Free Response in Opposition to Motion - District Court of Arizona - Arizona


File Size: 70.3 kB
Pages: 15
Date: January 30, 2006
File Format: PDF
State: Arizona
Category: District Court of Arizona
Author: unknown
Word Count: 5,002 Words, 30,769 Characters
Page Size: Letter (8 1/2" x 11")
URL

https://www.findforms.com/pdf_files/azd/43321/99.pdf

Download Response in Opposition to Motion - District Court of Arizona ( 70.3 kB)


Preview Response in Opposition to Motion - District Court of Arizona
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Sid Leach (#019519) Andrew F. Halaby (#017251) Monica A. Limón-Wynn (#019174) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6372 Attorneys for Plaintiff Hypercom Corporation [email protected] [email protected] [email protected] IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, vs. Omron Corporation, Defendant. No. CV 04-0400 PHX PGR HYPERCOM CORPORATION'S OPPOSITION TO OMRON'S MOTION TO STRIKE EVIDENCE OF COMPROMISE

Omron Corporation ("Omron") has moved this Court to strike certain exhibits in Hypercom Corporation's Opposition to Omron's Motion for Summary Judgment on grounds that the evidence is inadmissible under Rule 408 of the Federal Rules of Evidence. Rule 408 does not bar the introduction of this relevant evidence for the purposes for which it was offered. Evidentiary issues are addressed to the sound discretion of the Court. E.g., Josephs v. Pacific Bell, No. 03-56412, 2005 U.S. App. LEXIS 29737, at *23 (9th Cir. Dec. 27, 2005) ("We review `evidentiary rulings for abuse of discretion and will not reverse absent some prejudice.'"), quoting from Cassino v. Reichhold Chemical, Inc., 817 F.2d 1338, 1342 (9th Cir. 1987), cert. denied, 484 U.S. 1047 (1988). This Court should exercise its discretion and deny Omron's motion to strike. I. Factual Background This case involves a limited liability company with no assets, i.e., Verve L.L.C., that was created by a Texas attorney as a facade for filing patent infringement lawsuits.

Case 2:04-cv-00400-PGR

Document 99

Filed 01/30/2006

Page 1 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Instead of representing the patent owner in a contingency case, the Texas attorney would have the patents "assigned" to his shell corporation, and then his law firm would purport to represent Verve and file the patent infringement lawsuits in the name of Verve. The first lawsuit filed against Hypercom based upon the Omron patents was in the U.S. District Court for the Eastern District of Michigan, captioned Verve L.L.C. vs. VeriFone, Inc., Lipman USA, Inc. and Hypercom Corp., Civil Action No. 03-73481. Raymond Galasso, the Texas attorney who created Verve, is the managing member of Verve, and was the sole owner of Verve until recently, appeared in that case as Verve's counsel. Galasso's law firm, in which he is a named partner and the head of the firm's intellectual property law practice, has appeared as Verve's counsel in every case filed against Hypercom. In this case, Omron had no good faith basis for accusing Hypercom Corporation ("Hypercom") of infringement of any Omron patents. Omron has admitted that it still has no good faith basis for believing that Hypercom infringed any of its patents. Doc. #85, Exhibit 23, Nakano depo., at 161-62. Under the constraints of Rule 11, Fed.R.Civ.P., Omron could not have legally filed any patent infringement lawsuits against Hypercom. However, by having the patent infringement lawsuits filed in that name of a shell corporation created by the attorney who filed the suits, Omron contends that it has effectively evaded its obligations under Rule 11 and has no liability for the abuse of process that took place using Omron's patents. In the three memoranda that Omron's U.S. representative sent back to Japan in order to obtain approval to have Verve file suit against Hypercom on Omron's patents, Omron's representative specifically emphasized that Omron would have no risk if Verve lost the lawsuits. Doc. #85, Exhibits 4, 5 & 8 ("In case of losing suit, as [Omron] is not a party of the suit, it has no risk...".). Omron pretended to look the other way so it could claim that it did not know what Verve was doing. Exhibit 23, Nakano depo., at 148. Omron was aware of Hypercom's point-of-sale ("POS") terminals. Omron had approached Hypercom many years ago with a proposal of cooperation between Hypercom
Case 2:04-cv-00400-PGR 2 Document -99Filed 01/30/2006 Page 2 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

and Omron for the manufacture and design of POS terminals. Doc. #85, Exhibit 18, at 3.1 Omron purchased the design for a POS terminal from Hypercom. Id. Omron and Hypercom worked together with Omron manufacturing POS terminals using Hypercom electronics. Id. All of the Hypercom products accused of patent infringement in the cases filed by Verve are POS terminals. Indeed, that is all that Hypercom makes. Omron filed a motion for summary judgment in this case prior to the case management conference and prior to the entry of a scheduling order for discovery on the merits. Doc. #72. In the present motion, Omron seeks to use Rule 408, Fed.R.Evid., as a basis for excluding evidence offered in opposition to Omron's motion for summary judgment (1) to show that Omron had control over Verve and the baseless patent infringement lawsuits filed against Hypercom by Verve; (2) to show that Omron had notice and was aware that the patent infringement lawsuits were baseless; (3) to show that Omron knew that Verve was committing a tort; (4) as evidence of the relationship between Omron and Verve; and (5) to attack the credibility of Omron's witness. II. Rule 408 Does Not Require the Exclusion of Evidence Offered For Another Purpose Rule 408 by its express terms does not render evidence inadmissible for all purposes simply because the evidence was presented during settlement negotiations.

18 Instead, Rule 408 provides: 19 20 21 22 23 24 25 26 27 28 Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. Rule 408, Fed. R. Evid. (emphasis added). The exhibits offered by Hypercom Corporation ("Hypercom") are admissible under 1 Omron has challenged the admissibility of Exhibit 18 under Rule 408, Fed.R.Evid., but has waived any objection based upon hearsay.
Case 2:04-cv-00400-PGR 3 Document -99Filed 01/30/2006 Page 3 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Rule 408 because the evidence is being offered for another purpose or is otherwise discoverable. The third sentence of Rule 408 is intended to insure that relevant evidence is not immunized from use at trial merely because the information was presented during settlement discussions. See S. Rep. No. 93-1277, 93rd Cong., 2d Sess. 10 (1974). Rule 408 specifically provides an exception for evidence used to prove a fact in issue other than the claim's validity or amount. Brocklesby v. United States, 767 F.2d 1288, 1292 (9th Cir. 1985) (evidence of settlement negotiations was admitted to show the relationship of parties and to attack credibility of witnesses), cert. denied, 474 U.S. 1106 (1986); Hennepin County v. A.F.G. Industries, Inc., 726 F.2d 149, 153 (8th Cir. 1984). III. The Hypercom Exhibits 24 and 30 Are Admissible as Evidence of Control and as Evidence of the Relationship Between Omron and Verve a. Exhibit 24 ­ Deposition of Douglas Reich Omron is requesting this Court to strike portions of the Deposition of Douglas Reich taken by Omron's counsel in this action on March 23, 2005 ("Reich Deposition"). Specifically, Omron seeks to strike those portions of the Reich Deposition offered to show Omron's control over Verve and the lawsuits brought by Verve against Hypercom. For example, Mr. Reich testified in response to a question from Omron's lawyer: Q Okay. Were there conversations then that Hypercom had with attorneys for Omron or representatives of Omron that led you to believe that Omron had the ability to terminate these lawsuits against Hypercom? A Yes. Exhibit 24 of Hypercom's Response, Reich depo, at 24 (emphasis added). A similar exchange appears later in the Reich Deposition: Q Now, these are conversations that you were involved with Mr. Nakano and Mr. Kerner; correct? A That's correct. Q Okay. What did Omron say in response? A Omron indicated that they had the ability to make these actions go away.
Case 2:04-cv-00400-PGR 4 Document -99Filed 01/30/2006 Page 4 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

That was implicit that they had some control over Verve such that they would be able to facilitate a resolution of the various patent litigation matters. Exhibit 24 of Hypercom's Response, Reich depo, at 32-33 (emphasis added). Rule 408 does not support the exclusion of evidence offered for the purpose of showing that Omron had the power to control Verve. Brocklesby v. United States, 767 F.2d 1288, 1292 (9th Cir. 1985) (evidence of settlement negotiations was admitted to show the non-adversarial relationship of certain parties), cert. denied, 474 U.S. 1106 (1986). Moreover, in the case of Exhibit 24, the testimony that Omron seeks to exclude was elicited by questions from Omron's attorney. Omron cannot exclude the testimony after Omron specifically questioned the witness about the conversations that took place at the September 2004 meeting. Omron did not need discovery of the conversations that took place between Omron and Hypercom at the meeting, because Omron was there. Omron opened the door, and cannot now complain that testimony in response to questions from Omron's counsel was inadmissible. If the testimony was not admissible, then it was not discoverable, because we do not see how the testimony could have been reasonably calculated to lead to the discovery of admissible evidence under Omron's view of the rules of evidence. Omron cannot have it both ways, i.e., insist that the testimony is otherwise discoverable, and then claim that the testimony is inadmissible. b. Exhibit 30 ­ Declaration of Douglas Reich Omron is also requesting this Court to strike the entire Declaration of Douglas Reich filed in the ITC Action ("Reich Declaration"). The Reich Declaration is offered as evidence that Omron had the ability to terminate all of the lawsuits brought by Verve against Hypercom. The following statement is offered as evidence of Omron's control over Verve and the pending lawsuits: 4. During the course of the meeting, Omron's counsel, Herbert Kerner, assured the Hypercom representatives, including me, that Omron could settle all of the patent infringement claims against Hypercom, including
Case 2:04-cv-00400-PGR 5 Document -99Filed 01/30/2006 Page 5 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

those asserted against Hypercom by Verve. He stated in words or substance that Omron could settle on behalf of Verve and could make various lawsuits filed by Verve "go away." I understood this to mean that Omron exercised some control over Verve's patent enforcement activities. Exhibit 30 to Hypercom's Response, Reich Decl. ¶ 4. The Reich Declaration (Exhibit 30) is admissible for the same reasons that the Reich Deposition (Exhibit 24) is admissible. Hypercom Exhibits 24 and 30 are not being offered to "prove the liability for or invalidity of" the patent infringement claims that were discussed during the September 2004 meeting, and therefore do not fall within the scope of Rule 408. To the contrary, Hypercom Exhibits 23 and 30 are being presented to show that Omron had the ability to terminate the baseless lawsuits against Hypercom by virtue of its ability to exercise some control over Verve. Brocklesby v. United States, 767 F.2d 1288, 1292 (9th Cir. 1985) (evidence of settlement negotiations was admitted to show the relationship of certain parties), cert. denied, 474 U.S. 1106 (1986); Hennepin County v. A.F.G. Industries, Inc., 726 F.2d 149, 153 (8th Cir. 1984). In the case of Prudential Ins. Co. of America v. Curt Bullock Builders, Inc., 626 F. Supp 159 (N.D. Ill. 1985), the court admitted evidence in the face of a Rule 408 challenge, stating: In the case at bar, the portions of the affidavits which refer to conduct and statements at the various meetings in which the parties attempted to resolve the dispute are offered to show the relation between Prudential and the bank, not to dispute the claim. Id. at 165 (emphasis added). Similarly, in the present case, the evidence is admissible to show the relationship between Omron and Verve. IV.Hypercom Exhibits 18 and 23 Are Admissible as Evidence That Omron Had Notice That the Patent Infringement Claims Against Hypercom Were Baseless And That Verve Was Committing a Tort On September 16, 2004, Hypercom met with Omron representatives concerning the baseless patent infringement lawsuits and proceedings that Verve had filed against Hypercom in Michigan, Texas, California and Washington, D.C. During this meeting,

Case 2:04-cv-00400-PGR

6 Document -99-

Filed 01/30/2006

Page 6 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Hypercom demonstrated the operation of the Hypercom products accused of infringement, and made a presentation concerning why none of the Hypercom accused products infringed any of the Omron patents asserted against Hypercom. a. Exhibit 18 ­ September 16, 2004 Presentation Materials Provide Omron with Notice that the Accused Hypercom Products Do Not Infringe Any of the Asserted Patents During the September 2004 meeting, Hypercom made a PowerPoint presentation to Omron's representatives. Hypercom's Exhibit 18 is a copy of that presentation. The presentation discusses the specific Omron patents asserted in the lawsuits filed by Verve, and the specific Hypercom products accused of patent infringement. The presentation shows that Hypercom demonstrated the specific products accused of infringement, and why the products could not be accused on infringement of the Omron patents. For example, in the ITC proceeding and in the California lawsuit brought by Verve, Hypercom's T8 and ICE 6000 terminals were accused of infringement of Omron's U.S. Patent No. 5,012,077. The presentation made to Omron at the September 2004 meeting demonstrated that an accused product must have a card discriminator that automatically discriminates between a credit card and a debit card based solely upon data read from the card when the card is swiped through a card reader on the terminal. Hypercom had T8 and ICE terminals set up and operating at the meeting, and demonstrated that the terminals did not meet this critical requirement of the Omron patent and could not be, in good faith, accused of infringement of that patent. Doc.#85, Exhibit 18, at 4-6. The presentation of Exhibit 18 also shows that Hypercom discussed Omron's U.S. Patent No. 4,678,895 asserted in the Michigan lawsuit in which Hypercom's T7 terminals were accused of infringement. Hypercom demonstrated that Omron's patent required an electronic cash register, and that Hypercom did not make cash registers. Doc.#85, Exhibit 18, at 7-9. Hypercom showed that the Hypercom T7 terminals could not be, in good faith, accused of infringement of that patent.
Case 2:04-cv-00400-PGR 7 Document -99Filed 01/30/2006 Page 7 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

The presentation of Exhibit 18 further shows that Hypercom discussed Omron's U.S. Patent No. 4,562,341 asserted in the Texas lawsuit in which Hypercom's ICE 6000 terminals were accused of infringement. Hypercom demonstrated that Omron's patent only covered an electronic cash register, and that Hypercom's accused ICE 6000 terminal was not a cash register and did not perform cash registration functions. Doc.#85, Exhibit 18, at 11-12. Hypercom showed that the Hypercom ICE 6000 terminals could not be, in good faith, accused of infringement of that patent. Exhibit 18 is evidence that Omron had notice of the fact that the patent infringement lawsuits brought by Verve were baseless. Exhibit 18 is evidence that Omron was aware that Verve was committing a tort, i.e., abuse of process. Exhibit 18 is evidence that Omron was aware that Verve was committing a tort, i.e., malicious prosecution. At the time of the presentation, one of the lawsuits had already been terminated in favor of Hypercom. Doc.#85, Exhibit 18, at 7. b. Exhibit 23 ­ Deposition of Tetsuyki Nakano taken March 3, 2005 Omron is requesting this Court to strike portions of the Deposition of Tetsuyki Nakano taken in this action on March 3, 2005 ("Nakano Deposition"). Specifically, Omron seeks to strike the following portions of the Nakano Deposition: Q During the meeting, did representatives of Hypercom demonstrate Hypercom's POS terminals to you and Mr. Kerner and describe in detail information that -- about how the Hypercom accused products functioned? MR. IRMSCHER: Objection; vague, compound. A The explanation, as I recall my impression, was a very rough explanation. It wasn't a detailed. BY MR. LEACH: Q Do you recall being shown Hypercom products that were accused of infringement that required someone to press a
8 Document -99-

Case 2:04-cv-00400-PGR

Filed 01/30/2006

Page 8 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

button to indicate whether it was a credit card or a debit card? A I don't recall. *** A When I visited Hypercom in Arizona last September, as we discussed before, we had some explanation. We received some explanation but I do not recall any explanation that I received and anything that I may know may have come from that meeting. Exhibit 23 of Hypercom's Response, Nakano depo, at 155-56 & 159. Those portions of Exhibit 23 that Omron seeks to exclude are evidence that Omron had notice of the fact that the patent infringement lawsuits filed by Verve were baseless and there was no justification for maintaining any of the pending infringement suits against Hypercom. c. Exhibits 18 and 23 Are Admissible to Show That Omron Had Notice of the Baseless Patent Infringement Lawsuits Brought by Verve and Was Aware That Hypercom Did Not Infringe Any of the Asserted Patents Rule 408 cannot be used to exclude evidence offered to show that show that a party had notice or was aware of certain facts. Wiener v. Garrott & Sons, 759 F. Supp 510, 521 (E.D. Ark. 1991) (court allowed evidence to show defendants' notice of plaintiff's options to purchase farms). In the case of Perri v. Daggy, 776 F. Supp 1345 (N.D. Ind. 1991), an arrestee filed suit against a police chief claiming that police officers used excessive force in arresting him. The court held that Rule 408 allowed the use of prior settlements of excessive force claims to show that the police chief had notice or knowledge of police officer misconduct. 776 F. Supp. at 1349. Similarly, here the evidence challenged by Omron is admissible to show that Omron was aware of Verve's misconduct. Yet, after the September 2004 meeting, Omron took several actions to aid Verve in the prosecution of Verve's meritless lawsuits against Hypercom.

Case 2:04-cv-00400-PGR

9 Document -99-

Filed 01/30/2006

Page 9 of 15

1 2 3 4 5 6 7 8 9 10 11 12

In the case of United States v. Austin, 54 F.3d 394, 400 (7th Cir. 1995), the court held in a criminal case that evidence of a settlement from a civil suit was admissible to show that the defendant was on notice that the items he sold were forged. The court said that excluding this evidence entirely would have resulted in an incomplete presentation of the facts to the jury. The policy behind Rule 408 must bow before the stronger public policy in favor of issues of fact being determined on the basis of the greatest amount of relevant nonprejudicial testimony. A.E. Korpela, Annotation, Admissibility of admissions made in connection with offers or discussions of compromise. 15 A.L.R. 3d 13 (2005). d. Exhibit 18 Is Admissible to Attack the Credibility of Omron's Witness Omron's witness testified that the explanation of why Hypercom's products could not be, in good faith, accused of infringement of Omron's patents "was a very rough

13 explanation. It wasn't a detailed." Doc. #85, Exhibit 23, Nakano depo, at 155-56. 14 However, the presentation identified as Hypercom's Exhibit 18 demonstrates the contrary, 15 and is admissible to attack the credibility of Omron's witness. Brocklesby v. United States, 16 767 F.2d 1288, 1292 (9th Cir. 1985) (evidence was admissible to attack credibility of 17 witnesses), cert. denied, 474 U.S. 1106 (1986) 18 19 20 21 22 23 24 25 26 27 28 V. Evidence Should Not Be Excluded Under Circumstances Where the Policy Behind Rule 408 Does Not Come Into Play In the case of Cassino v. Reichhold Chemical, Inc., 817 F.2d 1338, 1342 (9th Cir. 1987), cert. denied, 484 U.S. 1047 (1988), the Ninth Circuit affirmed the admission into evidence of a "Settlement Agreement and General Release" under circumstances where "the policy behind Rule 408 does not come into play." 817 F.2d at 1343. Omron's attempt to exclude Hypercom's Exhibit 18 and portions of Exhibit 23 presents a case where the evidence should not be excluded because the policy behind Rule 408 does not come into play. Hypercom's Exhibit 18 is a PowerPoint presentation that Hypercom made to
10 Document -99 - Filed 01/30/2006

Case 2:04-cv-00400-PGR

Page 10 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Omron during the September 16, 2004 meeting in Phoenix between representatives of Hypercom and representatives of Omron. The presentation demonstrated that none of the Hypercom products accused of infringement actually infringed any of the patents that were the subject of patent infringement lawsuits brought against Hypercom by Verve. The presentation involves statements made by Hypercom during the September 2004 meeting, not statements by Omron. The presentation is being offered into evidence by Hypercom, not by Omron. "[T]he protections of Rule 408 were designed to encourage the compromise and settlement of existing disputes." Cassino v. Reichhold Chemical, Inc., 817 F.2d at 1343. The Rule is designed to encourage a party to let its guard down and speak freely without fear that its own statements will be used against it. This policy does not come into play when a party seeks to introduce its own statements into evidence. This issue was squarely addressed in the case of Hutler v. Commissioner of Internal Revenue, 83 T.C. 663 (U.S. Tax Ct. 1984) (the court noted that it could not find any prior case that had addressed the issue). In that case, the court refused to exclude evidence of a party's own statements under circumstances where the statements were offered into evidence by the party that made them. [T]he evil which the rule seeks to avoid is that the one party will use material against the party who submitted the material for settlement purposes, and the rule should not be interpreted to prevent the same party who submitted the material in the course of settlement discussions from using the material later at trial. 83 T.C. at 665 (emphasis in original). Rule 408 "does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations." Rule 408, Fed.R.Evid. Hypercom Exhibit 18 should therefore not be barred from admission simply because it was presented during the September 2004 meeting. Similarly, Exhibit 23 is the Deposition of Tetsuyki Nakano taken in this action on March 3, 2005 ("Nakano Deposition"). The portions of Mr. Nakano's testimony that Omron seeks to exclude involve his testimony about the fact that, at the September 2004
Case 2:04-cv-00400-PGR 11 Document -99 - Filed 01/30/2006 Page 11 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

meeting, Hypercom demonstrated the non-infringing operation of its accused products that had been accused of patent infringement. Again, the fact that Hypercom demonstrated to Omron that none of Hypercom's products infringed any of the patents asserted by Verve should not be excluded merely because the demonstration took place at the September 2004 meeting. VI.Hypercom's Evidence Should Not Be Excluded Under Rule 408 If There Was No Existing Patent Infringement Claim Between Omron and Hypercom Omron has repeatedly pointed out that Omron had not made any threats of patent infringement against Hypercom, and Omron did not file any patent infringement lawsuits against Hypercom. For example, Omron's statements in the Joint Case Management Report filed in this case include the assertion that there never was any actual controversy between Omron and Hypercom concerning any of Omron's patents. Doc. #71, at 14. Thus, according to Omron, there never was any existing dispute or controversy between Hypercom and Verve concerning the alleged infringement of Omron's patents. The evidence that Omron seeks to exclude on the basis of Rule 408 all involves the patent infringement claims asserted against Hypercom in the lawsuits filed by Verve. If Omron had no ability to control Verve or to settle the baseless patent infringement suits filed by Verve, then the September 2004 meeting cannot be claimed by Omron as a settlement meeting. No representative of Verve attended or participated in that meeting. According to Omron, there was no controversy between Hypercom and Omron that could be the subject of settlement negotiations. If there was no existing disputed claim of patent infringement between Hypercom and Omron, then Omron cannot seek to exclude evidence relating to Verve's patent infringement claims based upon Rule 408. The September 2004 meeting did not concern any claims between Omron and Hypercom. Josephs v. Pacific Bell, No. 03-56412, 2005 U.S. App. LEXIS 29737, at *23-24 (9th Cir. Dec. 27, 2005) ("Because the purpose of Rule 408 is to encourage the compromise and settlement of existing disputes, and the

Case 2:04-cv-00400-PGR

12 Document -99 - Filed 01/30/2006

Page 12 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

grievance proceeding did not concern Josephs' not-yet-filed discrimination claim, the district court did not abuse its discretion when it admitted the statements made by PacBell employees.") (emphasis added); Cassino v. Reichhold Chemical, Inc., 817 F.2d 1338, 1342 (9th Cir. 1987) ("[T]he protections of Rule 408 were designed to encourage the compromise and settlement of existing disputes. Where, as here, the employer tries to condition severance pay upon the release of potential claims, the policy behind Rule 408 does not come into play.") (citations omitted and emphasis added), cert. denied, 484 U.S. 1047 (1988). VII. Omron's Cited Case Law Fails to Support Its Assertion That the Hypercom Exhibits Are Inadmissible The case law presented to the Court by Omron in its Motion to Strike fails to support Omron's assertion that the Hypercom Exhibits are inadmissible based upon Rule 408. Specifically, Omron relies on United States v. Contra Costa County Water Dist., 678 F.2d 90 (9th Cir. 1982) for the general premise that evidence of settlement negotiations are inadmissible. In Contra Costa, the federal government filed an action against the Contra Costa water district to recover the costs of building a retaining wall. The district court granted summary judgment in favor of the federal government, concluding that the contract was unambiguous as to the water district's liability for repairs and maintenance. The appellate court affirmed. In precluding the use of the settlement agreement, the appellate court relied in large part on the fact that the party attempting to introduce the settlement agreement was not a party to the litigation or the settlement conferences. Id. At 92. Contra Costa is easily distinguished from the facts before this Court; Hypercom is both a party to the lawsuit and was directly involved in the settlement negotiations. Omron attempts to rely on Liesener v. Weslo, Inc., 775 F. Supp. 857 (D. Md. 1991) for the general holding that an "affidavit containing statements made in settlement discussions [are] inadmissible and incompetent under Rule 408 to oppose motion for summary judgment." Defendant Omron Corporation's Motion to Strike Evidence of Compromise ¶ 11. The court in Liesener refused to admit the affidavit because it was
Case 2:04-cv-00400-PGR 13 Document -99 - Filed 01/30/2006 Page 13 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

"offered on the merits of a defense rather than on a merely collateral matter." Liesener at 860. Again, this case fails to support the general premise posited by Omron and is easily distinguished on its facts. The Hypercom Exhibits are being presented to the Court for other purposes which is expressly allowed by Rule 408. The cases cited by Omron are distinguishable on the facts and do not provide an adequate basis for excluding the Hypercom Exhibits. Conclusion For the foregoing reasons, Hypercom respectfully requests that the Court should deny Omron's motion to strike Hypercom's Exhibits. DATED this 30th day of January, 2006. SNELL & WILMER L.L.P.

By /s/ Sid Leach Sid Leach Andrew F. Halaby Monica A. Limón-Wynn SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Attorneys for Plaintiff Hypercom Corporation

Case 2:04-cv-00400-PGR

14 Document -99 - Filed 01/30/2006

Page 14 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case 2:04-cv-00400-PGR

CERTIFICATE OF SERVICE I hereby certify that on January 30, 2006, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: David P. Irmscher John K. Henning, IV BAKER & DANIELS 300 N. Meridian Street, Suite 2700 Indianapolis, IN 46204 Phone: 317-237-1317 Fax: 317-237-1000 [email protected] [email protected] Paul Moore Ray K. Harris FENNEMORE CRAIG, P.C. 3003 N. Central Avenue, Suite 2600 Phoenix, AZ 85012-2913 Phone: 602-916-5414 Fax: 602-916-5614 [email protected] [email protected] Attorneys for Defendant Omron Corporation s/ Sid Leach

15 Document -99 - Filed 01/30/2006

Page 15 of 15