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KEE Action Sports, LLC v. Shyang Huei Industrial Co., Ltd.

United States District Court, D. Oregon

November 5, 2014

KEE ACTION SPORTS, LLC, a Delaware limited liability company, Plaintiff,
v.
SHYANG HUEI INDUSTRIAL CO., LTD, a Taiwan company, dba SUNWORLD INDUSTRIAL CO., LTD, also dba DANGEROUS POWER, also dba DP ENGINEERING, and AMAZONE, INC., a California corporation, Defendants.

Craig R. Rogers Matthew C. Phillips RENAISSANCE IP LAW GROUP, LLP Portland, OR Attorneys for Plaintiff

Devon Zastrow Newman SCHWABE, WILLIAMSON & WYATT, PC Portland, OR

Thomas J. Daly G. Warren Bleeker CHRISTIE, PARKER & HALE, LLP Glendale, CA Attorneys for Defendants

OPINION &ORDER

MARCO A.HERNNDEZ, District judge.

Plaintiff KEE Action Sports filed a motion asking the court to find Defendant Amazone in contempt. Plaintiff also moves the court for a preliminary injunction and a lift of the stay in this case. First, Plaintiff requests that Defendant be held in contempt because it violated this court's order by failing to participate in mediation and by filing two reexamination petitions with the United States Patent and Trademark Office ("USPTO"). Second, Plaintiff requests a preliminary injunction to prevent Defendant from challenging the validity of Plaintiff's patents before the USPTO and in other proceedings. Third, Plaintiff moves to lift the stay in this case, despite the parties' failure to mediate. I find that Amazone has not violated the court's order, that KEE has not made the required showing for a preliminary injunction, and that the stay should not be lifted because the parties have not completed mediation. Therefore, Plaintiff's motion [28] is denied in its entirety.

BACKGROUND

KEE brought suit against SunWorld and Amazone, SunWorld's exclusive U.S. distributor, for breach of a Restated Licensing Agreement, breach of good faith and fair dealing, and patent infringement. Compl. ¶¶ 80-107. Defendant Amazone moved to dismiss, arguing the Restated Licensing Agreement required the parties to mediate before filing suit. I denied Amazone's motion to dismiss, ordered the parties to mediate in Portland, Oregon, and stayed the case pending completion of the mediation. Jun. 2, 2014 Op. & Order [27] at 8.

After the court's order, KEE contacted a JAMS mediator, the Hon. Wayne Brazil (Ret.). Rogers Decl. ¶ 2. Amazone proposed two dates for the mediation, and the parties agreed on July 25, 2014. Id . ¶¶ 4-5. Amazone insisted that the mediation occur in person and with principals and officers from both sides who had full settlement authority. Id . ¶ 7. Amazone informed KEE that Yi Chuan (Belden) Liu, President of Amazone, would be present and would have full settlement authority for both Amazone and SunWorld. Daly Decl. ¶ 2. KEE made several demands for written documentation of Liu's authority to settle on behalf of SunWorld and his relationship to SunWorld. Roger's Decl. ¶¶ 14-20. Amazone did not comply with these demands because the information was confidential, and the parties had been unable to agree on mediation confidentiality rules. Daly Decl. ¶¶ 6-10. KEE then cancelled the mediation proceeding. Roger's Decl. ¶ 21. Both parties had booked non-refundable airline tickets, and Amazone had made a $3, 650 pre-payment to JAMS. Daly Decl. ¶ 5; Pl.'s Reply at 9. Amazone has since filed for reexamination of two of KEE's patents with the USPTO. Daly Decl. ¶ 11.

KEE now moves the court for the following: (1) to hold Amazone in contempt for failing to mediate in good faith and for filing its petitions for reexamination with the USPTO, (2) to enjoin[1] Amazone from filing any further proceedings and require Amazone to withdraw its reexamination petitions, and (3) to lift the stay on proceedings because Amazone has waived the mediation requirement in the Restated Licensing Agreement. Pl.'s Br. at 10, 16, 18.[2]

DISCUSSION

I. Motion for Contempt

KEE argues Amazone should be held in contempt for violating the court's June 2014 order. KEE asserts Amazone violated this order by failing to put forth a "good faith" effort to mediate and by filing reexamination petitions with the USPTO. Pl.'s Reply at 6-7; Pl.'s Br. at 10.

"[C]ourts have inherent power to enforce compliance with their lawful orders through civil contempt." Spallone v. United States , 493 U.S. 265, 276 (1990) (quoting Shillitani v. United States , 384 U.S. 364, 370 (1966) (internal quotation marks omitted)). A court may hold in contempt "any person who willfully disobeys a specific and definite order requiring him to do or to refrain from doing an act." Shuffler v. Heritage Bank , 720 F.2d 1141, 1146 (9th Cir. 1983) (citations omitted). To avoid contempt a person must take "all the reasonable steps within [his or her] power to insure compliance with" the order. Stone v. City & Cnty. of San Francisco , 968 F.2d 850, 856 (9th Cir. 1992), as amended on denial of reh'g (Aug. 25, 1992) (quoting Sekaquaptewa v. MacDonald , 544 F.2d 396, 406 (9th Cir.1976) (internal quotation marks omitted)). It is "well settled" that the party moving for contempt has the burden to show by clear and convincing evidence that the nonmoving party has failed to comply with a specific and definite court order. F.T.C. v. Affordable Media , 179 F.3d 1228, 1239 (9th Cir. 1999) (citing Stone , 968 F.2d at 856 n.9). "The burden then shifts to the nonmoving party to demonstrate why they were unable to comply." Id . (quoting Stone , 968 F.2d at 856 n.9) (internal quotation marks omitted).

KEE argues that Amazone should be held in contempt for failing to mediate in good faith. I ordered KEE and Amazone to participate in mediation in Portland, Oregon. Jun. 2, 2014 Op. & Order at 8. After the order issued, KEE contacted a mediator and the parties agreed on a date. Both parties purchased airline tickets, and Amazone paid its portion of the mediation fee. After both parties identified their representatives for mediation, KEE made repeated demands for written proof of Liu's authority to settle on behalf of both Defendants, and his connection to SunWorld. Amazone did not comply with these demands. According to KEE, because Amazone imposed the condition that principals with full settlement authority must represent all parties, Amazone could not proceed in good faith if it did not comply with KEE's demands. Pl.'s Br. at 6-7. Amazone responds that KEE's demands were an attempt to conduct "one way discovery" and created an "artificial limitation to the process." Def.'s Resp. at 8-9. In light of the evidence, I find that Amazone ...


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