Free Motion in Limine - District Court of Arizona - Arizona

Matthew A. C. Zapf (pro hac vice) A. Colin Wexler (pro hac vice) GOLDBERG KOHN 55 East Monroe Street, Suite 3300 Chicago, IL 60603-5792 Telephone: 312.201.3914 Facsimile: 312.863.7414 [email protected] [email protected] David P. Irmscher (15026-02) John K. Henning (25203-49) BAKER & DANIELS LLP 111 East Wayne Street, Suite 800 Fort Wayne, IN 46802 Telephone: 260-424-8000 Facsimile: 260-460-1700 [email protected] [email protected] H. Michael Clyde (009647) PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue, Suite 2000 Phoenix, AZ 85012-2788 Telephone: 602.351.8000 Facsimile: 602.648.7000 [email protected] Attorneys for the defendant, Omron Corporation UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, vs. Omron Corporation, ) ) ) ) ) ) ) ) ) ) ) CAUSE NO. CV04-0400 PHX PGR DEFENDANT OMRON CORPORATION'S MOTION IN LIMINE NO. 9 TO EXCLUDE EVIDENCE FROM PRIOR HYPERCOM/VERVE ACTION (Oral Argument Requested)

Defendants.

Case 2:04-cv-00400-PGR

Document 172

Filed 04/13/2007

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Omron Corporation moves in limine to bar Hypercom Corporation from introducing evidence of any order, finding, testimony, or other evidence from proceedings in Verve v. Hypercom Corp., No. CV-05-03650-PHX-JFM, (D. Ariz.) ("the Hypercom/Verve Action"). The Court should exclude this evidence from the Hypercom/Verve Action as not relevant under Rule 401 of the Federal Rules of Evidence. Moreover, Rule 403 mandates exclusion because allowing a jury to hear orders, findings, and testimony from a previous case to which Omron was not a party and had no opportunity to defend itself is unfairly prejudicial and will only confuse the jury. A. Evidence From The Prior Case Is Not Relevant To Hypercom's Claims Against Omron In This Case Hypercom has sued Omron over alleged misconduct by Omron's patent assignee Verve, L.L.C. ("Verve"), in infringement proceedings against Hypercom before various district courts and the International Trade Commission. Thus, to prevail at trial, Hypercom must establish (inter alia) that Verve lacked probable cause to prosecute the patent infringement claims against Hypercom, and that Omron intended and/or agreed to aid what it knew to be frivolous prosecutions. Hypercom originally sued Omron and Verve in this Court. However, early in discovery, Hypercom deliberately split its claims against Omron and Verve, dismissing the claims against Verve in this case and reasserting them in another lawsuit before Judge Martone. Judge Martone dismissed on summary judgment certain claims filed by Hypercom against Verve and granted summary judgment to Hypercom on certain other claims. See Order entered August 16, 2006, Case No. CV-05-0365-PHX-FJM (attached as Exhibit A to Motion In Limine No. 5). With Judge Martone already having determined Verve's liability on summary judgment, the case between Hypercom and -2Case 2:04-cv-00400-PGR Document 172 Filed 04/13/2007 Page 2 of 7

Verve proceeded to jury trial solely on the damages claims. A jury awarded compensatory and punitive damages to Hypercom. Hypercom no doubt will want to trumpet evidence from the prior action, including the Order from Judge Martone and the jury's award of damages, in front of the jury in this case. This should not be permitted under Rule 401, because the decisions, orders, verdicts, testimony, and other evidence from another case, involving another judge and jury, is not relevant to whether Omron engaged in any conspiracy to file baseless patent infringement lawsuits. Omron was not a party to the prior case and had no opportunity to present its own evidence and defend itself against Hypercom's claims. B. Evidence From The Prior Case Is Highly Prejudicial And Should Be Excluded Even if the findings, orders, testimony, and evidence from the Hypercom/Verve Action are relevant, they should be excluded because their probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, and misleading the jury. Orders and judgments in the prior lawsuit will be perceived by the jury as resolving material issues in this case. Specifically, Hypercom will present (1) the Court's rulings on summary judgment that Omron and Verve were involved in a conspiracy and that Verve failed to conduct an adequate pre-filing investigation, and (2) the jury's award of damages to Hypercom. However, as briefly explained above, Omron was not a party to, did not participate in, and its interests were not represented by Verve in the Hypercom/Verve Action. Omron had no opportunity to present any evidence favorable to Omron or make any strategy decisions at summary judgment or trial. Allowing a jury to hear the summary judgment decision of another judge will confuse and prejudice the jury, who -3Case 2:04-cv-00400-PGR Document 172 Filed 04/13/2007 Page 3 of 7

will impermissibly conclude that Judge Martone evaluated the same evidence that Omron will present in this case and held that a conspiracy existed. This is not the case at all. Indeed, liability has not been established against Omron in this case because the evidence is different than that presented in the Hypercom/Verve Action. For example, Omron will present (1) testimony from Herbert Kerner and Tetsuyuki Nakano regarding the real purpose for Omron's assignment of patents to Verve, (2) testimony from technical experts that publicly available information suggests Hypercom's products infringe the assigned patents, and (3) additional evidence related to Verve's pre-filing investigation not previously considered by Judge Martone. Additionally, the same rationale precludes any other testimony or evidence presented in the Hypercom/Verve Action - Omron was not present during any of the depositions used in the Hypercom/Verve Action or at trial during any testimony and, therefore, had no opportunity to ask questions or crossexamine the witnesses. Their testimony should not be permitted in this case. Moreover, the jury is likely to be confused by Judge Martone's ruling on summary judgment that a conspiracy existed. Judge Martone originally conceded that the Hypercom/Verve Action did not include a separate claim for civil conspiracy: In its first amended answer to the complaint and counterclaims Hypercom characterizes counter-defendants' actions as a "civil conspiracy." However, Hypercom neither lists civil conspiracy as a separate count in its counterclaims, nor demands relief for such a claim. Therefore, we do not consider civil conspiracy a separate claim for relief. Order dated June 12, 2006, at 3, n. 2, Hypercom Corp. v. Verve, No. CV-05-0365-PHXFJM. However, in his summary judgment Order, Judge Martone found as a matter of law that Verve "worked in concert with Omron in furtherance of the litigation harassment scheme," even though Omron was not a party to the case. See Order at 10 (attached as

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Exhibit A to Motion In Limine No. 5). Judge Martone's decision should be kept from the jury on this basis alone, but the fact that the finding of civil conspiracy was gratuitous and unnecessary to finding Hypercom liable for malicious prosecution and abuse of process should further preclude the use of that finding here.1 Fundamental issues of fairness require the exclusion of this evidence. Hypercom chose to pursue separate actions against Verve and Omron, and it would be perverse to allow Hypercom to use the Verve judgment against Omron in the name of judicial efficiency. Cf Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331 (1979) ("general rule should be that in cases where a plaintiff could easily have joined in the earlier action . . . a trial judge should not allow the use of offensive collateral estoppel"). Indeed, permitting Hypercom to use findings from one lawsuit while simultaneously prosecuting a separate action would amount to an ambush of Omron. Cf Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 347 (2d Cir. 1995) (rejecting defendant's use against lessor of owner's dismissal "with prejudice" because it would amount to unfair ambush). Omron respectfully asks that the Court bar Hypercom from introducing any evidence from the proceedings in Verve v. Hypercom, Cor., No. CV-05-03650PHX-JFM, (D. Ariz.).

1

Hypercom has previously contended that the Court could "judicially notice" findings in another federal action. This position, however, is wholly unsupported. See e.g., Kilroy v. State of California, 119 Cal. App. 4th 140, 148 (Cal. Ct. App. 2004) ("factual findings in a prior judicial opinion are not a proper subject of judicial notice;" rather, "the finding itself may be a proper subject of judicial notice if it has a res judicata or collateral estoppel effect in a subsequent action").

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RESPECTFULLY SUBMITTED on April 13, 2007.

By: /s/ Matthew A.C. Zapf Matthew A.C. Zapf A. Colin Wexler GOLDBERG KOHN 55 East Monroe Street Suite 3300 Chicago, IL 60603-5792 David P. Irmscher (15026-02) John K. Henning (25203-49) BAKER & DANIELS LLP 111 East Wayne Street Suite 800 Fort Wayne, IN 46802 H. Michael Clyde (009647) PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue Suite 2000 Phoenix, AZ 85012-2788 Attorneys for Defendant Omron Corporation

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CERTIFICATE OF SERVICE I hereby certify that on April 13, 2007, I electronically transmitted the attached documents 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: Andrew Foster Halaby Ray Kendall Harris John Kenyon Henning, IV David P. Irmscher Sid Leach Monica Anne Limon-Wynn Paul Moore A. Colin Wexler Matthew A.C. Zapf [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

I hereby certify that on April 16, 2007, I caused the attached document to be served by hand delivery on Judge Paul G. Rosenblatt, United States District Court of Arizona, 401 West Washington Street, Phoenix, Arizona 85003-2118

/s/ Lisa M. Sandoval

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