Quality Edge, Inc. v. Rollex Corp.

QUALITY EDGE, INC., Plaintiff/Counter-Defendant, v. ROLLEX CORPORATION, Defendant/Counter-Claimant.

Case No. 1:10-cv-278

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

October 6, 2016

HON. JANET T. NEFF

OPINION

On August 31, 2016, this Court entered an Opinion and Order granting Plaintiff Quality Edge's Motion for Permanent Injunction upon conclusion of the Court's resolution of the substantive patent infringement claims in this long-standing patent case (Dkts 164, 165). The Court granted Defendant Rollex Corporation's only objection to the proposed permanent injunction order (Dkt 138) filed in conjunction with the Motion,¹ and ordered the parties to confer and file a revised permanent injunction order consistent with the Court's Opinion (Or., Dkt 165 at PageID.4259). Rollex has since filed Objections (Dkt 170) to the revised proposed permanent injunction order filed by Quality Edge (Dkt 169); a Motion to Modify Permanent Injunction Order (Dkt 171)²; a Motionto Stay Litigation Pending Appeal (Dkt 178), and a Motion to Suspend Enforcement of the Injunction Pending Appeal (Dkt 181).

On October 4, 2016, the Court conducted a Status Conference in this case and ruled on the pending matters on the record. In accordance with the Court's rulings, that same day, the Court entered an Order denying Rollex's objections to the substantive terms of the revised proposed permanent injunction order (Dkt 192), and entered a Permanent Injunction Order (Dkt 193). The Court now issues this Opinion and an Order denying Rollex's Motion to Stay Litigation Pending Appeal (Dkt 178) and Motion to Suspend Enforcement of the Injunction Pending Appeal (Dkt 181). As stated on the record, the Court concludes the motions are properly denied for the reasons set forth in Quality Edge's respective Responses (Dkts 186, 188), as articulated herein.³

I. Legal Standard

Rollex moves under Federal Rule of Civil Procedure 62(c) to suspend/stay enforcement of the Permanent Injunction. Rule 62(c) provides in pertinent part:

Injunction Pending an Appeal. While an appeal is pending from an interlocutory order or final judgment that grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing party's rights.

Rollex also moves for a stay of this litigation pending interlocutory appeal of the permanent injunction order.

The factors that the Court should consider in deciding a motion to stay pending appeal, as well as a stay of injunctive relief, are: (1) whether the movant has made a strong showing that it is likely to succeed on the merits of the appeal; (2) whether the movant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Grutter v. Bollinger, 247 F.3d 631, 632 (6th Cir. 2001); Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991); Jennings v. Fuller, No. 13-13308, 2015 WL 5216714, at *3 (E.D. Mich. Sept. 4, 2015). "These factors are not prerequisites that must be met, but are interrelated considerations that must be balanced together." Mich. Coal. of Radioactive Material Users, 945 F.2d at 153. The probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury the movant will suffer absent the stay. Id. Thus, a stay is appropriate "'[w]here [a movant] establishes that it has a strong likelihood of success on appeal, or where, failing that, it can nonetheless demonstrate a substantial case on the merits,' provided the other factors militate in movant's favor." Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 513 (Fed. Cir. 1990) (quoting Hilton, 481 U.S. at 778) (emphasis added).

"'A stay is not a matter of right, even if irreparable injury might otherwise result.'" Nken v. Holder, 556 U.S. 418, 433 (2009) (citation omitted). Instead it is "'an exercise of judicial discretion.'" Id. (citation omitted). "[T]he 'party requesting a stay bears the burden of showing thatthe circumstances justify an exercise of that discretion.'" Indiana State Police Pension Trust v. Chrysler LLC, 556U.S. 960, 961 (2009) (quoting Nken, 556U.S. at433-34).

II. Discussion

Having fully considered the proceedings in this case over the course of more than six years, and the extensive record developed, the Court concludes that the relevant factors do not support suspending the enforcement of the permanent injunction or a stay of these proceedings pending appeal. As made apparent in the most recent status conference, and a review of the record, the legal disputes between these parties well predate this case. The parties have been at odds over their relative positions and reputations in the building products market and, specifically, the quality of their respective products, including vented aluminum soffits, for more than a decade. What was presented to the Court as a simple patent infringement dispute essentially over a single word in the patent claims for an aluminum soffit—the word "generally"—has now consumed more than six years' time in litigation and extensive resources of the Court and the parties. On June 28, 2013, this Court ruled that Rollex's Stealth Soffit™ product infringed Quality Edge's '224 patent (U.S. Patent No. 7,137,224) (Dkts 83, 84), and on July 15, 2015, the Court dismissed Rollex's invalidity defenses and counterclaims (Dkts 118, 119), thus resolving Count I of the Amended Complaint (Dkt 17). The remaining counts in the Amended Complaint, Counts II through VII, have been declared moot. The only remaining issues concern damages and attorney fees and costs. On October 4, 2016, the Court entered a Permanent Injunction Order in favor of Quality Edge based on the Court's rulings (Dkt 193).

The Court will now consider the factors and the parties' positions in the context of the motion to suspend enforcement of the permanent injunction. Essentially the same circumstancesapply to the motion to stay this litigation given the late stage of the case, and the outcome is the same.

Factor 1: Likely Success on the Merits of the Appeal

Rollex contends it is appealing "a number of significant factual and legal issues to the Federal Circuit, including thirteen different Opinions and Orders entered by the Court during the pendency of the litigation," which will "necessarily resolve substantial legal and factual issues in this case" (Dkt 182 atPageID.4428). These issues include "this Court's claim construction, granting summary judgment of infringement to Quality Edge, dismissing and striking Rollex's defenses, and precluding Rollex from seeking necessary discovery" (id.).

However, as Quality Edge points out, the various "significant" decisions in large part relate to Rollex's multiple attempts to revisit this Court's decision on claim construction (see, e.g., Dkts 34, 35, 40, 83, 84). The Court addressed and resolved the claim construction dispute, as presented by the parties. The Court declined to entertain Rollex's numerous attempts to recast its arguments and the issues after an unfavorable decision on claim construction. This hardly creates numerous additional significant decisions. In any event, as Quality Edge additionally points out, merely arguing that there are substantial questions as to claim construction fails to show Rollex's likelihood of success on appeal.

Rollex's assertions with regard to discovery fare no better. Rollex claims it is likely to be successful in appealing the Court's denial of its repeated requests for discovery, and the dismissal of its counterclaims and affirmative defenses for failing to meet the pleading standards (see, e.g., Dkts 83, 84, 104, 118, 119, 131, 134). However, the record fully establishes that Rollex's requests for discovery were belated and/or contrary to Rollex's own representations that discovery wasunnecessary to proceed on key issues before the Court. It was Rollex's decision not to take claim construction discovery; Rollex admitted that it did not have a factual basis for pleading its counterclaims; and Rollex expressly took the position on the record that no discovery was necessary to proceed with the permanent injunction motion (see Dkt 125 at PageID.2303). Quality Edge correctly notes that at the September 10, 2012 hearing, the Court asked Rollex to articulate its invalidity defenses, and Rollex indicated that they "are currently being investigated" (see Dkt 51 at PageID.684). The Court accordingly declined to permit Rollex's request to take discovery in response to a motion to dismiss those invalidity counterclaims/defenses or to amend the pleadings nearly five years into this case (id.; 6/28/13 Op. & Or., Dkts 83, 84; 7/15/15 Op. & Or., Dkts 118, 119). The Court's rulings and decisions resolving the claims of infringement and invalidity were thoroughly considered, and revisited, in argument and proceedings in this dispute. This includes the effect of the Supreme Court's Nautilus⁴ decision Rollex now raises (see Dkt 105). Rollex has failed to present any substantive basis or authority showing a likelihood of success on appeal:

[The] mere reference to prior motions to reconsider and to alter and amend, all of which were denied, is not nearly enough to persuade us that [the infringer/movant] is likely to succeed on appeal. To the contrary, the fact that we have already reconsidered and stood by our decision several times leads us to conclude that the appeal is quite unlikely to succeed on appeal. Therefore, we find that [the infringer/movant] has failed to persuade us of its likelihood of success on appeal, and is therefore not entitled to a stay ....

Endress + Hauser, Inc. v. Hawk Measurement Sys. Pty. Ltd., 932 F. Supp. 1147, 1149 (S.D. Ind. 1996); see also ePlus Inc. v. Lawson Software, Inc., 946 F....