Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01892/USCOURTS-ca13-15-01892-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 

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United States Court of Appeals 

for the Federal Circuit ______________________ 

DRONE TECHNOLOGIES, INC.,

Plaintiff-Appellee

v.

PARROT S.A., PARROT, INC.,

Defendants-Appellants

______________________ 

2015-1892, 2015-1955

______________________ 

Appeals from the United States District Court for the 

Western District of Pennsylvania in No. 2:14-cv-00111-

AJS, Judge Arthur J. Schwab.

______________________ 

Decided: September 29, 2016

______________________ 

GENE A. TABACHNICK, Beck & Thomas, P.C., Pittsburgh, PA, argued for plaintiff-appellee. Also represented 

by RICHARD T. TING. 

JEFFREY A. LAMKEN, MoloLamken LLP, Washington, 

DC, argued for defendants-appellants. Also represented 

by SARAH JUSTINE NEWMAN, ERIC RICHARD NITZ; JAMES E.

HOPENFELD, Singer Bea LLP, San Francisco, CA; TAMMY 

J. TERRY, Osha Liang LLP, Houston, TX; JOHN M.

WHEALAN, Chevy Chase, MD.

______________________ 

Case: 15-1892 Document: 82-2 Page: 1 Filed: 09/29/2016
2 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

Before NEWMAN, SCHALL, and CHEN, Circuit Judges.

Opinion for the court filed by Circuit Judge SCHALL. 

Opinion concurring in the judgment filed by Circuit 

Judge NEWMAN.

SCHALL, Circuit Judge. 

Parrot, S.A. and Parrot, Inc. (collectively, “Parrot”) 

appeal from the final judgment of the United States 

District Court for the Western District of Pennsylvania 

that awarded Drone Technologies, Inc. (“Drone”) damages 

for Parrot’s infringement of two patents owned by Drone 

as assignee and that also awarded Drone attorney fees 

pursuant to 35 U.S.C. § 285 and Rule 37 of the Federal 

Rules of Civil Procedure. Drone Techs., Inc. v. Parrot 

S.A., No. 14CV0111, 2015 WL 3756318, at *1, *14 (W.D. 

Pa. June 12, 2015). The awards of damages and attorney 

fees came after the district court entered a default judgment against Parrot as a sanction for Parrot’s failure to 

comply with two discovery orders issued by the court. The 

default judgment struck Parrot’s answer and counterclaims and made Parrot liable for infringement of the two 

patents. Drone Techs., Inc. v. Parrot S.A., 303 F.R.D. 254, 

266 (W.D. Pa. 2014). For the reasons set forth below, we 

hold that the district court abused its discretion in issuing 

the two discovery orders and in entering a default judgment against Parrot for its failure to comply with the 

orders. We therefore vacate the final judgment and the 

awards of damages and attorney fees and remand the 

case to the district court for further proceedings consistent with this opinion.

Parrot also appeals the district court’s denial of its 

motion to dismiss Drone’s complaint for lack of standing. 

As discussed below, the basis for the motion was Parrot’s 

contention that the assignments to Drone were invalid 

because the person named on the patents and who assigned the patents to Drone was not the true inventor. 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 3

Parrot also raised the affirmative defense of improper 

inventorship under 35 U.S.C. § 102(f), which the district 

court struck as part of its default judgment. We affirm 

the district court’s denial of Parrot’s motion to dismiss for 

lack of standing. However, on remand, Parrot will have 

the opportunity to reassert its invalidity defense based on 

alleged incorrect inventorship. The district court will be 

in a position to resolve the issue of inventorship; a successful challenge to inventorship may invalidate the 

patents-in-suit.

BACKGROUND

I.

Drone is a Taiwanese corporation and the assignee of 

U.S. Patent Nos. 7,584,071 (“the ’071 patent”) and 

8,106,748 (“the ’748 patent”) (collectively, “the patents-insuit”). The patents-in-suit are generally directed to systems for remotely controlled machines. ’071 patent, 

Abstract; ’748 patent, Abstract.1 According to the ’071 

patent, at the time of the invention, conventional remotecontrol systems included two main components: a remotecontrolled device (e.g., a model airplane) and a handheld 

device with a control stick. Id. at 1:22–36. To control the 

movement of the airplane once in flight, a user would 

alter the position of the stick to cause an associated 

change in the flight angle of the plane. See id. at 1:36–47. 

Such systems had drawbacks, though, as they only controlled movement in two directions. See id. at 1:48–51. 

Other systems existed that enabled users to control three 

directions of movement. The handheld devices in those 

systems, however, incorporated multiple control elements, 

which required simultaneous use of both hands and thus 

 

1 The patents-in-suit share similar specifications; 

thus, reference to the ’071 patent suffices for the purpose 

of providing background.

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4 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

made controlling the airplane’s flight path difficult. See 

id. at 1:52–60. The patents-in-suit purport to overcome 

these deficiencies by providing a system that enables a 

user to synchronize the movement of a remote-controlled 

device with the movement of a remote controller. See id. 

at 1:64–2:2, 2:62–3:3. In other words, moving the 

handheld control itself causes a synchronous movement of 

the airplane. For example, if the handheld control is 

tilted downward and to the left, the plane moves down 

and to the left.

The claims of the patents-in-suit recite systems with 

“a remote controller” and “a remote-controlled device,” 

each having a set of “modules.” Id. at 7:63–8:24. Independent claim 1 of the ’071 patent is representative of the 

claimed subject matter and provides as follows:

1. A remote control system, comprising:

a remote controller, comprising:

a motion detecting module, which detects the 

remote controller’s motion and outputs a motion 

detecting signal; and a first communication module, which connects to the motion detecting module and receives the motion detecting signal, and 

transmits a target motion signal according to the 

motion detecting signal; and

a remote-controlled device, which is controlled by 

the remote controller, comprising:

a second communication module, which receives the target motion signal from the remote 

controller;

a terrestrial magnetism sensing module, 

which detects the remote-controlled device’s terrestrial magnetism and outputs a terrestrial 

magnetism sensing signal;

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 5

a processing module, which has a first input 

connected to the terrestrial magnetism sensing 

module and receives the terrestrial magnetism 

sensing signal, and a second input connected to 

the second communication module and receives 

the target motion signal, and processes the terrestrial magnetism sensing signal and the target motion signal to output a driving control signal; and

a driving module, which connects to the processing module and receives the driving control 

signal, and adjusts the remote-controlled device’s 

motion according to the driving control signal.

’071 patent, 7:63–8:24 (emphases added).

Parrot, S.A. is based in Paris, France. Its wholly 

owned subsidiary, Parrot, Inc., is a New York corporation 

headquartered in Michigan. Parrot is a designer, developer, and marketer of hobby aircraft, i.e., “drones.” When 

this lawsuit was initiated, Parrot offered the AR.Drone 

and the AR.Drone 2.0 in the United States. Parrot also 

had two other types of drones: the Bebop Drone, which 

was still under development, and its Jumping Sumo and 

Rolling Spider MiniDrones (the “MiniDrones”), which had 

not yet been released in the United States. Parrot also 

offered software—the “FreeFlight” application—that 

consumers could download and install on a touchscreen 

device (e.g., a smartphone) to pilot a Parrot drone. Pertinent to this case, Parrot’s drones require source code for 

their operation.2 Parrot uses source code for the FreeFlight application (the “off-board source code”) and sepa-

 

2 Source code is the text of a program written in a 

human-readable programming language. Microsoft Computer Dictionary 491 (5th ed. 2002). Once written, source 

code needs to be compiled into machine code before it can 

be executed by a computer. Id. at 372, 491.

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6 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

rate source code in the drone itself (the “on-board source 

code”).

II.

On January 24, 2014, Drone sued Parrot in the Western District of Pennsylvania, alleging that Parrot (by 

virtue of its customers’ actions) indirectly infringed the

’071 patent and the ’748 patent. In particular, Drone 

contended that Parrot instructed customers who purchased the AR.Drone or AR.Drone 2.0 to download and 

use the FreeFlight application to pilot their aircraft.3 

Once the customers followed Parrot’s instructions and 

implemented Parrot’s remote-controlled system, Drone 

alleged, they directly infringed the systems claimed in the 

patents-in-suit. 

Parrot answered the complaint on May 7, 2014, denying infringement and asserting various counterclaims and 

affirmative defenses, based on its view that the patentsin-suit were neither infringed nor valid. As more fully 

discussed below, after discovery was underway, the parties began to dispute whether Parrot should be required 

to produce all source code used in operating its drones. 

Eventually, Drone filed a motion to compel. In an order 

dated July 1, 2014, the district court granted Drone’s 

motion, compelling Parrot to produce, inter alia, its onboard source code. Unsatisfied with Parrot’s subsequent 

productions, Drone filed another motion to compel Parrot 

to produce its on-board source code, which the court 

granted on July 25, 2014. Subsequently, on November 3, 

2014, the district court sanctioned Parrot for its failure to 

comply with its two prior discovery orders. In imposing 

sanctions, the court struck Parrot’s counterclaims and 

 

3 Drone did not identify the Bebop Drone or MiniDrones in its complaint.

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 7

defenses and entered a default judgment against it as to 

liability.

III.

Having found Parrot liable for infringement, the court 

scheduled proceedings on damages. In due course, the 

issue of damages was tried before a jury, with the jury 

finding that Drone was entitled to $7.8 million in damages for Parrot’s infringement. Thereafter, the court entered judgment in favor of Drone in the amount of $7.8 

million and awarded Drone roughly $1.7 million in attorney fees pursuant to 35 U.S.C. § 285 and Fed. R. Civ. P. 

37. Parrot now appeals. We have jurisdiction pursuant to 

28 U.S.C. § 1295(a)(1).

DISCUSSION

Parrot raises three issues on appeal. First, it contends that Drone did not have standing to sue and that, 

therefore, the district court should have dismissed Drone’s 

suit for lack of jurisdiction. Second, Parrot argues that 

the court abused its discretion in directing Parrot to turn 

over its on-board source code and then sanctioning Parrot 

by entering a default judgment against it when it failed to 

do so. Finally, Parrot urges that, even if the default 

judgment of liability is allowed to stand, the award of 

damages should be vacated because the district court 

misapplied the law on damages and abused its discretion 

in allowing the jury to consider certain evidence on damages. We turn first to the matter of standing.

I.

A.

Following the district court’s entry of default judgment, but before the trial on damages, Parrot moved on 

February 5, 2015, for dismissal of Drone’s complaint for 

lack of standing. Parrot argued that the district court 

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8 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

lacked jurisdiction because Drone did not have complete 

ownership of the ’071 and ’748 patents and thus did not 

have standing to bring an action for infringement. While 

recognizing that Drone is the putative assignee of the 

patents-in-suit, Parrot contended that the assignment to 

Drone is null and void because Yu-Tuan Lee (“Ms. Lee”), 

who is named as the sole inventor on the face of the 

patents and who executed the assignment, did not actually invent the claimed subject matter. According to Parrot, 

Bruce Ding (“Mr. Ding”), Ms. Lee’s husband, is the true 

inventor or, at the very least, is a co-inventor. Parrot 

appended to its motion transcripts of portions of Ms. Lee’s 

and Mr. Ding’s depositions. Parrot urged that the transcripts demonstrated that Ms. Lee does not qualify as an 

inventor and that they showed that Mr. Ding, who did not 

execute the assignment to Drone, does qualify as an 

inventor.

In a memorandum order filed on March 24, 2015, the 

district court denied Parrot’s motion. Drone Techs., Inc. v. 

Parrot S.A., No. 14CV0111, 2015 WL 1326334, at *3 

(W.D. Pa. Mar. 24, 2015). Despite viewing Parrot’s arguments as “re-styled versions” of invalidity defenses stricken as part of the default judgment, the court addressed 

Parrot’s challenge to inventorship. Id. at *2.4 Although 

 

4 Before the default judgment, on October 22, 2014, 

Parrot moved for leave to amend its answer to “add a 

defense and counterclaim for unenforceability due to 

inequitable conduct, and to add more specificity to the 

already pled defense and counterclaim for invalidity . . . 

under 35 U.S.C. § 102(f).” On November 3, 2014, the 

same day it sanctioned Parrot, the district court denied as 

moot Parrot’s motion to amend. J.A. 42. On February 18, 

2015, Parrot moved for leave to assert against Drone’s 

damages claim an affirmative defense and a request for 

equitable relief based on the contention that Ms. Lee was 

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the court did not cite any particular evidence or caselaw, 

it nevertheless found that the record sufficiently supported Ms. Lee’s claim to be a properly named inventor and 

that it did not demonstrate that Mr. Ding is at least a coinventor. Id. at *2. In light of Parrot’s concession that 

Ms. Lee is presumed to be the sole inventor, the court 

concluded that Drone had standing to sue as the rightful 

owner of the patents-in-suit by virtue of the assignment 

from her. See id. at *2–3.

B.

Parrot argues that we must consider inventorship to 

satisfy ourselves that Drone has standing and that the 

district court thus had jurisdiction. According to Parrot, 

the record establishes that Ms. Lee is not an inventor or 

at most is only a co-inventor, along with Mr. Ding. In 

particular, Parrot contends that Ms. Lee did not conceive 

of the claimed invention because she had “just a simple 

idea” to control aircraft using the movements of a remote 

controller, and did not have a solution for accomplishing 

that idea or even understand any of the technology described in the patents-in-suit. It was Mr. Ding, Parrot 

asserts, who conceived of the invention’s structure and 

the operative method of making the technology. In fact, 

in Parrot’s view, Mr. Ding accounted for all aspects of the 

invention except the “idea” of having the aircraft’s movements mimic the controller’s. Because Mr. Ding was the 

inventor or at least a co-inventor, Parrot reasons, Drone 

 

incorrectly named as the sole inventor on the ’071 and 

’748 patents. The district court denied the motion on 

March 2, 2015. J.A. 43–46. In its order, the court stated 

that Parrot’s motion, “filed over three months after liability has been established,” was “the product of undue delay 

and would impede the resolution of remaining damages 

issues.” J.A. 44–45.

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did not acquire complete (or any) ownership from Ms. Lee 

and, thus, did not have standing to sue.

Drone contends that an analysis of inventorship is 

unnecessary, given Parrot’s acknowledgment that Ms. Lee 

is named as the sole inventor and that she assigned to 

Drone the patents-in-suit. Drone reasons that, because 

Ms. Lee had standing as the patentee to whom the patents-in-suit issued, it obtained standing as her successor 

in title. In Drone’s view, the district court therefore did 

not need to consider inventorship as a prerequisite to 

standing because inventorship and standing are separate 

legal issues. And even if the court was required to address inventorship, Drone urges, Parrot failed to provide 

clear and convincing evidence that Mr. Ding is a coinventor. It thereby failed to overcome the presumption 

that Ms. Lee is the only inventor.

C.

We review de novo a district court’s determination of 

standing. Bard Peripheral Vascular, Inc. v. W.L. Gore & 

Assocs., Inc., 776 F.3d 837, 842 (Fed. Cir. 2015); Rite-Hite 

Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995) (en 

banc). Standing is a jurisdictional issue that implicates 

the case-or-controversy requirement of Article III. Lujan 

v. Defs. of Wildlife, 504 U.S. 555, 560 (1992); Samsung 

Elecs. Co. v. Rambus, Inc., 523 F.3d 1374, 1378 (Fed. Cir. 

2008) (“Standing to sue or defend is an aspect of the caseor-controversy requirement.”). To establish standing 

under Article III, a plaintiff must demonstrate, inter alia, 

that it has suffered an “injury in fact.” Lujan, 504 U.S. at 

560. “Constitutional injury in fact” occurs when a party 

infringes a patent in violation of a party’s exclusionary 

rights. Morrow v. Microsoft Corp., 499 F.3d 1332, 1339–

40 (Fed. Cir. 2007).

Before a court may exercise jurisdiction over a patent 

infringement action, it must be satisfied that, “in addition 

to Article III standing, the plaintiff also possesse[s] standCase: 15-1892 Document: 82-2 Page: 10 Filed: 09/29/2016
DRONE TECHNOLOGIES, INC. v. PARROT S.A. 11

ing as defined by § 281 of the Patent Act.” Alps S., LLC v. 

Ohio Willow Wood Co., 787 F.3d 1379, 1382 (Fed. Cir. 

2015). Under § 281, “[a] patentee shall have remedy by 

civil action for infringement of his patent.” 35 U.S.C. 

§ 281 (2012) (emphasis added). A “patentee” is not limited to the person to whom the patent issued, but also 

includes “successors in title to the patentee.” 35 U.S.C. 

§ 100(d) (2012) (emphasis added); see also H.R. Techs., 

Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1384 (Fed. Cir. 

2002) (“In order to have standing, the plaintiff in an 

action for patent infringement must be a ‘patentee’ pursuant to 35 U.S.C. §§ 100(d) and 281 . . . .”). A party may 

become the successor in title to the original patentee by 

assignment, 35 U.S.C. § 261 at ¶ 2 (“[P]atents, or any 

interest therein, shall be assignable in law by an instrument in writing.”), and then may sue for infringement in 

its own name, Propat Int’l Corp. v. RPost, Inc., 473 F.3d 

1187, 1189 (Fed. Cir. 2007); Morrow, 499 F.3d at 1339–40 

(explaining that a plaintiff that “hold[s] all legal rights to 

the patent as the patentee or assignee of all patent rights

. . . is one entitled to sue for infringement in its own 

name”).

When multiple inventors are listed on the face of a patent, “each co-owner presumptively owns a pro rata 

undivided interest in the entire patent, no matter what 

their respective contributions.” Isr. Bio-Eng’g Project v. 

Amgen, Inc., 475 F.3d 1256, 1263 (Fed. Cir. 2007) (internal quotation marks and citation omitted). Consequently, 

if a co-inventor assigns his or her ownership interest to a 

third party, the assignee cannot sue infringers “[a]bsent 

the voluntary joinder of all co-owners.” Id. at 1264–65.

The parties do not dispute that Ms. Lee is the only 

person named on the face of the patents-in-suit, or that 

Ms. Lee assigned to Drone her ownership interests in the 

patents-in-suit. Instead, as noted, the parties dispute 

whether, in assessing standing, we (1) should presume 

that Ms. Lee is correctly named as the sole inventor or 

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12 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

(2) should independently assure ourselves that, in fact, 

she is the sole inventor. Drone argues for the first approach, Parrot the second. We agree with Drone that, in 

this case, the first approach is the correct one.

There is a “presumption that [a patent’s] named inventors are the true and only inventors.” Acromed Corp. 

v. Sofamor Danek Grp., Inc., 253 F.3d 1371, 1379 (Fed. 

Cir. 2001) (citing Hess v. Advanced Cardiovascular Sys., 

Inc., 106 F.3d 976, 980 (Fed. Cir. 1997)). In our view, 

Parrot has failed to advance a persuasive reason for not

accepting this presumption at this stage of the litigation, 

particularly when another avenue exists for it to challenge inventorship. Specifically, a party may raise the 

defense that a patent is invalid for failing to name the 

correct inventors. 35 U.S.C. § 102(f) (2006)5; Pannu v. 

Iolab Corp., 155 F.3d 1344, 1348–50 (Fed. Cir. 1998). 

Parrot recognized as much when it first attempted to add 

a claim and defense under § 102(f) to its answer, alleging 

both the misjoinder of Ms. Lee and the nonjoinder of 

Mr. Ding. J.A. 2437–38. However, the court denied as 

moot6 Parrot’s motion to amend its answer at the same 

time the court imposed sanctions. While “[i]t is well 

settled that questions of standing can be raised at any 

time,” Bd. of Trustees of Leland Stanford Junior Univ. v. 

Roche Molecular Sys., Inc., 583 F.3d 832, 841 (Fed. Cir. 

2009), aff’d, 563 U.S. 776 (2011) (hereinafter “Roche”), we 

see no reason why Parrot should be allowed to reassert an

invalidity challenge under the guise of a motion to dismiss 

for lack of standing.

 

5 35 U.S.C. § 102(f) provides that a person shall be 

entitled to a patent unless “he did not himself invent the 

subject matter sought to be patented.”

6 A decision the district court may reconsider on 

remand.

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Parrot does not cite any controlling authority suggesting that we must undertake the review it seeks; namely, a 

substantive examination of inventorship in order to resolve an issue of standing in an infringement action 

where the plaintiff’s claim to title is not otherwise in 

dispute. Parrot’s reliance on Pandrol USA, LP v. Airboss 

Railway Products, Inc., 320 F.3d 1354 (Fed. Cir. 2003), in 

support of its position is misplaced. In Pandrol, we found 

that “the defendants waived the right to contest the 

plaintiffs’ title to the patent, insofar as lack of ownership 

is viewed as a defense to the claim of infringement.” Id.

at 1367. We explained, however, that “the defendants’ 

waiver of the defense of lack of patent ownership did not 

waive the defendants’ ability to challenge the plaintiffs’ 

standing to sue.” Id. Significantly, in “examin[ing] the 

record to determine if it support[ed] the plaintiffs’ Article III standing,” we only analyzed the relevant assignment records (i.e., the ownership information); we did not 

evaluate inventorship as it may relate to ownership and 

standing. See id. at 1367–68. It does not follow from our 

examination of patent ownership in Pandrol that we here 

must consider whether Ms. Lee is correctly named as the 

sole inventor for purposes of determining standing. 

Indeed, while ownership and inventorship are related 

concepts, they involve separate inquiries. Isr. Bio-Eng’g, 

475 F.3d at 1263 (explaining that “issues of patent ownership are distinct from questions of inventorship”); Beech 

Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248 (Fed. 

Cir. 1993) (“It is elementary that inventorship and ownership are separate issues.”).

Neither does Roche support Parrot’s position. In that 

case, we held that although the defendant was timebarred from obtaining a judgment of patent ownership, it 

still could assert the plaintiff’s lack of patent ownership 

“as a defense and a challenge to [the plaintiff’s] standing 

to maintain its action against [the defendant].” Roche, 

583 F.3d at 839. In Roche, we considered the plaintiff’s 

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ownership of the patent at issue to satisfy ourselves on 

the question of standing. Id. at 839, 848. As in Pandrol, 

though, we only examined ownership when addressing 

standing, and, in considering ownership, we accepted that 

the named inventors were the true inventors. See id. at 

837, 844, 848.

Parrot suggests that Ethicon, Inc. v. U.S. Surgical 

Corp., 135 F.3d 1456 (Fed. Cir. 1998), requires us to 

assess inventorship when considering Drone’s standing. 

We do not agree. In Ethicon, the defendant obtained a 

license from a putative co-inventor and then moved the 

trial court, under 35 U.S.C. § 256, to add the co-inventor 

as a named inventor on the patent asserted against the 

defendant. Id. at 1459. After the court granted the 

motion to correct inventorship, the defendant successfully 

moved to dismiss the case for failure to join a co-inventor. 

Id. at 1459–60. We affirmed. Id. at 1468. The key difference between Ethicon and this case is that the district 

court in Ethicon had already established that the patentin-suit had a co-inventor who was not named as a plaintiff

when the defendant moved to dismiss. Unlike in Ethicon, 

here, the district court never granted (or even considered) 

a § 256 motion, so the court was not presented with a 

newly established inventorship when Parrot moved to 

dismiss based on Drone’s alleged lack of standing. Thus, 

even though Ethicon involved an issue of inventorship 

ultimately leading to a dismissal, it does not compel 

consideration of inventorship in determining standing in 

this case.

Since we need not address the merits of Parrot’s inventorship challenge, the standing analysis in this case is 

straightforward. Parrot concedes, as it must, that 

Ms. Lee is the presumed “true and only” inventor. Moreover, beyond its challenge to inventorship, Parrot does not 

contend that Drone’s assignment is null or void under a 

contractual theory or any other ownership theory. In 

short, Drone established standing under § 281 by virtue of 

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its status as the sole patentee (i.e., successor in title), and 

also satisfied Article III’s standing requirement by owning 

a patent that allegedly has been infringed, Pandrol, 320 

F.3d at 1368 (“Establishing ownership of a patent that 

has been infringed satisfies the requirements of Article III 

standing.”). We therefore affirm the district court’s denial 

of Parrot’s motion to dismiss for lack of standing without 

reviewing or endorsing the district court’s inventorship 

analysis. The district court had, and will continue to 

have, jurisdiction to hear Drone’s suit.7

II.

A. 

Parrot’s main argument on appeal is that the district 

court twice abused its discretion: first, when it directed 

Parrot to turn over its on-board source code; and, second,

when it sanctioned Parrot by entering a default judgment 

against it after it failed to produce the source code. 

Discovery in patent cases in the Western District of 

Pennsylvania is governed by the Federal Rules of Civil 

Procedure and the district’s local patent rules. See W.D. 

Pa. LPR (effective Dec. 1, 2009). Pertinent to the issue 

before us is Local Patent Rule 3.1 (“LPR 3.1”). While this 

case was pending in the district court, LPR 3.1 provided 

in relevant part as follows:

With the Initial Disclosures of the party opposing a claim of patent infringement, such party 

 

7 As noted above, Parrot will have the opportunity 

to reassert its defense based on alleged incorrect inventorship. Should Parrot choose to challenge inventorship 

under 35 U.S.C. § 102(f), the district court will be in a 

position to consider Parrot’s arguments relating to inventorship that we do not address here, giving due consideration to our precedents on inventorship.

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shall produce or make available for inspection and 

copying, among other items:

Source code, specifications, schematics, flow charts, artwork, formulas, drawings or other documentation . . . sufficient 

to show the operation of any aspects or elements of each accused apparatus, product, device, process, method or other 

instrumentality identified in the claims 

pled of the party asserting patent infringement . . . .

W.D. Pa. LPR 3.1 (emphases added).8

Discovery began on June 11, 2014, when Parrot 

served on Drone its “Initial Disclosures,” which included

over two-thousand pages of documents. The parties 

immediately began to dispute whether Parrot’s production 

met the requirements of LPR 3.1, with Drone insisting 

that Parrot was required to produce “source code, specifications, schematics, [and] flow charts” relating to the 

accused products and Parrot contending that its production was “sufficient to show the operation of the accused 

products as required by LPR 3.1.” J.A. 609–14. After a 

series of email exchanges and a fruitless meet and confer, 

Drone moved the district court to compel Parrot to produce the requested information (the “Initial Motion”). In 

the Initial Motion, Drone reiterated its belief that, under 

LPR 3.1, Parrot was required to produce source code, 

specifications, schematics, and flow charts. J.A. 578–83. 

Noting that Parrot’s products use off-board and on-board 

source code, Drone asserted that the former was critically 

important to its case because that code permits users to 

 

8 After Parrot filed its appeal, the Western District 

amended its local patent rules. The amended rules became effective December 5, 2015.

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 17

pilot the accused products. J.A. 581–82. For its part, 

Parrot did not dispute that it had not produced any source 

code. It instead argued that LPR 3.1 did not include a 

requirement to produce source code, or any other particular kind of document. J.A. 604–05. According to Parrot, 

Drone did not even dispute that Parrot had complied with 

LPR 3.1 by producing documents “sufficient to show” the 

operation of the accused products. J.A. 601. Parrot also 

contended that Drone had failed to establish that any of 

Parrot’s source code was necessary to show the operation 

of the accused products or to prove infringement of any 

claim. J.A. 602–04.

The district court sided with Drone, issuing a onepage order on July 1, 2014 (the “July 1 Order”). In the 

July 1 Order, the court compelled Parrot to “produce all 

source code, specifications, schematics, [and] flow 

charts . . . relating to the operation of the accused products (Parrot’s AR.Drone, AR.Drone 2.0, MiniDrone[s], and 

Bebop Drone) . . . on or before July 9, 2014.” J.A. 5. The 

court provided no analysis or reasoning in the July 1 

Order. See J.A. 5. Two days later, Parrot filed an emergency motion for clarification and reconsideration of the 

July 1 Order. In it, Parrot made three requests. J.A. 698. 

First, Parrot asked the court to allow it to make available 

for inspection its on-board source code, which it said is

“extremely sensitive technical information.” J.A. 703–04. 

Second, it requested that it be able to produce documents 

on a rolling basis beginning on July 9. J.A. 704–06. And 

third, it sought permission to not produce documents 

relating to the Bebop Drone and MiniDrones because, in 

its view, those products were not accused of infringement. 

J.A. 706–07. On July 8, 2014, the court denied Parrot’s 

emergency motion in a text order (i.e., a text-only entry on 

the court’s docket that does not include a written analysis).

Shortly thereafter, Parrot produced various documents, as required by the July 1 Order. These documents 

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18 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

included its off-board source code. J.A. 892. However, 

because Parrot did not produce, among other things, 

documents relating to the Bebop Drone, the MiniDrones, 

and the on-board source code, Drone moved the district 

court to order Parrot to comply with the July 1 Order (the 

“Second Motion”). See J.A. 879–89. In opposing the 

Second Motion, Parrot argued that it had produced, or 

would imminently produce, the documents necessary to 

comply with the July 1 Order. See J.A. 893–900. As for 

the on-board source code and the Bebop Drone and MiniDrones documents, Parrot suggested that it should be 

allowed to make the former available for inspection and 

insisted that the latter were irrelevant to the lawsuit. 

J.A. 895–97. The court granted Drone’s Second Motion in 

an order dated July 25, 2014 (the “July 25 Order”), and 

gave Parrot until August 13, 2014, to comply. J.A. 8–9. 

The district court also ordered Parrot to file a “written 

confirmation” of its compliance. J.A. 9. In addition, the 

court prompted Drone to file a “Motion to Show Cause 

why [Parrot] should not be held in contempt” if Parrot 

again failed to comply. J.A. 9.

One week later, Parrot moved the district court to 

modify the existing protective order to include certain 

safeguards for the production of the on-board source code. 

See J.A. 914–24. Believing that the protective order in 

place adequately guarded Parrot’s interests, the court 

denied the motion. J.A. 10–11. On August 13, 2014, the 

last day to comply, Parrot filed an emergency motion to 

seek relief from the July 25 Order. It urged the court to 

excuse it from producing its on-board source code and 

from producing documents relating to the Bebop drone, 

and it sought an extension of time to produce documents 

relating to the MiniDrones. J.A. 1279–80. Parrot also 

requested, in the alternative, a stay of the litigation in 

order to allow it to file with this court (and to allow this 

court to resolve) an application for a writ of mandamus. 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 19

J.A. 15, 1279. The district court denied Parrot’s motion 

the following day. J.A. 16.

On August 18, 2014, Drone filed a motion to show 

cause why Parrot should not be held in contempt. J.A.

1328. Thereafter, on October 23, 2014, the district court 

held a hearing on the motion. J.A. 27. By this time, 

although Parrot had produced over 14 million pages of 

documents, it had not given Drone the on-board source 

code or filed its “written confirmation.” J.A. 27, 31, 3273–

74. At the hearing, the court heard testimony from Parrot’s “head of legal” and from a “project manager” at 

Parrot, as well as arguments from counsel for both parties. J.A. 20, 27. At the conclusion of the hearing, the 

district court ordered the parties to file briefing on the 

appropriateness of sanctions. J.A. 27–28. On November 

3, 2014, the court issued an opinion on Drone’s motion to 

show cause. Drone Techs., Inc. v. Parrot S.A., 303 F.R.D. 

254 (W.D. Pa. 2014). In assessing the propriety of sanctions, the court balanced the six “Poulis” factors. See 

Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 867 

(3d Cir. 1984) (enumerating factors for courts to consider 

in sanctioning parties). Considering the Poulis factors, 

the court found that they weighed in favor of imposing a 

default sanction instead of holding Parrot in contempt. 

303 F.R.D at 265–66. Concluding that “lesser sanctions” 

would have been inadequate, the court entered a default 

judgment against Parrot as to liability and struck its 

answer and counterclaims. Id. at 266; J.A. 42.

In the meantime, on September 24, 2014, Parrot had 

filed with us two petitions for writ of mandamus. In re 

Parrot S.A., Nos. 14-156, 14-157 (Fed. Cir. 2014). In its 

petitions, Parrot contended that the writs should issue 

because the district court (1) had exceeded its authority 

by compelling Parrot to produce its on-board source code 

and information relating to the Bebop Drone and MiniDrones and (2) had abused its discretion by refusing to 

grant a motion to transfer venue filed by Parrot. We 

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20 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

denied the petitions on January 22, 2015. In re Parrot 

S.A., No. 14-156, Order at 2 (Fed. Cir. Jan. 22, 2015) (per 

curiam) (Doc. No. 34). Relevant here, we stated that “the 

appeal from the default judgment” entered as a sanction 

“provides an adequate means to challenge the discovery 

order relating to the source code.” Id.

B.

As noted, Parrot contends that the district court 

(1) abused its discretion when it issued the July 1 and 

July 25 Orders and (2) abused its discretion again when it 

entered a default judgment against Parrot for its failure

to comply with the orders.9 On the first point, Parrot

argues that the court misconstrued Parrot’s initialdisclosure obligations because LPR 3.1 does not require 

defendants to produce all source code, or even any source 

code, and does not require production. Parrot further 

argues that LPR 3.1 only requires materials sufficient to 

show how each accused product operates. Further, Parrot 

asserts that the court’s July 1 and July 25 Orders defied 

traditional principles of discovery by requiring Parrot to 

produce irrelevant materials without considering the 

burden placed on it. Regarding the second point, Parrot 

concedes it did not produce its on-board source code, but 

avers that Drone’s unsubstantiated prejudice and the 

availability of alternative remedies demonstrate that the

default sanction was improper.

Drone does not present substantive arguments in 

defense of the July 1 and July 25 Orders. On the matter 

of the default sanction, Drone relies on the district court’s 

decision. It contends that default was the right sanction

because the record supports the district court’s findings 

 

9 On appeal, Parrot does not raise the issue of venue.

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 21

on the Poulis factors and because the court properly 

balanced those factors when considering sanctions. 

C.

We are guided by regional circuit law when reviewing 

discovery rulings, Dorf & Stanton Commc’ns, Inc. v. 

Molson Breweries, 100 F.3d 919, 922 (Fed. Cir. 1996), and 

the imposition of sanctions, Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364, 1370 (Fed. Cir. 2002). In 

the Third Circuit, “[i]t is well established that the scope 

and conduct of discovery are within the sound discretion 

of the trial court.” Marroquin-Manriquez v. I.N.S., 699 

F.2d 129, 134 (3d Cir. 1983). Accordingly, a ruling on a 

discovery issue is only disturbed on appeal when it is 

found to be an abuse of discretion. Petrucelli v. Bohringer 

& Ratzinger, 46 F.3d 1298, 1310 (3d Cir. 1995). 

The imposition of sanctions is likewise reviewed for 

an abuse of discretion. Grider v. Keystone Health Plan 

Cent., Inc., 580 F.3d 119, 134 (3d Cir. 2009). A district 

court abuses its discretion in imposing sanctions when it 

bases its ruling (1) “on an erroneous view of the law” or 

(2) “on a clearly erroneous assessment of the evidence.” 

Bowers v. Nat’l Collegiate Athletic Ass’n, 475 F.3d 524, 

538 (3d Cir. 2007) (quoting Cooter & Gell v. Hartmarx 

Corp., 496 U.S. 384, 405 (1990)). When reviewing a 

default or dismissal sanction, “[i]t is the function of the 

appellate court to determine if the court properly balanced the Poulis factors and whether the record supports 

its findings.” Livera v. First Nat’l State Bank of N.J., 879 

F.2d 1186, 1194 (3d Cir. 1989); Ali v. Sims, 788 F.2d 954, 

957 (3d Cir. 1986). 

We conclude that, in this case, the district court twice 

abused its discretion: first, when it issued the July 1 and 

July 25 Orders; and second, when it imposed a default 

sanction on Parrot for not complying with those orders. 

We turn first to the discovery orders. 

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22 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

1.

 District courts must generally follow their own local 

rules. See Blue v. U.S. Dep’t of Army, 914 F.2d 525, 550 

(4th Cir. 1990) (vacating attorney-disciplinary sanctions 

because “the district court failed to follow its own local 

rules”); Ortega v. Geelhaar, 914 F.2d 495, 497–98 (4th Cir. 

1990) (vacating Rule 11 sanctions because “the district 

court ignored its own local rules”); Manshack v. Sw. Elec. 

Power Co., 915 F.2d 172, 175 (5th Cir. 1990) (explaining 

that a district court should “scrupulously adhere[] to its 

own local procedures”); Woods Constr. Co. v. Atlas Chem. 

Indus., Inc., 337 F.2d 888, 890 (10th Cir. 1964) (“Rules of 

practice adopted by the United States District Courts . . . 

have the force and effect of law, and are binding upon the 

parties and the court which promulgated them . . . .”) 

(citations omitted). In issuing the July 1 and July 25 

Orders, the district court failed to follow its local patent 

rules (as well as the Federal Rules) and also failed to 

provide any explanation for its deviation from those rules. 

In our view, the court erred in five respects. 

First, the district court granted the Initial Motion 

even though it did not find (and Drone did not show) that 

Parrot had failed to meet its obligations under LPR 3.1. 

Indeed, in the Initial Motion, Drone did not even attempt 

to address whether the documents Parrot produced in its 

Initial Disclosures were “sufficient to show” the operation 

of the accused products, which is all that LPR 3.1 requires. As noted, Parrot produced over two-thousand 

pages of documents that, in its view, sufficiently demonstrated how its accused products operate. Drone never 

explained why Parrot’s production was lacking; nevertheless, it insisted that Parrot was required to produce all of 

its source code. Drone was wrong. Although LPR 3.1 

describes various types of documentation that may be 

disclosed, it requires no particular kind of document. 

LPR 3.1 plainly envisions that a defendant may produce 

“other documentation” instead of source code. The record 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 23

is devoid of any showing that Parrot’s initial production

did not meet the requirements of LPR 3.1. In addition, 

the July 1 Order does not provide any explanation for the 

decision to grant the Initial Motion and does not address 

any perceived flaws in Parrot’s initial production. Without any explanation from Drone as to any deficiencies in

Parrot’s initial production, the court could not have determined that Parrot had not met its burden under the 

local rules. Under these circumstances, we think the 

court should not have granted the Initial Motion.10

Second, in the July 1 and July 25 Orders, the district 

court appears to have overlooked the “sufficient to show” 

limitation in LPR 3.1 by forcing Parrot to turn over “all” 

of its technical information “relating to the operation of 

the accused products.” J.A. 5, 9. The court’s July 1 Order 

provides no explanation for its breadth; in fact, Drone did 

not even request such a broad order. To the contrary, 

Drone only requested “all of the source code, specifications, schematics and flow charts, as required by 

LPR 3.1.” J.A. 583 (emphasis added). Thus, even if 

Drone was entitled to some source code, the court provided no rationale for forcing Parrot to produce all of its 

source code and other technical documents as part of its 

Initial Disclosures.

Third, in the July 1 and July 25 Orders, the district 

court also appears to have overlooked the “make available 

for inspection and copying” language in LPR 3.1 by directing Parrot to “produce” all information. J.A. 5, 9. LPR 3.1 

clearly allows Parrot to make its source code available for 

inspection. Drone never argued in its Initial and Second 

Motions that it needed Parrot to produce the code be-

 

10 Although we focus on the July 1 Order, our analysis applies with equal force to the July 25 Order, as the 

later-issued order provides no new reasoning or analysis 

and merely enforces the earlier order.

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24 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

cause, for whatever reason, it could not inspect the code; 

rather, Drone misconstrued LPR 3.1 as requiring production. J.A. 579. Instead of recognizing that Drone had 

misconstrued the local rule, the court accepted Drone’s 

position and did so without providing any explanation. 

J.A. 6. Thereafter, when Parrot filed an emergency 

motion to clarify that LPR 3.1 allows it to make its source 

code available for inspection, the court simply denied the 

request for relief, again without providing any reasoning. 

J.A. 6. The record contains no basis to support the court’s 

conclusion that Parrot had to produce its source code even 

though LPR 3.1 envisions inspection as an alternative.

Fourth, the district court’s July 1 and July 25 Orders 

failed to take into account the “identified in the claims 

pled” limitation in LPR 3.1 by forcing Parrot to produce 

documents relating to the Bebop Drone and MiniDrones. 

None of these products were identified in Drone’s complaint or otherwise accused of infringement. See J.A. 

153–59. Contrary to Drone’s assertion, it did not identify 

these products as infringing in its infringement contentions. Instead, it merely stated that the Bebop Drone and

MiniDrones “may also be Accused Instrumentalities; 

however, there is insufficient information currently 

available to make [that] determination.” J.A. 2097. 

Notwithstanding that these products were never identified as infringing, the court compelled Parrot to produce 

all technical information related to their operation, and it 

did so without providing any explanation. J.A. 5. When 

Parrot tried to clarify that LPR 3.1 does not call for production relating to non-accused products, the court denied 

Parrot’s request without providing any reasoning. J.A. 6. 

The record thus contains no basis to support the court’s 

conclusion that Parrot had to produce documents relating 

to non-accused products, even though LPR 3.1 only requires disclosures relating to accused products.

Finally, the July 1 and July 25 Orders failed to address the absence of any showing of relevance or need for 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 25

the on-board source code and documents relating to the 

Bebop Drone and MiniDrones.11 Federal Rule of Civil 

Procedure 26(b)(1) allows a party to obtain discovery 

“relevant to any party’s claim or defense.”12 Fed. R. Civ. 

P. 26(b)(1); see also Micro Motion, Inc. v. Kane Steel Co., 

894 F.2d 1318, 1323 (Fed. Cir. 1990) (explaining that 

discovery may not be had unless it is relevant to the 

subject matter of the pending action). However, “[e]ven if 

relevant, discovery is not permitted where no need is 

shown.” Micro Motion, 894 F.2d at 1323; Am. Standard 

Inc. v. Pfizer Inc., 828 F.2d 734, 743 (Fed. Cir. 1987) 

(“Where proof of either relevance or need is not established, discovery is properly denied.”). Drone’s Initial 

Motion was virtually silent on the subject of the Bebop 

Drone and MiniDrones, offering no explanation as to how

these non-accused products were relevant or necessary to 

any of its infringement claims. See J.A. 578–83. The only

mention of these products, in fact, appears in the proposed order attached to Drone’s Initial Motion. J.A. 597. 

Notwithstanding that the Bebop Drone and MiniDrones 

seemed to have slipped into the fold, the court’s July 1 

and July 25 Orders failed to address the relevance of, or 

need for discovery relating to, these products. J.A. 5, 9. 

Because there was neither a charge of infringement nor 

 

11 “A determination of relevance implicates substantive patent law. Therefore, we look to Federal Circuit law 

rather than regional circuit law in discussing relevance.” 

Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1326 

n.8 (Fed. Cir. 1990) (citing Truswal Sys. Corp. v. HydroAir Eng’g, Inc., 813 F.2d 1207, 1212 (Fed. Cir. 1987)).

12 The Federal Rules of Civil Procedure, particularly 

the rules regarding discovery, were amended effective 

December 1, 2015. Because the old rules governed the 

proceedings below when the district court issued the 

July 1 and July 25 Orders, we review the district court’s 

actions based on the rules then in effect.

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26 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

any evidence of relevance or need, discovery relating to 

the Bebop Drone and MiniDrones should not have been 

granted based solely on Drone’s suspicion. See Micro 

Motion, 894 F.2d at 1327 (explaining that “mere suspicion” of a product’s infringement does not support discovery into that subject matter).

As for the on-board source code, Drone also failed to 

show its relevance or establish any need for the code as it 

relates to the operation of the accused products. In the

Initial Motion, Drone identified both the off-board and onboard source code but only explained why it felt it needed 

the former. See J.A. 578–83. Drone even conceded at oral 

argument before us that it “did not talk specifically about 

the on-board source code in the [Initial Motion].” Oral 

Arg. at 22:51–56, available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2015-1892.mp3. In granting 

Drone’s Initial and Second Motions, the district court 

failed to explain why “all” source code or even any source 

code was needed or relevant in this case. J.A. 5, 9. Thus, 

we find that the court acted in contravention of Federal 

Rule 26(b)(1) by ordering Parrot to produce its on-board 

source code—code which has never been shown to be 

relevant.13

 

13 We also think the district court should have compared the needs of the case with both the burden placed 

on Parrot to produce “all source code” and the significant 

consequences that might result from unauthorized or 

inadvertent disclosure. Despite the well-intentioned 

provisions of protective orders designed to guard confidential information, “there may be circumstances in which 

even the most rigorous efforts of the recipient of such 

[sensitive] information to preserve confidentiality in 

compliance with . . . a protective order may not prevent 

inadvertent compromise.” In re Deutsche Bank Trust Co.

Ams., 605 F.3d 1373, 1378 (Fed. Cir. 2010). In addition, it 

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We do not decide today whether the on-board source 

code is relevant to this case. However, we note that 

source code is not necessary in every case. See, e.g., 

Cochran Consulting, Inc. v. Uwatec USA, Inc., 102 F.3d 

1224, 1231 (Fed. Cir. 1996) (vacating discovery order 

requiring the production of computer-programming code 

because the party seeking discovery had not shown that 

the code was necessary to the case). At this stage of the 

proceedings, it is far from clear that all source code—

whether off-board or on-board—is necessary to Drone’s 

case. Nevertheless, on remand, Drone will have a chance 

to make a showing of need and relevance for the on-board 

source code, and Parrot will have a chance to dispute any 

such showings.

Taken together, the errors discussed above convince 

us that the district court abused its discretion in granting 

 

is well recognized among lower courts that source code 

requires additional protections to prevent improper 

disclosure because it is often a company’s most sensitive 

and most valuable property. See, e.g., Via Vadis Controlling GmbH v. Skype, Inc., No. Civ.A. 12-MC-193, 2013 WL 

646236, at *3 (D. Del. Feb. 21, 2013) (noting that source 

code might represent a company’s “most sensitive and 

confidential property” and that, in “U.S. litigation, extreme measures are ordered to protect [its] confidentiality”). As a result, district courts regularly provide for 

additional restrictions on discovery to account for the 

unique characteristics of source code. Indeed, after this 

case was decided, the Western District of Pennsylvania 

adopted more robust protections for source code. See W.D. 

Pa. App’x LPR 2.2 ¶¶ 12–19 (effective Dec. 5, 2015). 

Although there is no source-code exception to the production requirements of the Federal Rules, the district court

should have considered these concerns in light of the

proportionality requirements of Federal Rule 26(b)(2)(C). 

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28 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

Drone’s Initial and Second Motions and in issuing the

associated July 1 and July 25 Orders. Accordingly, the 

July 1 and July 25 Orders are vacated.14

2.

We turn next to the district court’s default sanction. 

A dismissal or default is a “drastic” sanction, Poulis, 747 

F.2d at 867, which is why the Third Circuit has “established [a] strong presumption against sanctions that 

decide the issues of a case,” Ali, 788 F.2d at 958. Accordingly, a dismissal or default sanction is “disfavored absent 

the most egregious circumstances.” United States v. 

$8,221,877.16 in U.S. Currency, 330 F.3d 141, 161 (3d Cir. 

2003). To determine whether a district court abused its 

discretion when imposing a default or dismissal sanction, 

the Third Circuit balances the six Poulis factors: (1) the 

extent of the party’s personal responsibility; (2) whether 

the party had a history of dilatoriness; (3) whether the 

conduct of the party or the attorney was willful or in bad 

faith; (4) the meritoriousness of claims or defenses; (5) the 

prejudice to the adversary caused by the party’s conduct; 

and (6) the effectiveness of sanctions other than dismissal 

or default. Poulis, 747 F.2d at 868; Ware v. Rodale Press, 

Inc., 322 F.3d 218, 221 (3d Cir. 2003) (citing Poulis, 747 

F.2d at 868); Bull v. United Parcel Serv., Inc., 665 F.3d 

68, 80 (3d Cir. 2012) (citing Poulis, 747 F.2d at 868). 

“[N]o single Poulis factor is dispositive,” Ware, 322 F.3d at 

222, and the Third Circuit has recognized that “not all of 

the Poulis factors need be satisfied in order to dismiss a 

complaint,” Mindek v. Rigatti, 964 F.2d 1369, 1373 (3d 

 

14 On remand, pursuant to LPR 1.4 (as amended in 

2015), the parties “shall meet and confer promptly . . . for 

the purpose of determining whether any provisions in [the 

amended local patent rules] should be made applicable” to 

this case, paying particular attention to the amended 

provisions of App’x LPR 2.2 ¶¶ 12–19. 

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Cir. 1992). In this case, the district court concluded that 

five of the factors favor default, while one weighs neutrally. On that basis, the court imposed upon Parrot the 

sanction of a default judgment.

Before examining the district court’s sanctions ruling, 

however, we address the preliminary question of whether, 

in fact, a Poulis analysis is required in this case. Specifically, it could be argued that, having ruled that the district court abused its discretion in issuing the July 1 and 

July 25 Orders, we should automatically vacate the 

district court’s entry of a default judgment against Parrot 

for its failure to comply with those orders. There is authority supporting that approach. See, e.g., EEOC v. First 

Nat’l Bank of Jackson, 614 F.2d 1004, 1007–08 (5th Cir. 

1980) (reversing dismissal sanction for refusal to comply 

with a discovery order because the sought-after information was “not properly discoverable” and thus “the 

district court should not have imposed a Rule 37 sanction 

upon appellant for refusing to reveal the information”) 

(citing Dunbar v. United States, 502 F.2d 506, 509 (5th 

Cir. 1974)); Dole v. Local 1942, Int’l Bhd. of Elec. Workers, 

870 F.2d 368, 376 (7th Cir. 1989) (reversing dismissal 

sanction for refusal to comply with a discovery order 

because “the district court abused its discretion by compelling discovery” and “such an abuse of discretion will 

not support a Rule 37(b) dismissal”). If followed, that 

course would obviate the need for a Poulis analysis. At 

the same time, however, there also is authority suggesting that abrogation of a discovery order does not automatically result in reversal of a sanction imposed for failure to 

comply with the order. See Chudasama v. Mazda Motor 

Corp., 123 F.3d 1353, 1366 (11th Cir. 1997) (explaining 

that an “important factor” in evaluating whether a district court abused its discretion in imposing severe sanctions upon a party for violating an order is “whether the 

entry of [the] order was itself an abuse of discretion”); 

Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1292 

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30 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

(11th Cir. 2005) (“This is not to say, however, that sanctions based on erroneous discovery orders will never be 

upheld.”) 

The Third Circuit, whose law controls here, does not 

appear to have spoken on this question. Indeed, it did not 

state in Poulis (nor has it stated in any case since as far 

as we can tell) that a determination that a discovery order 

was an abuse of discretion obviates the need for a Poulis 

analysis when assessing a default or dismissal sanction 

that is based at least in part on failure to comply with the 

discovery order. We recognize that the Circuit has said 

that the validity of a civil contempt order is predicated on 

the merits of the underlying order that was violated. See, 

e.g., In re Grand Jury Proceedings Harrisburg Grand 

Jury 79-1, 658 F.2d 211, 217 n.13 (3d Cir. 1981) (“It is a 

well established principle that an order of civil contempt 

cannot stand if the underlying order on which it is based 

is invalid.”) (quoting ITT Cmty. Dev. Corp. v. Barton, 569 

F.2d 1351, 1356 (5th Cir. 1978)); John T. ex rel. Paul T. v. 

Del. Cty. Intermediate Unit, 318 F.3d 545, 559 (3d Cir. 

2003) (“[I]t is well settled that the viability of a civil 

contempt order entered either to remedy past noncompliance or to coerce future compliance with a preliminary injunction hinges on the validity of the underlying 

injunction.”). However, this case does not involve a civil 

contempt order. See Drone Techs., 303 F.R.D. at 265 

(explaining that “treating [Parrot’s] actions as contempt of 

court pursuant to Rule 37 would not meet the goals of 

sanctions”). Under these circumstances, and in view of 

the fact that neither Drone nor Parrot has presented 

argument on the question, we think the prudent approach 

is to conduct a Poulis analysis. As seen below, based upon

that analysis, we conclude that the district court abused 

its discretion in imposing upon Parrot the sanction of a 

default judgment. Thus, even if weighing the Poulis 

factors is viewed as unnecessary given our holding that 

the district court abused its discretion in issuing the 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 31

July 1 and July 25 Orders, our conclusion (as informed by 

our Poulis analysis) on the issue of the court’s sanction 

stands as an alternative ground for vacating the default 

judgment. We turn now to the Poulis factors.

The extent of Parrot’s personal responsibility

We begin by looking at Parrot’s personal responsibility for not complying with the July 1 and July 25 Orders. 

The district court correctly found that Parrot was “personally involved in the decision to not produce required 

initial disclosures and, therefore, [was] responsible for 

[its] failure to comply with th[e] Court’s discovery Orders.” Drone Techs., 303 F.R.D. at 262. The court heard 

testimony from Parrot’s head of legal, who stated that she 

understood the court’s orders and that Parrot would not 

produce the on-board source code until an appellate court

compelled it to do so. Id. at 261 & n.4. Parrot also conceded its personal involvement in its opening brief. As a 

result, we see no reason to disturb the court’s conclusion 

on this factor.

History of dilatoriness & Willful or bad-faith conduct

In evaluating these factors together, the district court 

reviewed Parrot’s various submissions to it relating to the 

discovery orders. The court found that Parrot understood 

its obligations and willfully chose not to comply, as evidenced by, inter alia, testimony from its head of legal that 

the July 1 Order was “crystal clear” and by its continuous

attempts to make its on-board source code available for 

inspection even after the court clarified that production 

was required. Id. at 263–64. Finding that Parrot took 

“shifting” and “inconsistent” positions as the case progressed and that its noncompliance was a tactical decision, the court concluded that these factors weighed in 

favor of “serious sanctions.” Id. at 262–65. We do not 

think Parrot should be faulted for requesting clarification 

of the July 1 Order or for seeking additional safeguards 

for its source code. We also think Parrot made clear that 

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32 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

it was willing to make its on-board source code available 

for inspection, as permitted by LPR 3.1, which demonstrates that it was not seeking to hide information. 

Nevertheless, the record reflects that Parrot was fully 

aware of the consequences of its actions and that it vacillated, at least to some extent, on whether it intended to 

comply with the court’s orders. Parrot indeed does not 

dispute that its positions “evolved over time,” and it 

concedes that it should have informed the district court at 

the outset of its intention not to produce the on-board 

source code. The record therefore supports the court’s 

findings on these factors. 

The Poulis factors do not explicitly account for the 

propriety of a discovery order when considering the merits 

of a discovery sanction. Still, the Third Circuit has “recognized that a party sufficiently exercised over a discovery order may resist that order, be cited for contempt, and 

then challenge the propriety of the discovery order in the 

course of appealing the contempt citation.” In re Flat 

Glass Antitrust Litig., 288 F.3d 83, 89 (3d Cir. 2002) 

(quoting MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 

116, 121 (4th Cir.1994)); see also Firestone Tire & Rubber 

Co. v. Risjord, 449 U.S. 368, 377 (1981). Even though 

Parrot took a circuitous path to its contempt hearing, it 

did what the Third Circuit envisions a party should do if 

it hopes to overturn a court’s discovery order—it resisted 

the order and sought appellate review. Consequently, we 

think our conclusion above—that the court abused its 

discretion in issuing the July 1 and July 25 Orders—

sheds some favorable light on Parrot’s decision not to 

comply and thereby reduces the extent to which its dilatoriness and willfulness weigh in favor of serious sanctions.

Meritoriousness of claims or defenses

Despite the brevity of the court’s analysis on this issue, we agree that this factor is neutral because both 

parties “advanced prima facie cases.” Drone Techs., 303 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 33

F.R.D. at 266. Parrot attempts to cast doubt on the 

court’s finding by arguing that its defenses, if successful, 

would bar Drone’s recovery. But this argument misses 

the point. The district court did not need to fully assess 

the merits of the parties’ claims and defenses; it only 

needed to look to the pleadings. See Poulis, 747 F.2d at 

869–70 (“A claim, or defense, will be deemed meritorious 

when the allegations of the pleadings, if established at 

trial, would support recovery by plaintiff or would constitute a complete defense.”). Because Parrot has not shown 

that Drone’s pleadings could not support recovery, we 

reject its arguments on this factor.

Prejudice to Drone caused by Parrot

As for prejudice to Drone, we think the district court 

erred by concluding that this factor “weighs heavily 

toward the imposition of severe sanctions.” Drone Techs., 

303 F.R.D. at 262. The court found that Parrot’s noncompliance with the July 1 and July 25 Orders prejudiced 

Drone by (1) preventing Drone from reviewing information before the claim-construction hearing scheduled 

for October 24, 2014, (2) inhibiting Drone’s ability to 

prepare its case for trial, and (3) causing Drone to “expend 

substantial funds, time, and energy” on motions practice. 

Id. In our view, the record does not support the court’s 

findings. Although the court did not specify what information Drone needed but did not receive, it presumably 

was referring to the on-board source code and documents 

relating to the Bebop Drone and MiniDrones. However, 

as discussed above, Drone has not shown that this information is relevant or necessary to its case, so the record 

does not support a finding that lacking this information 

prejudiced Drone in any way, whether for claimconstruction purposes or for trial.

Nor do we believe that Drone demonstrated that it 

was prejudiced by spending time and money on its motions and its responses to Parrot’s motions. The Third 

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34 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

Circuit has stated that prejudice, for the purpose of Poulis, includes “the excessive and possibly irremediable 

burdens or costs imposed on the opposing party.” Bull, 

665 F.3d at 80 (quoting Scarborough v. Eubanks, 747 F.2d 

871, 876 (3d Cir. 1984)). Although the district court 

deemed Drone’s expenditures of time and money as being 

substantial, it did not state that they were “excessive” or 

“possibly irremediable.” Furthermore, the court did not 

provide a quantitative analysis of Drone’s lost time and 

money or provide any explanation of how this case is 

distinguishable from a garden-variety discovery dispute 

in terms of time and cost. Drone does not present any 

such arguments either on appeal. And neither the district 

court’s ruling nor Drone’s arguments on appeal point us to

a case suggesting that the mere expenditure of time and 

money associated with filing motions amounts to prejudice for the purpose of a Poulis analysis.

The district court also stated that Drone was “no closer to obtaining complete initial disclosures” than it was on 

the day it filed the Initial Motion. Drone Techs., 303 

F.R.D. at 262. That conclusion, we think, overlooks that 

Parrot produced 14 million pages of documents and that 

Drone has never shown Parrot did not meet its obligations 

under LPR 3.1. Accordingly, because the apparent prejudice to Drone is unsubstantiated, we hold that this factor 

disfavors a severe sanction.

Effectiveness of sanctions other than default

In our view, the remaining Poulis factor, the effectiveness of alternative sanctions, also militates against 

the sanction of default. In determining that default was 

the appropriate sanction, the district court stated that 

“monetary or other similar sanctions” would not “adequately account for or correct” the prejudice caused to 

Drone. Id. at 265–66. The court also emphasized the 

need to “penalize” and “deter others from taking similar 

action.” Id. at 265. Lastly, the court concluded that 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 35

lesser sanctions “would not meet the goals of sanctions” 

and that Parrot should not be allowed to remedy the 

situation through self-imposed sanctions. Id. We find 

several problems with the court’s analysis.

The court’s analysis suggests it did not seriously consider alternative sanctions. As noted, the only real prejudice here was lost time, energy, and money. Had the 

court started with that premise, it would have determined 

that numerous, alternative sanctions were available to 

adequately account for any prejudice to Drone. Notwithstanding the “strong presumption” against a “drastic” 

sanction like default, the court rejected all alternatives 

without explanation. 

We also question the court’s stated need to “penalize” 

Parrot. While “all sanctions by their very nature involve 

an element of punishment,” a court may not enter a 

default judgment against a defendant who failed to comply with a discovery order as “mere punishment.” DiGregorio v. First Rediscount Corp., 506 F.2d 781, 789 (3d 

Cir. 1974). Two facts suggest that the default sanction 

here was meant to serve as “mere punishment.” First, as 

explained above, “the sanction invoked [was] more stern 

than reasonably necessary” to cure the actual prejudice to 

Drone. Id. And second, the record does not support the 

presumption that Parrot refused to provide its on-board 

source code because discovery of that information would

have revealed the lack of merit in its defense against

Drone’s infringement case. See Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 705 (1982) 

(explaining that a proper application of Rule 37(b)(2) will, 

“as a matter of law,” support “the presumption that the 

refusal to produce evidence material to the administration 

of due process was but an admission of the want of merit 

in the asserted defense”) (citing Hammond Packing Co. v. 

Arkansas, 212 U.S. 322, 351 (1909)). To the contrary, the 

record indicates that Parrot repeatedly offered to make 

the on-board source code available for inspection. Parrot

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36 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

even offered to stipulate that all claim limitations relating 

to the “remote-controlled device” (i.e., limitations to which 

the on-board source might be relevant) are met if Drone 

could prove infringement of all of the “remote controller” 

limitations. In addition, Parrot proposed that the court 

sanction it by deeming all “remote-controlled device” 

limitations met or by precluding it from offering noninfringement defenses with respect to those limitations. 

Those offers are not indicative of a party trying to hide a 

smoking gun. Accordingly, we find that the district court 

abused its discretion in concluding that default was the 

only available remedy.

In sum, we conclude that the district court erred in its 

findings on prejudice and the availability of alternative 

sanctions and, consequently, erred in weighing the Poulis 

factors. We conclude that, on the facts of this case, those 

two factors outweigh the three factors suggesting that the 

imposition of severe sanctions was appropriate. Moreover, because “all sanctions originate from the realm of 

equity,” Bull, 665 F.3d at 83, we believe our vacatur of the 

district court’s discovery orders underscores the notion 

that a default sanction was improper here. Put most 

simply, bearing in mind that, in the Third Circuit, a 

default sanction is “disfavored absent the most egregious 

circumstances,” $8,221,877.16 in U.S. Currency, 330 F.3d 

at 161, we think it would be illogical to uphold the sanction of default for Parrot’s failure to comply with discovery 

orders which we have determined represented abuses of 

discretion. The district court’s entry of default judgment 

against Parrot is vacated. The awards of damages and 

attorney fees which resulted from the entry of judgment 

against Parrot also are vacated.

Notwithstanding that we are vacating the district 

court’s discovery orders and its entry of a judgment of 

default, we recognize that Parrot’s actions displayed a 

measure of misconduct. That is, Parrot vacillated between positions of compliance and noncompliance and 

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DRONE TECHNOLOGIES, INC. v. PARROT S.A. 37

brought various motions that would have been unnecessary had it immediately subjected itself to a contempt 

hearing. Parrot acknowledges as much in its opening 

brief, stating that it “perhaps should have taken the 

position, at the outset, that it would not produce the [onboard] source code without additional protections and 

asked for an immediately appealable sanction.” Accordingly, on remand, in the event Drone again moves for 

sanctions for Parrot’s prior conduct in this case, the 

district court may, in its discretion, consider whether 

lesser sanctions are warranted for such conduct. If the 

court chooses to consider sanctions, it should take into 

account, inter alia, Parrot’s production to date, its efforts 

to comply with the actual requirements of LPR 3.1, and 

the extent of any actual prejudice caused to Drone. It also 

should take into account the fact that we have vacated the 

July 1 and July 25 Orders.

III.

Parrot has raised arguments in regard to the district 

court’s evidentiary rulings relating to damages. Because 

we are vacating both the judgment of liability and the 

awards of damages and attorney fees, those arguments 

are now moot and we do not need to address them.

CONCLUSION

We hold that the district court has jurisdiction to entertain Drone’s suit because Drone has standing. We also 

hold that the district court abused its discretion when it 

issued the July 1 and July 25 Orders and again abused its 

discretion when it entered a default sanction against 

Parrot for its failure to comply with those orders. We 

therefore vacate the district court’s July 1 and July 25 

Orders and the default judgment. With the default judgment against Parrot vacated, we also vacate the awards of 

damages and attorney fees against Parrot. The case is

remanded to the district court for further proceedings 

consistent with this opinion.

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38 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

VACATED AND REMANDED

COSTS

Each party shall bear its own costs.

Case: 15-1892 Document: 82-2 Page: 38 Filed: 09/29/2016
United States Court of Appeals

for the Federal Circuit ______________________ 

DRONE TECHNOLOGIES, INC.,

Plaintiff-Appellee

v.

PARROT S.A., PARROT, INC.,

Defendants-Appellants

______________________ 

2015-1892, 2015-1955

______________________ 

Appeals from the United States District Court for the 

Western District of Pennsylvania in No. 2:14-cv-00111-

AJS, Judge Arthur J. Schwab.

______________________ 

NEWMAN, Circuit Judge, concurring in the judgment. 

I agree that the default judgment was inappropriately 

imposed, and I join the court’s ruling. On the ensuing 

remand, the case would normally proceed to trial on the 

merits. I write separately to stress an issue of potentially 

threshold impact. 

The record raises the question of inventorship, for the 

named sole inventor, Ms. Yu-Tuan Lee, testified that, “I 

came up with this idea about having the aircraft move 

following the motion of the remote controller,” but when 

asked whether she knew “how to make that idea work,” 

Ms. Lee answered, “I only came up with the ideas, and 

subsequently Bruce told me that there was such a chip 

that could detect movement.” Lee Dep. at 66:19–67:4. 

Case: 15-1892 Document: 82-2 Page: 39 Filed: 09/29/2016
2 DRONE TECHNOLOGIES, INC. v. PARROT S.A. 

Precedent provides that “‘[o]ne who merely suggests an 

idea of a result to be accomplished, rather than means of 

accomplishing it, is not a joint inventor.’” Nartron Corp. 

v. Schukra U.S.A. Inc., 558 F.3d 1352, 1359 (Fed. Cir. 

2009) (alteration in original). 

Thus I do not share the view that it is unnecessary to 

undertake “a substantive examination of inventorship in 

order to resolve an issue of standing in an infringement 

action where the plaintiff’s claim to title is not otherwise 

in dispute.” Maj. Op. at 13. Inventorship affects not only 

the validity of the patent, but also ownership and transfer 

of ownership. See Beech Aircraft Corp. v. EDO Corp., 990 

F.2d 1237, 1248 (Fed. Cir. 1993) (“At the heart of any 

ownership analysis lies the question of who first invented 

the subject matter at issue, because the patent right 

initially vests in the inventor who may then, barring any 

restrictions to the contrary, transfer that right to another, 

and so forth.”). There is no right to sue on patents one 

does not own. See Bd. of Trs. of Leland Stanford Junior 

Univ. v. Roche Molecular Sys., 583 F.3d 832, 839 (Fed. 

Cir. 2009), aff’d, 563 U.S. 776 (2011) (absence of ownership can be raised “as a defense and a challenge to [the 

plaintiff’s] standing to maintain its action against [the 

defendant].”). An incorrect inventor or inventive entity 

cannot pass title by assignment, because that entity has 

no title to pass.

Inventorship and standing appear to be critical to further proceedings. “The requirement that jurisdiction be 

established as a threshold matter ‘spring[s] from the 

nature and limits of the judicial power of the United 

States’ and is ‘inflexible and without exception.’” Steel Co. 

v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998)

(alteration in original). 

Case: 15-1892 Document: 82-2 Page: 40 Filed: 09/29/2016