Court Opinion

ID: 4202088
Source: CourtListenerOpinion
Date Created: 2017-09-08 15:01:47.906102+00
Date Added: 2024-06-11T14:40:47.601273
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

 EDGE SYSTEMS LLC, A CALIFORNIA LIMITED
 LIABILITY COMPANY, AXIA MEDSCIENCES, A
  DELAWARE LIMITED LIABILITY COMPANY,
             Plaintiffs-Appellees

                           v.

RAFAEL NEWTON AGUILA, AKA RALPH AGUILA,
   DBA HYDRADERMABRASION SYSTEMS,
           Defendant-Appellant
          ______________________

           2016-2189, 2016-2384, 2017-1030
               ______________________

   Appeals from the United States District Court for the
Southern District of Florida in No. 1:14-cv-24517-KMM,
Judge K. Michael Moore.
                ______________________

              Decided: September 8, 2017
                ______________________

   RAFAEL NEWTON AGUILA, South Miami, FL, pro se.

    BRENTON R. BABCOCK, Knobbe, Martens, Olson &
Bear, LLP, Irvine, CA, for plaintiffs-appellees. Also
represented by ALI S. RAZAI.
                ______________________
2                               EDGE SYSTEMS LLC   v. AGUILA

    Before PROST, Chief Judge, WALLACH and STOLL, Cir-
                      cuit Judges.
STOLL, Circuit Judge.
    Rafael Newton Aguila appeals from the final judge-
ment of the Southern District of Florida in a trademark
and patent infringement suit filed by Edge Systems LLC
and Axia Medscienes, LLC. 1 Specifically, Aguila argues
that the district court abused its discretion by dismissing
one of his affirmative defenses, imposing Rule 11 sanc-
tions, denying his motion to strike the expert report of
Edge Systems’ patent infringement expert, and granting a
protective order that reduced the number of depositions
Aguila was allowed to take. Aguila also challenges some
of the district court’s summary judgment determinations
and the scope of the district court’s permanent injunction.
Because the district court neither erred nor abused its
discretion, we affirm.
                        BACKGROUND
    The district court’s apt summation of this case sets
the stage on appeal: “Bootleg. Clone. Copycat. Imitation.
Knock-off. Palm-Off. However one labels a peddled prod-
uct that conspicuously capitalizes on another’s intellectual
property rights, this case presents the quintessential
example.” Edge Sys. LLC v. Aguila, 186 F. Supp. 3d 1330,
1337 (S.D. Fla. 2016) (“Summary Judgment Order”).
    Edge Systems was founded in 1997, and has continu-
ously designed and sold products that improve skin
health. Edge Systems’ best-selling product, the Hy-
draFacial MD® hydradermabrasion system is covered by
U.S. Patent Nos. 6,299,620, 6,641,591, 7,678,120,

    1  Unless otherwise indicated, we collectively refer to
both Edge Systems and Axia Medscienes as Edge Sys-
tems.
EDGE SYSTEMS LLC    v. AGUILA                           3

7,789,886, 8,066,716, and 8,337,513 (collectively, “the
Asserted Patents”). The ’620 patent, for example, disclos-
es “[a] system for atraumatic removal of skin surface
layers in a treatment to induce neocollagenesis in the
dermis to reduce wrinkles and alter the architecture of
the dermal layers.” ’620 patent, Abstract. Claim 1 of the
’620 patent is reproduced below:
    1. A system for treating surface layers of a pa-
    tient’s skin, comprising:
        (a) an instrument body with a distal work-
        ing end for engaging a skin surface;
        (b) a skin interface portion of the working
        end comprising an abrasive fragment
        composition secured thereto;
        (c) at least one inflow aperture in said skin
        interface in fluid communication with a
        fluid reservoir; and
        (d) at least one outflow aperture in said
        skin interface in communication with a
        negative pressurization source.
Id. at col. 9 ll. 54–63.
     Edge Systems also has common law trademark rights
in, inter alia, the following marks: (1) ACTIV-4;
(2) ANTIOX-6; (3) BETA HD; and (4) DERMABUILDER
(collectively, “the Serum Marks”). 2
     In 2014, Edge Systems learned that Aguila was
selling a device similar to its HydraFacial MD® system on
a website using the trademarks and trade name of Edge
Systems’ competitor, Lumenis. Edge Systems and Lu-

    2   Aguila does not challenge on appeal the district
court’s determination that Edge Systems had valid com-
mon law trademark rights in the Serum Marks.
4                              EDGE SYSTEMS LLC   v. AGUILA

menis separately sent Aguila cease and desist letters, and
Aguila subsequently changed the website and created an
additional website, using Edge Systems’ trademarks and
trade name.
    At least two different customers purchased an accused
infringing device from Aguila, thinking the device was
made by Edge Systems. One of the customers called a
number on Aguila’s website and spoke to an individual
purporting to be the Regional Sales Manager for Edge
Systems. When the customer asked why Aguila’s device
had a different name than the HydraFacial MD®, she was
informed that the device was Edge Systems’ newest
upgrade of the HydraFacial MD®. A side-by-side compar-
ison of Edge Sytems’ HydraFacial MD® and Aguila’s
accused infringing device is shown below:
Summary Judgment Order, 186 F. Supp. 3d. at 1338.

    Edge Systems, along with Axia Medsciences, the
owner of the Asserted Patents, brought suit against
Aguila in the Southern District of Florida, claiming both
patent and trademark infringement. The district court
swiftly granted Edge Systems a preliminary injunction,
enjoining Aguila from infringing Edge Systems’ trade-
marks, trade dress, and the ’620 patent. Edge Sys. LLC v.
Aguila, Case No. 1:14-cv-24517-KMM, 2015 WL 11233387
(S.D. Fla. June 3, 2015). We affirmed the district court’s
preliminary injunction on appeal. Edge Systems LLC v.
Aguila, 635 F. App’x 897, 907 (Fed. Cir. 2015).
EDGE SYSTEMS LLC   v. AGUILA                                5

    Edge Systems also moved for summary judgment.
The district court granted Edge Systems’ motion for
summary judgment and permanently enjoined Aguila
from infringing Edge Systems’ trademarks and the claims
of the ’620 patent. Summary Judgment Order, 186 F.
Supp. 3d at 1363–64. Following the district court’s sum-
mary judgment order, Edge Systems filed a motion to
voluntarily dismiss its remaining claims, which the
district court granted and, thereafter, closed the case.
   Aguila now appeals, and we have jurisdiction under
28 U.S.C. § 1295(a)(1).
                        DISCUSSION
    Aguila argues that the district court abused its discre-
tion by dismissing one of his affirmative defenses, impos-
ing Rule 11 sanctions, denying his motion to strike the
expert report of Edge Systems’ patent infringement
expert, and granting a protective order that reduced the
number of depositions Aguila was allowed to take. Aguila
also challenges some of the district court’s summary
judgment determinations and the scope of the district
court’s permanent injunction. We address each argument
in turn.
                               I.

     Aguila first challenges the district court’s dismissal of
his affirmative defense of prior trademark use and impo-
sition of Rule 11 sanctions based on Aguila’s repeated
attempts to rely on two evidentiary items of dubious
authenticity: (1) an invoice purportedly from 1996; and (2)
an invoice purportedly from 2004. Aguila relied on the
two invoices to support his prior use of trademarks af-
firmative defense. The district court was unconvinced
that these invoices were authentic and had “grave con-
cerns over [Aguila’s] willingness to manufacture evidence
and abuse the judicial process.” Edge Sys. LLC v. Aguila,
Case No. 1:14-cv-24517-KMM, 2015 WL 6447502, at *7
6                               EDGE SYSTEMS LLC   v. AGUILA

(S.D. Fla. Oct. 26, 2015). The district court granted Edge
System’s motion to strike Aguila’s prior use affirmative
defense, holding that “[c]lear and convincing evidence has
been presented that [Aguila] knowingly advanced a
document of questionable authenticity and relied upon it
in [his] pleadings.” Id.
    Notwithstanding the district court’s order, Aguila
continued to rely on these invoices throughout the sum-
mary judgment proceedings. As a result, the district
court imposed Rule 11 sanctions in the form of attorneys’
fees and costs from the date the invoices were initially
submitted during the preliminary injunction proceeding.
The district court reasoned that “Aguila’s continued
reliance on fraudulent documents clearly runs afoul of
Rule 11[,] and sanctions—including the award of attor-
ney’s fees to Edge—are appropriate for Aguila’s bad faith
conduct.” Summary Judgment Order, 186 F. Supp. 3d at
1345 n.10.
    On appeal, Aguila argues that the district court
abused its discretion by striking his prior use affirmative
defense and imposing Rule 11 sanctions based on his
reliance on the invoices. We disagree.
    The imposition of sanctions under the district court’s
inherent power or Rule 11 is reviewed for an abuse of
discretion. See Chambers v. NASCO, Inc., 501 U.S. 32, 55
(1991) (inherent power); Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 409 (1990) (Rule 11). “When employing an
abuse of discretion standard, ‘we must affirm unless we at
least determine that the district court has made a clear
error of judgment, or has applied an incorrect legal stand-
ard.’” Maiz v. Virani, 253 F.3d 641, 662 (11th Cir. 2001)
(quoting Alexander v. Fulton Cty., 207 F.3d 1303, 1326
(11th Cir. 2000)).
    Here, the district court did not abuse its discretion in
striking Aguila’s prior use affirmative defense. The
striking of an affirmative defense falls within the ambit of
EDGE SYSTEMS LLC   v. AGUILA                               7

the district court’s inherent powers. Chambers, 501 U.S.
at 43.
     The district court questioned the authenticity of Agui-
la’s invoices based on findings that “[t]he quality of the
purported invoices is extremely poor,” S.A. at 2102, and
“[t]here is nothing inherent about the documents to
suggest they are authentic,” id. at 2103. The court also
emphasized Aguila’s contradictory testimony during the
preliminary injunction hearing. For example, the 1996
invoice purports to have sold a “HydraPeel system.” Id. at
2222. Aguila testified, however, that he was selling a
system called the Dermis Peel in 1996, and did not start
selling the HydraPeel system until it was developed in
2003. Id. at 2017–19 (“So I decided to start distributing
some machines at that point in 1996 under the name --
the actual name of the machine was Dermis Peel . . . . By
2003, we had started developing a liquid-based system
that we would call . . . HydraPeel.”). Further, the 2004
invoice purports to have sold, inter alia, the HydraDerm
MD. Id. at 2224. Aguila testified, however, that in 2004,
his system was “called [] the HydraDerm. Not the Hy-
draDerm MD. That would come later. But HydraDerm.”
Id. at 2020.
    On this record, considering Aguila’s untimely submis-
sion of the invoices, the invoices’ questionable authentici-
ty, the lack of any corroborating evidence to support the
authenticity of the invoices, and Aguila’s testimony con-
tradicting the substance of the invoices, it was not an
abuse of discretion for the district court to strike Aguila’s
prior use affirmative defense based on those invoices.
    The district court likewise did not abuse its discretion
in granting Rule 11 sanctions. Under Eleventh Circuit
8                                  EDGE SYSTEMS LLC   v. AGUILA

law, 3 “where no evidence or only ‘patently frivolous’
evidence is offered to support factual contentions, sanc-
tions can be imposed.” Thompson v. RelationServe Media,
Inc., 610 F.3d 628, 665 (11th Cir. 2010).
    Here, the district court determined that “Aguila only
offered documents of an unquestionably fraudulent na-
ture in support of his stricken defense of prior use dating
back to 1996” and “Aguila’s continued reliance on fraudu-
lent documents clearly runs afoul of Rule 11.” Summary
Judgment Order, 186 F. Supp. 3d at 1345 n.10. On this
record, the district court’s imposition of Rule 11 sanctions
in the form of attorneys’ fees and costs from the date
Aguila introduced the invoices was not an abuse of discre-
tion.
                             II.
    Aguila next argues that the district court abused its
discretion by denying his motion to strike the expert
testimony of Edge Systems’ patent infringement expert,
Gary L. Loomis. Aguila argues that Edge Systems’ un-
timely served Loomis’s expert report after the discovery
deadline.
    Rule 26 of the Federal Rules of Civil Procedure pro-
vides, in pertinent part, that a party must make its expert
disclosures “at the times and in the sequence that the
court orders,” and “[a]bsent a stipulation or a court order,
the disclosures must be made . . . at least 90 days before
the date set for trial or for the case to be ready for trial.”
Fed. R. Civ. P. 26(a)(2)(D). Here, the court issued a

    3    “In deciding issues not unique to our exclusive ju-
risdiction, we apply the law of the regional circuit in
which the district court sits.” Q-Pharma, Inc. v. Andrew
Jergens Co., 360 F.3d 1295, 1299 (Fed. Cir. 2004). We
therefore apply the law of the Eleventh Circuit to these
issues.
EDGE SYSTEMS LLC   v. AGUILA                              9

scheduling order requiring that “[a]ll discovery, including
expert discovery, shall be completed one hundred (100)
days prior to the date of trial.” S.A. 3576 (emphasis
added). The scheduling order also set a trial date of
February 22, 2016. Id. Thus, all expert discovery was
due by November 13, 2015.
    Edge Systems served Loomis’s report on November
24, 2015—90 days before the February 22, 2016 trial date.
Had the court not set its discovery deadline of 100 days
before trial, Loomis’s report would have been timely
under Rule 26(a)(2)(D)(i). Instead, Loomis’s report was
served 10 days after the court’s deadline and, thus, was
untimely. Determining that Edge Systems violated Rule
26, however, comprises only half the inquiry. See OFS
Fitel, LLC v. Epstein, Becker & Green, P.C., 549 F.3d
1344, 1363 (11th Cir. 2008). “Under Rule 37(c)(1), a
district court clearly has authority to exclude an expert’s
testimony where a party has failed to comply with Rule
26(a) unless the failure is substantially justified or is
harmless.” Id.
    The district court did not abuse its discretion in
declining to exclude Loomis’s report. Rule 37(c)(1) merely
authorizes the district court to exercise its discretion to
exclude untimely reports; it does not require the district
court to do so. “A district court has inherent authority to
manage its own docket ‘so as to achieve the orderly and
expeditious disposition of cases.’” Equity Lifestyle Props.,
Inc. v. Fla. Mowing & Landscape Serv., Inc., 556 F.3d
1232, 1240 (11th Cir. 2009) (quoting Chambers, 501 U.S.
at 43). Indeed, “district courts enjoy broad discretion in
deciding how best to manage the cases before them.”
Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1366
(11th Cir. 1997). In any event, we agree with Edge Sys-
tems that the ten-day delay here was harmless.
    Aguila nonetheless argues that Edge Systems’ late
disclosure was harmful because it “den[ied] him the
10                                 EDGE SYSTEMS LLC   v. AGUILA

possibility to schedule a deposition with [Loomis].” Appel-
lant Br. 21. Such harm, however, is belied by the record.
The day Loomis’s report was served, Aguila requested the
opportunity to depose Loomis. Edge Systems responded,
indicating an intent to make Loomis available for deposi-
tion. Aguila, however, did not make any subsequent
effort to proceed with Loomis’s deposition. Because Edge
Systems was willing to make Loomis available for deposi-
tion after its untimely disclosure, its failure to comply
with Rule 26(a) was harmless, and the district court did
not abuse its discretion in denying Aguila’s motion to
strike Loomis’s report under Rule 37.
                            III.
    Aguila also argues that the district court abused its
discretion in granting in part Edge System’s motion for a
protective order, limiting his allowed number of deposi-
tions from ten to five. The district court’s determination
is reviewed for an abuse of discretion. McCarthy v. Bar-
nett Bank of Polk Cty., 876 F.2d 89, 91 (11th Cir. 1989).
    During a status conference on July 10, 2015, the
district court warned Aguila that “what you don’t want to
do is [to] be issuing your discovery requests so late that as
a practical matter you make it impossible for the parties
to complete discovery within that [November 24th] dead-
line.” S.A. 2652. The district court additionally cautioned
Aguila that, “[i]f you want a 30(b)(6) deposition of [Edge
Systems], notice it now. Follow the rules.” Id. at 2653.
    Three weeks before the November 13, 2015 discovery
deadline, on October 23, 2015, Aguila served a notice
requesting a Rule 30(b)(6) deposition of Edge Systems,
identifying 90 separately identified topics. Two days
later, Aguila served eleven more deposition notices: one
Rule 30(b)(6) deposition of Axia Medsciences on
117 separately identified topics and ten individual deposi-
tions. Aguila subsequently agreed to reduce the number
of depositions to ten pursuant to Rule 30(a). Aguila
EDGE SYSTEMS LLC   v. AGUILA                               11

unilaterally scheduled these ten depositions during the
last week of discovery, scheduling five for the last day
before the discovery deadline. Edge Systems subsequent-
ly filed its motion for protective order.
    The magistrate judge granted Edge System’s motion
in part, allowing Aguila to take five of the ten noticed
depositions. At a hearing on the motion, the magistrate
judge repeatedly questioned Aguila as to the reasons for
taking the various depositions. The magistrate judge
determined that it was reasonable to reduce the number
of depositions from ten to five. The magistrate judge
explained his reasoning as follows:
       So I think what’s reasonable to do here is to
   limit the depositions to -- the 30(b)(6) depositions
   of Edge and Axia and to the depositions of Shad-
   duck, Cohen and Ignon.
       I pick them, first of all, because the other dep-
   ositions . . . honestly, Mr. Aguila, I am very un-
   persuaded that you have a decent basis to think
   that they could produce much at all in the way of
   meaningful evidence that relates to the claims or
   defenses.
       So that’s a very to me a dubious thought. I
   don’t think you really know. I think you’re guess-
   ing. You’re going off of a . . . title and kind of --
   I’m not hearing too much more than that.
        And you really sprung those on the Plaintiff at
   the last minute. Shadduck, Cohen and Ignon, the
   Plaintiff has known for quite some time that those
   folks could be deposed. So in terms of their ability
   to, you know, foresee that there would be a depo-
   sition and to think about what the issues are and
   prepare I think the Plaintiffs [are] in a reasonable
   position to do that.
12                                EDGE SYSTEMS LLC   v. AGUILA

S.A. 2934–35. Aguila objected to the magistrate judge’s
order, which the district judge implicitly denied when
final judgment was entered. See Misabec Mercantile, Inc.
De Panama v. Donaldson, Lufkin & Jenrette ACLI Fu-
tures, Inc., 853 F.2d 834, 840 nn.17, 19 (11th Cir. 1988);
WSB-TV v. Lee, 842 F.2d 1266, 1268 n.1 (11th Cir. 1988).
    Rule 26(c) of the Federal Rules of Civil Procedure
provides that a “court may, for good cause, issue an order
to protect a party or person from annoyance, embarrass-
ment, oppression, or undue burden or expense.” The
Eleventh Circuit “also require[s] the district court to
balance the interests of those requesting the order.”
McCarthy, 876 F.2d at 91.
    On this record, the district court did not abuse its dis-
cretion in granting a protective order. We see no error in
the district court court’s finding that Aguila had no basis
for believing that five of his noticed depositions would
result in any evidence related to the claims or defenses at
issue. Likewise, we see no error in the district court’s
determination that Aguila’s last-minute noticing of these
five baseless depositions placed an undue burden on Edge
Systems. In any event, even if the district court had
abused its discretion in limiting Aguila’s depositions, such
error would be harmless, as Aguila did not even take the
five depositions allowed by the district court.
                            IV.
    Aguila next challenges the scope of the district court’s
permanent injunction. The district court permanently
enjoined Aguila from using, copying, simulating, or in any
other way infringing, inter alia, the Serum Marks. This
injunction followed the district court’s determination that
Edge Systems has valid common law rights in the Serum
Marks and that Aguila infringed those marks.
   Aguila does not challenge these determinations on
appeal. Rather, Aguila argues that the district court’s
EDGE SYSTEMS LLC   v. AGUILA                            13

permanent injunction effectively invalidates Aguila’s
similar registered trademarks, which Aguila sought from
the United States Patent and Trademark Office on De-
cember 1, 2014, the same day the district court signed a
temporary restraining order enjoining Aguila from in-
fringing, inter alia, the Serum Marks. The PTO granted
Aguila’s applications in July 2015, without knowledge of
Edge Systems’ common law rights in the same Serum
Marks.
    We reject Aguila’s contention that the district court’s
injunction in this case invalidates its registered trade-
marks. The permanent injunction relates to the district
court’s determination that Edge Systems had valid com-
mon law trademark rights in the Serum Marks and that
Aguila had infringed these marks. That Aguila applied
for and received federal registration of the Serum Marks
during the pendency of this action—albeit under seeming-
ly dubious circumstances—is of no consequence. Accord-
ingly, in light of the district court’s determinations of
ownership and infringement, which are unchallenged on
appeal, the district court did not err in permanently
enjoining Aguila from using, copying, simulating, or in
any other way infringing Edge Systems’ common law
rights in the Serum Marks. 4
                               V.
    Aguila next challenges the district court’s summary
judgment of infringement of Edge Systems’ patents.
Although we apply our own law to issues of substantive
patent law, we review the grant of summary judgment
using the standard of review of the relevant regional
circuit. Accenture Glob. Servs., GmbH v. Guidewire

   4    Edge Systems has filed petitions for the cancella-
tion of Aguila’s trademarks with the PTO, which are
currently pending.
14                              EDGE SYSTEMS LLC   v. AGUILA

Software, Inc., 728 F.3d 1336, 1340–41 (Fed. Cir. 2013).
The Eleventh Circuit “review[s] de novo the district
court’s grant of summary judgment, drawing all infer-
ences and reviewing all evidence in the light most favora-
ble to the non-moving party.” Rodriguez v. Doral, 863
F.3d 1343, 1349 (11th Cir. 2017). “A district court should
grant summary judgment only if the movant establishes
the absence of a genuine issue of material fact.” Id.
    The district court granted summary judgment of
infringement of the ’620 patent, determining that “[n]o
reasonable jury could find that each limitation of Claim 1
of the ’620 Patent is not literally present in Aguila’s
accused products.” Summary Judgment Order, 186 F.
Supp. 3d at 1355. The district court similarly granted
summary judgment of infringement of the ’591 patent. Id.
at 1356.
     Without citation to any record evidence, Aguila argues
on appeal that his accused products do not contain a “skin
interface portion of the working end comprising an abra-
sive fragment composition secured thereto,” as required
by claim 1 of the ’620 patent, or a “skin interface com-
ris[ing] an abrading structure with substantially sharp
edges for abrading tissue,” as required by claim 1 of the
’519 patent. Apart from these conclusory arguments on
appeal, Aguila presents no evidence to support his nonin-
fringment argument.
    On the other hand, Edge Systems’ patent infringe-
ment expert, Gary Loomis, relied on, inter alia, state-
ments from Aguila’s own website describing the accused
infringing products and testified that these limitations
are found in Aguila’s accused infringing products. Be-
cause Aguila fails to introduce any contrary evidence, we
conclude, as did the district court, that Aguila failed to
present evidence sufficient to create a genuine issue of
material fact as to infringement of the ’620 and ’591
EDGE SYSTEMS LLC   v. AGUILA                              15

patents. Accordingly, we affirm the district court’s sum-
mary judgment in Edge Systems’ favor on these claims. 5
                               VI.
    Aguila finally argues that the district court’s perma-
nent injunction should be barred by the doctrine of laches.
We previously addressed and denied Aguila’s laches
defense. Edge Systems, 635 F. App’x at 907. There, we
held that Aguila’s laches defense was “ipse dixit, failing to
provide any reasoned analysis of the applicable law to the
facts of this case.” Id. Here, Aguila similarly fails to
provide any reasoned analysis of the applicable law to the
facts of this case. Accordingly, the district court did not
err in barring the injunction based on Aguila’s propound-
ed laches defense.
                          CONCLUSION
     We have carefully considered Aguila’s remaining
arguments and determine that they lack merit. We
affirm.
                        AFFRIMED
                            COSTS
    Costs to Appellees.

    5    Following the district court’s summary judgment
order, Edge Systems moved to voluntarily dismiss its
remaining claims, which the district court granted, and
subsequently closed the case. Aguila argues that the
district court erred in closing the case because the in-
fringement claims related to the ’591 patent remained
unadjudicated. Aguila is mistaken. As discussed above,
the district court granted summary judgment of literal
infringement of the ’591 patent. Summary Judgment
Order, 186 F. Supp. 3d at 1356.