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

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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. Verve, L.L.C., and Omron Corporation, Defendants. Omron Corporation ("Omron") moved for summary judgment prior to the scheduling conference, and prior to discovery on the merits, "on the grounds that no evidence supports the claim ... that Omron engaged in a civil conspiracy with former defendant Verve L.L.C. (`Verve')...". That is the sole basis for Omron's motion. Remarkably, Omron failed to submit any affidavit of any Omron witness controverting the conspiracy allegations of the First Amended Complaint. Omron Failed to Carry Its Burden of Showing That There Is No Genuine Issue of Material Fact Hypercom Corporation ("Hypercom") respectfully submits that Omron's motion should be denied for the same reason that the Ninth Circuit reversed summary judgment in Beltz Travel Service, Inc. v. International Air Transport Assoc., 620 F.2d 1360 (9th Cir. 1980) (reversing summary judgment on grounds that a question of fact existed as to whether defendants were members of an unlawful conspiracy). In the Beltz case, the Ninth Circuit noted that the case arose in the posture that there were allegations in the complaint the appellees were members of an alleged conspiracy; the motion for summary judgment
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No. CV 04-0400 PHX PGR HYPERCOM CORPORATION'S OPPOSITION TO OMRON'S MOTION FOR SUMMARY JUDGMENT

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presented no affidavits to negate their involvement in the overall conspiracy; and the opposition to the motion presented no affidavits or other evidence that the appellees were participants in the overall conspiracy. 620 F.2d at 1365. The Ninth Circuit held that the appellees had not met their initial burden of showing that there was no genuine issue as to any material fact. Id. The Ninth Circuit said: "Appellees have failed to present any affidavits or other evidence denying that they were members of the alleged conspiracy. Because appellees have failed to meet their initial burden of establishing the absence of their agreement to participate in the overall conspiracy, Beltz was not required to produce suitable opposing affidavits." 620 F.2d at 1365 (citation omitted). In this case, Omron did not file any affidavit denying that it was a participant in the overall alleged conspiracy. Omron filed certain pages from the deposition of an Omron witness, but that witness did not testify about or deny the alleged conspiracy. In fact, the word "conspiracy" was never spoken at the deposition. Nowhere in that transcript is there testimony that negates Omron's involvement in the alleged conspiracy. The statement of facts submitted in support of Omron's summary judgment motion does not include a statement of fact that expressly denies Omron's participation in the alleged conspiracy. Thus, the Beltz case would appear to be controlling, and the motion should be denied on that basis alone. Proof of Conspiracy by Circumstantial Evidence Omron's summary judgment motion appears to rest on the legally insufficient basis that there is no express written agreement to engage in a conspiracy in evidence at the present time, and on that basis alone Omron argues that summary judgment should be granted. Omron's legal theory is flawed, because an express agreement need not be shown. Recently, this Court noted that "an express agreement need not be shown for a plaintiff to prevail on a civil conspiracy claim." Wojtunik v. Kealy, No. CV-03-2161Case 2:04-cv-00400-PGR 2 Document -84Filed 12/23/2005 Page 2 of 16

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PHX-PGR, 2005 U.S. Dist. LEXIS 32651, at *57 (D. Ariz. Sept. 26, 2005), quoting from Southern Union Co. v. Southwest Gas Corp., 165 F. Supp.2d 1010, 1021 (D. Ariz. 2001). A "tacit understanding" will suffice. Id. In almost every case involving an alleged conspiracy, the conspiracy must be shown by circumstantial evidence. It is well recognized that it is next to impossible to secure direct evidence of a conspiracy unless one of the participants has confessed. "As for the matter of the conspiracy between the appellants, it is well settled that the existence of a conspiracy, like other facts, may be proved by circumstances as well as direct evidence. Generally, it can be established only by such circumstantial evidence, for it is next to impossible to secure direct evidence of a conspiracy unless one of the participants has confessed. Evidence of the conspiracy may be inferred from all the circumstances, such as the nature of the acts done, the interests of the alleged conspirators, and the relation of the parties." Northrup v. Baker, 202 Cal. App.2d 347, 353-54, 20 Cal. Rptr. 797, 801 (Cal. App. 1962). Although the Northrup case is a California state court case, the law in Arizona is in accord. This Court has said, "The existence of a conspiracy may sometimes be inferred from the nature of the acts done, the relations of the parties, the interests of the alleged conspirators, and other circumstances." Wojtunik v. Kealy, No. CV-03-2161-PHX-PGR, 2005 U.S. Dist. LEXIS 32651, at *57 (D. Ariz. Sept. 26, 2005), quoting from Southern Union Co. v. Southwest Gas Corp., 165 F. Supp.2d 1010, 1021 (D. Ariz. 2001). In addition, the Ninth Circuit has held, "concerted action may be inferred from circumstantial evidence of the defendant's conduct and course of dealings." Harkins Amusement Enterprises, Inc. v. General Cinema Corp., 850 F.2d 477, 484 (9th Cir. 1988), cert. denied, 488 U.S. 1019 (1989); Dimidowich v. Bell & Howell, 803 F.2d 1473, 1479 (9th Cir. 1986). In evaluating the factual issues involved in this motion, the evidence of the nonmovant Hypercom is to be believed, and all justifiable inferences are to be drawn in
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Hypercom's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). If the circumstantial evidence would support an inference of a conspiracy, then the Court must infer the existence of a conspiracy for purposes of this motion, and deny Omron's motion for summary judgment. If there is a genuine issue as to whether Omron participated in a conspiracy, then it would be error to grant summary judgment. Securities Investor Protection Corp. v. Vigman, 908 F.2d 1461, 1470 (9th Cir. 1990) ("[T]he district court erred in granting summary judgment to Holmes because genuine issues exist as to whether Holmes participated in a conspiracy ...".), rev'd on other grounds, 503 U.S. 258 (1992) (the alleged conspiracy to manipulate did not proximately cause the injury claimed). As a conspirator, Omron would be liable for the acts of Verve. Beltz Travel Service, Inc. v. International Air Transport Assoc., 620 F.2d 1360, 1367 (9th Cir. 1980) ("All conspirators are liable for the acts of their co-conspirators."). Under Arizona law, "a conspirator is liable for any tortious act, even unknown, committed in furtherance of the conspiracy, including acts not personally committed." Baker v. Stewart Title & Trust of Phoenix, Inc., 197 Ariz. 535, 543, 5 P.3d 249, 256 (Ariz. App. 2000) (citations omitted). Undisputed Evidence in This Case In this case, it is undisputed that Omron agreed with Verve to allow Verve to sue Hypercom on Omron's patents. In a memorandum seeking initial approval from Omron headquarters in Japan before any lawsuits had been filed by Verve, Omron's U.S. representative Tetsuyuki Nakano wrote: "Main points of the contract" "1) Among the profit obtained with the transmitted US patents, excluding the fee needed for exercising the rights, 44% of the portion up to $5 million and 30% of the portion above $5 million should be paid by Verve LLC to OC [Omron Corporation]." "2) Even after transmission of rights, OC still reserves the right of free licensing to its customers." "Supplementary explanation:"
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"1) OC has zero payment risk. In case of losing a suit, as it is not a party of the suit, it has no risk, even other than money." "2) Verve LLC will negotiate a license after petitioning for a jury trial with East Michigan Municipal Court against 3 companies, including VeriFone, Lipman, and Hypercom." Exhibit 4 (emphasis added). At the time that Omron gave the first patents to Verve, Omron knew that Verve was going to sue Hypercom with those patents in Michigan ("the Michigan Action"). Id. Omron specifically approved Hypercom as a target. Exhibit 7. In this case, it is undisputed that Omron had no good faith basis for believing that Hypercom infringed any of its patents. Exhibit 23, Nakano depo., at 161-62. Omron admits that the patent asserted against Hypercom in the Michigan Action "covers technology for an electronic cash register and payment system." Doc. # 74, Statement of Facts in Support of Omron Corporation's Motion for Summary Judgment ¶12 ("Omron Statement of Facts"). The Hypercom T7 terminal accused of infringement in the Michigan Action is not an electronic cash register. See Exhibits 27 & 28. Hypercom does not manufacture or sell electronic cash registers. According to Omron, patents were given to Verve at three different points in time. When Omron provided the third group of patents to Verve, Omron knew that Verve had sued Hypercom in Michigan and in Texas, and yet Omron approved Verve's use of an additional Omron patent to bring another action against Hypercom before the International Trade Commission in Washington, D.C. ("the ITC Action"). Exhibit 8. Omron's attorney Herbert Kerner knew about the ITC Action before it was filed, and assisted Verve in the preparation of Verve's complaint. Exhibit 10. The administrative law judge presiding over the ITC Action found that "Verve's filing of the complaint in the face of virtually no pre-filing investigation of Hypercom's accused products demonstrates an abuse of process and bad faith." Doc. #61, ITC Order No. 48, at 17. Omron's U.S. Patent No. 5,012,077, which was asserted in the ITC Action, requires
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that an accused terminal must have a card discriminator for automatically discriminating whether a card is a credit card or a debit card based solely on the information read from the magnetic stripe on the card when the card is swiped through a card reader on the terminal. Doc. #61, ITC Order No. 48, at 16-17; Exhibit 47. Hypercom's T8 terminal accused of infringement had a "debit" button that has to be manually pressed if a debit card was to be processed. Exhibits 19 & 20. Hypercom's product clearly did not infringe the asserted Omron patent. Doc. #61, ITC Order No. 48, at 16-17. On September 16, 2004, less than two weeks after the commencement of the ITC Action, Hypercom met with Omron representatives and demonstrated why none of Hypercom's accused products infringed any of the asserted Omron patents, including the patent involved in the ITC Action. Exhibit 18; Exhibit 24, Reich AZ depo., at 22-47; Exhibit 30, Reich Decl. ¶¶ 2-3; Exhibit 23, Nakano depo., at 155-56. Omron assisted Verve in the ITC Action by contacting a critical third party witness in Japan who was the inventor named in the patent, so he would be "prepared for any contacts he may receive from the other side." Exhibit 12. Omron's representative Mr. Nakano, who is based in the United States, traveled to Japan and met with the witness in person to discuss the pending proceeding before the International Trade Commission in which the inventor would be a potential witness. Exhibit 12. Mr. Nakano also called the witness on two additional occasions to talk to the witness about the ITC proceeding. Exhibit 23, Nakano depo., at 151. Omron also contacted a lawyer in Japan to assist in this endeavor. Exhibit 13. Mr. Nakano got one of Omron's Japanese lawyers to assist Verve. Exhibit 23, Nakano depo., at 152 (The Japanese lawyer "has been attorney for Omron for a long time."). After Omron set things up with the lawyer in Japan, Raymond Galasso told the lawyer to "let me know as soon as possible if anyone does try to contact [the inventor witness] and please instruct him not to discuss anything with anybody about United States Patent No. 5,012,077 until we have a chance to discuss first." Exhibit 13. Omron's attorney Herbert V. Kerner assisted Verve by providing legal research to Verve's attorneys in connection with the ITC proceeding. Mr. Kerner actively assisted in
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the ITC proceeding by sending information to Verve's lawyers concerning prior decisions of the ITC on the issue of standing. Exhibit 14; Exhibit 15. Mr. Kerner had participated in the meeting with Hypercom on September 16, 2004, in which Hypercom demonstrated that its accused products did not infringe the Omron patent asserted in the ITC Action. Exhibit 23, Nakano depo., at 155-56. Omron wanted Verve to be named as the party in the patent infringement lawsuits brought against Hypercom so that Omron would have "zero risk." Exhibit 4. Mr. Nakano emphasized to the internal decision makers at Omron that "In case of losing a suit, as [Omron] is not a party of the suit, it has no risk." Exhibits 4, 5 & 8. Omron assisted Verve by executing "assignment documents" that made it appear as if Verve had standing to bring the patent infringement lawsuits without joining Omron as a party. Exhibits 52, 53 & 54. In the complaint filed in the ITC Action, Verve represented that it owned the Omron patent. Exhibit 38, ¶50. Verve produced a one-page "assignment document" signed by Omron as proof of its ownership of the Omron patent. Exhibit 52. Verve filed the ITC Action with the Simon, Galasso & Frantz law firm as Verve's counsel. Exhibit 38; Exhibit 39. However, the Simon, Galasso & Frantz law firm was disqualified from receiving any confidential information under the protective order. Exhibit 64; Exhibit 67. Consequently, Verve was forced to retain outside counsel. In the ITC Action, Verve concealed the existence of Addendum No. 1-033004 from Verve's own outside counsel at Dewey Ballantine. Exhibit 29. Addendum No. 1033004 clearly showed that Verve did not have standing to bring the ITC Action. Exhibit 17; Exhibit 26. On November 17, 2004, Verve was ordered to produce adequate responses to Hypercom's discovery requests, including all agreements between Verve and Omron. Exhibit 56, at 5. On November 23, 2004, after Verve had been ordered by the ITC administrative law judge to produce its agreements with Omron, Verve gave its outside attorneys at Dewey Ballantine a redacted copy of Agreement No. 031804 for the first

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time. Exhibit 29, Farney Decl. ¶ 7; Exhibit 56. Verve would not give its outside attorneys an unredacted copy of the document at that time. Id. On November 29, 2004, the administrative law judge had to enter yet another order, stating "Verve is hereby compelled to produce all discovery requests regarding the assignment and licensing agreements, as they are clearly relevant discovery." Exhibit 55, at 2. After this second order compelling the disclosure of the Verve-Omron agreements, Galasso gave his outside attorneys an unredacted copy of Agreement No. 031804 for the first time on December 1, 2004, but when he did so, Galasso instructed Verve's outside counsel to limit disclosure of the unredacted agreement to only two attorneys at Dewey Ballantine "until further notice from Verve." Exhibit 29, Farney Decl. ¶ 9. On December 3, 2004, when one of the outside attorneys (Mr. Conner - who had not seen the unredacted documents) met with Raymond Galasso to obtain information to supplement answers to interrogatories, "Mr. Galasso informed Mr. Conner that it would be accurate to state that Omron did not retain any right, title or interest in the '077 patent and that Verve owned all right, title and interest in the '077 patent." Exhibit 29, Farney Decl. ¶ 12. On December 6, 2004, the day before the deposition of Verve was scheduled to begin in the ITC Action, Raymond Galasso provided his outside counsel with an unredacted copy of Agreement No. 031804 for the first time. Exhibit 29, Farney Decl. ¶ 16. That same day, Galasso disclosed for the first time the existence of Addendum 1033004 to Verve's attorneys at Dewey Ballantine. Exhibit 29, Farney Decl. ¶ 16. According to Verve's outside counsel, "Prior to that time, no one at Dewey Ballantine had been aware that an Addendum existed, and certainly no one at Dewey Ballantine had seen it prior to this time, or heard of anything regarding its contents." Exhibit 29, Farney Decl. ¶ 16. After this incident, Dewey Ballantine withdrew from further representation of Verve. Exhibit 29, Farney Decl. ¶ 17. Based on Addendum 1-033004, and the other agreements that Verve was forced to produce in the ITC Action, the ITC held that Verve never had standing to bring the ITC
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Action in the first place. Exhibit 26. All of the above-recited facts are undisputed. The Alleged Conspiracy The determination of whether sufficient circumstantial evidence exists from which a jury could infer a conspiracy must be made by looking at all of the facts as a whole. "[A] conspiracy is not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole." United States v. Patten, 226 U.S. 525, 544 (1913); Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 990 (9th Cir. 2000) ("The law requires that every conspiracy by judged as a whole."); Securities Investor Protection Corp. v. Vigman, 908 F.2d 1461, 1468 (9th Cir. 1990). In view of the undisputed evidence in this case, it is not a great leap to infer a conspiracy under these circumstances. The conspiracy involved an agreement to sue Hypercom on Omron's patents without regard to whether or not Hypercom infringed the patents, and without any good faith basis for believing that Hypercom infringed the asserted patents. Omron agreed to provide Verve with patents to accomplish this unlawful objective. Omron knew that it had no basis for believing that Hypercom infringed any of the patents. Exhibit 23, Nakano depo., at 161-62. And Omron took overt actions in furtherance of the conspiracy to aid Verve in its unlawful scheme. Omron knew Hypercom does not manufacture or sell electronic cash registers when Omron approved Hypercom as a target to be sued in the Michigan Action for allegedly infringing an Omron patent that Omron admits "covers technology for an electronic cash register and payment system." Doc. # 74, Omron Statement of Facts ¶12. Similarly, Omron knew that Omron's patent asserted in the Texas Action "covers technology for an electronic cash register." Doc. # 74, Omron Statement of Facts ¶20. And Omron knew that the Hypercom product accused of infringement in the Texas Action was not an electronic cash register. Exhibits 27 & 28. At least as early as September 16, 2004, Omron had to know that Hypercom's accused products did not infringe the Omron patent asserted against Hypercom in the ITC
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Action, because Hypercom demonstrated this fact to Omron's representatives during the meeting that took place in Phoenix. Exhibit 18. Thereafter, Omron actively aided and abetted Verve in its abuse of process in the ITC Action with knowledge that the claim asserted against Hypercom was baseless. Omron actively assisted Verve in the ITC Action by contacting the inventor in Japan of the patent asserted in the ITC proceeding, so the inventor (who was a critical witness in the patent case) would be "prepared for any contacts he may receive from the other side." Exhibit 12. Omron's representative Mr. Nakano, who is based in the United States, traveled to Japan and met with the witness in person to discuss the pending proceeding before the International Trade Commission in which the inventor would be a potential witness. Exhibit 12. Mr. Nakano also called the witness on two additional occasions to talk to him about the ITC proceeding. Exhibit 23, Nakano depo., at 151. Omron also set Verve up with one of Omron's outside lawyers in Japan, so that Galasso could have the lawyer "let me know as soon as possible if anyone does try to contact [the inventor witness] and please instruct him not to discuss anything with anybody about United States Patent No. 5,012,077 until we have a chance to discuss first." Exhibit 13. Omron signed documents for Verve that concealed the true nature of Verve's interest in the Omron patents, and which concealed the fact that Verve did not have standing to file suit on Omron's patents, so that Omron would not have any risk in case Verve lost any of the lawsuits. Exhibit 4. Omron provided other assistance to Verve as well. Exhibits 14 & 15. Omron had the power at all times to stop the litigation that Verve filed against Hypercom. Exhibit 30, Reich Decl. ¶¶ 2-4; Exhibit 24, Reich AZ depo., at 22-26, 32-34, 39-47. Omron retained the right to grant licenses under the Omron patents to anyone, without limitation, including anyone that Verve had already sued, and could have granted Hypercom immunity from suit by Verve at any time. Exhibit 17. But after Hypercom demonstrated on September 16, 2004, that none of the Hypercom products infringed any of the Omron patents, instead of putting a stop to the litigation, Omron demanded millions
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of dollars from Hypercom. Exhibit 24, Reich AZ depo., at 34-35. Omron was a willing participant in the "shakedown" of the industry. Omron received "profits" from smaller companies who just could not afford the expense of litigating against Verve, and who were forced to pay Verve to but peace from Verve's meritless patent claims. Exhibit 8 (Verve "has reached conciliation with Schlumberger, the smallest company among them, and OC received a profit of $80K."). Omron is the owner of the patents that Verve used to commit its acts of abuse of process and malicious prosecution. Omron agreed to Verve's use of Omron's patents to sue Hypercom, and stood to make millions if Verve was successful in its wrongful scheme. Omron had an extraordinary economic motivation to aid in Verve's scheme, because Omron stood to get 50% of the money that Verve collected. Verve estimated the revenue from the scheme was potentially between $979 Million and $4.9 Billion. Exhibit 22, at 3. This is an appropriate case for the application of Arizona's civil conspiracy law to impose liability upon Omron. "Conspiracy serves as a device to impose vicarious liability for the underlying tort on all who commonly plan, take part in, or cooperate in the wrongdoers' acts." Baker v. Stewart Title & Trust of Phoenix, Inc., 197 Ariz. 535, 545, 5 P.3d 249, 259 (Ariz. App. 2000). Omron clearly took part in, cooperated in, and helped plan the scheme for attempting to coerce Hypercom into paying a "settlement" in order to buy peace from Verve's expensive and costly patent litigation. If Omron had given Raymond Galasso firearms and looked the other way while Galasso robbed banks, and then split the "profits" with him, no one would have any difficulty appreciating the appropriateness of imposing liability upon Omron. Hypercom respectfully submits that what Omron and Verve conspired to do in this case is equally wrong. Hypercom's Proposed Second Amended Complaint A motion for summary judgment at this early stage in a case is wasteful. It is generally unfair to force a party to come forward with evidence that is in the hands of its
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opponent, before discovery on the merits has begun, and at the risk of having a summary judgment entered. Generally, at such an early stage, a motion to dismiss should be accompanied by leave to amend unless amendment would be futile. Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 983 (9th Cir. 2000); Wojtunik v. Kealy, No. CV-032161-PHX-PGR, 2005 U.S. Dist. LEXIS 32651, at *58 (D. Ariz. Sept. 26, 2005) ("Although the plaintiff inexplicably fails to request leave to file a second amended complaint in the event that any of the motions to dismiss are granted, the Court concludes that there is no reason not to permit such an amendment."). Hypercom has timely moved for leave to file a Second Amended Complaint. The proposed Second Amended Complaint adds claims against Omron for malicious prosecution (as an instigator) and for aiding and abetting Verve's malicious prosecution and abuse of process. Omron knew at the time that it filed this motion for summary judgment that Hypercom would be filing an amended complaint, because Hypercom discussed its additional claims in the Joint Case Management Report filed four days before Omron's summary judgment motion was filed. Doc. #71. Under the federal rules, a "complaint need not set out the facts in detail; what is required is a 'short and plain statement of the claim showing that the pleader is entitled to relief.'" Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 984 (9th Cir. 2000), quoting Fed.R.Civ.P. 8(a). Nevertheless, Hypercom's Second Amended Complaint includes detailed allegations concerning the asserted claims. Under Arizona law, a defendant may be held liable for malicious prosecution as an instigator of the wrongful civil actions, even if the defendant was not a party to the civil actions giving rise to the malicious prosecution claim. Bradshaw v. State Farm Mutual Automobile Ins. Co., 157 Ariz. 411, 417, 758 P.2d 1313, 1319 (1988). Hypercom's Second Amended Complaint includes detailed allegations that support a claim of malicious prosecution. Under Arizona law, "a person who aids and abets a tortfeasor is himself liable for the resulting harm to a third person." Wells Fargo Bank v. Arizona Laborers, Teamsters
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& Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 485, 38 P.3d 12, 23 (2002). A claim of aiding and abetting tortious conduct are made out where: (1) the primary tortfeasor commits a tort that causes injury to the plaintiff; (2) the defendant has at least a general awareness of the primary tortfeasor's tortious conduct; and (3) the defendant substantially assists or encourages the primary tortfeasor in the achievement of the tort. Id., 201 Ariz. at 485-88, 38 P.3d at 23-26. In this case, Omron aided and abetted Verve in the commission of torts of abuse of process and malicious prosecution. The party charged with aiding and abetting must have knowledge of the primary tortfeasor's wrongful acts, but "such knowledge may be inferred from the circumstances." Id., 201 Ariz. at 425, 38 P.3d at 23. A showing of "actual and complete knowledge of the tort is not uniformly necessary to hold a secondary tortfeasor liable under an aiding and abetting theory." Id., 201 Ariz. at 488, 38 P.3d at 26. In the Wells Fargo case, the court held that the knowledge requirement could be met "even though the bank may not have known of all the details of the primary fraud." Id. Here, there is ample evidence to support a finding that Omron knew that the patent claims asserted against Hypercom were baseless. Executing transactions, even ordinary course transactions, can constitute substantial assistance under some circumstances, such as where there is an extraordinary economic motivation to aid in the scheme. Id., 201 Ariz. at 489, 38 P.3d at 27. Here, Omron executed fictitious "assignment documents" to make it appear as if Verve had standing to bring the patent infringement lawsuits without joining Omron as a party. Omron had an extraordinary economic motivation to aid in Verve's scheme, because Omron stood to get 50% of the money that Verve collected, and which Verve estimated to be potentially between $979 Million and $4.9 Billion. Exhibit 22, at 3. Moreover, "substantial assistance does not mean assistance that is necessary to commit the [tort]. The test is whether the assistance makes it 'easier' for the violation to occur, not whether the assistance was necessary." Id., 201 Ariz. at 489, 38 P.3d at 27 (citations omitted). Omron took several actions which assisted Verve, and which made it easier for
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Verve's wrongful conduct to occur. But for Omron supplying its patents to Verve so that Verve could sue Hypercom, Verve's wrongful scheme could not have occurred. The Court Should Permit Discovery on the Merits Up until this point in this case, discovery was limited to jurisdictional issues, and discovery on the merits had not begun. The Court's Scheduling Order was entered about a month ago on November 21, 2005. At this point, the parties have not even exchanged disclosure statements. "[S]ummary judgment . . . should not be granted until the party opposing the motion has had an adequate opportunity for discovery." Farmer v. Brennan, 81 F.3d 1444, 1449 (7th Cir. 1996). Accord, Dean v. Barber, 951 F.2d 1210, 1213-14 (11th Cir. 1992); First Chicago International v. United Exchange Co., 836 F.2d 1375, 1381 (D.C. Cir. 1988) ("it was premature for the district court to dismiss the case against [the defendants] without first permitting discovery on the merits."). Hypercom has submitted a Rule 56(f) declaration of counsel. Hypercom respectfully submits that the Court should not seriously entertain summary judgment at this stage without allowing further discovery. Conclusion The United States patent system is important to our nation's economy. But today our country is faced with a growing wave of abuse of that system. As the International Trade Commission noted in the case brought by Verve against Hypercom, patent cases are often "massive, expedited proceedings." Doc. #61, ITC Order No. 48, at 25. The unwarranted costs and expenses that unscrupulous lawyers can impose on innocent businesses are staggering. Verve succeeded in imposing more than $4.2 million dollars in attorneys fees and litigation costs on the respondents named in the ITC Action. Exhibit 71, at 23. And this does not include the additional litigation costs resulting from the other cases that Verve filed in Michigan, Texas, and California. Contrary to what some lawyers seem to think, our court system was not created so that lawyers could make money. Our judicial system is first, last, and always a system of
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justice. Our courts are here to adjudicate meritorious claims and to resolve bona fide disputes, and are not here to be abused by opportunistic litigants who seek to exploit the high cost of patent litigation by filing baseless lawsuits in the hope that the defendants will be forced to pay them off to buy peace. There are issues in this case that transcend the private litigants before the Court. This is a case where the law should step in and put a stop to the kind of abuse that has occurred here, not only to redress the damages and harm that have been visited upon an important Arizona company, but to send a message to others similarly situated that such abuse cannot be tolerated. Our court system and patent system will suffer if this type of abuse goes unchecked. Evil will only flourish when good men stand by and do nothing. For the foregoing reasons, Plaintiff Hypercom Corporation respectfully requests that the Court should deny Omron's motion for summary judgment. DATED this 23rd day of December, 2005. 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

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Case 2:04-cv-00400-PGR

CERTIFICATE OF SERVICE I hereby certify that on December 23, 2005, 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

16 Document -84 - Filed 12/23/2005

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