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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION CATCH CURVE, INC., Plaintiff, vs. GRAPHNET, INC., Defendant.

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CIVIL ACTION NO. 1:06-CV-2386-CC

OPINION AND ORDER This matter is before the Court on Plaintiff’s Motion for Entry of Default Judgment or, in the Alternative, to Compel Defendant to Comply With its Disclosure Obligations Under the Local Patent Rules and for Sanctions [Doc. No. 43]. For the reasons stated herein, the Court grants Plaintiff’s alternative request to compel Defendant to comply with its disclosure obligations under the Local Patent Rules and for sanctions. I.

BACKGROUND Plaintiff Catch Curve, Inc. (“Catch Curve”) originally filed this action against

Defendant Graphnet, Inc. (“Graphnet” or “Defendant”) on October 5, 2006. The Summons and Complaint were served on Graphnet on October 17, 2006. After jointly moving the Court with Catch Curve for an extension of time for Graphnet to respond to Plaintiff’s Complaint, Graphnet filed a Motion to Dismiss or in the Alternative to Transfer (“Motion to Dismiss or Transfer”). The Court denied Graphnet’s Motion to Dismiss or Transfer”) on September 28, 2007. Following the Court’s Order denying Graphnet’s Motion to Dismiss or Transfer, Graphnet jointly moved the Court with Catch Curve for an extension of time for Graphnet to answer Catch Curve’s Complaint. The Court extended the time for Graphnet to file its answer from October 12, 2007 to October 22, 2007. On October 16, 2007, Graphnet’s first set of attorneys filed a Motion to

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Withdraw as Attorneys of Record. Graphnet also filed on that date a Motion to Extend Due Date for Defendant’s Answer and Other Responsive Pleadings (the “Motion to Extend Due Date”). In the Motion to Extend Due Date, Graphnet’s counsel explained that it “ha[d] not received any response to its numerous attempts to contact Graphnet regarding the Motion to Withdraw nor the upcoming response deadline.” (Motion to Extend Due Date [Doc. No. 20] at 1.) Counsel further stated, “[g]iven the lack of communication, Counsel for Graphnet cannot respond to the Complaint, and accordingly, respectfully requests the response date be extended and permission to withdraw from this matter.” (Id.) On November 28, 2007, this Court entered an Order permitting Graphnet’s first set of attorneys to withdraw. While the Motion to Withdraw was pending, Graphnet retained a second set of attorneys, who filed an Answer, Affirmative Defenses and Counterclaim of Graphnet, Inc. on October 22, 2007. Pursuant to this Court’s Local Rules and Local Patent Rules, the discovery period opened on November 21, 2007. Catch Curve served its Local Patent Rule 4.1 Infringement Contentions on December 21, 2007. Pursuant to Local Patent Rules 4.2 and 4.4, Graphnet’s Response to Infringement Contentions was due on January 21, 2008. Pursuant to Local Patent Rules 4.3 and 4.4, Graphnet’s Disclosure of Invalidity Contentions also was due on January 21, 2008. Due to a change of address by one of Graphnet’s attorneys at the time, Mr. Chaiken, Catch Curve re-served the Infringement Contentions by mail on December 28, 2007. Catch Curve agreed to a request by Mr. Chaiken to consent to an extension of time for service of Graphnet’s Response to the Infringement Contentions until January 28, 2008. On January 18, 2008, before Graphnet served either its Response to Infringement Contentions or its Disclosure of Invalidity Contentions, Graphnet’s second set of attorneys filed a Motion to Withdraw as Counsel of Record. Citing counsel’s non-compliance with Local Rule 83.1(E)(2)(b), the Court denied the Motion -2-

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to Withdraw as Counsel of Record in an Order entered on February 14, 2008. Graphnet’s second set of attorneys filed a Second Motion to Withdraw on February 19, 2008, citing a lack of communication from Graphnet as a basis for the withdrawal. Graphnet’s second set of attorneys contemporaneously filed a Motion for Extension of Time, seeking an extension of time for Graphnet to serve its Response to Infringement Contentions and to serve its Disclosure of Invalidity Contentions. The grounds cited in support of the Motion for Extension of Time were that “[c]ounsel for Defendant ha[d] been wholly unable to communicate with their client, making it not only impossible to submit substantive responses but also forcing counsel to file their Motion to Withdraw.” (Motion for Extension of Time [Doc. No. 34] at 1.) Catch Curve filed no opposition to the Second Motion to Withdraw but vigorously opposed the Motion for Extension of Time. Arguing that Graphnet had been engaging in a pattern of delay, Catch Curve urged that “Defendant’s refusal to communicate with its own counsel should not be rewarded with a further extension of time.” (Plaintiff Catch Curve, Inc.’s Memorandum in Opposition to Defendant’s Motion for Extension of Time to Respond to Patent Rule 4.4 Disclosures/Responses [Doc. No. 35] at 3.) Catch Curve requested that the Court deem its Infringement Contentions admitted for Graphnet’s willful failure to respond thereto, deem Graphnet’s allegations of patent invalidity to be waived for Graphnet’s willful failure to serve Invalidity Contentions, and order that Graphnet show cause why a judgment by default should not be entered. On February 26, 2008, this Court entered an Order (the “February 26th Order”) allowing Graphnet’s second set of attorneys to withdraw and granting Graphnet an extension of time to respond to the Local Patent Rule 4.4 disclosures/responses. The February 26th Order states, in pertinent part, the following: The Court ORDERS Defendant to obtain new counsel within thirty (30) -3-

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days and to respond to the Patent Rule 4.4 disclosures/responses by thirty (30) days from the entry of an appearance of counsel. No further extensions will be granted, including extensions for an inability of Defendant’s counsel to communicate with Defendant, and Defendant’s continued failure to respond may result in a default judgment for the Plaintiff. (February 26th Order [Doc. No. 37] at 1) (emphasis in original). On March 27, 2008, Graphnet’s current counsel entered his appearance. Pursuant to the February 26th Order, Graphnet’s Response to Catch Curve’s Infringement Contentions and Graphnet’s Disclosure of Invalidity Contentions were due thirty (30) days thereafter, on April 28, 2008. On April 28, 2008, Graphnet’s current counsel served two documents that Graphnet contended were responsive to Catch Curve’s Local Patent Rule 4.1 Infringement Claim Charts. These documents were entitled “Defendant’s Response to Infringement Contentions of Plaintiff Under LPR 4.2“ (referred to herein as “Graphnet’s Response to Infringement Contentions”) and “Defendant’s [sic] Graphnet’s Response to Plaintiff’s Chart of Claims” (referred to herein as Graphnet’s Response to Chart of Claims”). Defendant’s Response to Infringement Contentions included the following statement: “Defendant fully anticipates supplementing additional information in response to Plaintiff’s LPR 4.1 Infringement Contentions within 33 days of the filing of these responses.” (Graphnet’s Response to Infringement Contentions [Doc. No. 43-6] at 1.) Also on April 28, 2008, Defendant served a document entitled “Defendant Graphnet’s LPR 4.3 Initial Invalidity Contentions to Plaintiff’s Claims for Patents” (referred to herein as “Graphnet’s Initial Invalidity Contentions”). Defendant stated in that filing that “Defendant shall supplement this response with additional general and technical information outlining in detail that the patents on the claimed technology in this case are neither patentable nor unique, and have otherwise been in general prevalent use prior to the patent applications and patent grant dates to Catch Curve and its predecessors.” (Graphnet’s Initial Invalidity Contentions [Doc. -4-

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No. 43-8] at 1-2.) Taking the position that Graphnet’s Response to Infringement Contentions, Response to Chart of Claims, and Initial Invalidity Contentions were inadequate and did not comply with the Local Patent Rules, counsel for Catch Curve wrote to Graphnet’s counsel on May 5, 2008. In that letter, Catch Curve’s counsel outlined what he perceived to be deficiencies. Catch Curve requested in the letter that Graphnet voluntarily remedy the deficiencies so that it would not be necessary for Catch Curve to seek the Court’s intervention to compel compliance with the Local Patent Rules. On May 9, 2008, Graphnet’s counsel sent Catch Curve a letter in reply, which indicated that supplemental disclosures/responses were “attached.” Graphnet’s counsel also filed a Certificate of Service indicating that “Graphnet’s First Supplemental Response to its Patent Disclosures” were mailed to counsel for Catch Curve via first class mail on May 9, 2008. It is undisputed that no additional documents were attached to or provided with the May 9, 2008, letter from Graphnet’s counsel. The letter also stated that “documents, including source code, diagrams, and charts” would be “share[d] upon the execution of an appropriate non-disclosure agreement to be agreed upon by the parties.” (Letter of May 9, 2008 [Doc. No. 43-10] at 1.) On May 13, 2008, counsel for Catch Curve received the document entitled “Graphnet’s First Supplemental Response to its Patent Disclosures” (referred to herein as “Graphnet’s First Supplemental Response”). After Catch Curve’s counsel reviewed Graphnet’s First Supplemental Response, Catch Curve still maintained the position that Graphnet had not complied with its obligations under the Local Patent Rules. On May 15, 2008, Catch Curve’s counsel again wrote to Graphnet’s counsel, pointing out the deficiencies in Graphnet’s responses and disclosures made pursuant to Local Patent Rules 4.2 and 4.3. Catch Curve informed Graphnet’s -5-

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counsel that if the deficiencies were not remedied by May 20, 2008, Catch Curve would be forced to seek the Court’s intervention to compel Graphnet’s compliance with its obligations under the Local Patent Rules. As of the filing of Catch Curve’s Motion on May 22, 2008, Catch Curve had not received a response to the letter of May 15, 2008. Graphnet’s counsel claims to have been out of the country on vacation at the time the letter of May 15, 2008, was sent. However, even if Graphnet’s counsel was away on vacation during this time, Graphnet submits no evidence of a leave of absence submitted to the Court and copied to Catch Curve’s counsel or any other evidence establishing that Catch Curve’s counsel knew that Graphnet’s counsel was away on vacation. II.

DISCUSSION Pursuant to Local Patent Rules 4.2 and 4.3, a patent infringement defendant’s

Response to Infringement Contentions and Disclosure of Invalidity Contentions must be served within the time mandated by Local Patent Rule 4.4. In the case at bar, this Court’s February 26th Order gave Graphnet additional time, specifically until April 28, 2008, to submit its Response to Infringement Contentions under Local Patent Rule 4.2 and to make its Disclosure of Invalidity Contentions under Local Patent Rule 4.3. Even with this additional time, neither of the documents served by Graphnet complied with the requirements of this Court’s Local Patent Rules. The Court details the deficiencies below. Local Patent Rule 4.2 states the following with respect to a patent infringement defendant’s Response to Infringement Contentions: (a) A party opposing a claim of infringement shall make the following Response to Infringement Contentions within the time period provided by these rules: (1) The Response to Infringement Contentions shall include a chart responsive to the claims chart contained within the Disclosure of Infringement Contentions, and shall either acknowledge or deny whether each element of each asserted claim is found within each Accused Instrumentality; (2) The Response to Infringement Contentions shall include a -6-

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copy of source code, specifications, schematics, flow charts, artwork, formulas, or other documentation sufficient to show the operation or composition of an Accused Instrumentality identified in the Disclosure of Infringement Contentions within the time period specified by these Rules. Patent L.R. 4.2. Here, Graphnet’s Response to Infringement Contentions clearly contravened Local Patent Rule 4.2. First, Graphnet did not include a chart responsive to the detailed infringement claim charts served by Catch Curve. Second, Graphnet neither acknowledged nor denied whether each element of each asserted claim is found within each of Graphnet’s accused products. Third, while Local Patent Rule 4.2 specifically requires a defendant in a patent infringement action to provide “a copy of source code, specifications, schematics, flow charts, artwork, formulas, or other documentation sufficient to show the operation or composition of an Accused Instrumentality identified in the Disclosure of Infringement Contentions,” Graphnet did not provide this information with the documents served on April 28, 2008, or those documents received by Catch Curve on May 13, 2008. Graphnet improperly conditioned providing documents and information showing the operation or composition of the accused instrumentality upon the entry of a case specific non-disclosure agreement. Graphnet’s imposition of this condition is contrary to the requirements of the Local Patent Rules that a party’s disclosure obligations cannot be delayed because a case specific protective order has not been entered. See McKesson Info. Solutions, LLC v. Epic Systems Corp., 495 F. Supp. 2d 1329, 1332-33 (N.D. Ga. 2007 ) (stating that “the Local Patent Rules were intended to address the types of disputes which frequently arise in patent cases but which are generally addressed similarly – for example, how to treat confidential information prior to the entry of a protective order” and noting that a patent infringement defendant must provide information that is sufficient to show the operation or composition of the accused instrumentality). Local Patent Rule 2.1 specifically provides for protection of confidential information produced prior to entry of a case -7-

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specific protective order. See Patent L.R. 2.1.1 Accordingly, Defendant’s Response to Infringement Contentions is inadequate, and Defendant’s failure to produce the information and documents required by Local Patent Rule 4.2(a)(2) is unjustified. Further, the claim charts provided by Graphnet on May 13, 2008, fail to acknowledge that any element of any asserted claim is present in the accused instrumentality. Instead, for each element of each asserted claim, Graphnet’s claim charts repeat the boilerplate statement “[t]his element is not present within the accused service.” (See generally Graphnet’s First Supplemental Response To Its Patent Disclosures [Doc. No. 43-11].) As it cannot be legitimately disputed that at least some elements of the asserted claim are present in Graphnet’s accused instrumentality, the Court agrees with Catch Curve that this blanket denial is contrary to the letter and spirit of the Local Patent Rules as well as Graphnet’s obligations under Rule 11 of the Federal Rules of Civil Procedure. With respect to the Disclosure of Invalidity Contentions, Local Patent Rule 4.3 states the following: (a) Each party opposing a claim of patent infringement, and each party seeking a declaratory judgment of patent invalidity, shall serve on all parties its Disclosure of Invalidity Contentions at the time specified in these rules, which shall contain the following information: (1) The identity of each item of prior art that allegedly anticipates each asserted claim or renders it obvious. (i) 1

Prior art under 35 U.S.C. § 102(b) shall be

Local Patent Rule 2.1 provides, in pertinent, part as follows:

(a) If any document or information produced is deemed confidential by the producing party and if the Court has not entered a protective order, until a protective order is issued by the Court, the document shall be marked “Confidential – Subject to Protective Order” by the disclosing party and disclosure of the confidential document or information shall be limited to each party’s outside attorney(s) of record and the employees of such outside attorney(s). Patent L.R. 2.1. -8-

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identified by specifying the item offered for sale or publicly used or known, the date the offer or use took place or the information became known, and the identity of the person or entity which made the use or which made and received the offer, or the person or entity which made the information known or to whom it was made known. (ii) Prior art under 35 U.S.C. § 102(f) shall be identified by providing the name of person(s) or entity(ies) from whom and the circumstances under which the invention or any part of it was derived. (iii) Prior art under 35 U.S.C. § 102(g) shall be identified by providing the identities of the person(s) or entity(ies) involved in and the circumstances surrounding the making of the invention before the patent applicant(s); (2) For each item of prior art disclosed, whether each item of prior art anticipates each asserted claim or renders it obvious. If the disclosing party contends that a combination of items of prior art makes a claim obvious, each such combination, and the motivation to combine such items, shall be identified. (3) A chart identifying where specifically in each alleged item of prior art each element of each asserted claim is found; (4) Any grounds of invalidity based on any applicable provision of 35 U.S.C. § 112. (b) The Disclosure shall include a copy of each item of prior art identified in the Disclosure comprising a printed publication if such item of prior art does not appear in the file history of the patent(s) at issue. To the extent any such item is not in English, an English translation of the portion(s) relied upon shall be produced. Patent L.R. 4.3. As with Graphnet’s Response to Infringement Contentions, Graphnet’s Initial Invalidity Contentions failed to comply with the Local Patent Rules for at least the reasons that (1) Graphnet failed to identify each item of alleged prior art that allegedly anticipates each asserted claim or renders it obvious, (2) Graphnet failed to indicate whether invalidity is alleged on the basis of anticipation or obviousness, and (3) Graphnet failed to include a chart identifying where specifically in each alleged item of prior art each element of each asserted claim is found. Graphnet’s untimely supplemental disclosure of May 13, 2008, likewise failed to remedy its -9-

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noncompliance with Local Patent Rule 4.3. Graphnet’s service of grossly non-compliant responses and disclosures and its transparent, unilateral attempt to extend the time for its compliance with the Court’s February 26th Order and the Local Patent Rules was in knowing and willful contempt of this Court’s February 26th Order that no further extensions would be granted. Significantly, in addition to the aforementioned deficiencies, Graphnet explicitly stated that “Defendant fully anticipates supplementing additional information in response to Plaintiff’s LPR 4.1 Infringement Contentions within 33 days of the filing of these responses.” (Graphnet’s Response to Infringement Contentions [Doc. No. 43-6] at 1.) Graphnet again ignored the Court’s admonition that “no further extensions will be granted” by stating that “Defendant shall supplement this response with additional general and technical information outlining in detail that the patents on the claimed technology in this case are neither patentable nor unique, and have otherwise been in general prevalent use prior to the patent application and patent grant dates to Catch Curve and its predecessors.” (Graphnet’s Initial Invalidity Contentions [Doc. No. 43-8] at 1-2.) Graphnet all but acknowledged that its Response to Infringement Contentions and Disclosure of Invalidity Contentions were patently deficient and then gave itself additional time to comply with the February 26th Order and the Local Patent Rules by disguising the extension of time as purported supplementation. Graphnet argues that its counsel was new to the case and did not have the documents necessary to respond to Plaintiff’s Infringement Contentions. However, Graphnet was well aware of the contents and admonitions of this Court’s February 26th Order, and counsel for Graphnet presumably was aware of the same prior to accepting representation of Graphnet in the case. The Court understands that strict compliance with this Court’s February 26th Order, the Local Rules, and the Local Patent Rules would have required great diligence and the expenditure of substantial time by Graphnet and its counsel. Still, strict compliance was and continues to be - 10 -

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expected, particularly given Graphnet’s willful delay in this action thus far. Notwithstanding the Court’s opinion that Graphnet’s service of the obviously noncompliant Response to Infringement Contentions and Disclosure of Invalidity Contentions on April 28, 2008, constitutes willful disregard of this Court’s February 26th Order, the Court will not impose the harsh sanction of a judgment by default. The Court has the discretion to fashion appropriate sanctions for conduct, such as Graphnet’s, that abuses the judicial process. Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991). In light of Graphnet’s attempt to make some progress in this case, the Court believes that lesser sanctions may suffice to ensure compliance with this Court’s orders and that a lesser sanction should be imposed before resorting to the imposition of a default judgment. See In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1306 (11th Cir. 2006) (“The severe sanction of a dismissal or default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance with the court’s orders.”) (citation omitted). As such, the Court finds that entry of default judgment against Graphnet is not warranted at this time. To the extent that Graphnet has not fully complied with the Local Patent Rules to date,2 however, the Court will compel Graphnet to do so. In addition, the Court will grant Catch Curve’s request for its costs and attorney’s fees incurred in bringing the Motion for Entry of Default Judgment or, in the Alternative, to Compel Defendant to Comply With its Disclosure Obligations Under the Local Patent Rules and for Sanctions. Federal Rule of Civil Procedure 37(a)(5) provides for the payment of costs and attorney’s fees incurred in bringing a motion to compel discovery as follows:

The Court understands from Catch Curve’s reply brief that it received additional materials from Graphnet on June 12, 2008. Catch Curve specifically reserves the right to challenge the adequacy of these materials as it relates to Graphnet’s obligations under the Local Patent Rules. 2

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If the motion is granted– or if the disclosure or requested discovery is provided after the motion was filed–the court must, after giving an opportunity to be heard, require the party ... whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant’s reasonable expenses incurred in making the motion, including attorney’s fees. But the court must not order this payment if: (i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action; (ii) the opposing party’s nondisclosure, response, or objection was substantially justified; or (iii) other circumstances make an award of expenses unjust. Fed. R. Civ. P. 37(a)(5). Here, Graphnet’s pattern of delay and unjustified positions necessitated the filing of Catch Curve’s Motion. Despite Graphnet’s arguments to the contrary, the Court finds that Catch Curve attempted in good faith to obtain the disclosures at issue without court action. Notably, the Court does not agree that Catch Curve was “writ[ing] and threaten[ing] Graphnet with sanctions and other conduct unless [Graphnet] immediately did as [Catch Curve] demanded.” (Defendant Graphnet’s Brief in Response to Catch Curve’s Motion for Entry of Default Judgment or in the Alternative to Compel Discovery Responses [Doc. No. 44] at 2.) Rather, Catch Curve was seeking to have Graphnet comply with what the Local Patent Rules clearly demand and with what this Court ordered in its February 26th Order. Further, while Graphnet’s counsel mentions in Graphnet’s opposition brief that he made phone calls to Catch Curve’s counsel that were not returned, Graphnet’s counsel has failed to file an affidavit attesting to the fact that he actually made phone calls that were not returned. See LR 7.1A.(1), NDGa (“If allegations of fact are relied upon [in a memorandum of law], supporting affidavits must be attached to the memorandum of law.”). As such, the Court rejects Graphnet’s arguments, and Catch Curve will be awarded its costs and attorney’s fees incurred in making this Motion. III.

CONCLUSION Based on the foregoing, the Court GRANTS Catch Curve’s alternative request

to compel Graphnet to comply with its disclosure obligations under the Local Patent - 12 -

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Rules and ORDERS Graphnet to comply fully with those obligations within ten (10) days from the date of this Order, if Graphnet has not done so already. Further, the Court GRANTS Catch Curve’s request for sanctions and ORDERS that Graphnet shall be required to pay Catch Curve’s costs and attorney’s fees incurred in bringing the Motion for Entry of Default Judgment or, in the Alternative, to Compel Defendant to Comply With its Disclosure Obligations Under the Local Patent Rules and for Sanctions. The Court DIRECTS Catch Curve to submit to the Court within fifteen (15) days specific documentation and evidence establishing the amount of attorney’s fees and expenses that Catch Curve has incurred. Graphnet shall then have fifteen (15) days to respond to Catch Curve’s submission, and Catch Curve shall have ten (10) days to reply, if necessary. SO ORDERED this 16th day of September, 2008.

s/ CLARENCE COOPER CLARENCE COOPER UNITED STATES DISTRICT JUDGE

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