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Western District of Texas Sanctions Patent Infringement Defendant for Discovery Abuse and Misconduct

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On April 6, 2021, the Western District of Texas ordered that preliminary injunction relief was appropriate to prevent irreparable harm to the plaintiff due to the defendant’s “discovery abuse and related misconduct.” Performance Chem. Co. v. True Chem. Solutions, LLC, No. 6:21-cv-00222-ADA, Dkt. No. 334 at 1 (W.D. Tex. Apr. 6, 2021) (Albright, J.). Pursuant to its inherent authority, Federal Rule of Civil Procedure 37, and 35 U.S.C. § 283, the Court struck the defendant’s non-infringement defense and invalidity counter-claims, found that the defendant had willfully infringed, entered a permanent injunction against the defendant to prevent it from continuing its infringing activity, and awarded attorneys’ fees to the plaintiff.

The plaintiff had alleged that the defendant infringed the asserted patents by manufacturing and using infringing frac trailers. A key issue in the case was whether the defendant automated the trailers, which would have confirmed infringement of the asserted patents. Accordingly, the Court ordered the defendant to present its trailer for inspection.

When the plaintiff inspected the defendant’s trailers, no automation device was present. Throughout the litigation, the defendant repeatedly testified under oath and represented to the Court that it did not attempt to automate its trailers. The Court later ordered the defendant to produce electronically stored information (“ESI”) in its possession. The plaintiff’s review of the ESI revealed third-party documents (through a subpoena) establishing that the defendant hired the third party to install an automation device in its trailers. One of the documents was an invoice sent to the defendant one month before the discovery hearing in which the Court ordered the defendant to make its trailers available for inspection.

The plaintiff then deposed a subcontractor hired by the third party who confirmed that an automation device had been installed on the defendant’s trailers. This forced the defendant to finally produce the automation device installed by the third party. The defendant provided no explanation as to where the device had been throughout the litigation, why and when it was removed, how it suddenly found the device once the invoice was discovered, or why the defendant repeated under oath that it had never automated its trailers. Consequently, the plaintiff moved for sanctions against the defendant for “bad faith discovery abuse, repeated falsehoods and concealment, and spoliation.” Performance Chem., No. 6:21-cv-00222-ADA, Dkt. No. 305 at 24.

What This Means for You

The Court’s order in Performance Chem. underscores the importance of fully understanding and complying with courts’ discovery orders and parties’ discovery obligations. When misrepresentations or mistakes are made, courts will consider sanctions and will use the full extent of their inherent authority to prevent egregious misconduct and abuse during discovery. In addition, practitioners should take time to explain the relevant scope of discovery in a particular case to their clients and when necessary, inform their clients of potential consequences for not complying with the rules.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.