United States District Court, N.D. California
ORDER DENYING DEFENDANTS' MOTION FOR PARTIAL
SUMMARY JUDGMENT, DENYING PLAINTIFF'S MOTION FOR PARTIAL
SUMMARY JUDGMENT, AND DENYING PLAINTIFF'S MOTION TO
STRIKE PORTIONS OF DEFENDANTS' EXPERT REPORT RE: DKT.
NOS. 145, 146, 156
HAYWOOD S. GILLIAM, JR. United States District Judge.
before the Court are Security People, Inc.
(“Digilock”) and Asil Gokcebay's
(collectively, “Defendants”) motion for partial
summary judgment on several claims asserted by Ojmar U.S.,
LLC (“Ojmar” or “Plaintiff”) in its
second amended complaint, Dkt. No. 146 (“Defs.
Mot.”); see also Dkt. No. 117
(“SAC”); Plaintiff's motion for partial
summary judgment that U.S. Patent No. 5, 337, 043 is material
prior art to U.S. Patent No. 6, 655, 180, Dkt. No. 145
(“Pl. Mot.”); and Plaintiff's motion to
strike portions of the expert report of Larry Nixon, Dkt. No.
156 (“Mot. to Strike”). Briefing on the motions
is complete. See Dkt. Nos. 160 (“Pl.
Opp.”), 167 (“Defs. Reply”), 159
(“Defs. Opp.”), 166 (“Pl. Reply”),
157 (“Opp. to Strike”), 158 (“Reply to
Strike”).Having carefully considered the
parties' arguments, the Court DENIES the
SUMMARY JUDGMENT STANDARD
judgment is proper when a “movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A fact is “material” if it “might
affect the outcome of the suit under the governing
law.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute is
“genuine” if there is evidence in the record
sufficient for a reasonable trier of fact to decide in favor
of the nonmoving party. Id. The Court views the
inferences reasonably drawn from the materials in the record
in the light most favorable to the nonmoving party,
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587-88 (1986), and “may not weigh the
evidence or make credibility determinations, ”
Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir.
1997), overruled on other grounds by Shakur v.
Schriro, 514 F.3d 878, 884-85 (9th Cir. 2008).
moving party bears both the ultimate burden of persuasion and
the initial burden of producing those portions of the
pleadings, discovery, and affidavits that show the absence of
a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Where the moving
party will not bear the burden of proof on an issue at trial,
it “must either produce evidence negating an essential
element of the nonmoving party's claim or defense or show
that the nonmoving party does not have enough evidence of an
essential element to carry its ultimate burden of persuasion
at trial.” Nissan Fire & Marine Ins. Co. v.
Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Where
the moving party will bear the burden of proof on an issue at
trial, it must also show that no reasonable trier of fact
could not find in its favor. Celotex Corp., 477 U.S.
at 325. In either case, the movant “may not require the
nonmoving party to produce evidence supporting its claim or
defense simply by saying that the nonmoving party has no such
evidence.” Nissan Fire & Marine Ins. Co.,
210 F.3d at 1105. “If a moving party fails to carry its
initial burden of production, the nonmoving party has no
obligation to produce anything, even if the nonmoving party
would have the ultimate burden of persuasion at trial.”
Id. at 1102-03.
however, a moving party carries its burden of production, the
nonmoving party must produce evidence to support its claim or
defense.” Id. at 1103. In doing so, the
nonmoving party “must do more than simply show that
there is some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., 475 U.S.
at 586. A nonmoving party must also “identify with
reasonable particularity the evidence that precludes summary
judgment.” Keenan v. Allan, 91 F.3d 1275, 1279
(9th Cir. 1996). If a nonmoving party fails to
produce evidence that supports its claim or defense, courts
enter summary judgment in favor of the movant. Celotex
Corp., 477 U.S. at 323.
DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT
move for summary judgment on Ojmar's federal antitrust
claims, Cartwright Act claim, Lanham Act claim, tort claims,
and Ojmar's request for attorneys'
fees. Disputes of material fact preclude summary
judgment on each of these claims.
argue that Ojmar's alleged product market and
submarket-electronic keypad locks with electronically
actuated bolts (“EKLs”)-are artificially narrow.
See Defs. Mot. at 14. Defendants claim that there is
no dispute that the proper product market and submarket
extend beyond EKLs to include other types of shared use
locks, including EKLs with manually actuated bolts,
mechanical keypad locks, electronic non-keypad lock products,
and hasps and cam locks. See Id. at 16-17.
Defendants accordingly contend that summary judgment on
Ojmar's antitrust claims is proper.
are incorrect. To begin, Defendants need not move for summary
judgment on Ojmar's alleged product market. In its order
denying Defendants' second dismissal motion, the Court
precluded Ojmar from proceeding on a product market
consisting only of EKLs. See Dkt. No. 132
(“SAC Dismissal Order”) at 3 (finding that
Ojmar's “trait-focused allegations”
“fail[ed] as a matter of law to demonstrate the absence
of economic substitutability, the benchmark for a facially
sustainable product market”). Nonetheless, the Court
allowed Ojmar to advance its antitrust claims based on a
properly alleged submarket. See Id. at 4-5; Pl. Opp.
at 10; Defs. Mot. at 17. Specifically, the Court held that
Ojmar could premise a cognizable antitrust claim on an
economically distinct EKL submarket (i.e., a “small
part of the general market of substitutable products”)
within the broader market for locker locks. See SAC
Dismissal Order at 4-5.; Newcal Indus., Inc. v.
Ikon Office Sol., 513 F.3d 1038, 1045 (9th Cir. 2008).
Ojmar's alleged submarket to survive summary judgment,
Ojmar “must be able to show that the alleged submarket
is economically distinct from the general product
market.” Newcal Indus., Inc., 513 F.3d at
1045. Indicia of a valid submarket include: “industry
or public recognition of the submarket as a separate economic
entity, the product's peculiar characteristics and uses,
unique production facilities, distinct customers, distinct
prices, sensitivity to price changes, and specialized
vendors.” Brown Shoe Co. v. U.S., 370 U.S.
294, 325 (1962). Defendants argue that Ojmar fails to set
forth evidence demonstrating that the EKL submarket is
economically significant or otherwise distinct from the
broader locker lock market. See id.; Defs. Mot. at
Court disagrees. There are genuine disputes of material fact
underlying several of the Brown Shoe factors.
See 370 U.S. at 325. One such disagreement concerns
what an EKL actually is. See Id. Defendants
argue that EKLs include electronic locks with manual bolts,
and that electronic locks with manual bolts are
indistinguishable from EKLs with electrically actuated bolts.
See, e.g., Defs. Mot. at 10 (“The lock
industry does not draw a boundary between manual and
motorized EKLs, let alone with other locks.”). Ojmar,
in contrast, claims that there is no such thing as an EKL
with a manual bolt. See Pl. Opp. at 11 n.8. Ojmar
presents evidence that, when all required inferences are made
in its favor, supports that proposition. That evidence also
suggests that the bolt's look and function are
economically significant because they implicate purchasing
decisions. See Dkt. No. 160-40 (“Lenzo
Decl.”) ¶ 22 (differentiating between EKLs and
locks with “an electronic keypad with a manual-cam
locking device, ” and opining that the latter
“have less complex circuitry and require significantly
less battery power because they do not include an
electrically actuated bolt or latch”); Dkt. No. 161-3
(“Wind Decl.”) ¶ 4 (distinguishing
“electronic locks that are motorized or
solenoid-actuated” from those “with an electronic
keypad but a manual lock”); Dkt. No 160-42 (“Oonk
Decl.”) ¶¶ 3-4, 6-12 (observing that certain
purchasers opt for EKLs because of the “premium image
EKLs convey because they are fully automatic”); Dkt.
No. 161 (“Callaway Decl.”), Ex. 3 at 74:23-75:19
(indicating that there are only three competitors in the
marketplace for an electronic lock for lockers with a
motor-driven or solenoid-driven locking mechanism). Thus,
what lock technology comprises an EKL presents a disputed
factual issue for a jury to decide.
all inferences in Ojmar's favor, as required at this
stage, the Court finds that a reasonable jury could also find
that EKLs occupy a distinct submarket based on unique and
economically significant characteristics. Ojmar sets forth
facts showing that lock consumers prefer EKLs to other lock
types because EKLs can improve efficiency, reduce management
costs, enhance user convenience, augment security, provide a
“premium image, ” and facilitate compliance with
the Americans with Disabilities Act (“ADA”).
See Oonk Decl. ¶¶ 4-35 (listing advantages
to EKLs over conventional locks and electronic lock
variations); Wind Decl. ¶¶ 4, 7, 12-14, 16
(detailing benefits relating to enhanced security, image, and
ADA compliance); Lenzo Decl. ¶¶ 54-56 (describing a
combination of value-adding EKL features and
functionalities); Dkt. No. 160-6 (“Boullié
Decl.”) ¶¶ 7-12 (explaining design features
that can enhance security).
Brown Shoe factors are similarly in dispute. There
are, for instance, facts tending to show that lock
manufacturers recognize competition within a distinct EKL
submarket. See, e.g., Wind Decl. ¶ 17
(“Zephyr Lock competes with Ojmar and Digilock in the
market for electronic keypad locks for lockers.”);
Callaway Decl., Ex. 3, 74:23-75:19 (stating that there are
three competitors in the EKL marketplace: Zephyr, Ojmar, and
Digilock). One expert opines that EKLs require distinct
production facilities. See Boullié Decl.
¶¶ 15-19. There is evidence, if viewed through a
lens favorable to Ojmar, that could show that EKL pricing is
distinct from and immune to pricing of other lock types,
including conventional locks, mechanical shared use locks,
and radio frequency identification (RFID) locks. See
Boullié Decl. ¶ 20 (noting that EKL complexity
implicates costs); Oonk Decl. ¶¶ 5-12 (depicting
features contributing to price premium), 32-33 (detailing
price differences between EKLs, mechanical locks, and RFID
locks), 36. Considering these disputes of fact, summary
judgment is inappropriate on Ojmar's federal antitrust
Defendants move for summary judgment on Ojmar's
Cartwright Act claim. See Cal. Bus. & Prof. Code
§ 16720. “In California, exclusive dealing
arrangements are . . . proscribed when it is probable that
performance of the contract will foreclose competition in a
substantial share of the affected line of commerce.”
Fisherman's Wharf Bay Cruise Corp. v. Sup. Ct.,
7 Cal.Rptr.3d 628, 649 (2003) (quotation omitted). Defendants
argue that Digilock's conduct does not stifle competition
in the alleged EKL submarket. See Defs. Mot. at
11-13, 19- 21. Specifically, Defendants contend that Ojmar
has not lost market share because (1) Digilock's
agreements with original equipment manufacturers
(“OEMs”) are short term and terminable at will;
and (2) these agreements occupy just a small fraction of the
marketplace. See Id. Defendants assert that these
agreements can even promote competition. See id.
material facts preclude summary judgment on Ojmar's
Cartwright claim. For instance, Ojmar presents evidence
which, when all required inferences are made in its favor,
could suggest that Digilock's OEM agreements were, in
fact, coercive, and that OEMs could not realistically
terminate these agreements for financial reasons.
See Wind Decl. ¶¶26-28 (describing how
OEMs might lose market share as a result of declining
Digilock's terms); Dkt. No. 160-7 (“Day
Decl.”), Ex. A ¶¶ 9-10; Dkt. No. 144-22.
There is also evidence, interpreted in the light most
favorable to Ojmar, that Defendants stifled competition by
threatening to bring patent infringement lawsuits against
OEMs that used or displayed Ojmar EKLs. See Callaway
Decl., Exs. 23, 24, 25; Oonk Decl. ¶ 38, 40 (describing
companies' refusals to display Ojmar locks at subsequent
industry trade shows); Lenzo Decl. ¶ 44. The Court does
not, and need not, offer any view as to ...