UNITED STATES INTERNATIONAL TRADE C(:
`WASHINGTON, D.C.
`
`vIMISSION
`
`Before the Honorable Paul J. Luckern
`
`IN THE MATTER OF
`CERTAIN INK CARTRIDGES AND
`COMPONENTS THEREOF
`
`Investigatio
`
`COMPLAINANTS' MOTION IN LIMINE TO EXCLUDE
`EVIDENCE AND ARGUMENT REGARDING THE EPSON
`AMERICA CLASS ACTION LAWSUIT AND UNCLEAN HANDS DEFENSE
`
`
`
`c
`
`*
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`Complainants Epson Portland Inc., Epson America, Inc. and Seiko Epson Corporation
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`(collectively "Complainants" or "Epson") hereby move in limine for an order precluding
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`Respondents Ninestar Technology Co. Ltd., Ninestar Technology Company, Ltd., Town Sky,
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`Inc., and Dataproducts USA LLC (collectively "Respondents") from introducing any evidence or
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`argument regarding a class action lawsuit filed against Epson America, Inc. and Respondents'
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`Unclean Hands Defense at the evidentiary hearing.
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`Pursuant to Ground Rule 3(ii), Complainants hereby certify that they have met and
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`conferred with Respondents and the Commission Investigative Attorney concerning the subject
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`of this Motion. Counsel for Ninestar and Dataproducts and the Commission Investigative Staff
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`will take a position once they have reviewed the Motion.
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`

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`For the reasons set forth above and in the accompanying Memorandum, Complainants
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`respectfully request that this Motion be granted.
`
`-
`
`
`
`I
`
`Louis S. Masf&&
`Barbara A. Murphy
`Michael L. Doane
`David F. Nickel
`ADDUCI, MASTRIANI & SCHAUMBERG, L.L.P.
`1200 Seventeenth Street, N. W., Fifth Floor
`Washington, DC 20036
`(202) 467-6300
`
`Harold A. Barza
`Richard A. Schirtzer
`Steven M. Anderson
`Ryan S. Goldstein
`Tigran Guledjian
`QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP
`865 South Figueroa Street, 10th Floor
`Los Angeles, California 900 17-2543
`(213) 443-3000
`
`Counsel for Epson Portland Inc., Epson
`America, Inc. and Seiko Epson Corporation
`
`Dated: January 9,2007
`
`SEC700807
`
`2
`
`

`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`WASHINGTON, D.C.
`
`Before the Honorable Paul J. Luckern
`
`IN THE MATTER OF
`CERTAIN INK CARTFUDGES AND
`COMPONENTS THEREOF
`
`Investigation No. 337-TA-565
`
`MEMORANDUM IN SUPPORT OF COMPLAINANTS'
`MOTION IN LIMINE TO EXCLUDE EVIDENCE AND
`ARGUMENT REGARDING THE EPSON AMERICA
`CLASS ACTION LAWSUIT AND UNCLEAN HANDS DEFENSE
`
`Pursuant to Commission Rule 2 10.15 and Ground Rule 3, Complainants Epson Portland
`
`Inc., Epson America, Inc. and Seiko Epson Corporation (collectively "Complainants" or "Epson")
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`submit this Memorandum in support of their Motion in Limine to preclude Respondents Ninestar
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`Technology Co. Ltd., Ninestar Technology Company, Ltd., Town Sky, Inc., and Dataproducts
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`USA LLC' (collectively "Respondents") from introducing any evidence or argument regarding a
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`class action lawsuit filed against Epson America, Inc. and Respondents' Unclean Hands Defense
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`at the evidentiary hearing.
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`I.
`
`INTRODUCTION
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`Respondents assert that the doctrine of unclean hands bars Complainants' infringement
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`claims because Complainants have allegedly used
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`the asserted patents to "perpetrate
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`unconscionable acts of fraud and deception."
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`(Ninestar's Response to Complainants'
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`Interrogatory No. 17, CX-886) But the only purported evidence Respondents cite in their Pre-
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`Dataproducts USA LLC asserted a boilerplate unclean hands defense and never disclosed the
`basis for it during discovery. Dataproducts' defense should therefore be deemed abandoned. In any event,
`to the extent Dataproducts now purports in its joint pre-hearing statement to rely on the same grounds for
`the defense as the Ninestar Respondents, it too should be precluded from referring to the consumer
`lawsuit at the evidentiary hearing.
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`

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`Hearing Statement in support of the defense is a class action lawsuit, now settled, brought
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`against Epson America, Inc. in connection with a protective feature of certain Epson ink
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`cartridges and printers that prevents the printers from running when the ink cartridges are close
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`to empty. The feature is designed to avoid damage to the printer, which can be ruined if used
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`when the cartridge has run dry. Complainants deny that the use of the protective feature results
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`in any wrongdoing. Regardless, the allegations asserted in the class action are legally irrelevant
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`and do not bar Complainants' claims because (1) they do not establish that Complainants have
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`committed any wrongdoing, let alone engaged in "unconscionable acts of fraud," and (2) even if
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`true, the allegations have nothing whatsoever to do with the patent rights that Complainants seek
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`to enforce in this Investigation. Evidence relating to the class action lawsuit is irrelevant and
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`would only serve to needlessly consume valuable time at the evidentiary hearing. Respondents
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`should therefore be precluded from introducing any evidence or argument regarding the class
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`action lawsuit at the hearing. Furthermore, because Respondents have offered no other evidence
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`in support of their unclean hands defense, they should not be permitted to assert any other
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`evidence or argument in support of the defense.
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`11.
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`EVIDENCE RELATING TO THE CLASS ACTION LAWSUIT
`AND UNCLEAN HANDS IS IRRELEVANT AND SHOULD BE EXCLUDED
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`The doctrine of unclean hands is an equitable defense that precludes a party tainted with
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`bad faith relative to the matter in which relief is sought from bringing suit. Courts only apply the
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`doctrine where there is a finding that the plaintiff is guilty of truly unconscionable and brazen
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`behavior. See CFMCommunications, LLC v. Mitts Telecasting Co., 424 F. Supp. 2d 1229, 1238
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`(E.D. Cal. 2005). Respondents, as the party invoking the doctrine, have the burden of proof.
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`Gidatex v. Campaniello Imports, Ltd, 82 F. Supp. 2d 126, 130 (S.D.N.Y. 1999).
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`2
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`

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`Not surprisingly, Respondents cannot point to any admissible evidence that would
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`support their contention that Complainants have committed unconscionable acts of fraud or
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`otherwise acted in bad faith. All Respondents have done is to cite to a now-concluded lawsuit
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`that was filed against Epson America relating to certain of its ink cartridges and printers, and
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`even then they have done so only in the most general of terms.2 Needless to say, allegations in a
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`lawsuit are not evidence of wrongdoing. See, e.g., Owens v. Ruglund, 313 F . Supp. 2d 939, 941
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`(W.D. Wisc. 2004) (noting that a plaintiff may not rely on the allegations in her complaint unless
`the allegations are admitted in the defendant's answer); Burrett v. City oflvew York, 237 F.R.D.
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`39, 41 (E.D.N.Y. 2006) ("unsubstantiated allegations may not be admissible at trial"). The mere
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`fact that a lawsuit was filed alleging consumer fraud by no means demonstrates, let alone
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`establishes, that Complainants perpetrated "unconscionable acts of fraud and deception."
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`Similarly, the fact that Epson America settled the lawsuit also establishes nothing. The lawsuit
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`was settled without any admission of wrongdoing whatsoever. Indeed, Complainants vigorously
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`deny that the use of a protective feature designed to avoid damage to its printers is in any way
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`fia~dulent.~ Because the lawsuit does not in any way establish that Complainants engaged in
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`fraud or are otherwise tainted with "unclean hands," any evidence relating to it should be
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`excluded.
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`Even the general statements made by Respondents about the lawsuit are factually incorrect.
`For instance, the lawsuit was not "commenced by the consumer frauds [sic] divisions of numerous state
`governments on behalf of their citizens, including the States of New York and California." Respondents'
`Pre-Hearing Statement at 71. There were no governmental entities involved in the suit.
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`As part of the settlement, Epson America agreed to disclose on its new printer boxes for inkjet
`printers and its website that "[a] variable amount of ink remains in the cartridges" after the printer has
`signaled that the ink has run out. (CX-1388C.) Thus, even if there were any legitimate concerns that the
`protective feature of Epson's ink cartridges and printers might mislead consumers, that issue is being
`addressed. See Republic Molding Corp. v. B. W. Photo Utilities, 319 F.2d 347, 349-50 (9' Cir. 1963) (the
`defense of unclean hands does not apply where the claimed misconduct has been cured).
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`3
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`

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`Respondents' reliance on the class action lawsuit is misplaced for yet another reason.
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`Even if one were to give any credence to the alleged consumer fraud charged in the lawsuit, this
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`supposed act of misconduct does not support a finding of unclean hands. For misconduct to
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`support an unclean hands defense, it must relate directly to the subject matter that is being
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`litigated. See CFM, 424 F.Supp.2d at 1238; Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304
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`F.3d 829, 841 (9th Cir. 2002); Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985).
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`Specifically, the misconduct must infect the cause of action: "[wlhat is material is not that the
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`plaintiffs hands are dirty, but that he dirtied them in acquiring the right he now asserts, or that
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`the manner of dirtying renders inequitable the assertion of such rights against the defendant."
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`CFM, 424 F. Supp. 2d at 1238. Misconduct that is unrelated to the claim to which it is asserted
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`as a defense does not constitute unclean hands. See International Union, Allied Indus. Workers
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`ofAmerica, AFL-CIO v. Local Union No. 589, 693 F.2d 666, 672 (7th Cir. 1982) ("The bad
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`conduct constituting unclean hands must involve fraud, unconscionability or bad faith toward the
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`party proceeded against, and must 'pertain to the subject matter involved and affect the equitable
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`relations between the litigants."'). The doctrine does not apply to collateral matters not directly
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`Indeed, "'equity does not
`affecting equitable relations which exist between the parties. Id.
`demand that its suitors shall have led blameless lives,' [only that] . . . they shall have acted fairly
`and without fraud or deceit as to the controversy in issue." Precision Instrument Mfg. Co. v.
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`Auto. Maint. Mach. Co., 324 U.S. 806,814-15 (1945). Thus, wrongdoing or claimed misconduct
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`not connected with the matter in controversy or sufficiently related thereto have been held not to
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`bar relief. See, e.g., Sanofi-Synthelabo v. Apotex, Inc., - F.3d -, 2006 WL 3613616, *12-13
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`(Fed. Cir. 2006) (doctrine does not bar enforcement of patent based on misconduct relating to
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`settlement agreement between the parties) ("Sanofi 11"). There is no such connection between
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`4
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`

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`the alleged consumer fraud cited by Respondents and the patent rights Complainants seek to
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`enforce in this Investigation.
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`In the specific context of patent infringement claims, courts have applied the doctrine of
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`unclean hands (as distinct from patent misuse) in only two situations: where the patent at issue
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`was fraudulently obtained or where there has been a concealment of evidence amounting to a
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`fraud on the court or other litigation misconduct. See, e.g., Sanoji-Synthelabo v. Apotex Inc.,
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`2006 WL 3103321, *2 (S.D.N.Y. 2006) (unclean hands defense bars equitable relief when
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`parties "committed perjury before the PTO, or litigation misconduct or fraud on the court")
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`("Sanofi I") (citing Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806
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`(1 945)); Goldstein v. Delgratia Mining Corp. , 176 F.R.D. 454,458 (S.D.N.Y. 1997) (stating that
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`unclean hands defense successful where plaintiff made multiple misrepresentations to court
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`regarding law and facts); Aris-Isotoner Gloves, Inc. v. Berkshire Fashions, Inc. , 792 F. Supp.
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`969, 970 (S.D.N.Y. 1992), a f d 983 F.2d 1048 (2d Cir. 1992) (finding that defendant's unclean
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`hands barred laches defense in trademark dispute where defendant's president fabricated
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`testimony to create impression that he detrimentally relied on plaintiffs acquiescence).
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`The charges of consumer fraud cited by Respondents have no relation either to the
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`procurement of Complainants' patents or to Complainants' litigation conduct in this
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`Investigation. In short, there is no connection between the claimed misconduct relied upon by
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`Respondents in support of their unclean hands defense and the patent rights that Complainants
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`seek to enforce in this Investigation. Accordingly, even if the allegations of consumer fraud
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`were true (and there is no evidence that they are), the conduct does not support the defense of
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`unclean hands. See Gidatexv. Campaniello Imports, Ltd., 82 F. Supp. 2d 126, 132 (S.D.N.Y.
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`1999).
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`5
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`

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`Because evidence relating to the lawsuit does not aid Respondents in establishing their
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`unclean hands defense, the lawsuit and allegations asserted therein are irrelevant and should be
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`excluded at the hearing. Fed. R. Evid. 402.
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`Allowing Respondents to introduce evidence of the lawsuit will only result in
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`considerable time being wasted at the evidentiary hearing on a matter that has no probative value
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`whatsoever. Such evidence should therefore also be excluded pursuant to Fed. R. Evid. 403.
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`Finally, as Respondents have offered nothing other than the lawsuit in support of their
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`unclean hands defense, they should not be permitted to assert any other evidence or argument in
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`support of the defense.
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`111. CONCLUSION
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`For the reasons set forth above, Complainants respectfully request that Respondents be
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`precluded from introducing any evidence or argument regarding the consumer class-action
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`lawsuit against Epson and, because Respondents have offered no other evidence in support of
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`their unclean hands defense, they should be from asserting any other
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`evidence or argument in
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`support of the defense.
`
`Barbara A. Murphy
`Michael L. Doane
`David F. Nickel
`ADDUCI, MASTRIANI & SCHAUMBERG, L.L.P.
`1200 Seventeenth Street, N.W., Fifth Floor
`Washington, DC 20036
`(202) 467-6300
`
`6
`
`

`
`Harold A. Barza
`Richard A. Schirtzer
`Steven M. Anderson
`Ryan S. Goldstein
`Tigran Guledjian
`QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP
`865 South Figueroa Street, 10th Floor
`Los Angeles, California 90017-2543
`(213) 443-3000
`
`Counsel for Epson Portland Inc., Epson
`America, Inc. and Seiko Epson Corporation
`
`Dated: January 9,2006
`
`SEC700707
`
`7
`
`

`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a copy of the foregoing COMPLAINANTS' MOTION IN
`LIMINE TO EXCLUDE EVIDENCE AND ARGUMENT REGARDING THE EPSON
`AMERICA CLASS ACTION LAWSUIT AND UNCLEAN HANDS DEFENSE and
`MEMORANDUM IN SUPPORT THEREOF (PUBLIC) was served via electronic mail
`unless otherwise indicated, to the parties listed below, this 9* day of January 2007:
`
`The Honorable Marilyn R. Abbott
`SECRETARY
`U.S. INTERNATIONAL TRADE COMMISSION
`500 E Street, S.W., Room 112A
`Washington, DC 20436
`(VIA HAND DELIVERY - Original + 6 copies)
`
`The Honorable Paul J. Luckern
`LAW JUDGE
`ADMINISTRATIVE
`U.S. INTERNATIONAL TRADE COMMISSION
`500 E Street, S.W., Room 317
`Washington, DC 20436
`(VIA HAND DELIVERY - 2 copies)
`
`Kevin Baer, Esq., Investigative Attorney
`OFFICE OF UNFAIR IMPORT INVESTIGATIONS
`U.S. INTERNATIONAL TRADE COMMISSION
`500 E Street, S.W., Room 401
`Washington, DC 20436
`(kevin.baer@usitc.gov)
`
`COUNSEL FOR RESPONDENTS NINESTAR
`TECHNOLOGY COMPANY LTD, NINE STAR
`IMAGE CO., LTD., TOWN SKY INC. AND
`DATAPRODUCTS USA LLC
`
`Joel E. Lutzker, Esq.
`Leonard S. Sorgi, Esq
`David A. Kagan, Esq.
`SCHULTE ROTH & ZABEL, LLP
`91 9 Third Avenue
`New York, New York 10022
`(joel.lutzker@srz.com)
`(leonard.sorgi@sn.com)
`(david.kagan@sn.com)
`
`COUNSEL FOR RESPONDENT GERALD
`CHAMALES CORP.
`
`Steven A. Lamb, Esq.
`ZELLE, HOFMANN, VOELBEL, MASON
`& GETTE LLP
`650 South Hope Street, Suite 1600
`Los Angeles, California 9007 1
`(slamb@zelle.com)
`
`COUNSEL FOR RESPONDENTS MMC
`CONSUMABLES, INC. AND ZHUHAI GREE
`MAGNETO - ELECTRIC Co. LTD.
`
`Thomas T. Chan, Esq.
`Lisa A. Karczewski, Esq
`CHAN LAW GROUP LLP.
`1055 West 7' Street, Suite 1880
`Los Angeles, California 900 17
`(epson@chanlaw.com)
`(lakarczewski@chanlaw.com)
`
`

`
`COUNSEL FOR RESPONDENTS INKJET
`
`WAREHOUSE.COM, INC. AND NECTRON
`INTERNATIONAL, LTD.
`
`Mario G. Ceste, Esq.
`LAW OFFICES OF MARIO G. CESTE, LLC
`P.O. Box 82
`Wallingford, Connecticut 06492
`(Mario@cestelaw.com)
`
`COUNSEL FOR RESPONDENTS ARTECH, GMBH
`
`Matthew B. Lowrie, Esq.
`Aaron W. Moore, Esq.
`Carla M. Levy, Esq.
`LOWRIE, LANDO & ANASTASI, LLP
`Riverfront Office Park
`One Main Street- 1 I* Floor
`Cambridge, Massachusetts 02 142
`(mlowrie@ll-a.com)
`(amoore@ll-a.com)
`
`Hung H. Bui, Esq.
`STEIN, MCEWEN & BUI LLP
`1400 Eye Street, N.W.
`Suite 300
`Washington, D.C. 20005
`(hbui@smbiplaw.com)
`
`COUNSEL FOR RESPONDENTS APEX
`
`DISTRIBUTING INC., MASTER INK Co., LTD.
`AND RIBBON TREE (USA) INC.
`[DBA CANA-PACIFIC RIBBONS, INC.)
`
`Lizbeth R. Levinson, Esq.
`David Lieberworth, Esq.
`Ronald M. Wisla, Esq.
`GARVEY SCHUBERT BARER
`1000 Potomac Street, N. W.
`Washington, DC 20007-3501
`(llevinson@gsblaw.com)
`(dlieberworth@gsblaw.com)
`(rwisla@gsblaw.com)
`
`SEC 100006
`
`1200 Seventeenth Street, N.W., Fifth Floor
`Washington, D.C. 20036
`
`2