United States District Court, S.D. New York
OPINION AND ORDER
JESSE M. FURMAN, District Judge.
By Opinion and Order dated April 24, 2015, the Court granted in part and denied in part a motion for partial summary judgment filed by Plaintiff Skyline Steel, LLC ("Skyline"), granted Skyline's motion for spoliation sanctions, and, sua sponte, granted Defendant PilePro, LLC ("PilePro") summary judgment on the question of bad faith with respect to many of Skyline's claims. See Skyline Steel, LLC v. PilePro, LLC, No. 13-CV-8171 (JMF), ___ F.Supp. 3d ___, 2015 WL 1881114 (S.D.N.Y. Apr. 24, 2015) (" Skyline I "). Now pending is Skyline's motion for reconsideration of the Court's grant of summary judgment to PilePro, as well as its request for the fees and costs it incurred in prosecuting its motion for spoliation sanctions. The Court, assuming familiarity with Skyline I and this heated dispute generally, will address each in turn.
MOTION FOR RECONSIDERATION
Motions for reconsideration are governed by Rule 59(e) of the Federal Rules of Civil Procedure and Local Civil Rule 6.3, which are meant to "ensure the finality of decisions and to prevent the practice of a losing party examining a decision and then plugging the gaps of a lost motion with additional matters." Medisim Ltd. v. BestMed LLC, No. 10-CV-2463 (SAS), 2012 WL 1450420, at *1 (S.D.N.Y. Apr. 23, 2012) (internal quotation marks omitted). "A district court has broad discretion in determining whether to grant a motion [for reconsideration]." Baker v. Dorfman, 239 F.3d 415, 427 (2d Cir. 2000). Such a motion "is appropriate where the moving party can point to controlling decisions or data that the court overlooked - matters, in other words, that might reasonably be expected to alter the conclusion reached by the court.'" Medisim, 2012 WL 1450420, at *1 (quoting In re BDC 56 LLC, 330 F.3d 111, 123 (2d Cir. 2003)). "The major grounds justifying reconsideration are an intervening change in controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.'" Terra Sec. ASA Konkursbo v. Citigroup, Inc., 820 F.Supp.2d 558, 560 (S.D.N.Y. 2011) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)). It is well established that the rules permitting motions for reconsideration must be "narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the [C]ourt." United States v. Treacy, No. 08-CR-0366 (RLC), 2009 WL 47496, at *1 (S.D.N.Y. Jan. 8, 2009) (internal quotation marks omitted).
As the Court explained in Skyline I, this litigation concerns "sheet pile wall systems" - that is, "long structural wall sections with a vertical interlocking system that creates a continuous wall" that can be used to retain soil or water. 2015 WL 1881114, at *1 (internal quotation marks omitted). In particular, it concerns a sheet pile wall system patented by PilePro (the "'543 Patent") and a similar sheet pile wall system manufactured by Skyline known as the "HZM System, " which consists - in turn - of three different components: King Piles, intermediary AZ Piles, and connectors. ( See, e.g., Pl. Skyline Steel, LLC's Mem. Law Supp. Mot. Partial Summ. J. (Docket No. 103) ("Pl.'s Mem. Supp. MSJ") 3-4). In Skyline I, the Court found as a matter of law that Skyline could not show that PilePro had acted in bad faith in accusing Skyline of having infringed PilePro's patent, holding specifically that Skyline could not show that "the claims asserted were objectively baseless - that is, that no reasonable litigant could realistically expect to prevail in a dispute over infringement of the patent." 2015 WL 1881114, at *6 (internal quotation marks omitted); see also id. at *6-9. Skyline argues that the Court erred, in part by not distinguishing among the components of the HZM System.
A. The AZ Piles and Connectors
Skyline first contends that the Court erred by failing to consider that PilePro's infringement allegations could be objectively baseless as to the AZ Piles and connectors, even if they were not objectively baseless as to the King Piles. (Skyline's Mem. Law Supp. Mot. Recons. Regarding Court's Summ. J. Finding PilePro's Accusations Infringement Were Good Faith (Docket No. 335) ("Pl.'s Mem.") 2-7). Skyline argues that, had the Court performed that analysis, it would have found that PilePro acted with objective bad faith as to the AZ Piles and connectors because PilePro always knew that they were not shape-cut and that they were prior art, and thus were not covered by the '543 Patent. ( Id. at 4-7).
PilePro accused Skyline of infringement in two ways: (1) in communications made directly to Skyline's current and potential customers (the "Customer Communications"), and (2) in a warning posted on the isheetpile website (the "Infringement Warning"). Skyline's arguments that the Court should reconsider its grant of summary judgment with respect to the first category of allegations are baseless. Those allegations expressly warned Skyline's customers that PilePro's patent covered the HZM System; that is, the Customer Communications did not refer specifically to the AZ Piles or connectors. (Pl. Skyline Steel, LLC's Statement Undisputed Material Facts Pursuant Local Rule 56.1 (Docket No. 104) ("SUF") ¶¶ 53-54, 56-57, 73-74). As the Court previously found - and as it will discuss in further detail below - a reasonable litigant could have believed that at least one of the components of the HZM System, the King Piles, infringed PilePro's patent. The Court is unaware of, and Skyline has failed to cite, any authority standing for the proposition that a party may not allege that a system containing at least one infringing component infringes its patent unless every component of that patent infringes. It follows that PilePro's allegations of infringement in the Customer Communications were not objectively baseless as a matter of law.
Skyline's arguments with respect to the Infringement Warning posted on the isheetpile website, however, are on more solid ground. The Infringement Warning stated, in relevant part: "This product infringes a U.S. patent owned by PilePro, LLC.... If you would like more details and to use this patented system, please email email@example.com." (SUF ¶ 78). Given the uncontradicted evidence that neither the AZ Piles nor the connectors are shape cut, Skyline has a strong argument that a reasonable litigant would not have expected to prevail on a claim that those two components infringed PilePro's patent. Further, in support of its motion for partial summary judgment, Skyline submitted evidence that the warning appeared on every webpage concerning any product involved in the HZM system, which would presumably include pages specific to the connectors or AZ Piles. ( See Def. PilePro LLC's Mem. Law Opp'n Pl. Skyline Steel, LLC's Mot. Spoliation Sanctions (Docket No. 187) ("Def.'s Spoliation Mem."), Ex. 2 ("Montrose Dep.") 143-44). Given that, and given the warning's reference to "[t]his product, " a reasonable jury could find that the Infringement Warning referred specifically to the AZ Piles and connectors and was objectively baseless. At the same time, given the warning's reference to "this patented system, " a reasonable jury could find that the Infringement Warning referred to the HZM System as a whole, in which case - given the Court's prior decision and discussion below - it would not be objectively baseless. In other words, there is a factual dispute that precludes summary judgment. Accordingly, Skyline's motion for reconsideration is granted with respect to the Court's grant of summary judgment to PilePro on any Infringement Warning posted on webpages concerning the connectors and the AZ Piles.
B. The King Piles
Skyline also argues that the Court should reconsider its ruling that PilePro had an objective basis for its claims with respect to the King Piles. (Pl.'s Mem. 7-23). Skyline first argues that PilePro disclaimed piles shaped like the King Piles in obtaining the '543 Patent. To the extent Skyline argues that prosecution disclaimer made PilePro's claim construction unreasonable, the Court has already rejected that argument. See, e.g., Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (stating that a motion for reconsideration should not be used to "relitigat[e] old issues); In re Adelphia Commc'ns Corp. Sec. & Derivative Litig. No. 03-MD-1529 (JMF), 2015 WL 268846, at *1 (S.D.N.Y. Jan. 21, 2015) (same). To the extent Plaintiff is instead arguing that, because some of Skyline's King Piles have the same shape as those disclosed in Hermes I, PilePro acted with bad faith with respect to those King Piles ( See Pl.'s Reply 4), that is a new argument. Skyline claims that it raised the argument in its memorandum of law in support of its motion for partial summary judgment. ( See Skyline's Reply Supp. Mot. Recons. Regarding PilePro's Bad Faith Allegations Infringement (Docket No. 345) ("Pl.'s Reply") 4 (citing Pl.'s Mem. Supp. MSJ 9-10)). The section of the memorandum that Plaintiff cites, however, relates to noninfringement, not bad faith; nowhere in its original motion papers did Skyline argue that PilePro may have had objective bad faith with respect to some King Piles even if it did not have objective bad faith with respect to others. Skyline's motion for reconsideration on that issue is thus an improper attempt to "tak[e] a second bite at the apple." Analytical Surveys, 684 F.3d at 52 (internal quotation marks omitted).
Next, Skyline argues that the Court should reconsider its ruling that PilePro's proposed claim construction was reasonable, contending that it would have rendered '543 Patent invalid. (Pl.'s Mem. 11-14). Notably, Skyline never advanced that argument in its original motion either. ( See Pl.'s Mem. Supp. MSJ 14-21; Pl's Reply Supp. MSJ 8-10). Skyline may well be proved right - and will presumably have an opportunity to argue the point in connection with its declaratory judgment claim of invalidity. (Second Am. Compl. (Docket No. 58) ¶¶ 84-86). But, given that Skyline itself did not seek summary judgment on its claim of invalidity, it is hard to argue that the '543 Patent was " obviously invalid." Globetrotter Software, Inc. v. Elan Computer Grp., Inc., 362 F.3d 1367, 1374-75 (Fed. Cir. 2004) (stating that a finding of objective baselessness could be supported where the patent was "obviously invalid or plainly not infringed"). In any event, patent invalidity is a complicated question that the Court declines to resolve in a motion for reconsideration.
Lastly, Skyline argues that the Court's grant of summary judgment to PilePro should be reconsidered because PilePro waived attorney-client privilege on the eve of the discovery deadline and one of PilePro's attorneys may have informed the company that the HZM System did not infringe the '543 Patent. (Pl.'s Mem. 14-23). To be sure, one of the criterion for granting a non-moving party summary judgment is that the party against whom summary judgment was granted must have had "an adequate opportunity to come forward with all of its evidence." Orix Credit Alliance, Inc. v. Horten, 965 F.Supp. 481, 484 (S.D.N.Y. 1997). In essence, therefore, Skyline argues that because PilePro waived attorney-client privilege so late in the discovery period, it did not have such an opportunity. Of course, Skyline would not have been in that position had it not sought leave to file an early summary judgment motion. In persuading the Court that an early motion was appropriate, Skyline assured the Court that no further discovery would be needed on the question of bad faith. ( See Docket No. 89, at 69). Skyline's problem is therefore one of its own making.
Nevertheless, even if Skyline could obtain evidence that counsel informed PilePro that the HZM System did not infringe the '543 Patent before PilePro ceased its infringement allegations, the Court's conclusion would remain the same. Put simply, because PilePro proposed a reasonable claim construction under which the HZM System could be found to be infringing, its accusations were not objectively baseless, regardless of counsel's advice at the time. If counsel warned PilePro not to accuse the HZM system of infringement, that would certainly be strong evidence of subjective bad faith (which might ultimately be enough in itself to support a finding that this case is "exceptional" for purposes of Title 35, United States Code, Section 285, which does not require a showing of objective bad faith, see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756-58 (2014)). But the Federal Circuit has held that "objective baselessness does not depend on the [party's] state of mind at the time the [allegations were made], but rather requires an objective assessment of the merits." iLor, LLC v. Google, Inc., 631 F.3d 1372, 1377-78 (Fed Cir. 2011) (internal quotation marks omitted). Thus, even if a ...