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Maxill Inc. v. Loops, LLC
United States District Court, W.D. Washington, Seattle
July 9, 2019
MAXILL INC., an Ohio corporation, Plaintiff,
LOOPS, LLC; and LOOPS FLEXBRUSH, LLC, Defendants. LOOPS, L.L.C.; and LOOPS FLEXBRUSH, L.L.C., Plaintiffs,
MAXILL INC., a Canadian corporation, Defendant.
following Minute Order is made by direction of the Court, the
Honorable Thomas S. Zilly, United States District Judge:
(1) The motion for protective order and stay, docket no. 50,
brought by Loops, L.L.C. and Loops Flexbrush, L.L.C.
(“Loops”) is DENIED. Loops contends that this
action should be stayed while the parties litigate in Canada
concerning an alleged breach of a settlement agreement
executed in April 2014. The Court is not persuaded that a
stay is necessary. The settlement agreement at issue was
between Loops and Maxill Inc., a Canadian corporation
(“Maxill-Canada”); Maxill Inc., an Ohio
corporation (“Maxill-Ohio”) was not a party to
the settlement agreement. See Ex. A to Brechtel
Decl. (docket no. 52-1). Thus, even if the settlement
agreement precludes Maxill-Canada from “attacking the
validity” of United States Patent No. 8, 448, 285 (the
“'285 Patent”), it does not prevent
Maxill-Ohio from doing so. Moreover, the
“no-challenge” clause contained in the settlement
agreement is unenforceable in this patent litigation with
regard to the '285 Patent. See Massillon-Cleveland-Akron
Sign Co. v. Golden State Advert. Co., 444 F.2d 425, 427
(9th Cir. 1971); see also Rates Tech. Inc. v. Speakeasy,
Inc., 685 F.3d 163 (2d Cir. 2012). The Canadian lawsuit
that culminated in the settlement agreement and a consent
judgment involved only Canadian Patent No. 2, 577, 109, and
the validity of the '285 Patent was not at issue in the
prior proceedings. See Ex. E to Brechtel Decl.
(docket no. 50-3 at 7, ¶ 6); see also Ex. 1 to
DiMeo Decl. (docket no. 60). Thus, with respect to the
'285 Patent, the “no-challenge” clause
constitutes an attempt to resolve a dispute about patent
validity prior to any litigation, which runs contrary to the
“strong federal policy favoring the full and free use
of ideas in the public domain.” Lear, Inc. v.
Adkins, 395 U.S. 653, 674 (1969); see also Rates
Tech., 685 F.3d at 170-71; Massillon, 444 F.2d
at 427. In contrast to final judgments, consent decrees, and
settlement agreements with “no-challenge” clauses
relating to patents actually “in suit, ” see
Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1369 (Fed.
Cir. 2001), pre-litigation settlements containing
“no-challenge” clauses threaten to
“muzzle” those who might be the only entities
with “enough economic incentive to challenge the
patentability of an inventor's discovery, ” and
thereby force the public to continue to “pay tribute to
would-be monopolists without need or justification.”
Lear, 395 U.S. at 670; see also Rates
Tech., 685 F.3d at 172 (holding that “covenants
barring future challenges to a patent's validity entered
into prior to litigation are unenforceable, regardless of
whether the agreements containing such covenants are styled
as settlements agreements or simply as license
agreements”). The Canadian proceedings do not warrant a
stay of this action or provide a basis for Loops to resist
Maxill-Canada's and Maxill-Ohio's efforts to depose
(2) The motion to compel, docket no. 46, brought by
Maxill-Canada and Maxill-Ohio (collectively,
“Maxill”), is GRANTED in part and DENIED in part
as follows. Counsel shall meet and confer concerning a
mutually convenient time to further depose Steven Kayser
individually and under Federal Rule of Civil Procedure
30(b)(6). Such deposition shall occur before the fact
discovery completion deadline of August 1, 2019. Maxill's
request for attorney's fees in connection with its motion
to compel is DENIED.
(3) Counsel are REMINDED of their obligation to provide
working or courtesy copies of voluminous filings.
See Local Civil Rule 10(e)(9).
(4) Loops's motion to seal, docket no. 63, is GRANTED as
follows. The unredacted version of Loops's reply, docket
no. 64, in support of its motion for protective order and
stay, shall remain under seal. Moreover, Loops's
unopposed request, see Reply at 1 n.1 (docket no. 64
at 2), for extension of time is GRANTED, and Loops's
reply, docket no. 64, will be considered timely filed.
(5) Maxill's motion to seal, docket no. 67, is GRANTED as
follows. The unredacted versions of the Declaration of Mudit
Kakar and Exhibits A, B, and E thereto, docket no. 68, shall
remain under seal.
(6) Counsel are REMINDED that motions to seal should be noted
for the third Friday after filing unless they are unopposed
or stipulated. Counsel shall meet and confer in advance of
filing motions to seal and, if possible, file a stipulation
and proposed order to seal, rather than a motion to seal.
(7) The Clerk is directed to send a copy of this Minute Order
to all counsel of record.
 The Court makes no ruling concerning
the preclusive effect of the settlement agreement with
respect to any other patents or the extent to which the
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