Shure Infringement Claims Against ClearOne Survive Motion to Dismiss Based on Civil Procedure Rules

In the latest development in extensive litigation between Shure and ClearOne over audio and conferencing equipment, the District of Delaware rejected a motion to dismiss Shure’s claims over multiple civil procedure grounds, including as compulsory counterclaims to an earlier suit and as failing to be the first to file.

The conflict between Shure and ClearOne began not in the District of Delaware but in the Northern District of Illinois. In 2017, Shure filed a declaratory judgment of noninfringement of ClearOne’s U.S. Patent No. 9,635,186, and ClearOne responded with counterclaims for infringement of the ’186 patent and of U.S. Patent No. 9,813,806. Both patents relate to beamforming microphones in ceiling arrays, an area in which the parties compete. ClearOne got a preliminary injunction for the ’806 patent (but not the ’186 patent), specifically against Shure’s MXA910 product “in its drop-ceiling mounting configuration.” In 2019, ClearOne filed a second infringement suit against Shure in the Northern District of Illinois over U.S. Patent No. 9,264,553, also related to beamforming microphones. Shure got an inter partes review instituted by the Patent Trial and Appeal Board against the ’553 patent, but the PTAB ended up upholding the challenged patent claims.

In this District of Delaware case, Shure sued for infringement of U.S. Patent No. 9,565,493, related to ceiling-mounted microphones, as well as for various state and federal claims stemming from statements that ClearOne made to customers about the patent litigation. Shure later moved to add U.S. Design Patent No. D865,723, which claimed priority back to the ’493 utility patent. The ’723 patent was scheduled to issue on November 5, 2019, and the court scheduled a hearing a couple weeks after that for the motion. On November 5, the ’723 patent issued, and ClearOne filed a declaratory judgment action of noninfringement of the ’723 patent in the Northern District of Illinois. When the hearing occurred, the court permitted Shure to file the amended complaint. ClearOne filed a motion to dismiss all the claims in the District of Delaware action, leading to this decision.

The first basis for dismissal was that the ’493 patent infringement claim and the nonpatent claims were compulsory counterclaims in the 2019 Northern District of Illinois suit. According to Federal Rule of Civil Procedure 13(a), “[a] pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim … arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Failing to raise a compulsory counterclaim in an earlier suit means that the claim is barred from later suits. The test is whether there is a “logical relationship” between the claims that “would involve a substantial duplication of effort and time by the parties and the courts.”

With respect to the nonpatent claims over ClearOne’s statements, the court found that they did not qualify as compulsory counterclaims, meaning that the claims survived dismissal. These claims did not have a sufficient relationship to the 2019 ND IL suit because ClearOne’s statements instead related to the subject matter of the 2017 suit and to the IPR. In essence, Shure was asserting that ClearOne oversold its win on the preliminary injunction in the 2017 suit by telling customers it was final rather than preliminary and that it covered more products and configurations than it really did. The preliminary injunction from the 2017 case was not sufficiently related to the 2019 case. While the IPR involved the same patent as the 2019 suit, it was still a separate proceeding and likewise not sufficiently related to the 2019 case.

The ’493 patent infringement claim survived as well. “[T]his Court and other courts have rejected the position that a party sued for patent infringement must counter-assert its own patent as a compulsory counterclaim, finding that claims involving different patents asserted against different products do not arise out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” The court cited several district court decisions coming to the same conclusion.

ClearOne did not argue that infringement of the newly issued ’723 patent was a compulsory counterclaim, given that the patent had not issued at the time of the 2019 ND IL suit. Instead, ClearOne argued that the ’723 infringement claim should be dismissed in favor of its declaratory judgment suit in Illinois based on the “first-to-file” rule. In general, when two parties file separate suits over the same cause of action, the first-filed suit is favored. But the first-to-file rule has exceptions, two of which Shure contended applied here. The first is the relation-back doctrine, codified in Fed. R. Civ. P. 15(c)(1)(B): “An amendment to a pleading relates back to the date of the original pleading when … the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out … in the original pleading.” The new pleading gets the credit of an earlier pleading’s filing date, thus becoming the first-to-file. Second, a court can choose to overlook the first-to-file rule if the first-filed suit is “anticipatory,” in other words, filed with knowledge that the second-filed suit was imminent.

The court found that the relation-back doctrine applied. In the context of patent infringement, the Federal Circuit has stated that, in determining “whether newly alleged claims, based on separate patents, relate back to the date of the original complaint,” a court should consider “the overlap of parties, the overlap in the accused products, the underlying science and technology, time periods, and any additional factors that might suggest a commonality or lack of commonality between the two sets of claims.” Anza Tech., Inc. v. Mushkin, Inc., 934 F.3d 1359 (Fed. Cir. 2019). All those factors favored relation back: same defendant, same accused product, same allegedly infringing conduct, same technology, and same patent family in that the ’723 patent claimed priority to the ’493 patent.

While the applicability of the relation-back doctrine ensured that the ’723 infringement claim survived, the court went on to decide that the declaratory judgment action was an anticipatory suit, providing a second reason for the ’723 infringement claim to survive. Because of the scheduled hearing date occurring after the issue date, ClearOne knew that infringement claim was coming and was able to file the declaratory judgment on the issue date, but Shure was prevented from filing the infringement claim on the issue date. The DJ suit was thus anticipatory. Whether an anticipatory suit is precluded from the benefit of the first-to-file rule depends not only on whether the suit is anticipatory but also on the convenience of the parties and the courts. Because the ’723 and ’493 patents come from the same family, the convenience factors favored keeping the ’723 infringement claim in the District of Delaware with the ’493 infringement claim, rather than letting the earlier-filed Northern District of Illinois declaratory judgment action continue.

The overall result was that all Shure’s claims survived the motion to dismiss.

Lessons for Practice

This decision offers a couple lessons when managing multiple patent suits. First, how to countersue for infringement is a decision that can be made strategically, rather than one course of action being necessitated by the rules. An accused infringer can choose whether to assert its own patents as counterclaims in the existing suit or as claims in a new, separate suit. The decision can be based on the relative merits of the available jurisdiction, the stories one wants to tell at trial, the possibility of stays, and any other relevant strategic considerations.

Second, later-issued patents in a family have some advantages in being added to an ongoing suit. The fact that the ’723 patent claimed priority to the ’493 patent already in suit helped Shure with respect to the relation-back doctrine, as well as with the convenience factors. The convenience factors would also affect a motion to transfer, not just a motion to dismiss.

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Shure Infringement Claims Against ClearOne Survive Motion to Dismiss Based on Civil Procedure Rules
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In the latest development in extensive litigation between Shure and ClearOne over audio and conferencing equipment, the District of Delaware rejected a motion to dismiss Shure’s claims over multiple civil procedure grounds, including as compulsory counterclaims to an earlier suit and as failing to be the first to file.
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Bejin Bieneman PLC
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