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Optigen, LLC v. International Genetics

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK


April 16, 2010

OPTIGEN, LLC, PLAINTIFF,
v.
INTERNATIONAL GENETICS, INC, ET AL., DEFENDANTS.
OPTIGEN, LLC, PLAINTIFF,
v.
TEXAS A&M UNIVERSITY SYSTEM, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Andrew T. Baxter, U.S. Magistrate Judge

DECISION AND ORDER

Presently before this court is plaintiff's amended cross-motion (Dkt. No. 130), pursuant to FED. R. CIV. P. 56(f), to deny or continue the motion of Defendant International Genetics, Inc. ("InGen") for summary judgment (Dkt. No. 116) until the plaintiff can conduct further discovery.*fn1 For the reasons stated below, this court grants the cross-motion, in that it orders a continuance with respect to InGen's summary judgment motion until July 2, 2010 so that plaintiff can conduct further relevant discovery, and gives plaintiff leave to file a supplemental response in opposition to InGen's motion by August 2, 2010.

I. Relevant Facts and Procedural History

Plaintiff OptiGen, LLC ("Optigen") is a company based in Ithaca, New York in the business of providing DNA-based diagnostic services to test for inherited diseases in dogs. OptiGen is the exclusive licensee of several U.S. patents relating to genetic tests for inherited canine diseases, and has filed two actions, now consolidated (09-CV-6 Dkt. No. 38), alleging, inter alia, infringement of those patents. (Complaint, 09-CV-06, Dkt. No. 1 ("06 Compl."); Complaint, 09-CV-457, Dkt. No. 1 ("457 Compl.")).

Defendant PinPoint DNA Technologies, Inc. ("PinPoint"), was founded in 2006 by Defendant Richard Dobbins ("Dobbins") and is based in Georgia. (06 Compl. ¶¶ 5, 12). PinPoint offered a service called "Pawsitive I.D." for the DNA testing in dogs and cats. (Id. ¶ 13). In January 2008, OptiGen notified PinPoint and Dobbins that their activity in selling, offering to sell, making, and using one particular genetic test by means of the Pawsitive I.D. testing kit constituted infringement of two of OptiGen's patents. (Id. ¶ 14). By April 15, 2008, PinPoint no longer actively promoted that genetic test on its website. (Id. ¶ 15).

In approximately July 2008, Dobbins set up InGen under the law of The Bahamas to perform genetic testing for pets in that country. InGen purchased assets from PinPoint, including the Pawsitive I.D. product and trademark, database, and website domain names. (06 Compl. ¶ 16). InGen now offers the Pawsitive I.D. and other genetic testing service for purchase through its Bahamian website, including to customers in the United States. (Id. ¶ 23).

On February 12, 2010, plaintiff requested a conference with this court to resolve certain discovery disputes with InGen and related defendants. (09-CV-06 Dkt. No. 112). The court scheduled a conference for March 23rd. In the interim, InGen filed a motion for summary judgment, seeking dismissal of all the claims against it in both actions. (09-CV-06 Dkt. No. 116). During the discovery conference, this court addressed various discovery issues, taking into account the pendency of the InGen summary judgment motion, which, even if granted, would not affect numerous causes of actions against PinPoint, Dobbins, and other defendants in both cases. On March 24, 2010, this court entered an order resolving the discovery issues and, with the consent of the parties involved, extending the deadline for the completion of ongoing discovery until July 2, 2010. (Dkt. No. 121).*fn2 On March 29, 2010, plaintiff filed its opposition to InGen's summary judgment motion and the cross motion under Rule 56(f), which it amended the following day. (09-CV-06 Dkt. Nos. 124-130). On April 5th, InGen filed a response to plaintiff's cross motion. (Dkt. No. 137).*fn3

InGen's summary judgment motion relies heavily on a recent en banc decision of the Federal Circuit which held that the infringement provisions of Section 271(f) of the Patent Act do not apply to a "method" patent. Cardiac Pacemakers, Inc. v. St. Jude's Medical, Inc., 576 F.3d 1348, 1365-66 (Fed. Cir. 2009), cert. denied, U.S., 130 S.Ct. 1088 (2010) (interpreting 35 U.S.C. § 271(f)). The patents in dispute in the cases before this court are "method" or "process" patents, in that they protect, not a product or device, but a series of steps of a method or process. (InGen's Memo. of Law, Dkt. No. 116-1, at 3-4).*fn4 Section 271(f) expands the reach of the Patent Act to impose infringement liability on one who "supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention... in such manner as to actively induce combination of such components outside of the United States in a manner that would infringe the patents if such combination occurred within the United States." 35 U.S.C. § 271(f).

InGen construes the Cardiac Pacemaker case as holding that, to infringe a U.S. method patent, all of the steps of the method must be performed within the United States. It argues that, because InGen does not conduct any genetic testing in the United States, it cannot infringe the OptiGen patents, even assuming that InGen performs the patented method in the Bahamas (which InGen concedes, only for the purposes of its motion). (InGen's Memo. of Law at 2 n.1, 4-5). InGen further argues that, if it cannot infringe OptiGen's patents from the Bahamas, it also cannot be liable on OptiGen's claims based on the Lanham Act or its common law claim for misappropriation of intellectual property. (Id. at 6-8).

In opposing InGen's summary judgment motion, OptiGen argues:

Contrary to InGen's assertions, [the Cardiac Pacemakers] case is not dispositive of OptiGen's patent claims. First, the Federal Circuit's decision in Cardiac Pacemakers is limited in scope, as it addresses infringement under only one section of the Patent Act--Section 217(f). Cardiac Pacemakers does not address, among other things, whether an accused infringer who, like InGen, sells or offers to sell within the United States the performance of every step of a patented method infringes under 35 U.S.C. § 271(a). Second, Cardiac Pacemakers impacts OptiGen's Section 271(f) claims only to the extent that InGen is performing the patented method in the Bahamas. OptiGen has reason to believe that InGen conducted, and continues to conduct, testing in the United States and it is entitled to full discovery into that subject before this motion is ruled upon.

(OptiGen Memo. in Opposition to InGen's Motion for Summary Judgment, Dkt. No. 124-1, at 6). OptiGen further argues that its various other claims against InGen--for inducing infringement by others, violations of the Lanham Act, and unfair competition--would survive even if its patent infringement claims did not. (Id. at 14-19).

In its reply in support of its summary judgment motion, InGen responds to OptiGen's argument that it's infringement action is based, in part, on InGen's sale or offer of sale of a patented method within the United States. Critically, for the purposes of this court's decision on OptiGen's Rule 56(f) cross-motion, InGen relies heavily on factual statements about the manner in which it sells its genetic testing services from the Bahamas in an attempt to establish that it does not sell or offer to sell the patented method in the U.S. (Reply in Support of InGen's Summary Judgment Motion, Dkt. No. 137, at 2).*fn5 Further, InGen distinguishes cases cited by OptiGen with respect to the sale/offer of sale theory of infringement, in part, by arguing that InGen's sales methods differ factually from those of the parties in other cases who were found to be making infringing offers and sales in the U.S. (Id. at 3-6).*fn6 In opposing OptiGen's cross-motion under Rule 56(f), InGen states: "The only question before this Court [in connection with the summary judgment motion] is where InGen performs its genetic testing. On that topic, there is no dispute that InGen conducts its testing in the Bahamas." (Id. at 8).

II. Discussion

A. Rule 56(f)--Applicable Law

Rule 56(f) of the Federal Rules of Civil Procedure, as interpreted by the courts, provides "that when a party facing an adversary's motion for summary judgment reasonably advises the court that it needs discovery to be able to present facts needed to defend the motion, the court should defer decision of the motion until the party has had the opportunity to take discovery and rebut the motion." Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271 F.3d 374, 386 (2d Cir.2001) (citations omitted). "[O]nly in the rarest of cases may summary judgment be granted against a plaintiff who has not been afforded the opportunity to conduct discovery." Trammell v. Keane, 338 F.3d 155, 161 n. 2 (2d Cir.2003) (citation omitted). As the Second Circuit has stated:

Under Rule 56(f), summary judgment may be inappropriate where the party opposing it shows... that he cannot at the time present facts essential to justify his opposition. The nonmoving party should not be 'railroaded' into his offer of proof in opposition to summary judgment.

The nonmoving party must have had the opportunity to discover information that is essential to his opposition to the motion for summary judgment.

Trebor Sportswear Co. v. The Ltd. Stores, Inc., 865 F.2d 506, 511 (2d Cir.1989) (internal quotations and citations omitted). If a court determines that the party opposing a summary judgment motion "cannot present facts essential to justify its opposition," it may deny the motion, order a continuance to enable necessary discovery to be undertaken, or issue any other just order. FED. R. CIV. P. 56(f).*fn7

For the party opposing summary judgment to be entitled to a delay to conduct more discovery under Rule 56(f), "a party must file an affidavit describing: (1) what facts are sought and how they are to be obtained; (2) how these facts are reasonably expected to raise a genuine issue of material fact; (3) what efforts the affiant has made to obtain them; and (4) why the affiant's efforts were unsuccessful." Gualandi v. Adams, 385 F.3d 236, 244-245 (2d Cir.2004) (citations omitted). "Even where a Rule 56(f) motion is properly supported, a district court may refuse to allow additional discovery if it deems the request to be based on speculation as to what potentially could be discovered"-- that is, a mere fishing expedition. Nat'l Union Fire Ins. Co. of Pittsburgh v. Stroh Cos., 265 F.3d 97, 117 (2d Cir.2001) (internal quotations and citation omitted).

B. Application

OptiGen has filed an attorney's affidavit and other documents that meet the requirements of Rule 56(f). (Galvin Declaration, Dkt. No. 125, ¶¶ 7-16; OptiGen Response to InGen Statement of Material Facts, Dkt. No. 127). OptiGen seeks additional discovery to determine the extent to which InGen or its predecessor conducted the patented genetic testing methods in the United States. (Galvin Decl. ¶ 14). OptiGen sets forth a good faith basis for believing that it can, through further discovery, develop further information to rebut the crucial factual predicate of InGen's summary judgment motion--that it performed the genetic testing exclusively in the Bahamas. (Id. ¶ 15).*fn8 OptiGen describes the discovery disputes with InGen that prevented it from obtaining the necessary information sooner, and how it intends to proceed with discovery, in light of this court's recent ruling to seek that information. (Id. ¶¶ 8-12).*fn9

For the purpose of resolving OptiGen's cross-motion under Rule 56(f), this court does not need to decide the merits of the difficult issues of patent law that the parties present in their memoranda of law. It is clear that InGen's summary judgment motion is predicated, in substantial part, on certain factual claims that it performs its genetic testing and sales activities exclusively in the Bahamas. OptiGen requests an opportunity to complete discovery so it can contest the factual statements on which InGen's summary judgment motion is based, before that motion is resolved. OptiGen has presented sufficient evidence to establish that it is not pursuing an unwarranted or futile "fishing expedition" by seeking further discovery with respect to whether, and to what extent, InGen performs testing or sales activities in the United States. Accordingly this court rules that OptiGen should be entitled to complete discovery and file a further response to InGen's summary judgment motion before that motion is decided by the District Court.

Accordingly, it hereby:

ORDERED that OptiGen's cross-motion under Fed. R. Civ. P. 56(f) (Dkt. No. 130) is granted, in that InGen's motion for summary judgment (Dkt. No. 116) will be held in abeyance pending the completion of discovery on July 30, 2010, and it is also:

ORDERED that OptiGen is granted leave to file a supplemental response to InGen's summary judgment motion by August 30, 2010, and it is also:

ORDERED that InGen is granted leave to file a further reply with respect to its summary judgment motion by September 15, 2010.


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