Attorney for Defendant Hi-Tech Pharmaceuticals, Inc. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

Transcription

1 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 Arthur W. Leach (pro hac vice) THE LAW OFFICE OF ARTHUR W. LEACH 0 Windward Parkway, Suite Alpharetta, Georgia 000 Tel: Art@ArthurWLeach.com Attorney for Defendant Hi-Tech Pharmaceuticals, Inc. THERMOLIFE INTERNATIONAL, LLC, vs. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA Plaintiff, MYOGENIX CORPORATION, et al., Defendants. ¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾ and RELATED/COORDINATED MATTERS // // // // // Case No. :-cv-00 JLS-MDD (Lead Case) DEFENDANT HI-TECH PHARMACEUTICALS, INC. S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR Hearing Date: January, 0 Hearing Time: :0 p.m. Courtroom: A Judge: Hon. J. Sammartino C N. :- -00 JLS (MDD)

2 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 TABLE OF CONTENTS I. Adoption of Arguments... II. III. IV. ThermoLife s Allegations Against Hi-Tech... ThermoLife s Failure to Perform a Pre-Filing Investigation... a. None of the Accused Products Contain Enough L-Arginine to be Infringing, and ThermoLife Would Have Discovered this Fact Through Reasonable Investigation b. The Supplement Facts of the Accused Products Reveals the ThermoLife Could Not Successfully Claim Infringement Against Hi-Tech.... Stamina Rx Contains Less than One Gram of L-Arginine.... Zencore Plus Contains Less than One Gram of L-Arginine.... SizeMatters Contains Less than One Gram of L-Arginine.... Mesomorph Does Not Contain L-Arginine and Contains Other Amino Acids as Active Ingredients.... NO Overload Contains Other Amino Acids as Active Ingredients... The Exceptional Nature of This Case Warrants an Award of Attorneys Fees and Expenses... V. Conclusion... i C N. :- -00 JLS (MDD)

3 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 Cases: TABLE OF AUTHORITIES Bayer CropScience AG v. Dow AgroSciences LLC, 0 WL 0 (D. Del. Jan., 0)...0 Cambridge Products, Ltd. v. Penn Nutrients, Inc., F.d 0 (Fed. Cir. )... Commil USA, LLC v. Cisco Systems, Inc., S.Ct. 0 (0)... Eon Net LP v. Flagstar Bancorp, F.d (Fed. Cir. 0)...0 In re Bill of Lading Transmission and Processing System Patent Litigation, MD Case No. :0-cv- (S.D. Ohio Sept., 0)...0 Octane Fitness, LLC v. ICON Health & Fitness, Inc., S. Ct. (0)... SFA Sys., LLC v. Newegg, Inc., F.d (Fed. Cir. 0)...0 View Engineering, Inc. v. Robotic Vision Systems, Inc., 0 F.d (Fed. Cir. 000)... Yufa v. TSI Inc., 0 WL 00 (N.D. Cal. Aug., 0)... Statutes and Rules: U.S.C.... Fed. R. Civ. P.... ii C N. :- -00 JLS (MDD)

4 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 COMES NOW, Hi-Tech Pharmaceuticals, Inc., Defendant in the above-styled action, and hereby submits its Memorandum of Points and Authorities in Support of its Motion for Attorneys Fees, respectfully showing this Court as follows: Simply put, ThermoLife brought claims against Hi-Tech that should have never been brought, a fact evident from the labels of the accused products. In true patent troll fashion, however, ThermoLife conveniently ignored this publically available information, failed to conduct a reasonable investigation, and proceeded with its attempt to extract a settlement. While ThermoLife s conduct in proceeding with suit was wrongful in and of itself, making matters worse, ThermoLife maintained its suit against Hi-Tech in the face of litigation and discovery that made the baseless nature of its claims even more evident. Under these circumstances, the current case is truly exceptional within the meaning of U.S.C.. I. Adoption of Arguments The arguments and authorities contained in Defendant Vital Pharmaceuticals, Inc. s Memorandum of Points and Authorities in Support of its Motion for Attorney Fees (Vital Memo), Doc. -, are equally applicable to Hi-Tech. Hi-Tech, therefore, adopts those arguments and authorities, and incorporates them as if fully set forth herein. Hi-Tech also adopts all statements of fact and evidence cited in Vital s Brief, except those pertaining to Vital s accused products. Facts and evidence specific to Hi-Tech s accused products are set forth herein. II. ThermoLife s Allegations Against Hi-Tech ThermoLife baselessly, and without reasonable investigation, filed suit against Hi-Tech for patent infringement. Specifically, ThermoLife made the following allegation against Hi-Tech: By way of example and without limitation, Defendant, directly or through intermediaries (including distributors, retailers, and others), makes, manufactures, ships, distributes, advertises, markets, offers for sale, and/or sells dietary supplement products that infringe on one or - - C N. :- -00 JLS (MDD)

5 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 more claims of the patents in suit (hereinafter the accused products ), which include without limitation products sold under the Anavar, NO Overload, Zencore Plus, Mesomorph, SizeMatters, and StaminaRx brand names, in the United States, the State of California, and the Southern District of California. ThermoLife Int l, LLC v. Hi-Tech Pharmaceuticals, Inc., Northern District of Georgia, Case :-cv-000-jls-mdd, Doc ThermoLife s Amended Infringement Contentions repeatedly refer to the labels and advertisements of the accused products as support for its infringement claims. See generally Doc. - (Ex. G to Vital Memo); see also Doc. - (Ex. D to Vital Memo, Kramer Dep. Tr. at :-). The labels and advertisements, however, fall far short of a reasonable basis for bringing the subject claims. III. ThermoLife s Failure to Perform a Pre-Filing Investigation While this case was disposed of at the validity stage after a -day trial, it could have been altogether avoided, at least as to Hi-Tech, had ThermoLife bothered to investigate whether it had a reasonable factual basis for filing suit in April 0. Had ThermoLife tested the Hi-Tech products accused of infringement, it would have learned that none of the products contained L-Arginine or L-Arginine hydrochloride in an amount sufficient to constitute what ThermoLife s expert considered infringing. Further, had ThermoLife made any effort to meaningfully review the supplement facts listed on the packaging of the accused products, it would have readily seen from this publically available information that labeling alone demonstrates that four of the six accused products could not have been infringing, as conceded by ThermoLife s own expert, Dr. Boger. ThermoLife, however, all but failed to put any investigatory effort into its claims against Hi-Tech, forcing Hi-Tech to defend itself against a suit ThermoLife reasonably knew or reasonably should have known could not succeed. C N. :- -00 JLS (MDD)

6 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 a. None of the Accused Products Contain Enough L-Arginine to be Infringing, and ThermoLife Would Have Discovered this Fact Through Reasonable Investigation. According to ThermoLife s own expert, at least one gram of L-Arginine or L- Arginine hydrochloride would have been required for infringement of the patent. See Doc. -0 (Ex. H to Vital Memo, Boger Dep. Tr. at : -:) and Doc. - (Ex. I to Vital Memo, Trial Tr. at :-:). Indeed, claim of patent specifically requires a dose of gram. Doc. - ( patent) at :-. Each of the accused products, however, contains significantly less than one gram of L-Arginine or L-Arginine hydrochloride per serving, if any. Wheat Dec., ; Ex. - attached hereto. ThermoLife could have easily determined this fact prior to filing suit by simply purchasing and testing the accused products. Instead of doing so, ThermoLife elected to rush to the courthouse with its newly-licensed patents (without standing and without full disclosure to Stanford that Mr. Kramer s intent was to sue the industry ). Indeed, the totality of the circumstances in this case renders it apparent that ThermoLife hurriedly filed suit against anyone and everyone based upon the sheer and insufficient fact that various product labels contained the word arginine or mentioned the phrase nitric oxide. b. The Supplement Facts of the Accused Products Reveals the ThermoLife Could Not Successfully Claim Infringement Against Hi-Tech. As previously stated, ThermoLife could have, and more importantly should have, easily determined that Hi-Tech was not a proper defendant in its flurry of infringement suits filed in the spring of 0 by simply testing the accused Hi-Tech products. ThermoLife, however, could have also determined that its claims against Hi-Tech were not proper by simply reviewing the products publically available supplement facts. The supplement facts for each of the accused products is See Ex. A attached hereto (Nakashima Dep. Tr. at :0-; :-; :-) - - C N. :- -00 JLS (MDD)

7 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 prominently displayed on the products labels as well as on various websites selling the accused products. Wheat Dec., 0-; Ex. - attached hereto. While Kramer testified that in order to determine whether someone was an infringer, they looked to advertisements and whether the [product] label had a certain doses of arginine in the product, this testimony does not appear to be accurate. Had ThermoLife bothered to perform more than a cursory search for the word arginine or the word nitric oxide on the products labels, it would have readily determined that infringement claims relating to four of the five the accused products would be meritless due to the limited amount of L-arginine in the products. Alternatively, Kramer s testimony was accurate; ThermoLife determined that various Hi-Tech products did not meet the - gram threshold by reviewing the labels, and it filed suit anyway.. Stamina Rx Contains Less than One Gram of L- Arginine. As prominently displayed in Stamina Rx s supplement facts, L-Arginine is the last-listed ingredient in a blend with a total weight of only 0 milligrams per serving: Ex. attached hereto; see also Wheat Dec., -. It is, therefore, evident from the Doc. - (Ex. D to Vital Memo, Kramer Dep. Tr. at :-). - - C N. :- -00 JLS (MDD)

8 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 product label that a serving size of Stamina Rx could not contain the gram of L- Arginine limitation cited by ThermoLife s expert, Dr. Boger.. Zencore Plus Contains Less than One Gram of L- Arginine. The supplement facts for Zencore Plus also reveal the baseless nature underlying ThermoLife s claim of infringement. ingredient of a blend weighing only milligrams: - - L-Arginine is the last-listed Ex. attached hereto. As a result, Zencore Plus also could not meet the infringing threshold of gram. blend:. SizeMatters Contains Less than One Gram of L- Arginine. As for SizeMatters, L-Arginine is the last-listed ingredient of a 0 milligram C N. :- -00 JLS (MDD)

9 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 Ex. attached hereto. Thus, the supplement facts for three of the six accused products plainly show that these products do not contain a sufficient amount of L- Arginine to be allegedly infringing.. Mesomorph Does Not Contain L-Arginine and Contains Other Amino Acids as Active Ingredients. ThermoLife sued Hi-Tech on Mesomorph but this product did not end up being before the Court during the trial. We submit the following information simply to show the reckless nature of ThermoLife s filing suit against this product. A simple review of the Mesomorph supplement facts also reveals that ThermoLife could not have successfully demonstrated infringement with respect to that product, as Mesomorph does not contain either L-Arginine or L-Arginine Hydrochloride: - - C N. :- -00 JLS (MDD)

10 Case :-cv-00-jls-mdd Document - Filed 0// Page 0 of Ex. attached hereto. While Mesomorph does contain Arginine Alpha Ketoglutarate (a/k/a L-Arginine AKG), this ingredient is a salt excluded from the scope of claim of the patent. See Doc. -, p.. The supplement facts for the Mesomorph product further show that the product contains numerous other active ingredients, including amino acids other than L- Arginine. Specifically, the supplement facts show that the Mesomorph product contains beta alanine and citrulline (malate), the inclusion of which provides that the Mesomorph product could not be found to infringe claim of the patent. See id., pp NO Overload Contains Other Amino Acids as Active Ingredients. Similarly, the supplement facts for the current formula of NO Overload show the inclusion of the amino acids creatine monohydrate, tyrosine, beta alanine, leucine, and valine in that product: 0 Ex. attached hereto. NO Overload, therefore, could not be found to be infringing upon claim of the patent. The prior version of NO Overload, sold in and before 0, also could not be found to be infringing upon claim of the patent -- CASE NO. :-CV-00 JLS (MDD)

11 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 due to its inclusion of L-taurine and beta alanine. Wheat Dec.,. In sum, the face of the accused products reveals that ThermoLife could not sustain any infringement claim against Hi-Tech with respect to four of the five products, and that ThermoLife could not successfully a claim for infringement of claim of patent with respect to two of the products. While the supplement facts for the sixth product, Anavar, do not readily reveal that Anavar was similarly non-infringing, this fact could have been easily determined through testing testing ThermoLife should have done as a matter of course, especially in light of the supplement facts for the other products. Therefore, we suggest, a careful pre-suit investigation should have had at least two steps with regard to Hi-Tech. First, a review of the supplement facts which would have eliminated the lion s share of the products in question. The second step should have been actual testing to assure that an infringing quantity of L-Arginine was present. The absence of these efforts is a large part of what makes this case exceptional. IV. The Exceptional Nature of This Case Warrants an Award of Attorneys Fees and Expenses. As set forth in Vital s Opening Brief, this case stands out and is therefore exceptional for many reasons. See Octane Fitness, LLC v. ICON Health & Fitness, Inc., S. Ct., (0). ThermoLife is the quintessential non-practicing entity, exactly the type of troll various courts and legislators are seeking to limit or eliminate altogether. First, ThermoLife purchased patent licenses for the sole purpose of profiting from the enforcement of them: ThermoLife licensed the four patents-in-suit in February of 0, despite the fact that three of them were set to expire approximately four months later, in June 0. Compare Doc. - (February, 0 ThermoLife-Stanford License Agreement) with Ex. B attached hereto (Trial Tr. at :0-; 0: :; : -). ThermoLife then filed suit against the better part of the dietary supplement industry in March and April of 0, just one to - - C N. :- -00 JLS (MDD)

12 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 two months after obtaining the licenses. See Doc. - (Ex. F to Vital Memo); see also Ex. C attached hereto (Kramer Dep. Tr. at :-; :-) (Kramer testifying that when he asked for an exclusive license of the patents he believed there were a lot of infringing companies, and he intended to enforce the patents against other supplement companies). In doing so, ThermoLife hurriedly and recklessly filed suit against 0 some-odd defendants, including Hi-Tech, without a reasonable investigation into the allegedly infringing products, and without the knowledge or consent of the licensor. See Ex. A (Nakashima Dep. Tr. at :0-; :-; :-). Adding insult to injury, ThermoLife did not even have a dog in the L- Arginine fight, as it never sold, or expressed any intention of selling, a product using the intellectual property it was supposedly protecting. ThermoLife had a clear duty to investigate whether Hi-Tech s products infringed the now-void patents, and it had the duty to conduct this investigation before it filed suit. See Yufa v. TSI Inc., 0 WL 00, at * (N.D. Cal. Aug., 0); View Engineering, Inc. v. Robotic Vision Systems, Inc., 0 F.d, (Fed. Cir. 000); Cambridge Products, Ltd. v. Penn Nutrients, Inc., F.d 0, 00 (Fed. Cir. ). However, instead of exercising the requisite due diligence by first reading the labels if there was any doubt, purchasing and testing Hi-Tech s products, and in the face of clear label information demonstrating non-infringement, ThermoLife elected to file suit against Hi-Tech (and in excess of 0 other companies), demand a license and, if rebuffed, ask questions later. And even then, even after the Court s claim construction ruling, Dr. Boger s deposition, and notice of prior art which subsequently sealed the fate of ThermoLife s baseless infringement claims ThermoLife still refused to evaluate or While Kramer testified that ThermoLife had de minimus, if any, sales of Pump-Bol, a product containing arginine, the Pump-Bol product contained arginine nitrate and did not therefore utilize the technology of the patents or, at the very least, the technology of the patent. See Ex. C attached hereto (Kramer Dep. Tr. at :-:; :-:; :-:; :-). - - C N. :- -00 JLS (MDD)

13 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 investigate its claims in a reasonable manner. ThermoLife stubbornly maintained its suit, forcing Hi-Tech to spend three years and almost one million dollars to defend itself against the assertion of invalid patents. It is clear from ThermoLife s litigation tactics, including its ill-fated effort at trial, that it never had any good faith intention of testing the merits of its claims, but instead sought to extract lump-sum license payments from each of the more than 0 supplement companies that were accused of infringement. It did not matter to ThermoLife whether or not the patents-in-suit were valid. ThermoLife simply wanted to litigate the case, however baseless, as long as was necessary to extract the maximum amount of settlement money from the defendants. As a result, ThermoLife won this case before the trial even started: In the hypothetical event ThermoLife obtained, on average, the relatively nominal amount of $, from 0 defendants, the total amount recovered by ThermoLife on its invalid and unused patents would be two million dollars ($,000,000.00). These multi-defendant, sue-and-settle tactics employed by patent trolls or patent assertion entities are precisely the tactics frowned upon by courts through findings of exceptionality. See, e.g., SFA Sys., LLC v. Newegg, Inc., F.d, (Fed. Cir. 0); Eon Net LP v. Flagstar Bancorp, F.d, (Fed. Cir. 0); In re Bill of Lading Transmission and Processing System Patent Litigation, MDL Docket No. :0-md-00, Case No. :0-cv-, slip. op. at (S.D. Ohio Sept., 0); Bayer CropScience AG v. Dow AgroSciences LLC, No. CV - (RMB/JS), 0 WL 0, at * (D. Del. Jan., 0). ThermoLife in this case, as in other patent cases it has filed, successfully extracted settlements from numerous dietary supplement companies which simply did not have either the means or the fortitude to fight it. Hi-Tech was one of the few who stood up to ThermoLife s baseless allegations, litigating the case to the end, and ensuring that ThermoLife can no longer use these invalid patents to unjustly enrich itself at the expense of an entire industry, the judicial system, and taxpayers. Hi C N. :- -00 JLS (MDD)

14 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 Tech, however, should not be forced to incur the significant financial burden of litigating this exceptional case; ThermoLife, which has made significant sums off of the invalid patents, should bear this burden. It would be wholly unconscionable for ThermoLife, and -time convicted felon Kramer, to retain the fortune received as a result of the coercive patent trolling scheme. ThermoLife s settlement monies constitute ill-gotten gains, which ThermoLife will undoubtedly use to perpetuate its wrongful trolling activities. Unless and until ThermoLife is penalized and ceases to profit from its activities, Hi- Tech and others in the industry will be forced to endlessly defend themselves against baseless and bad faith patent claims, as they have in this case and others around the country. As a result, permitting ThermoLife to retain its ill-gotten gains would be to reward and fuel the third most prolific patent troll in the country at significant expense, and significant future expense, to the dietary supplement industry, the judicial system, and taxpayers. ThermoLife s conduct should not be without risk or consequences, and Hi-Tech should not be forced to bear the enormous cost of baseless litigation that plainly should have never been brought. See Commil USA, LLC v. Cisco Systems, Inc., S.Ct. 0, (0) (discussing the undesirability of a holding which increases the in terrorem power of patent trolls ) (Scalia, J., dissenting). To that end, Hi-Tech has filed the current Motion in accordance with the requirements set forth in Federal Rule of Civil Procedure (d)()(b), hereby requesting that it recover $,0.00 in attorney fees and $,0. in expenses. Holmes Dec., -; Gallagher Dec., -; Posner Dec., ; Leach Dec., -. Ex. C attached hereto (Kramer Dep. Tr. at :-:). Doc. - at (Ex. E to Vital Memo). This amount includes $,.00 in fees charged for the work of patent agent Dr. Nicole Smythe. See Holmes Dec., C N. :- -00 JLS (MDD)

15 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 V. Conclusion For the reasons set forth herein, the Court should award Hi-Tech its attorneys fees and expenses incurred in defense of this unwarranted patent litigation. Dated: October, 0 The Law Office of Arthur W. Leach 0 Windward Parkway, Suite Alpharetta, Georgia 000 Tel: 0-- Art@ArthurWLeach.com Respectfully submitted, /s/ Arthur W. Leach Arthur W. Leach Georgia Bar No. 0 Counsel for Defendant Hi-Tech Pharmaceuticals, Inc. - - C N. :- -00 JLS (MDD)

16 Case :-cv-00-jls-mdd Document - Filed 0// Page of 0 0 CERTIFICATE OF SERVICE I hereby certify that on October, 0, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the addresses denoted on the Electronic Mail Notice List, and I hereby certify that I have mailed the foregoing document or paper via the United States Postal Service to the non-cm/ecf participants indicated on the Electronic Mail Notice List. By: - - /s/ Arthur W. Leach Arthur W. Leach C N. :- -00 JLS (MDD)