Case 1:17-cv-06782-DLC Document 66 Filed 12/14/18 Page 1 of 11

Eric J. Shimanoff (ejs@cll.com)

Mark Montague (mxm@cll.com)
Joelle A. Milov (jam@cll.com)
COWAN, LIEBOWITZ & LATMAN, P.C.
114 West 47th Street
New York, NY 10036
(212) 790-9200
Attorneys for Plaintiff and Counterclaim Defendant
Wine Enthusiast, Inc.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK
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WINE ENTHUSIAST, INC.,
No. 17 Civ. 6782 (DLC) (HP)
Plaintiff and Counterclaim Defendant,

against

VINOTEMP INTERNATIONAL CORPORATION,

Defendant and Counterclaim Plaintiff.

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MEMORANDUM OF LAW IN SUPPORT OF WINE ENTHUSIAST’S

MOTION FOR SANCTIONS PURSUANT TO FED. R. CIV. P. 11
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Plaintiff and Counterclaim Defendant Wine Enthusiast, Inc. (“Wine Enthusiast”)

respectfully submits this memorandum of law in support of its motion pursuant to Rule 11 of the

Federal Rules of Civil Procedure for sanctions against Defendant and Counterclaim Plaintiff

Vinotemp International Corporation (“Vinotemp”) and its counsel for filing a frivolous and

unsupported design patent infringement claim based on a patent it knew or should have known

was invalid because Vinotemp publically disclosed and sold products embodying the claimed

invention more than one year before filing its patent application.
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INTRODUCTION

Wine Enthusiast filed this declaratory judgment action in response to far-fetched claims

by Vinotemp that Wine Enthusiast inter alia infringed U.S. Design Patent No. D711,936 (the

“D936 Patent”) for a black wine rack shelf front. Vinotemp then filed a counterclaim against

Wine Enthusiast for infringement of the D936 Patent. Dkt.#24. On July 19, 2018, the Court

dismissed Vinotemp’s counterclaim for infringement of the D936 Patent pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure, finding no design patent infringement as a

matter of law. Dkt.#42.

Wine Enthusiast recently uncovered evidence showing that the invention claimed in the

D936 Patent was disclosed publically by Vinotemp through marketing materials, manuals and

three products offered for sale more than one year prior to February 8, 2013, the date Vinotemp

filed its application for the D936 Patent. As such, the D936 Patent is invalid under 35 U.S.C. §

102, a fact which Vinotemp knew or should have known at the time it filed its counterclaims. At

minimum, even if not identical, the prior art is so close to the claimed invention in the D936

Patent that it renders the D936 Patent obvious and invalid under 25 U.S.C. § 103. Despite this

knowledge, Vinotemp failed to disclose the existence of this prior art to the Patent Office,

obtained the D936 Patent under false pretenses and asserted claims against Wine Enthusiast for

design patent infringement that were litigated on the merits, wasting significant judicial

resources and at great cost to Wine Enthusiast.

This discovery is just the latest example showing that Vinotemp is improperly attempting

to stifle legitimate competition by making baseless and unsustainable claims over unprotectable,

common place, functional and generic design features of wine refrigerators. Vinotemp’s true

motives are clearly borne out by a 2012 email from its CEO, India Hynes, where she states: “we

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are Trademarking [sic] our Black wood lip, I have a feeling that this is the trend, so wanted to

capture than [sic] all for ourselves.” Claverie Decl. Ex. T (emphasis added). As Wine

Enthusiast pointed out in its pending motion to bifurcate the issue of the purported validity of

Vinotemp’s trade dress, aesthetic, generic and commonplace “trends” are not protectable.

Pursuant to Fed. R. Civ. P. 11, Wine Enthusiast respectfully requests that the Court order

Vinotemp and its counsel to pay Wine Enthusiast its reasonable attorneys’ fees related to claims

involving the D936 Patent and to pay the Court a reasonable penalty, the amount of each to be

determined in a subsequent inquest by Magistrate Judge Pitman.

FACTUAL SUMMARY

On February 8, 2013, Vinotemp filed an application for the D936 Patent, seeking

protection over the design of a black wine rack shelf front, which patent application was granted

for the design below:

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Counterclaim Ex. B (Dkt.#24-2).

Based on evidence recently uncovered by Wine Enthusiast, Vinotemp publically

disclosed the invention claimed in the D936 Patent through product literature and product sales

with respect to at least three Vinotemp wine refrigerators more than one year before the

application date for the D936 Patent. The three wine refrigerators relevant to the disclosures are:

• VT-100WINEDISP4 – Dual-Zone Wine Dispenser and Cooler

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• VT-140TS – 142 Bottle Dual-Zone Touch Screen Wine Cooler

• VT-32TSFE – 33-Bottle Touch Screen Mirrored Wine Cooler

Based on historical captures of Vinotemp’s website, Vinotemp press releases, Vinotemp

instruction manuals and third party websites, each of these products embodies the black wine

shelf front and was first offered for sale or disclosed in or about 2011, more than a year before

Vinotemp filed its application for the D936 Patent. Claverie Decl. Exs. F-S.

Vinotemp did not disclose the existence of this prior art to the Patent Office at any time

during the prosecution of the D936 Patent. Claverie Decl. Ex. B. Vinotemp is the owner of

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several other patents and was represented by counsel during the prosecution of the D936 Patent.

Claverie Decl. Exs. A & B. The D936 Patent issued on August 26, 2014. Dkt.#24-2. On July

19, 2018, the Court dismissed Vinotemp’s counterclaim for infringement of the D936 Patent as a

matter of law. Dkt#42.

ARGUMENT

I. Wine Enthusiast Has Complied with Rule 11’s Safe Harbor

Provisions

Pursuant to Rule 11’s safe harbor provisions, notice of a motion for sanctions must be

served on a party at least 21 days prior to the time it is filed and cannot be filed if the challenged

allegation is withdrawn prior to filing. Fed. R. Civ. P. 11(c)(2). The moving party is not

required to serve the non-moving party with its memorandum or law and supporting affidavits in

order to start the 21-day safe harbor period. See Star Mark Mgmt., Inc. v. Koon Chun Hing Kee

Soy & Sauce Factory, Ltd., 682 F.3d 170, 175-76 (2d Cir. 2012). The party seeking sanctions

need only provide the non-moving party with “(1) the source of authority for the sanctions being

considered; and (2) the specific conduct or omission for which the sanctions are being considered

so that the subject of the sanctions motion can prepare a defense.” Id. (proper notice given

through service of notice of motion and letter detailing factual and legal basis of motion).

On October 31, 2018, Wine Enthusiast sent a letter to Vinotemp concerning Wine

Enthusiast’s discovery of Vinotemp’s public disclosures more than one year before filing its

application for the D936 Patent. Claverie Decl. Ex. C. When Vinotemp did not respond to that

letter, on November 12, 2018, Wine Enthusiast sent Vinotemp a formal Rule 11 safe harbor letter

detailing the grounds for and nature of the requested sanctions and an accompanying notice of

motion. Claverie Decl. Ex. D. On December 3, 2018, Vinotemp sent an email to Wine

Enthusiast that did not deny the substantive allegations that Vinotemp’s D936 Patent was invalid

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due to Vinotemp’s own public disclosure of the claimed invention more than a year prior to

application. Claverie Decl. Ex. E. As of yet, Vinotemp has failed to agree to the sanctions

demanded by Wine Enthusiast. The 21-day safe harbor period has lapsed. Thus, Wine

Enthusiast has complied with the statutory requirements of Rule 11’s safe harbor provision prior

to filing the instant motion for sanctions.

II. The Court Should Grant Wine Enthusiast’s Motion for Sanctions

Pursuant to Fed. R. Civ. P. 11:

By presenting to the court a pleading, . . . an attorney . . . certifies that to the best

of the person’s knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause
unnecessary delay, or needlessly increase the cost of litigation;

(2) the claims, defenses, and other legal contentions are warranted by existing law
or by a nonfrivolous argument for extending, modifying, or reversing existing law
or for establishing new law; [and]

(3) the factual contentions have evidentiary support . . . .

“If, after notice and a reasonable opportunity to respond, the court determines that Rule

11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm,

or party that violated the rule or is responsible for the violation. Absent exceptional

circumstances, a law firm must be held jointly responsible for a violation committed by its

partner, associate, or employee.” Fed. R. Civ. P. 11(c). A claim is frivolous when it is “utterly

devoid of legal or factual basis.” Reichmann v. Neumann, 553 F. Supp. 2d 307, 320 (S.D.N.Y.

2008).

“When a court determines that Rule 11 sanctions are appropriate, it has significant

discretion in determining what sanctions, if any, should be imposed for a violation.” Lipin v.

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Hunt, 573 F. Supp. 2d 836, 844 (S.D.N.Y. 2008) (internal quotations and citations omitted). The

nature of this sanction should:

deter repetition of the conduct or comparable conduct by others similarly situated.

The sanction may include nonmonetary directives; an order to pay a penalty into
court; or, if imposed on motion and warranted for effective deterrence, an order
directing payment to the movant of part or all of the reasonable attorney's fees and
other expenses directly resulting from the violation

Fed. R. Civ. P. 11(c)(4). Monetary penalties and an award of attorneys’ fees are appropriate

sanctions for filing a frivolous patent infringement claim. See, e.g., Source Vagabond Sys. v.

Hydrapak, Inc., 2012 U.S. Dist. LEXIS 51916 at *18-24 (S.D.N.Y. Apr. 11, 2012), later

proceeding at 2013 U.S. Dist. LEXIS 4853 (S.D.N.Y. Jan. 11, 2013) (awarding monetary penalty

and attorneys’ fees for filing frivolous patent infringement claim).

The Court should sanction Vinotemp for filing a frivolous infringement counterclaim

based on a patent it knew or should have known was invalid. Pursuant to Section 102 of the

Patent Act, no patent shall issue if the claimed invention was “described in a printed publication,

or in public use, on sale, or otherwise available to the public” more than one year prior to the

date the application was filed. 35 U.S.C. § 102. See also Robotic Vision Sys. v. View Eng'g,

Inc., 249 F.3d 1307, 1310 (Fed. Cir. 2001). As noted above, the invention claimed in the D936

Patent was publically disclosed and offered for sale by Vinotemp in product literature, press

releases, marketing materials and physical products dating back to at least 2011, more than a

year before Vinotemp filed the D936 Patent in 2013. Vinotemp has not denied these facts and

the materials accompanying this motion clearly disclose the claimed invention. Indeed,

Vinotemp’s marketing materials expressly state that the shelf fronts of two of these three

products are covered by Vinotemp’s design patent. Claverie Decl. Exs. K & P. As such, the

D936 Patent is invalid. See Robotic Vision Sys., 249 F.3d at 1313. Yet, Vinotemp filed a

counterclaim for infringement of the D936 Patent against Wine Enthusiast, resulting in the

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parties’ and Court’s great expenditure of time and resources, including on Wine Enthusiast’s

motion to dismiss the claim. Vinotemp owns several patents and was represented by counsel

during the prosecution of the D936 Patent. Thus, Vinotemp knew or should have known that the

D936 was invalid at the time it filed its patent application and well before it filed its

counterclaims in the instant action.

To the extent Vinotemp claims that the wine rack shelf front disclosed in product

literature, press releases, marketing materials and physical products is not identical to the design

claimed in the D936 Patent—a position it has not yet asserted—the design is so similar that the

invention would be deemed “obvious” and unpatentable under Section 103 of the Patent Act. 35

U.S.C. § 103 (“A patent for a claimed invention may not be obtained, notwithstanding that the

claimed invention is not identically disclosed as set forth in section 102, if the differences

between the claimed invention and the prior art are such that the claimed invention as a whole

would have been obvious before the effective filing date of the claimed invention to a person

having ordinary skill in the art to which the claimed invention pertains). 1

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At bare minimum, Vinotemp was under an obligation to disclose these prior
designs to the Patent Office pursuant to its duty under 37 C.F.R. 156 (requiring
disclosure of “material to patentability”). The obligation extended to Vinotemp
and its attorneys. See id. Prior art is material if “it establishes, by itself or in
combination with other information, a prima facie case of unpatentability of a
claim.” Id. Such failure to disclose also could be tantamount to inequitable
conduct before the Patent Office, which would invalidate the patent. See
Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229, 1234 (Fed. Cir. 2008)
(“To hold a patent unenforceable for inequitable conduct, a district court must
find by clear and convincing evidence that a patent applicant breached its duty of
candor and good faith to the United States Patent and Trademark Office ("PTO")
by failing to disclose material information, or submitting false material
information, with an intent to deceive the PTO”).

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CONCLUSION

Based on the foregoing, the Court should issue an award of sanctions against Vinotemp,

including to pay Wine Enthusiast its attorneys’ fees incurred in connection with the frivolous

claim and pay a monetary penalty to the Court, the amount of each to be determined in a

subsequent inquest by Hon. Magistrate Judge Pitman.

Dated: New York, New York COWAN, LIEBOWITZ & LATMAN, P.C.
December 14, 2018
By: s/ Eric J. Shimanoff
Eric J. Shimanoff (ejs@cll.com)
Mark Montague (mxm@cll.com)
Joelle A. Milov (jam@cll.com)
114 West 47th Street
New York, NY 10036
(212) 790-9200
Attorneys for Plaintiff and Counterclaim Defendant
Wine Enthusiast, Inc.

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