Columbia Sportswear N. Am., Inc. v. Seirus Innovative Accessories, Inc.

428 F.Supp.3d 354

COLUMBIA SPORTSWEAR NORTH AMERICA, INC., Plaintiff,

v.SEIRUS INNOVATIVE ACCESSORIES, INC. ; Ventex Co., Ltd. ; Michael J. Carey; Wendy M. Carey; Robert (Bob) Murphy; Scott DeNike; Kyung-Chan Go; and Man-Sik (Paul) Park, Defendants.

Case No. 3:19-cv-137-SI

United States District Court, D. Oregon.

Signed December 2, 2019

Nicholas F. Aldrich, Jr., David W. Axelrod, and Erin M. Forbes, Schwabe, Williamson & Wyatt pc, 1211 SW Fifth Avenue, Suite 1600, Portland, OR 97204. Of Attorneys for Plaintiff.

Renee E. Rothauge and Harry B. Wilson, Markowitz Herbold pc, 1455 SW Broadway, Suite 1900, Portland, OR 97201; Christopher S. Marchese, Seth M. Sproul, Oliver J. Richards, and Tucker N. Terhufen, Fish & Richardson pc, 12390 El Camino Real, San Diego, CA 92130. Of Attorneys for Defendants Seirus Innovative Accessories, Inc.; Michael J. Carey; Wendy M. Carey; Robert Murphy; and Scott DeNike.

OPINION AND ORDER

Michael H. Simon, United States District Judge Plaintiff Columbia Sportswear North America, Inc. ("Columbia") alleges that Defendants Seirus Innovative Accessories, Inc. ("Seirus"); Ventex Co., Ltd. ("Ventex"); and their officers, directors, and agents engaged in a scheme to defraud Columbia and the U. S. Patent and Trademark Office ("PTO"). In its Second Amended Complaint, Columbia alleges that the Defendants violated the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1964(c), (d) ; violated the Oregon Racketeer Influenced and Corrupt Organizations Act, Or. Rev. Stat. ("ORS") § 166.725(7)(a)(B) ; committed fraud under Oregon and Virginia common law; engaged in a civil conspiracy to commit fraud in violation of both Virginia Code § 18.2-499 and Virginia common law; and engaged in abuse of process under Virginia common law. Defendants Seirus, Michael J. Carey ("Mr. Carey"), Wendy M. Carey ("Ms. Carey"), Robert (Bob) Murphy ("Mr. Murphy"), and Scott DeNike ("Mr. DeNike") (collectively, the "Seirus Defendants") have filed a total of four motions to dismiss or strike. On November 6, 2019, the Court heard oral argument. For the reasons that follow, all pending motions to dismiss or strike are denied.

BACKGROUND

A. Columbia, Seirus, and Ventex

Columbia makes and sells outdoor apparel. In some of its products, Columbia uses material and technology known as "Omni-Heat® Reflective," in which the inner surface of garments is partially coated with reflective foil that directs heat back towards the user. Columbia owns several patents protecting its Omni-Heat® Reflective technology, including design patents and two utility patents, U.S. Patent Nos. 8,424,119 ("the '119 patent"), and 8,453,270 ("the '270 patent").

Seirus makes and sells winter accessories. Columbia alleges that in 2012, Seirus launched a plan to copy Columbia's patented Omni-Heat® Reflective technology. According to Columbia, Seirus contacted several of Columbia's suppliers of the custom-made fabric used in Columbia's Omni-Heat® Reflective line of products. Seirus also approached Ventex, a South Korean textile manufacturer and broker that touted its ability to supply fabrics coated with laminated reflective foil. Ventex calls this fabric "MegaHeat RX." In March 2013, Seirus and Ventex entered into a Vendor Agreement, under which Seirus agreed to buy MegaHeat RX from Ventex. Seirus named its new line of products "HeatWave." Columbia contends that Ventex's MegaHeat RX fabric and Seirus' HeatWave products infringe Columbia's patents for its Omni-Heat® Reflective technology.

Columbia filed a lawsuit against Seirus in the Western District of Washington (the "Washington Action"), alleging that Seirus's HeatWave products infringed one of Columbia's design patents. Several months later, Columbia served Seirus with an amended complaint, adding claims of infringement of the Omni-Heat® Reflective utility patents. In January 2015, Columbia voluntarily dismissed the Washington Action and filed a new lawsuit in the District of Oregon (the "Seirus Oregon Action"), alleging infringement of its design and utility patents.

Between January 2015 and January 2017, Columbia and Seirus litigated the Seirus Oregon Action toward trial. By January 2017, Columbia and Seirus were on the verge of trial. Seirus already had been found liable at summary judgment for infringement of one of Columbia's design patents, although damages still needed to be determined at trial. Thus, according to Columbia, trial was almost certain to lead to a substantial money judgment against Seirus, and Seirus faced the prospect that it might have to pay Columbia Seirus' profits from its sales of HeatWave products. Seirus and Ventex then allegedly began a scheme use the inter partes review ("IPR") process under the patent laws to delay financial reckoning. Columbia's claims in this case arise out of that alleged scheme.

B. The Ventex IPRs and the IPR Funding Contract

The America Invents Act created a new body within the PTO called the Patent Trial and Appeal Board ("PTAB"), based in Alexandria, Virginia. It also created the IPR process, which is a trial-type procedure conducted before the PTAB. IPR allows third parties to seek to invalidate a patent issued by the PTO. Any person who is not the owner of a patent may file with the PTAB a petition for inter partes review of that patent. There is, however, an important limitation on the right to seek IPR. An IPR "may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, real party in interest , or privy of the petitioner is served with a complaint alleging infringement of the patent." 35 U.S.C. § 315(b) (emphasis added). The petitioner also is required, under 35 U.S.C. § 312(a)(2), to identify in the IPR all real parties in interest. If the petitioner identifies as a real party in interest a party that is time-barred under 35 U.S.C. § 315(b), the PTAB must, by statute, deny the petition for IPR. After a petition for IPR has been filed, the PTAB decides whether to institute review.

In late 2016, Seirus and Ventex signed an agreement governing Seirus's purchases of HeatWave fabric from Ventex. They called this agreement the Exclusive Manufacturing Agreement ("EMA"). Its purported purpose was to have Ventex sell HeatWave fabric exclusively to Seirus. The EMA obligated Seirus to make an immediate down payment of $250,000 and pay additional licensung fees of $550,000 that covered purchases of 200,000 yards of HeatWave fabric over five years.

In January 2017, Ventex filed two IPR petitions with the PTAB, seeking review of Columbia's '119 and '270 patents (the "Ventex IPRs"). Columbia alleges that the true purpose of the EMA was secretly to fund the Ventex IPRs and delay the trial in the Seirus Oregon Action. Based on that allegation, Columbia calls the Exclusive Manufacturing Agreement the "IPR Funding Contract." Seirus was time-barred from filing its own petition for IPR, and the Ventex IPRs also would have been time-barred had Ventex identified Seirus as a real party in interest, as Columbia alleges Ventex was obligated to do. In August 2017, Seirus moved to stay the Seirus Oregon Action until after the PTAB resolved the Ventex IPRs. In September 2017, the district court in the Seirus Oregon Action denied Seirus's motion to stay and later transferred the case to the U. S. District Court for the Southern District of California, although the district judge from Oregon continued to preside over the case in California.

Shortly before trial, Columbia voluntarily dismissed its claims based on its '119 utility patent. In November 2017, after a ten-day trial, the jury awarded Columbia more than $3 million in damages against Seirus for infringement of Columbia's design patent (for which liability already had been established at summary judgment) and found two claims of Columbia's '270 utility patent invalid. The court entered judgment based on the jury's verdict. Both parties appealed.¹

The Ventex IPRs moved forward in the PTAB review process until late 2018, when discovery revealed the existence of the IPR Funding Contract. On January 24, 2019, based on this new information, the PTAB concluded that Seirus was a real party in interest in the Ventex IPRs. As a result, the PTAB determined that the Ventex IPR petitions were time-barred under 35 U.S.C. § 315(b). The PTAB dismissed the petitions and terminated the IPRs.²

Columbia filed its complaint in this lawsuit two days after the PTAB terminated the Ventex IPRs. Columbia alleges that because of the continued litigation of the Ventex IPRs and Seirus's motion to stay the Seirus Oregon Action, Columbia has spent more than $700,000, including attorney's fees, filing fees, and other litigation costs, defending against what Columbia alleges were the fraudulently-filed Ventex IPRs and the associated motion to stay the Seirus Oregon Action.

ANALYSIS

A. Personal Jurisdiction and Venue

In a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the plaintiff bears the burden of proving that the exercise of jurisdiction is proper. Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800 (9th Cir. 2004) (citation omitted). When resolving such a motion on written materials without an evidentiary hearing, a court need "only inquire into whether the plaintiff's pleadings and affidavits make a prima facie showing of personal jurisdiction." Id. (quotation marks omitted) (quoting Caruth v. Int'l Psychoanalytical Ass'n , 59 F.3d 126, 128 (9th Cir. 1995) ). Although a plaintiff may not rest solely on bare allegations in a complaint, uncontroverted allegations must be taken as true. Id. Conflicting statements in affidavits submitted by the parties must be resolved in favor of the plaintiff. Id. (citations omitted).

Unless a federal statute governs personal jurisdiction for a specific claim, a district court applies the law of the forum state. See Boschetto v. Hansing , 539 F.3d...