IP Law Daily, PATENT—D. Utah: Antitrust counterclaim added to aerial photograph patent suit, (Jul 19, 2023)

By Kenneth H. Ryesky, M.B.A., J.D.

A roofing manufacturer successfully amended answer after learning of non-public settlement between plaintiff aerial image process technology patent holder and third party after filing original answer.

A federal district court in Salt Lake City, Utah has allowed a roofing materials manufacturer's motion to amend its answer in a patent infringement lawsuit. The roofing manufacturer had been sued by the patentees of technology for measuring rooftops by processing aerial photographs. The roofing manufacturer sought to amend its answer by adding two defenses plus an antitrust counterclaim. The patentees objected to the addition of the antitrust claim. The court granted the roofing manufacturer's motion in all respects, finding that no undue prejudice to the patentees would result (Eagle View Technologies, Inc. v. GAF Materials, LLC, July 17, 2023, Stewart, T.).

Eagle View Technologies, Inc. and its Pictometry International Corporation subsidiary (collectively, Eagle View) own nine image capture and processing technology patents used in products that measure roof tops from aerial photographs. Eagle View sued its competitor GAF Materials, LLC (GAF), alleging infringement of those patents resulting in lost profits. In December 2022, the court denied, without prejudice, GAF's motion to dismiss the lawsuit on the grounds that the subjects of the patents were unpatentable.

GAF moved to amend its Answer, based upon information it had received after filing the original Answer; this information included details of a non-public settlement of a dispute between Eagle View and an unconnected third party. The amended Answer would (1) assert patent misuse and inequitable conduct as defenses; and (2) add a Sherman Act antitrust counterclaim. Eagle View did not oppose the addition of the patent misuse and inequitable conduct defenses but opposed the addition of the Sherman Act counterclaim, asserting that the antitrust counterclaim would cause it undue prejudice.

Discovery overlap. The court found that there would be substantial overlap in discovery between the patent infringement issues and the antitrust issues. These include the need for Eagle View to prove the absence of non-infringing substitutes in both the lost profits and Sherman Act issues. The antitrust counterclaim discovery would also overlap the discovery regarding the patent misuse defense, a defense that asserts anticompetitive effects from an impermissible broadening of the patent's scope by the patentee.

Bifurcation. The court declined to consider the bifurcation issues in granting GAF's motion to amend its Answer. Here, Eagle View had asserted that it would incur prejudice when the antitrust counterclaim issues are bifurcated from the patent infringement issues at trial. The court found that while such bifurcations do occur often, there is no requirement that the court exercise its discretion to bifurcate the trials, and there are circumstances where conducting a unified trial promotes judicial economy and efficiency. The bifurcation decision accordingly was found to be premature at this stage of litigation.

Prolongation of litigation. The court discounted Eagle View's contention that addition of the Sherman Act counterclaim would prejudice it by prolonging discovery and therefore, the resolution of the litigation. Here, GAF made its motion nearly a half-year before the scheduled close of fact discovery; this did not unfairly impede Eagle View from preparing its defense to the antitrust counterclaim. Any resulting delay, reasoned the court, would not be so substantial as to unduly prejudice Eagle View.

The Case is No. 2:22-cv-00215-TS-DAO.

Attorneys: Eric S. Lucas (Shearman & Sterling LLP) for EagleView Technologies, Inc. Edward L. Tulin (Gish PLLC) for GAF Materials LLC.

Companies: EagleView Technologies, Inc.; GAF Materials LLC

Cases: Patent UtahNews