Gao v. The P'ships & Unincorporated Ass'ns Identified on Schedule "A"

FENG GAO, Plaintiff, v. THE PARTNERSHIPS and UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE “A, ” Defendants.

No. 21-cv-4055

United States District Court, N.D. Illinois, Eastern Division

April 4, 2022

MEMORANDUM OPINION AND ORDER

Robert M. Dow, Jr., United States District Judge.

Plaintiff Feng Gao (“Plaintiff” or “Gao”) brings suit against the partnerships and unincorporated associations listed on Schedule A to the complaint for patent infringement in violation of 35 U.S.C. § 271. Plaintiff filed a motion for a temporary restraining order [7], which was granted [11] but expired without being converted into a preliminary injunction, see [33]. Currently before the Court are Plaintiff's motion for preliminary injunction [18] motion to compel compliance with Local Rule 83.15 [31], and motion to dismiss Defendants' single counterclaim [37]. For the following reasons, Plaintiff's motion for preliminary injunction [18] and motion to compel [31] are denied. Plaintiff's motion to dismiss [37] is granted. This case is set for a telephonic status hearing on April 14 2022, at 9:30 a.m. Participants should use the Court's toll-free, call-in number 877-336-1829, passcode is 6963747. A joint status report, including a discovery plan and a statement in regard to any settlement discussions and/or any interest in a referral to the Magistrate Judge for a settlement conference is due no later than April 12, 2022.

I. Background

The following facts are taken primarily from the complaint [1]. Plaintiff is a resident of China. He is the inventor of earbuds that are manufactured, distributed, and retailed through his company, Qenla Electronic Technology (Dongguan) Co., Ltd. (the “Gao Products”). Gao Products are distributed and sold to consumers through the website “qenla.com, ” which was launched in May 2014. The complaint alleges that “Gao Products are known for their distinctive patented designs, ” which “are broadly recognized by consumers.” [1] at 3. This suit concerns three of Plaintiff's design patents for earbuds: U.S. Patent No. D888, 023 (“the ‘023 Patent”), which was issued on June 23, 2020; U.S. Patent No. D915, 356 (“the ‘356 Patent”), which was issued on April 6, 2021; and U.S. Patent No. D915, 357 (“the ‘357 Patent”), which was also issued on April 6, 2021 (together, the “Gao Designs”).

Defendants are individuals or business entities that, on information and belief, reside and/or operate in China or other jurisdictions outside the United States. Defendants allegedly own and/or operate e-commerce stores under the seller aliases identified on Schedule A to the complaint. According to the complaint, “Defendants, without any authorization or license from Plaintiff, have jointly and severally, knowingly and willfully offered for sale, sold, and/or imported into the United States for subsequent resale or use products that infringe directly and/or indirectly the Gao Designs.” [1] at 10. The complaint contains three counts for violation 35 U.S.C. § 271, one based on each of the patented Gao Designs.

II. Motion to Compel Compliance with Local Rule 83.15

Local Rule 83.15 provides that “[a]n attorney not having an office within this District (‘nonresident attorney') may appear before this Court only upon having designated as local counsel a member of the bar of this Court having an office within this District upon whom service of papers may be made.” In his motion to compel, Plaintiff argues that Defendants fail to comply with this rule because their sole counsel of record, Mr. Shengmao Mu, listed only a New York, New York address on his appearance forms and no local counsel has been designated. See [31]. Plaintiff requests that Defendants be required to retain local counsel.

In response, Defendants seek “permission … to update” Mr. Mu's “status to Local Counsel as Defendants' Counsel does have an office in this district, which is located at 111 W. Jackson, Suite 1700, Chicago, IL, 60604.” [35] at 1. Plaintiff opposes Defendants' request on the basis that it is “a thinly veiled attempt to circumvent both the letter and spirit of Local Rule 83.15.” [36] at 1. According to Plaintiff, Mr. Mu's Chicago address is “a shared office space run by Regus with Offices available at $310 a month, Coworking space at $292 a month, and Virtual offices at $71 a month.” Id. Plaintiff speculates (and Defendants do not deny) that Mr. Mu has a virtual office and no employees in Chicago. Plaintiff maintains that “Mr. Mu's virtual office is not an office in the district as contemplated under Local Rule 83.15.” Id. at 2. Plaintiff further argues that “[t]o the extent Mr. Mu contends his Chicago virtual office is an attorney's office the existence of such an office may run afoul of the Illinois Supreme Court Rule 5.5(b), ” which in general prohibits a lawyer who is not admitted in the jurisdiction from establishing an office in the jurisdiction for the practice of law. Id.

Assuming that Mr. Mu has only a virtual office in this District, Plaintiff has not demonstrated that this runs afoul of Local Rule 83.15. Plaintiff has not identified, and the Court has not found, any precedent addressing whether a virtual office should be considered an “office within this District” as that term is used in the local rules. The language of the rule contemplates that the office in the District is one where “service of papers may be made.” Plaintiff does not contend that he tried and was unable to serve papers at the Chicago address; if that were true, he might have a stronger argument based on the text of the local rule. He also might have a stronger argument about the necessity of Mr. Mu's physical presence in the district if Mr. Mu had a history of failing to appear at in-person hearings. But thus far all hearings in this case (as well as most other cases during the COVID-19 pandemic) have been telephonic, and there is no indication that Mr. Mu would be unable to attend whenever in-person attendance is required. Even before the pandemic, the widespread use of electronic filing made physical presence in the district increasingly less important. As for Plaintiff's argument that Mr. Mu may be running afoul of the Illinois Supreme Court Rules, any questions concerning the application of state court rules to the novel situation of a “virtual” office should be addressed to the appropriate state authorities-for example, the ARDC or the Supreme Court Rules Committee. The motion to compel [31] is denied.

III. Motion for Preliminary Injunction

A. Legal Standard

Section 283 of the Patent Act authorizes courts to issue injunctive relief “in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.” 35 U.S.C. § 283. A court's determination of whether to issue a preliminary injunction involves a two-step inquiry, with a threshold phase and a balancing phase. See Whitaker v. Kenosha Unified Sch. Dist. No. 1 Bd. of Educ., 858 F.3d 1034, 1044 (7th Cir. 2017); Vendavo, Inc. v. Long, 397 F.Supp.3d 1115, 1128 (N.D. Ill. 2019). “First, the party seeking the preliminary injunction has the burden of making a threshold showing: (1) that he will suffer irreparable harm absent preliminary injunctive relief during the pendency of his action; (2) inadequate remedies at law exist; and (3) he has a reasonable likelihood of success on the merits.” Whitaker, 858 F.3d at 1044; see also Valencia v. City of Springfield, 883 F.3d 959, 965 (7th Cir. 2018). The likelihood of success and irreparable harm factors “are the most critical in a patent case, and a court may deny a motion for a preliminary injunction if ‘a party fails to establish either of the[se] two critical factors.'” Pressure Specialist, Inc. v. Next Gen Manufacturing Inc., 469 F.Supp.3d 863, 868 (N.D. Ill. 2020) (quoting Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1556 (Fed. Cir. 1994)).

If the movant successfully makes the required threshold showing, “the court must engage in a balancing analysis, to determine whether the balance of harm favors the moving party or whether the harm to other parties or the public sufficiently outweighs the movant's interests.” Whitaker, 858 F.3d at 1044. The Court “employs a sliding scale approach” to the balancing analysis; “[t]he more likely the plaintiff is to win, the less heavily need the balance of harms weigh in his favor; the less likely he is to win, the more need it weigh in his favor.” Valencia, 883 F.3d at 966 (internal quotations marks and citation omitted). “Ultimately, the moving party bears the burden of showing that a preliminary injunction is warranted.” Courthouse News Service v. Brown, 908 F.3d 1063, 1068 (7th Cir. 2018).

B. Analysis

The Court confines its analysis of the motion for preliminary injunction to likelihood of success, because this factor is dispositive. See Pressure Specialist, 469 F.Supp.3d at 868. “To establish a likelihood of success on the merits, a patentee must show that it will likely prove infringement of the asserted claims and that its infringement claim will likely withstand the alleged infringer's challenges to patent validity and enforceability.” Metalcraft of Mayville, Inc. v. The Toro Co., 848 F.3d 1358, 1364 (Fed. Cir. 2017). “[A] plaintiff cannot meet his burden where the accused infringer raises a substantial question as to infringement or invalidity.” Scholle Corporation v. Rapak LLC, 35 F.Supp.3d 1005, 1009 (N.D. Ill. 2014). As explained in this section, Plaintiff is not entitled to a preliminary injunction based on the showing he has made thus far because Defendants have raised a substantial question as to the validity of Plaintiff's asserted patents.

Design patents enjoy a “presumption of validity.” Ethicon Endo-Surgery, Inc. v. Covidien, Inc., 796...