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Liqwd, Inc. v. L'Oreal USA, Inc.

United States District Court, D. Delaware

August 30, 2018

LIQWD, INC. and OLAPLEX LLC, Plaintiffs,
v.
L'OREAL USA, INC., L'OREAL USA PRODUCTS, INC., L'OREAL USA S/D, INC., and REDKEN 5th AVENUE NYC, L.L.C., Defendants.

         Unsealed

          MEMORANDUM ORDER

          SHERRY R. FALLON UNITED STATES MAGISTRATE JUDGE

         At Wilmington this 30th day of August, 2018, the court having considered the parties' discovery dispute submissions and the arguments presented during the August 1, 2018 discovery dispute hearing (D.I. 347; D.I. 349; D.I. 358; D.I. 368; D.I. 369; D.I. 370; D.I. 371; D.I. 374; D.I. 380; D.I. 381; D.I. 384; 8/1/18 Tr.; 8/29/18 Tr.), IT IS HEREBY ORDERED THAT the relief requested by defendants L'Oreal USA, Inc., L'Oreal USA Products, Inc., L'Oreal USA S/D, Inc., and Redken 5th Avenue NYC, L.L.C. (collectively, "L'Oreal") is DENIED without prejudice for the reasons set forth below.

         1. Background.

         Plaintiffs Liqwd, Inc. and Olaplex LLC ("Olaplex") brought this civil action for patent infringement on January 5, 2017. (D.I. 2) Olaplex alleges causes of action for infringement of United States Patent Nos. 9, 498, 419 ("the '419 patent") and 9, 668, 954 ("the '954 patent") (together, the "patents-in-suit"). (D.I. 262 at ¶¶ 90-138) The patents-in-suit are directed to formulations, kits, and methods of applying a bleaching mixture containing an active agent of maleic acid to the hair during treatments to rebuild disulfide bonds. (Id., Ex. A at Abstract; Ex. B at Abstract)

         2. Analysis.

         By way of its letter submissions, L'Oreal requests the entry of an order barring Olaplex's outside counsel, Mr. Matthew Blackburn, from further participation in the post-grant review ("PGR") proceedings relating to the patents-in-suit[1] in accordance with the terms of the protective order. (D.I. 358 at 2-4) In addition, L'Oreal seeks a modification to the existing protective order to preclude Olaplex's in-house counsel, Ms. Tiffany Walden, from continued access to L'Oreal's highly confidential information. (Id. at 4-5) For the following reasons, L'Oreal's requested relief on both grounds is denied.

         3. Mr. Blackburn's participation in PGR proceedings.

         Following the filing of Olaplex's motion for leave to amend its complaint to add a cause of action for infringement of the '954 patent in June 2017, L'Oreal filed three PGR petitions challenging the patentability of all claims of the '954 patent. (D.I. 354 at 5) On May 18, 2018, Olaplex's outside patent prosecution counsel, Rivka Monheit, filed a statutory disclaimer with the United States Patent and Trademark Office ("PTO") pursuant to 35 U.S.C. § 253, disclaiming claim 17 of the '954 patent.[2] (D.I. 358, Ex. B; D.I. 370 at¶ 5)

         4. On August 10, 2018, the PTAB instituted PGR proceedings regarding the '954 patent based on one of L'Oreal's three PGR petitions. (D.I. 366, Ex. A) However, the Patent Trial and Appeal Board ("PTAB") excluded claim 17 from the institution of PGR proceedings on the '954 patent in light of the statutory disclaimer. (Id., Ex. A at 3 n.l) The PTAB declined to institute proceedings based on L'Oreal's two remaining petitions challenging the validity of the '954 patent. (D.I. 366, Exs. B-C)

         5. The parties' dispute centers on whether the statutory disclaimer of claim 17 falls within the scope of the protective order's prohibition against "amendment or change to any claim" in PGR proceedings. (D.I. 54 at ¶ 12(c)) The protective order provides that "no person on behalf of Plaintiffs . . . shall, for a period commencing upon receipt of such information and ending one year following final disposition of this case engage in any Post Grant Activity ... on behalf of any Party other than the Producing Party." (D.I. 54 at ¶ 12(b)) Pursuant to paragraph 12(c) of the protective order, "post grant activity" includes:

any activity related to directly or indirectly providing any advice, counseling. preparing, prosecuting, editing, amending and/or drafting of any claim for any post grant proceeding involving the patent-in-suit patent or other patent or patent application claiming priority to or otherwise related to the patent-in-suit (including, but not limited to . . . post grant review . . .) before any domestic or foreign patent office or agency. The restrictions set forth in paragraphs 12(b-c) shall apply immediately upon a good faith belief that an amendment or change to any claim of the patent-in-suit. . . would be made or any new claims would be added in such a post grant proceeding.

(D.I. 54 at ¶ 12(c))

         6. L'Oreal has failed to establish that Mr. Blackburn's PGR activities violate paragraph 12 of the protective order. The filing of the statutory disclaimer occurred outside the PGR proceeding because it was filed and recorded with the PTO. (D.I. 358, Ex. B) Consequently, when the PTAB issued its decisions regarding whether to institute proceedings on the '954 patent, claim 17 of the '954 patent did not factor into the analysis because Federal Circuit precedent dictates that the PTAB must treat statutorily disclaimed claims as though they never existed. (D.I. 366, Ex. A at 3 n.l; Ex. B at 24; Ex. C at 17)[3] (quoting In re Yamazaki,702 F.3d 1327, 1332 (Fed. Cir. 2012)). In this context, the statutory disclaimer of claim 17 of the '954 patent does not constitute an "amendment or change" under the terms of the protective order. This is consistent with guidance from the Manual of Patent Examining Procedure ...


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