Court Finds that Nike Did Not Intentionally Wait To File Motion

May 22, 2009

A federal judge from the Northern District of Illinois has found that Nike did not intentionally wait to file an amended answer, affirmative defenses and counterclaims in a patent lawsuit involving a Japanese company.
Specifically, the court held that Nike was diligent in gathering the information, which involved translations of legal documents, before filing the pre-trial motion.
The dispute centered on the claim of plaintiff Saso Golf, Inc., which alleged on February 22, 2008 that Nike infringed on the patents associated with its golf clubs in violation of 35 U.S.C. § 271. Nike answered the complaint on April 11, 2008, and Saso Golf answered Nike’s counterclaims on May 1, 2008. Shortly thereafter, on May 7, 2008, the parties agreed to a joint scheduling order setting May 23, 2008 as “the last date for the parties to seek leave of court to . . . amend the pleadings unless good cause is shown.”
The parties continued with discovery, and on January 9, 2009, Saso Golf voluntarily withdrew its assertion of the ‘495 patent. According to Saso Golf, its decision to withdraw the ‘495 patent was based on the fact that “(1) the ‘495 patent and the ‘055 patent are related such that Saso Golf need only prove infringement under one of the patents; and (2) Saso Golf wanted to relieve the court’s and the parties’ burden and simplify the case. Several weeks later on February 19, 2009, Nike sent Saso Golf a letter stating its intent to seek leave to amend its affirmative defenses and counterclaims. Saso Golf initially indicated that it would not oppose the motion.
On March 9, 2009, Nike filed its motion for leave to file an amended answer. The purpose of the amendment, wrote the court, “is to add an affirmative defense of inequitable conduct relating to the ‘055 patent. Specifically, Nike contends that in prosecuting the ‘055 patent, Saso Golf’s inventor, Mr. Mitsuhiro Saso, and his counsel intentionally and knowingly failed to disclose to the U.S. Patent and Trademark Office the following material information:
(1) Canadian Patent No. 899,928 (Carlino patent), which the Canadian Patent Office relied on in rejecting Mr. Saso’s ‘055 patent application in October 1998;
(2) two prior art Japanese publications, No. 01-256981 (Kajita I patent) and 03-070584 (Kajita II patent), which the Japanese Patent Office relied on in rejecting Mr. Saso’s application for the Japanese Equivalent to the ‘055 patent in March 1999;
(3) the existence of litigation relating to the subject matter of the ‘055 patent – i.e., Saso Grind Sports, Inc. sued Sumitomo Rubber Industry Co. (SRI) in March 2001 alleging infringement of the Japanese Equivalent of the ‘055 patent (the SRI Litigation); and
(4) prior art references that SRI cited in defending the lawsuit, including U.S. Design Pat. Nos. 277,221 and 266, 344; Japan Design Patent No. 685,605; and 1990 Golf Digest Extra Edition.
Nike further claimed that it “diligently analyzed Mr. Saso’s worldwide patenting efforts and the numerous foreign language documents and proceedings relating to Mr. Saso’s worldwide patent portfolio,” and did not learn facts supporting its inequitable conduct allegations until after it received Saso Golf’s first document production on December 29, 2008. Saso Golf disagreed, “arguing that Nike deliberately and prejudicially waited to amend its pleadings until after Saso Golf voluntarily withdrew the ‘495 patent because the inequitable conduct allegations relate only to the ‘055 patent,” wrote the court. “In Saso Golf’s view, Nike has known the relevant facts to assert an inequitable conduct defense since at least July 24, 2008, and it should not be allowed to amend the pleadings at this late date.”
Saso Golf countered that Nike failed to satisfy Rule 16(b)’s good cause standard because “it has not demonstrated an exercise of due diligence in pursuing its inequitable conduct defense.” The plaintiff suggested that Nike knew about the Canadian Carlino patent as of July 24, 2008; the two Japanese references as of April 21, 2006; the Japanese litigation as of March 23, 2007; and the Japanese litigation references soon after March 23, 2007. With respect to the Japanese litigation, Saso Golf argued that it disclosed a prior lawsuit against Callaway Golf — Saso Golf, Inc. v. Callaway Golf Co., No. 03 C 4646 (N.D. Ill.) — in February 2006, and the claim construction briefs in the Callaway case expressly disclosed the Japanese litigation. “As Saso Golf sees it,” wrote the court, “Nike had all the data it needed to file an inequitable conduct defense many months ago, yet it strategically waited until after Saso Golf withdrew the ‘495 patent because now the defense may be dispositive of the entire case.”
Nike conceded that it obtained the prosecution histories for the Japanese Equivalent and the Canadian patent on July 22, 2008 and July 24, 2008, respectively. It denied, however, that it knew about the other information until after those dates. Nike’s timeline indicates that between July 24, 2008 and January 9, 2009, it obtained “(1) an English translation of the prosecution history for the Japanese Equivalent; (2) the Appendix to Callaway’s responsive brief to Saso Golf’s proposed claim construction, which contained an English translation of the lower court decision in the SRI litigation which, in turn, was Nike’s first confirmation that validity was at issue in that case; (3) an English translation of the higher court decision in the SRI Litigation; (4) English translations of non-patent literature prior art cited against the Japanese Equivalent in the SRI Litigation; (5) English translations of prior art cited in the prosecution history for the Kajita I and Kajita II patents; and (6) Saso Golf’s privilege log from the Callaway case indicating that prosecution counsel on the ‘055 patent and counsel for Saso Golf knew of the existence of the SRI Litigation during prosecution of the ‘055 patent.”
Nike claimed that “the pattern of Saso’s intentional, selective disclosure of material information [to the PTO] was not apparent” until after December 2008, “when the undersigned counsel received and analyzed translations of the prior art cited in the Japanese prosecution history, the SRI Litigation, and Saso’s Privilege Log from the Callaway case.” In Nike’s view, according to the court, it could not properly plead an inequitable conduct defense until it had this information.
Further, the court found that Nike satisfied the particularity requirement of Federal Rule 9(b), acting “with due diligence in pursuing evidence related to an inequitable conduct defense and in seeking leave to file an amended answer.”
In reaching this conclusion, the court noted that “Nike has no objection to Saso Golf renewing its allegations of infringement as to the ‘495 patent. This lends further support to Nike’s showing that it did not deliberately wait to file an inequitable conduct defense until after Saso Golf withdrew the ‘495 patent. In addition, discovery is not set to close until August 14, 2009 and the parties have not yet taken any depositions.”
The court went on to “recognize that the parties have submitted initial claim construction briefs for the ‘055 patent. To the extent the ‘495 patent is closely tied to the ‘055 patent, however, only limited additional briefing will be required if the ‘495 patent is reinstated. It also agreed with Nike that “the most efficient course is to address all of the claims at one time.”
Thus, it granted Nike’s motion and gave Saso Golf until April 7, 2009 to decide whether it intends to renew its allegations of infringement as to the ‘495 patent.
Saso Golf, INC v. Nike, INC.; N.D. Ill.; No. 08 C 1110, 2009 U.S. Dist. LEXIS 28633; 4/6/09
Attorneys of Record: (for plaintiff) James D. Ryndak, LEAD ATTORNEY, Eric H. Weimers, Ryndak & Suri LLP, Chicago, IL; Mark K. Suri, Ryndak & Suri, Chicago, IL. (for defendant) Christopher James Renk, LEAD ATTORNEY, Erik S Maurer, Katherine Laatsch Fink, Banner & Witcoff, Ltd., Chicago, IL.


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