Free Reply to Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-00617-LTB-BNB

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-B-0617 (BNB) POLYROCK TECHNOLOGIES, LLC, a Colorado limited liability company, Plaintiff, vs. GENERAL STEEL DOMESTIC SALES, LLC, a Colorado limited liability company, d/b/a General Steel Corporation; GENSTONE ENTERPRISES, LLC, a Colorado limited liability company, d/b/a GenStone; JEFF KNIGHT; KEVIN KISSIRE; and CHUCK DEMAREST, Defendants. DEFENDANTS' REPLY TO PLAINTIFF'S OPPOSITION TO CERTAIN DEFENDANT'S MOTION TO DISMISS PURSUANT TO FED.R.CIV.P. 41(b)

Dated July 8, 2005.

Kurt S. Lewis R. Daniel Scheid Lewis Scheid LLC 2300 Fifteenth Street, Suite 320 Denver, CO 80202 (303) 534-5040 David S. Fein David S. Fein, P.C. 2316 W. Main Street Littleton, CO 80120 (303) 854-0234 ATTORNEYS FOR DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC, GENSTONE ENTERPRISES, LLC & JEFF KNIGHT

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Defendants Genstone Enterprises, LLC, General Steel Domestic Sales, LLC, and Jeff Knight (collectively "Defendants" for purposes of this Motion) respectfully submit their response to the Plaintiff's Opposition to Certain Defendants' Motion to Dismiss pursuant to Rule 41(b) of the Fed.R.Civ.P 41(b). I. POLYROCK'S OPPOSITION FAILS TO COUNTER DEFENDANTS' EVIDENCE OF PREJUDICE Defendant Polyrock's Opposition fails on the key issue before this Court: refuting the prejudice to Defendants due to the Plaintiff's delay in prosecuting the case for more than one year from filing the complaint. Plaintiff Polyrock now shouts that its intellectual property is being infringed (emphasizing a patent for which there is not claim), but neglects to consider and justify its delay given the critical fact that patent and trademark infringement claims are continuing damage claims. Contrary to Plaintiff's assertion that Defendants have suffered no prejudice, Defendants were prejudiced every day, every hour, every minute that the Plaintiff delayed in notifying the Defendants that Plaintiff had filed patent infringement and trade secret infringement claims. If notified of a Federal Court Lawsuit, Defendants could have stopped or corrected an activity that allegedly infringed. At the very least Defendants could have conducted an in depth investigation as to the allegations. Plaintiff's arguments treat their delay as if it were car accident where the event has occurred, the damage is based on to the events of the accident and delay does not increase the stakes of the litigants. Here the delay significantly increased the stakes and caused prejudice to Defendants Defendants have put forward evidence that demonstrates that prejudice has occurred to the Defendants as a result of the delay of the Plaintiff and the nature of the asserted claims. See 2

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Affidavit of Jeff Knight filed as Exhibit 1 to Defendant's Motion to Dismiss. A representative of Plaintiff Fairfield & Woods, sent a March 23, 2004 letter to Jeffrey Knight of General Steel Corporation and the letter was titled "Patent Infringement Cease and Desist." See Exhibit A to Affidavit of Jeffrey Knight. Ironically Patent No. 6,607,683 asserted in that letter was dropped by Plaintiff as a basis for a claim. David Fein responding on behalf of General Steel on March 29, 2004 stated that he had reviewed a copy of the patent and that there was no infringement of any intellectual property rights of Polyrock. His letter invited statements in response to his refutation. None were received. After sending its cease and desist letter, Plaintiff Polyrock filed this lawsuit and did nothing to prosecute the matter for a time period in excess of a year. Counsel for Plaintiff had to know of the consequences of a failure to prosecute and later the Court notified them of the risk of dismissal. During that time period: Polyrock did not write any further letters to the Defendants; did not notify Plaintiff of the lawsuit; did not give any notice in any way that they disputed David Fein's March 29, 2004 letter which said that there was no infringement; and did not comply with the Federal Rules of Civil Procedure which required service. This is a basis for dismissal pursant to Rule 41(b). See Olsen v. Mapes 333 F.3d 1199, 1204 (10th Cir. 2003). Plaintiff deceived the Defendants. When a party sends and desist letter and receives a response that denies it in its entirety the party sending the cease and desist has an implied evidentiary duty to refute the denial or be deemed to accept it. The Motion to Dismiss is based upon the prejudice to Defendants caused by the delay of one year in prosecuting this matter. Now the Plaintiff has been served affidavits establishing the prejudice to the Defendants as a result of Plaintiff's delay and again has not responded. To avoid

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the argument, Plaintiff points to itself and says we didn't have enough money to prosecute the case. However, the prejudice to Defendants arises from Plaintiff's failure to give notice to the Defendants of the existence of the lawsuit and that the Plaintiff disagreed with the Defendants denial of Plaintiff's claims of infringement. Notice could have been given with the assistance of thirty-seven cents on an envelope containing a letter, by serving the case or by giving notice that the papers had been filed. None of those events occurred and it is obvious that the Plaintiff was attempting to deceive the Defendants in this matter into believing that Plaintiff had determined it did not have an infringement claim against Defendants. II. PLAINIFF HAS NOT SHOWN GOOD CAUSE FOR ITS FAILURE TO SERVE DEFENDANTS. The majority of Plaintiff's Brief in Opposition to the Motion to Dismiss deals with the issue of Rule 4(m) and the concept that the dismissal pursuant to 4(m) would be without prejudice. If the Court does not dismiss this case with prejudice pursuant to Rule 41(b) Defendants seek its dismissal without prejudice pursuant to Rule 4(m) because certain of the claims may be barred by the statute of limitations as a result of that dismissal and any pleading refiled by new counsel would be subject to Rule 11 sanctions. The Plaintiff has not shown good cause for their failure to serve the lawsuit in accordance with Rule 4(m). The record shows that the Plaintiff ignored Rule 4(m); Plaintiff never sought any extension to accomplish service and only served it now due to the actions of the Court. The Plaintiff who seeks to rely on the good cause provision must show meticulous efforts to comply with the rule. Kirkland v. Kirkland 86 F.3d 172, 176 (10th Cir. 1996). Plaintiff cannot make that showing.

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Surely, Plaintiff had the resources to at least complete service of process to three in-state Defendants and the absence of any other explanation as to why service was not achieved until one year after the filing of the original complaint demonstrates a lack of good cause. III. THE DECEPTIVE ACTIONS OF THE PLAINTIFFS SUPPORTS A DISMISSAL OF THE CLAIMS The deceptive nature of the Plaintiff's litigation practice in this case warrants dismissal with prejudice. First, the Plaintiff sent a cease and desist letter saying that there is potentially patent infringement, but does not respond to Defendants unequivocal denial. Plaintiff attempts to justify its failure to prosecute the case and failure to serve the Defendants by a claim that it was financially strapped. This claim of financial hardship includes the argument that this is a case involving highly complex patent related technology. In fact, prior to service, the patent claim, the focus of the March 23, 2004 cease and desist letter and the focus of the original complaint, was dropped by the Plaintiff. Now the focus of the Plaintiff's claims is a trade secret claim which the Plaintiff has not enforced or protected over the course of several years and which means Plaintiff has abandoned it. Notice was easy to give. A response to the letter from Defendants counsel would have been easy to write, for instance, "We disagree with your claim in your letter that you don't infringe upon our patents and technology. We have filed a case in federal court asserting patent infringement and trade secret infringement. Please stop or change what you are doing." Sincerely, Plaintiff. III. CONCLUSION

Since the Plaintiff has failed to in any way to refute the prejudice shown by the Defendants in their Motion to Dismiss, this case should be dismissed pursuant to Rule 41(b). If 5

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the Court does not have sufficient evidence to make a ruling dismissing the case, Defendants request leave to take the Rule 30(b)(b) of the Polyrock and supplement its Motion to Dismiss with relevant evidence from that deposition. In the event that the Court needs additional information concerning the actions of the Plaintiff including its delay the Defendants request leave to conduct the Rule 30(b)(6) deposition of Polyrock and bring any relevant information to the Court in connection with this Motion to Dismiss.

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Dated July 8, 2005.

__________/s/Kurt Lewis________ Kurt S. Lewis R. Daniel Scheid Lewis Scheid LLC 2300 Fifteenth Street, Suite 320 Denver, CO 80202 (303) 534-5040 David S. Fein David S. Fein, P.C. 2316 W. Main Street Littleton, CO 80120 (303) 854-0234 ATTORNEYS FOR DEFENDANTS GENERAL STEEL DOMESTIC SALES, LLC GENSTONE ENTERPRISES, LLC & JEFF KNIGHT

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CERTIFICATE OF SERVICE I hereby certify that on this 8th day of July, 2005, I electronically filed the foregoing with the Clerk of court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: John A. DeSisto E-mail: [email protected] Susan M. Hargleroad E-mail: [email protected] /s/Kurt Lewis______________

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