iAddressing default judgment and injunction issues, the US Court of Appeals for the Federal Circuit affirmed the district court’s grant of a default judgment and permanent injunction stemming from a series of delays, missed deadlines and other procedural missteps by the appellant. United Construction Prods., Inc. v. Tile Tech, Inc., Case No. 16-1392 (Fed. Cir., Dec. 15, 2016) (Wallach, J).
United Construction Products (UCP) sued Tile Tech for infringement of a patent relating to support pedestals used in elevated floors, decks and walkways, that included a specific anchoring washer. As is typical, UCP served Tile Tech with discovery requests. Following multiple missed deadlines and delays, Tile Tech served deficient responses. UCP requested to meet and confer, but Tile Tech again delayed and postponed. Even after the parties agreed to a date for supplemental responses, Tile Tech failed to provide them. UCP then filed a motion to compel a response. Tile Tech never responded. Instead, Tile Tech served supplemental responses that were still deficient.
The district court issued an order compelling responses and imposed monetary sanctions on Tile Tech, warning that it would enter a default judgment if Tile Tech failed to comply. Despite the Court’s warning, Tile Tech failed to respond to the order. UCP then filed a motion for default judgment, whereupon Tile Tech served another set of supplemental responses, in which it admitted the destruction of a previously undisclosed anchoring washer mold—a key component of the accused support pedestal. UCP sought sanctions for spoliation of evidence and amended its complaint to add a claim for unfair competition. When Tile Tech failed to respond, the district court entered default judgment for all of UCP’s claims and entered a permanent injunction. Tile Tech appealed.
Applying US Court of Appeals for the Ninth Circuit law, the Federal Circuit affirmed the district court’s entry of default judgment, finding that four of the five Ninth Circuit Malone factors favored dismissal of the case: (1) the public’s interest in expeditious resolution of litigation, (2) the court’s need to manage its docket, (3) the risk of prejudice to the other party, and (5) the availability of less drastic sanctions. Only the fourth factor, “(4) the public policy favoring disposition of cases on their merits,” favored non-dismissal. However, according to the Court, the district court’s “opinion demonstrate[d] its thorough consideration of the Malone factors leading to the ultimate decision not to impose lesser sanctions in this case . . . As the district court explained, ‘[w]here a party so damages the integrity of the discovery process that there can never be assurance of proceeding on the true facts, a case dispositive [remedy] may be appropriate.’”
The Federal Circuit also agreed with the scope of the permanent injunction entered by the district court. The injunction’s use of the term “substantially similar” was not erroneous because “[t]o the extent that sale, advertisement, marketing, or promotion of a substantially similar product to [UCP’s] would constitute infringement if evaluated under the test set forth in TiVo such actions would be prohibited.” The Court further found that the requirement to surrender the molds for washers was also appropriate because it was an acceptable means of preventing future infringement to UCP’s patents. With respect to the unfair competition language of the injunction, the Court clarified that the injunction would not cover any Tile Tech advertising that clearly distinguished its product from that of UCP’s in a comparative advertisement.
