United States District Court, D. Connecticut
RULING ON DEFENDANTS' MOTION TO DISMISS AND
PLAINTIFFS' MOTION TO RECONSIDER
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE.
October 14, 2011, Plaintiffs LEGO A/S and LEGO Systems, Inc.
(collectively "Lego" or Plaintiffs) initiated this
action, alleging infringement of two copyrights filed in
1994, VA 655-104 and VA 655-230 (the "Minifigure
Copyrights"). The Complaint, as amended on August 30,
2012, alleges that Defendants Best-Lock Construction Toys,
Inc. and Best-Lock Limited, Hong Kong (collectively
"Best-Lock") infringed the Minifigure Copyrights
through its actions producing and selling similar minifigures
in the United States. Specifically, Lego asserts claims for
(1) infringement of the Minifigure Copyrights under 17 U.S.C.
§ 101, et seq.; (2) defamation; and (3)
violation of the Connecticut Unfair Trade Practices Act
("CUPTA"), Conn. Gen. Stat. § 42-110a, et
seq. Second Amended Complaint (Doc. 84). Lego seeks to
enjoin and restrain Best-Lock from manufacturing or selling
its minifigures, and asserts claims for its "actual
damages" caused by the alleged infringement and for the
award of Best-Lock's profits generated thereby.
Id. at 10-11.
part, Best-Lock has asserted several affirmative defenses and
Counterclaims claiming, inter alia, that (1) the
Minifigure Copyrights are invalid and unenforceable; (2)
Best-Lock is entitled to a declaratory judgment that the sale
of Best-Lock's minifigures does not infringe on the
Minifigure Copyrights; and (3) Best-Lock is entitled to an
injunction requiring Lego to consent to the importation and
delivery of Best-Lock's goods in the United States.
Best-Lock Answer (Doc. 86). Best-Lock also added Best-Lock
Group Limited as a Counterclaim Plaintiff. Id.
Court has previously decided several motions and disputes
between the parties. Familiarity with those earlier rulings
is assumed. The Court denied motions for preliminary and
permanent injunctions sought by both parties, without
prejudice to renewal after discovery and after assessing the
need for a further evidentiary hearing. 874 F.Supp.2d 75 (D.
Conn. 2012) ("Lego I"). The Court
subsequently granted Lego's motion to join Best-Lock Hong
Kong as a Defendant, but denied Lego's motion to add
Torsten Geller as a Defendant. 886 F.Supp.2d 65 (D. Conn.
2012) ("Lego II"). Thereafter, the Court
settled a dispute between the parties regarding the terms of
a Protective Order governing the action, 2012 WL 6156129 (D.
Conn. Dec. 11, 2012) ("Lego III"), a
ruling the Court subsequently declined to reconsider, 2013 WL
1611462 (D. Conn. April 15, 2013) ("Lego
Court orders had considered and adjudicated the proper
conduct of mutual pretrial discovery, which gave every
indication of being complex in nature and global in scope. To
all outward appearances, the discovery aspect of the case had
been going on apace when, on March 16, 2016, Best-Lock
changed the litigation focus dramatically by filing pursuant
to Fed.R.Civ.P. 41(b) a Motion to Dismiss Lego's Second
Amended Complaint (Doc. 84), based on Lego's asserted
failure to prosecute the action. The parties have fully
briefed that Motion. Best-Lock filed a Memorandum of Law in
Support of the Motion ("Best-Lock Dismiss Br.") on
March 16, 2016 accompanied by an Affidavit of Lawrence S.
Rosenthal ("Rosenthal Dismiss Aff.") with
twenty-six exhibits attached and an affidavit of Torsten
Geller ("Geller Dismiss Aff.") with two additional
exhibits attached. Doc. 128. Lego filed a Memorandum in
Opposition to the Motion ("Lego Dismiss Br.")
accompanied by an Affidavit of Elizabeth A. Alquist
("Alquist Dismiss Aff.") with twenty-three exhibits
attached. Doc. 129. Best-Lock thereafter filed a Reply
Memorandum in Support of the Motion ("Best-Lock Reply
Br.") and additional exhibits. Docs. 133-34.
this Motion to Dismiss by Best-Lock was pending, Lego filed a
Motion for Partial Summary Judgment as to liability for its
infringement claims under Count One of its Second Amended
Complaint, as well as on several of Best-Lock's
affirmative defenses and Counterclaims. Docs. 130-32.
Best-Lock then filed an Emergency Motion to Deny, Dismiss or
Stay Lego's Motion for Partial Summary Judgment
("Emergency Motion") with a supporting memorandum
of law ("Emergency Motion Br.") and affidavit in
support of its Emergency Motion ("Rosenthal Rule 56(d)
Aff."), arguing that Lego's Motion for Partial
Summary Judgment should be denied or stayed in light of the
fact that Best-Lock's Motion to Dismiss was pending. Doc.
135. Best-Lock also purported to make that Emergency Motion
pursuant to Rule 56(d), which authorizes the district court
to issue an "appropriate order" when the nonmovant
for summary "cannot present facts essential to justify
its opposition." Fed.R.Civ.P. 56(d).
Court initially granted Best-Lock's Emergency Motion,
denying Lego's Motion for Summary Judgment without
prejudice to refiling once the Motion to Dismiss was
resolved. Doc. 136. Lego sought reconsideration of the
Court's Doc. 136 Order ("Lego Reconsider Br.").
Doc. 137. As a result, the Court vacated its Doc. 136 Order
and stayed the requirement for Best-Lock to file an
opposition to partial summary judgment in favor of Lego until
the Court decided Lego's Motion to Reconsider. Doc. 139.
Best-Lock then filed an opposition to Lego's Motion to
Reconsider ("Best-Lock Reconsider Br."). Doc. 141.
Lego filed a reply brief in support of its Motion to
reconsider ("Lego Reply Br."). Doc. 142.
this welter of motion activity, two motions presently ripe
for decision emerge: Best-Lock's Motion to Dismiss
Lego's Second Amended Complaint; and Lego's Motion
for Reconsideration of the Court's Order staying
Lego's Motion for Partial Summary Judgment until
Best-Lock's Motion to Dismiss has been adjudicated. This
Ruling resolves those two pending motions.
Background and Procedural History
with a background and procedural history that is applicable
to both motions.
first filed a Complaint in this action against Best-Lock on
October 14, 2011. Doc. 1. Lego has manufactured toys called
"minifigures" since 1978. These minifigures depict
people, each with a cylindrical head, cylindrical neck, a
trapezoidal torso, bent arms, hooked hands and square
block-like feet. Each is designed so that the user can
disassemble them and attach them to other figures and to
studded blocks. All the minifigures have the same shape but
vary in the two-dimensional representations of facial
features and clothing styles on the torso and head
respectively. In 1994 Lego registered its Minifigure
Copyrights with the United States Copyright Office.
has been selling its own minifigures in the United States
since 1998. These minifigures can also be attached to studded
blocks and are the same size as Lego's, with cylindrical
heads, cylindrical necks, trapezoidal torsos, bent arms,
hooked hands and square block-like feet. The minifigures
differ in color and also in the two-dimensional
representations of facial features and clothing. Other
companies such as Hasbro, Inc. and Mega Brands, Inc. Create
and sell similar minifigures.
about July 14, 2011, the U.S. Customs and Border Protection
Service ("CBP"), at the behest of Lego, carried out
the first of a series of seizures of shipments from abroad of
Best-Lock's toy blocks and minifigures. The CBP,
administratively echoing Lego's principal allegation in
the case, asserted that such a seizure occurred because
Best-Lock's minifigures infringed Lego's '104
copyright. Best-Lock petitioned to have CBP release the
shipments and cease the seizures, to no avail.
Best-Lock's initial efforts to liberate its minifigures
did not succeed.
filed an Answer to Lego's initial Complaint on January 5,
2012 and asserted certain counterclaims against Plaintiffs.
Doc. 25. Best-Lock amended this Answer and
Counterclaims on February 6, 2012 and moved for a Preliminary
Injunction against Lego. Docs. 35, 37. Lego filed an
Amended Complaint on February 13, 2012, Doc. 40, and sought
to join two additional Defendants to this action, Docs.
44-45. Best-Lock twice sought extensions for its time to
respond to the Amended Complaint, Docs. 42, 47, both of which
this Court granted, Docs. 46, 49 in February 2012. The
parties both sought extensions to respond to discovery
requests in March 2012. Docs. 56-57.
parties fully briefed Best-Lock's motion for a
Preliminary Injunction. Docs. 37, 43, 52. The Court held a
hearing on Best-Lock's motion, as well as on Lego's
motion to join two additional Defendants on March 8, 2012.
Doc. 60. Best-Lock subsequently filed a partial opposition to
Lego's motion to join additional Defendants and Lego
filed a reply brief in support. Docs. 63, 71. The Court
requested supplemental briefing related to Best-Lock's
motion for a Preliminary Injunction, Doc. 74, which the
parties filed on May 11, 2012, Docs. 75-76. The Court also
granted Lego an extension to respond to Best-Lock's
discovery requests on May 15, 2012. Doc. 78.
11, 2012, the Court denied Best-Lock's motion for a
Preliminary Injunction, 874 F.Supp.2d 75 (Lego I).
On August 20, 2012, the Court granted in part and denied in
part Lego's motion to join two additional Defendants, 886
F.Supp.2d 65 (Lego II). Thereafter, Lego filed a
corrected Second Amended Complaint, Doc. 84, which Best-Lock
filed an Answer and Counterclaims to on September 13, 2012,
Doc. 86. Lego filed an Answer to these Counterclaims on
October 4, 2012. Doc. 92. The parties each moved for a
Protective Order in the fall of 2012. Docs. 90-91, 93-94. The
Court granted in part and denied in part each of these
motions in December 2012, 2012 WL 6156129 (Lego
III). Lego requested and was granted more time to file
for reconsideration of that Ruling. Docs. 100-101. In April
2013, the Court denied reconsideration of its Ruling on the
Protective Order, 2013 WL 1611462. In May 2013, the
Protective Order issued in this action. Doc. 110.
20, 2014, the Court directed counsel to send simultaneous
letters on June 12, 2014 updating the Court on the status of
the case and recommending how the case should proceed. Doc.
113. In that Order, the Court recognized that the case had
become "somewhat like a sleeping volcano, "
id. at 1, and inquired as to the impact of the
Supreme Court's decision in Petrella v. Metro-Goldwyn
Mayer, Inc., 134 S.Ct. 1962 (2014) on the parties'
discovery, Doc. 113 at 3. Petrella, which resolved a
conflict between circuits, held that laches cannot be invoked
to preclude adjudication of a claim for damages for copyright
infringement brought within the three-year window of the
applicable statute of limitations for such claims.
Id. That holding directly impacted the case at bar,
because this Court had previously concluded that laches did
apply in the copyright context, and that more discovery
between the parties on laches-related issues was necessary to
a decision on a preliminary or permanent injunction. The
parties submitted letter briefs to the Court, and the Court
held a telephonic conference to further discuss the pending
discovery issues. Docs. 115-117. At the conference, the
parties disputed whether discovery should be bifurcated, with
Best-Lock seeking to bifurcate discovery so as to limit it
initially to its defense of equitable estoppel. The Court
reserved a decision on bifurcation.
March 23, 2015, the Court directed that counsel for each
party file letters detailing the status of the case and
attend a telephonic status conference. Doc. 118. The Court
held another telephonic conference on April 9, 2015, and on
April 15, 2015 issued a ruling directing that discovery would
not be bifurcated. Doc. 120. The Court directed counsel to
file further status reports on October 15, 2015. Id.
at 3. The parties agreed after this Ruling that prior
discovery requests would be deemed abandoned and the only
operative requests going forward would be newly propounded
requests. Lego Dismiss Ex. J. Each party subsequently moved
for extensions of time to respond to certain discovery
requests, which the Court granted. Docs. 123-24, 126-27. When
the parties filed their letters updating the Court on the
status of the case, it was clear that the parties were
continuing to attempt to resolve ongoing discovery disputes.
See, e.g., Lego Dismiss Ex. D. This was
confirmed by the extensive correspondence between the parties
filed with the Court related to this motion. That
correspondence extended from September 14, 2015 through
December 23, 2015. Lego Dismiss Exs. K-V.
March 16, 2016, Best-Lock filed the instant Motion to
Dismiss, based on Lego's asserted failure to prosecute.
Doc. 128. On April 13, 2016, before Best-Lock's Motion to
Dismiss was fully briefed and while it was still pending,
Lego filed its Motion for Partial Summary Judgment, Docs.
130-32. As noted supra, the Court initially granted
Best-Lock's Emergency Motion to deny this Motion for
Partial Summary Judgment without prejudice to refiling for
good cause shown under Federal Rule of Civil Procedure 56(d).
Lego has sought reconsideration of this decision. That is the
second of the two pending motions resolved by this Ruling.
Court now turns to consideration of Best-Lock's Motion to
Dismiss, and then to Lego's Motion to Reconsider.
Motion to Dismiss for Failure to Prosecute
Standard of Review
Rule of Civil Procedure 41(b) provides that "[i]f the
plaintiff fails to prosecute or to comply with these rules or
a court order, a defendant may move to dismiss the action or
any claim against it." The Supreme Court perceives the
value of this rule to be that it prevents "undue
delays" and "congestion in the calendars of the
District Courts." Link v. Wabash R.R. Co., 370
U.S. 626, 629-30 (1962). The authority of a district court to
dismiss an action on one or another of these grounds
"cannot seriously be doubted" and can be done
sua sponte by a district judge. Id. at
630-31. Pursuant to the law of this Circuit, five factors
must be weighed by this Court in considering a Rule 41(b)
dismissal: "(1) the duration of the plaintiff's
failure to comply with the court order, (2) whether plaintiff
was on notice that failure to comply would result in
dismissal, (3) whether the defendants are likely to be
prejudiced by further delay in the proceedings, (4) a
balancing of the court's interest in managing its docket
with the plaintiff's interest in receiving a fair chance
to be heard, and (5) whether the judge has adequately
considered a sanction less drastic than dismissal."
Baptiste v. Sommers, 768 F.3d 212, 216 (2d Cir.
2014) (quoting Lucas v. Miles, 84 F.3d 532, 535 (2d
Cir. 1996)) (internal quotation marks omitted). "No
single factor is generally dispositive." Id.
(citing Nita v. Conn. Dep't of Envtl. Prot., 16
F.3d 482, 485 (2d Cir. 1994)).
dismissals under Rule 41(b) are reviewed for abuse of
discretion, the Second Circuit has stressed that it is
"'the harshest of sanctions'" and
"insist[ed] that dismissal 'be
proceeded by particular prerequisites, '
including 'notice of the sanctionable conduct, the
standard by which it will be assessed, and an opportunity to
be heard.'" Id. at 217 (quoting
Mitchell v. Lyons Prof'l Servs., Inc., 708 F.3d
463, 467 (2d Cir. 2013)). Indeed, even where the court issues
a notice of possible dismissal and a plaintiff does not
comply with the court's directive, "the court must
still make a finding of 'willfulness, bad faith, or
reasonably serious fault' by evaluating those
criteria." Id. (quoting Mitchell, 708
F.3d at 467). Moreover, the Second Circuit has instructed
that dismissal "should be used in only extreme
situations." Id. (quoting Mitchell,
708 F.3d at 467) (internal quotation marks omitted).
preliminary matter, the Court notes that in their briefs on
this motion, counsel have disputed with an asperity bordering
on ad hominem the procedural history of this
litigation, numerous facts related to Lego's and
Best-Lock's alleged delay and failures, and discovery
issues that have apparently been festering in this litigation
for years. Indeed, those latter disputes run through the
present briefs to such an extent Best-Lock felt it necessary
to remind the Court at the outset of its motion to dismiss
that "[t]o be clear, this motion is not a motion for an
Order related to discovery." Best-Lock Dismiss Br. at 2.
distinction is worth drawing, because a motion to dismiss a
complaint for failure to prosecute is not the appropriate
vehicle to litigate discovery issues encountered by either
side. To the extent the disputes are relevant to any alleged
delay, the Court will take that into account. Otherwise, both
parties were, and are still, free to bring motions related to
these discovery failures before the Court. Because they have
chosen not to do so at this point, the Court has no occasion
to, and does not determine, what discovery should or should
not have happened. The Court will now analyze each of the
factors recited in Baptiste to determine whether a
Rule 41(b) dismissal should be granted.
Duration of Delay
first factor to be examined breaks down into two parts: (1)
whether the failures to prosecute were those of the
plaintiff, and (2) whether those failures were of significant
duration." U.S. ex rel. Drake v. Norden
Systems, 375 F.3d 248, 255 (2d Cir. 2004) (citation
motion asserting a failure to prosecute requires a two-part
inquiry: (1) whether the failures to move the case forward
were ascribable to the party plaintiff, here Lego; and (2)
whether those failures were of a duration sufficient to
warrant the ultimate sanction of dismissal. See Id.
In complex and strenuously contested cases, such as this one
pitting Lego against Best-Lock and vice versa, it is
not uncommon for the litigation to progress in fits and
starts over dams and obstructions, rather than flowing as a
smooth and steady stream. The trial judge's function in
Rule 41(b) practice is to ascribe responsibility for delay to
one party, or to the other, or to both, or to neither.
"The question we must ask with respect to duration is
simply whether or not the delay was caused by plaintiff's
side as a whole." Id.
were several periods of inactivity throughout this
time-consuming litigation that warrant discussion and further
analysis. The first interval, when the battle fleets were
drawn up but appeared on the surface to be becalmed, occurred
from the Court's entry of the Protective Order on May 13,
2013 until May 20, 2014 when the Court ordered the parties to
update it on the status of the litigation. Docs. 110,
Thus, the delay was for just over a year. Notably, neither
the Court nor the Clerk warned Lego that failing to continue
to prosecute the case at that juncture could lead to
dismissal of the case. Instead, in its May 20, 2014 order the
Court sought only an update on the status of the case and to
assist in moving the case along, in light of the recent
Supreme Court decision in Petrella. Doc. 113.
point, both parties represented that they had been engaging
in settlement negotiations, which according to Lego were
taking place on a global scale. Lego Dismiss Ex. A at 1 (June
12, 2014 letter from Best-Lock stating "[t]he parties
are actively pursuing settlement"); Lego Dismiss Ex. B
at 1 (June 12, 2014 letter form Lego stating "[s]ince
this Court's July 11, 2012 Ruling on defendant's
Motion for Preliminary Injunction [Doc. 79], the parties have
engaged in extensive global settlement negotiations lead by
counsel for the parties in Germany"). The Court
recognized in its June 17, 2014 Order, Doc. 115, that the
parties had stated the settlement negotiations had occurred
"with differing degrees of emphasis." Id.
at 1. Best-Lock emphasizes that it had made the settlement
offer to Lego and Lego had never even responded. Best-Lock
Dismiss Br. at 11; Best-Lock Reply Br. at 5. Best-Lock,
therefore, faults Lego for this entire period of delay, a
charge Lego vehemently denies. Lego Dismiss Br. at 3-5. In
any event, although this period of delay is ...