Technologies, Inc., 413 F. Supp. 2d 1073, 1089 (N.D. Cal. 2006) (quoting BIC Leisure Products, Inc. v. Windsurfing Inter., Inc., 1 F.3d 1214, 1220 (Fed. Cir. 1993)). Pursuant to this doctrine, under 35 U.S.C. §§ 252 and 307, when claims in a patent are cancelled or amended after PTO reexamination, a patentee can only recover for infringement occurring prior to the resolution of the reexamination if the amended claims are substantially identical to the original claims. Bloom Engineering Co., Inc. v. North American Mfg. Co., Inc., 129 F.3d 1247, 1249-50 (Fed. Cir. 1997) (the scope of the claims must be the same after reissue or else the patent cannot be enforced against infringing activity that occurred before the issuance of the reexamination certificate); see 35 U.S.C. § 252 ("[I]n so far as the claims of the original and reissued patents are substantially identical, such surrender shall not affect any action then pending nor abate any cause of action then existing, and the reissued patent, to the extent that its claims are substantially identical with the original patent, shall constitute a continuation thereof and have effect continuously from the date of the original id. at § 307(b) (applying § 252 to claims amended during a reexamination proceeding).

The dispositive issue is thus whether the original claims and the new claims are legally identical. Unfortunately, "[t]here is no absolute rule for determining whether an amended claim is legally identical to an original claim," although "[a]n amendment that clarifies the text of the claim or makes it more definite without affecting its scope is generally viewed as identical for the purpose of § 252. Bloom, 129 F.3d at 1249. "Identical" has also been held to mean "without substantive change." DuVal Wiedmann, LLC v. InfoRocket.com, Inc., 620 F.3d 496, 504 (5th Cir. 2010); see also Laitram Corp. v. 163 F.3d 1342, ...


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