838 F.3d 1283
Fed. Cir.2016Background
- Drone Technologies, Inc. (assignee) sued Parrot, S.A. and Parrot, Inc. for indirect infringement of two patents directed to synchronized motion control of remote-controlled machines (AR.Drone products and related software).
- Parrot produced voluminous materials but withheld on-board source code and some materials for unreleased products; Drone moved to compel under the district court’s Local Patent Rule 3.1.
- The district court ordered Parrot to "produce all source code, specifications, schematics, [and] flow charts" for accused and some non-accused products (July 1 and July 25 orders) and denied Parrot’s requests for additional protections and inspection-only alternatives.
- Parrot refused to produce the on-board source code and sought mandamus; the district court ultimately struck Parrot’s defenses and entered default judgment as a discovery sanction; a jury later awarded damages and fee awards followed.
- On appeal, the Federal Circuit held the district court abused its discretion by (1) issuing the July 1 and July 25 discovery orders inconsistent with the local rule and Rule 26, and (2) imposing a default sanction for failure to comply; the court vacated the discovery orders, default judgment, damages, and fee awards and remanded.
Issues
| Issue | Plaintiff's Argument (Drone) | Defendant's Argument (Parrot) | Held |
|---|---|---|---|
| Standing/inventorship | Drone: assignment from named inventor Lee gives Drone §281 and Article III standing; presumptions suffice. | Parrot: Lee not the true inventor; Ding is the inventor or co-inventor so assignment to Drone is invalid and divests standing. | Affirmed denial of dismissal for lack of standing; accept presumption that named inventor is correct and require inventorship to be raised as an invalidity defense under §102(f) rather than by dismissal. |
| Scope of discovery — source code and non‑accused products | Drone: LPR 3.1 required production of source code/specs/schematics to show operation of accused products. | Parrot: LPR 3.1 requires only documents "sufficient to show" operation; permits inspection; excludes non‑accused products; on‑board code is sensitive and not shown necessary. | Vacated July 1 and July 25 orders as an abuse of discretion for (a) not requiring a showing that Parrot’s initial disclosures were insufficient, (b) ordering production of "all" code rather than "sufficient" materials or inspection, (c) compelling non‑accused products, and (d) failing to address relevance/need under Rule 26. |
| Appropriateness of default sanction under Poulis | Drone: default warranted — Parrot willfully disobeyed clear orders, prejudiced Drone, and lesser sanctions inadequate. | Parrot: refusal was to protect sensitive code, offered inspection, sought clarifications and appellate relief; prejudice not shown; lesser sanctions adequate. | Vacated default judgment: appellate court found errors in district court’s findings on prejudice and alternative sanctions and held the Poulis balancing did not justify the drastic sanction. |
| Remedies on remand | Drone: (implicit) entitlement to proceed and obtain discovery/damages absent Parrot’s continued noncompliance. | Parrot: should be allowed to reassert inventorship invalidity and protect sensitive materials; mandamus previously denied. | Case remanded: Drone retains standing; Parrot may reassert inventorship/§102(f) defense on remand; district court may re-open discovery consistent with local rules, Rule 26, and with consideration of protected treatment for source code and proportionality. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury in fact)
- Roche Molecular Sys. v. Board of Trustees of Leland Stanford Junior Univ., 583 F.3d 832 (Fed. Cir.) (ownership challenges may be raised as standing defenses)
- Acromed Corp. v. Sofamor Danek Group, 253 F.3d 1371 (presumption that named inventors are true inventors)
- Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863 (3d Cir.) (six‑factor test for dismissal/default sanctions)
- Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318 (discovery must be relevant and necessary; mere suspicion insufficient)