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Nano-Second Technology Co., Ltd., A Taiwanese Corporation v. Dynaflex International

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


May 10, 2013

NANO-SECOND TECHNOLOGY CO., LTD., A TAIWANESE CORPORATION, PLAINTIFF,
v.
DYNAFLEX INTERNATIONAL, A CALIFORNIA CORPORATION., AND GFORCE CORP. D/B/A DFX SPORTS & FITNESS, A NEVADA CORPORATION, DEFENDANTS.

The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

ORDER Re: Defendants' Motion for Imposition of Sanctions Pursuant to Federal Rule of Civil Procedure 11 [232]

Currently before the Court is Defendants Dynaflex International and GForce Corporation's ("Defendants") Motion for Imposition of Sanctions Pursuant to Federal Rule of Civil Procedure 11 [232]. The Court having reviewed all papers submitted pertaining to this Motion and having considered all arguments presented to the Court, NOW FINDS AND RULES AS FOLLOWS:

The Court DENIES the Motion.

This is a patent infringement case where Defendants are alleged to have sold gyroscopic wrist exercisers that infringe on Plaintiff Nano-Second Technology Co.'s ("Plaintiff") patent, U.S. Patent No. 5,800,311 ("'311 patent"), issued on September 1, 1998.

Plaintiff listed nine products ("accused products") in its Infringement Contentions that allegedly infringe on the '311 Patent [66-1]. One of these nine accused products is identified as A6, Dynagrip Pro Xtreme Gyro Exerciser ("A6"). Plaintiff asserted in its Infringement Contentions that A6 infringes on independent claim 15 and dependent claim 17 of the '311 Patent. In general, Claim 15 discloses a wrist exerciser comprising a spherical casing, a spherical rotor with a circumferential groove containing a driving hole, a flexible rope with a rigid end that winds around the circumferential groove, and a counter able to count the rotations of the rotor. Claim 17 depends on Claim 15 and further discloses a counter with a proximity detector actuateable by a magnet fixed in the groove of the rotor.

Earlier in the Action, on May 15, 2012, Defendants filed a Motion for Summary Judgment of Non-Infringement of Plaintiff's Patent [113], which the Court granted in part and denied in part. Of particular relevance to Defendants' present Motion for Sanctions, the Court denied the summary judgment motion as to the A6 accused product, stating that there were genuine issues of material fact as to whether it infringed Plaintiff's '311 patent [146].

On March 27, 2013, Defendants filed the present Motion for Sanctions Pursuant to Federal Rule of Civil Procedure 11 [232], which was set for hearing on May 9, 2013, and taken under submission on May 3, 2013 [269]. On April 10, 2013, Defendants filed an Ex Parte Application to Strike Plaintiff Nano-Second's Declaration of Chi On Chui ("Ex Parte Application") [246], which was filed concurrently with Defendants' Reply for the present Motion for Sanctions. Plaintiff did not file an opposition. The Court issued a minute order deeming the Ex Parte Application to be part of the Reply [251].

Federal Rule of Civil Procedure 11 provides that every pleading, motion, or other paper presented to the court must be signed by an attorney, or the party if not represented by an attorney. Fed. R. Civ. P. 11(a). The signature certifies that the pleading, motion, or other paper is: 1) warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; or 2) supported by evidence or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Fed. R. Civ. P. 11(b)(2) and (3).

The test imposed by Rule 11 is an objective one. Zaldivar v. City of Los Angeles, 780 F.2d 823, 831 (9th Cir. 1986). The certification requirements of Rule 11 are violated "if the paper filed . . . is frivolous, legally unreasonable, or without factual foundation, even though . . . not filed in subjective bad faith." Id. Rule 11 "must be read in light of concerns that it will . . . chill vigorous advocacy." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). "If, judged by an objective standard, a reasonable basis for the position exists in both law and in fact at the time the position is adopted, then sanctions should not be imposed." Golden Eagle Distributing Corp. v. Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986). The decision to impose a sanction is within the discretion of the court. Fed. R. Civ. P. 11(c).

Defendants assert that no factual basis exists for Plaintiff's patent infringement claim as to the A6 Product because this product does not include a counter or magnet for actuating a counter. Further, Defendants contend that Plaintiff misrepresented the features of the A6 Product in its Infringement Contentions.

On balance, the Court DENIES the instant Motion for Sanctions and finds that Defendants' request for Rule 11 sanctions is unwarranted.

First, the Court finds that there is insufficient evidence before the Court showing that Plaintiff intentionally misrepresented the A6 Product in its Infringement Contentions. At the time Plaintiff filed its Infringement Contentions, the alleged A6 Product contained a number of the limitations of Claims 15 and 17. Previously, the Court found that because Defendants separately sold counters attachable to the A6 Product, there was a possibility that A6 indirectly infringes on the '311 Patent. It is unclear why the A6 was originally believed to have a magnet, when now the Parties have discovered that the A6 does not contain a magnet. Without more evidence demonstrating that Plaintiff intentionally misled the Court, the Court declines to sanction Plaintiff.

Second, the Court finds that Plaintiff's arguments regarding the Accused Product A6 are not entirely baseless. Plaintiff previously observed that Defendants have separately sold counters that potentially attach to the A6. The Parties appear to dispute whether these counters would be able to "count" the rotations of the rotor, which is a limitation of Claim 15. Although Defendants contend that Plaintiff's corporate designee "admitted" broadly that certain wrist exercisers not containing magnets could not be used with counters, Plaintiff's corporate designee actually said, in the context examining another wrist exerciser marked Exhibit 47, which was not the A6 Product, that Exhibit 47 was not designed for use with a counter. That statement does not appear to have any bearing as to whether A6 can work with a counter. As to Claim 17, Plaintiff appears to dispute Defendants' claim that they do not manufacture A6 with a magnet, which is not unreasonable given that at least some of Defendants' products are manufactured with a magnet.

Thus, the Court declines to award sanctions under these circumstances. The Court also OVERRULES Defendants' objections to Dr. Chui's declaration, which are the subject of Defendants' Ex Parte Application, as MOOT because the analysis above does not rely upon his testimony.

IT IS SO ORDERED.

20130510

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