In Sorrell Holdings LLC v. Infinity Headwear & Apparel, LLC, a patent infringement dispute in the United States District Court for the Western District of Arkansas, the court denied defendant’s motion to dismiss, reasoning that plaintiff’s failure to disclose key evidence until three days before trial was inadvertent and a sanction tantamount to a dismissal would be too extreme. However, the court allowed defendant to seek, fees, and costs associated with a continuance and plaintiff’s failure to comply with its initial discovery and disclosure obligations. 2021 U.S. Dist. LEXIS 221459 (W.D. Ark. Nov. 17, 2021).
In 2016, Sorrell sued Infinity for infringement of a patent related to hand-held loofahs. The matter was set for jury trial for November 15, 2021. On the 12th, three days prior to the trial date, the plaintiff moved to introduce new documents into evidence, including a patent assignment and several maintenance fee statements. Absent those documents, the plaintiff would be unable to meet its burden of showing it was the legal assignee of the patent and thus would lack standing to sue defendant for infringement. Id. at *3.
The court denied plaintiff’s motion to introduce these belatedly disclosed documents, reasoning that plaintiff had no justification for the late disclosure and that allowing entry of the new evidence would harm defendant. On that same day, defendant filed a motion to dismiss the case. However, the court slammed on the brakes, denying defendant’s motion to dismiss. Id. at *2.
There was no dispute that plaintiff failed to timely disclose the assignment documents. And there was no dispute that such failure was not harmless to defendant’s trial preparation. Id. The issue for the district court was the appropriate sanction for such failure. The court analyzed the four factors set out in Wegener v. Johnson, 527 F.3d 687, 692 (8thCir. 2008) to determine an appropriate sanction for failure to timely disclose information. Those four factors are:
- the reason for noncompliance,
- the surprise and prejudice to the opposing party,
- the extent to which allowing the information or testimony would disrupt the order and efficiency of the trial, and
- the importance of the information or testimony.
Id. at *4.
In its reasoning, the court focused on plaintiff counsel’s candor with the court in admitting his failure to disclose and admitting that he had no excuse for the failure. This candor also convinced the court that counsel had no bad faith in the failure to disclose. Thus, the court found that “to dismiss plaintiff’s claims for what is essentially an oversight by its counsel would be an extreme sanction.” Id. at *5. “[E]xclusion of the documents would be tantamount to a dismissal” because the assignment evidence was critical to plaintiff’s standing. Id.
As for factors 2 and 3, prejudice to defendant and disruption to the trial, the court found that they could be cured by reopening discovery for a short period of time, thus allowing defendant to test the proof and prepare for the trial. Id.
Therefore, despite that the court was “troubled by the blatant violation of [discovery] rules” and that the nondisclosure was harmful to defendant, the court decided, in what might be considered a Holiday Miracle, to give plaintiff a second chance to cure this “inadvertent” mistake and ruled that a sanction less than exclusion and ultimate dismissal was appropriate. Id. at *6. The motion to dismiss was denied, discovery was reopened for an extra 2 months, and the trial was continued to a later date.
The court also allowed defendant to seek, fees, and costs associated with a continuance and plaintiff’s failure to comply with its initial discovery and disclosure obligations. Hence, the inadvertent error cost the plaintiff, at least financially.
The court has wide discretion to fashion a remedy or sanction as appropriate when a party fails to timely disclose required information in discovery. Although in this case plaintiff was held responsible for defendant’s extra costs, that was a much better outcome compared to having the case dismissed and/or being charged for malpractice and professional misconduct.
Litigation is supposed to be a fair fight. Each side should timely disclose any relevant documents during discovery and adhere to court orders to allow trial to proceed in a timely manner and to prevent undue burden on the opposing party. Flagrantly disrespecting these principles may lead to an unforgiving response by the court.
But why is this case appearing in a prosecution blog? Because the same is true in patent prosecution. The duty of good faith and candor set forth in Rule 56 is supposed to guarantee that patents are procured in a fair and timely proceeding that avoids placing an undue burden on the USPTO. As prosecution counsel, consider asking your client hard questions, such as requiring the client to confirm inventorship and ownership. The prosecutor should consider asking those hard questions in writing.
If the patent prosecutor has suspicions of untruthful statements or other misconduct by the applicant, consider available options and consider withdrawing from the application; it may be the best move. Needlessly recreating a scene from the Titanic and going down with the ship would never seem to be a good move.