throbber

`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`GREENSBORO DIVISION
`
`OPTOLUM, INC.,
`
`Plaintiff,
`
`v.
`
`CREE, INC.,
`
`Defendant.
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Civil Action No.
`17-cv-00687-WO-JLW
`
`DEFENDANT CREE, INC.’S RESPONSE TO PLAINTIFF OPTOLUM INC.’S
`MOTION FOR DISALLOWANCE OF COSTS
`
`
`
`
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 1 of 21
`
`

`

`TABLE OF CONTENTS
`
`
`Page
`I. INTRODUCTION ......................................... 1
`
`II. BACKGROUND ........................................... 2
`
`III. ARGUMENT ............................................. 3
`
`A. LEGAL STANDARD .................................. 3
`
`B. THERE IS NO INJUSTICE IN AWARDING CREE THE
`COSTS IT INCURRED DEFENDING ITSELF IN THIS
`ACTION .......................................... 4
`
`C. CREE’S BILL OF COSTS IS PROPER .................. 7
`
`1. Hearing Transcripts and Rough Trial
`Transcripts ................................ 8
`
`2. Deposition Transcripts ..................... 9
`
`3. Copying and Printing ...................... 10
`
`4. Exemplification ........................... 11
`
`IV. CONCLUSION .......................................... 16
`
`
`
`- i -
`
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 2 of 21
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`

`

`
`I.
`
`INTRODUCTION
`
`For approximately seven years, Plaintiff OptoLum, Inc.
`
`(“OptoLum”) litigated the present case using a variety of
`
`causes actions against Defendant Cree, Inc. (“Cree”),
`
`including its allegations of patent infringement, all of
`
`which were rejected. With the employ of two sophisticated
`
`law firms (McCarter & English, LLP and Womble Bond
`
`Dickinson LLP), these allegations spanned numerous
`
`hearings, a trial, and a subsequent appeal of an
`
`infringement theory rejected by this Court on summary
`
`judgment and summarily affirmed by the Federal Circuit.
`
`But, now that OptoLum must pay the relatively modest and
`
`statutorily mandated costs sought by Cree, OptoLum suddenly
`
`claims (without the necessary and appropriate
`
`documentation) a wholesale inability to pay.
`
`There is no dispute that Cree is the prevailing party.
`
`Indeed, this Court’s judgment clearly ordered that Cree
`
`“recover costs from . . . OptoLum.” (D.I. 367). OptoLum’s
`
`claim of inability to pay Cree’s reasonable costs lacks
`
`credibility in view of the backdrop of the numerous lawyers
`
`OptoLum has employed through trial and on appeal. Also,
`
`notwithstanding OptoLum’s self-serving affidavit alleging
`
`
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`- 1 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 3 of 21
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`
`
`no ability to pay (and lacking any supporting
`
`documentation), the asserted patents in this case (which
`
`OptoLum contends are extremely valuable) have not been
`
`invalidated, and thus, remain as assets that OptoLum could
`
`use to pay costs if necessary.
`
`In light of the history of this case, and the obviously
`
`significant resources expended to date by OptoLum pursuing
`
`claims that were unsupported and/or completely rejected at
`
`every turn, there is no unfairness nor inequity in
`
`requiring OptoLum to pay Cree its requested costs in this
`
`case. Accordingly, for the reasons below, this Court
`
`should reject OptoLum’s attempt to escape the legal
`
`consequences of pursuing meritless theories and order
`
`OptoLum pay Cree’s reasonable costs.
`
`II. BACKGROUND
`
`In consideration of judicial efficiency, Cree will
`
`forgo a detailed recitation of the seven-year history of
`
`this litigation. Instead, Cree incorporates by reference
`
`the background of its motion for attorney fees, which
`
`detailed at least some of the theories that OptoLum pursued
`
`without any basis to do so. (D.I. 368). These included
`
`claims for violation of § 43(a) of the Lanham Act through
`
`
`
`- 2 -
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`false advertising, improper damages theories concerning
`
`brand value, and baseless theories of willful infringement
`
`for which OptoLum had no evidence to maintain through trial
`
`(as confirmed by the Court’s grant of summary judgement).
`
`Cree was forced to defend against these allegations,
`
`and many others, in opposition to OptoLum’s assertions that
`
`it was owed tens of millions of dollars. Cree prevailed on
`
`all these claims, including prosecution history disclaimer
`
`and estoppel, through this Court’s rulings, the jury’s
`
`findings, and the Federal Circuit’s summary affirmance.
`
`On January 31, 2022, this Court entered judgment in
`
`Cree’s favor that “plaintiff recover nothing” and that Cree
`
`“recover costs from” OptoLum. (D.I. 367). On June 12,
`
`2023, the Federal Circuit issued the mandate affirming the
`
`Court’s judgment. Cree promptly filed its Bill of Costs.
`
`OptoLum has now moved to challenge those costs.
`
`III. ARGUMENT
`
`A.
`
`Legal Standard
`
`Federal Rule of Civil Procedure 54(d)(1) provides that
`
`“costs—other than attorneys’ fees—should generally be
`
`allowed to the prevailing party.” This “rule creates the
`
`presumption that costs are to be awarded to the prevailing
`
`
`
`- 3 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 5 of 21
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`
`
`party.” Cherry v. Champion Int’l Corp., 186 F.3d 442, 446
`
`(4th Cir. 1999) (citing Delta Air Lines, Inc. v. August,
`
`450 U.S. 346, 352 (1981); Teague v. Bakker, 35 F.3d 978,
`
`995–96 (4th Cir. 1994)); see also Oak Hall Cap & Gown Co.
`
`v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th
`
`Cir. 1990) (“[D]istrict courts may not depart from the
`
`normal practice of awarding fees to the prevailing party
`
`without first articulating some good reason for doing so.”)
`
`(citation and internal quotes omitted).
`
`Here, it is undisputed that Cree is the prevailing
`
`party, as established by the jury’s verdict (D.I. 342) and
`
`the Court’s judgment (D.I. 367). Rather, OptoLum argues
`
`that awarding costs in this case would be inequitable and
`
`that certain costs are not properly taxed.
`
`B.
`
`There Is No Injustice in Awarding Cree the
`Costs It Incurred Defending Itself In This
`Action
`
`The long record of this seven-year litigation
`
`indisputably shows that Cree has been forced to vigorously
`
`defend itself at every possible stage. Throughout, OptoLum
`
`has operated no differently than any other sophisticated
`
`litigant, represented by well-known local and national law
`
`firms and engaging numerous experts to assert their claims.
`
`
`
`- 4 -
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`
`
`But now that the chips have fallen in Cree’s favor and
`
`costs to Cree are warranted, OptoLum conveniently attempts
`
`to portray struggling financial woes that would make it
`
`inequitable and unjust for the Court to tax costs against
`
`OptoLum. The Court should reject that effort.
`
`First, the Court should deny OptoLum’s argument as
`
`insufficiently supported. “Merely stating that one is of
`
`‘modest means’ is insufficient to overcome the presumption
`
`that the losing party must pay the prevailing party's
`
`costs.” Wyne v. Medo Indus., Inc., 329 F. Supp. 2d 584,
`
`588 (D. Md. 2004).1 Here, the sole support for OptoLum’s
`
`claim centers around a self-serving affidavit provided by a
`
`corporate representative. But that is not enough under the
`
`record and facts of this case.
`
`OptoLum’s “claim of poverty is not meaningfully
`
`
`1 Id. (citing Chapman v. Al Transp., 229 F.3d 1012, 1039
`(11th Cir. 2000) (noting that losing litigant's financial
`status is factor to be considered, but court must first
`require substantial documentation of true inability to pay
`costs); Briscoe v. City of Phila., Civ. A. No. 95–1852, 1998
`WL 52064, *2 (E.D.Pa. Jan. 28, 1998) (acknowledging that court
`may consider indigency but refusing to do so because plaintiff
`provided no documentation); McGuigan v. CAE Link Corp., 155
`F.R.D. 31, 35 (N.D.N.Y.1994) (refusing to reduce costs
`because plaintiff did not adequately document inability to
`pay).
`
`
`
`- 5 -
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`
`
`supported by the record” where “[t]he only evidence of an
`
`inability to pay [Cree’s] taxable costs is the affidavit of
`
`[a corporate representative] but there is no documentation
`
`to support h[er] statement” about OptoLum’s exhausted
`
`funds. Deep Fix, LLC v. Marine Well Containment Co., No.
`
`CV H-18-0948, 2020 WL 1845336, at *2 (S.D. Tex. Apr. 10,
`
`2020). Moreover, OptoLum’s allegations of its exhaustion
`
`of funds are “refuted by the record” as OptoLum “has
`
`demonstrated an ability to pay the costs required to pursue
`
`an appeal in this case, and to pay attorneys from multiple
`
`law firms to represent it before this Court and on appeal.”
`
`Id. In short, after continuously mounting many legal
`
`challenges against Cree over the years, OptoLum cannot
`
`claim injustice over costs that Cree was inevitably forced
`
`to incur defending itself.
`
`Second, OptoLum clearly has remaining assets in the
`
`form of patents that have not been legally adjudicated as
`
`invalid. Throughout this litigation, OptoLum has
`
`maintained that its patents, including those asserted
`
`against Cree, are worth millions of dollars. Any effort
`
`now on OptoLum’s part to show an element of injustice
`
`regarding poverty would require, at minimum, that OptoLum
`
`
`
`- 6 -
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`provide extensive documentation and explanation as to why
`
`its presumptive assets cannot be used to satisfy Cree’s
`
`reasonable costs. Simply put, under the facts of this case
`
`and this record, the only element of plausible injustice
`
`here would be if the Court were to not follow the legal
`
`“presumption in favor of an award of costs to the
`
`prevailing party.” Williams v. Metro. Life Ins. Co., 609
`
`F.3d 622, 636 (4th Cir. 2010); Cherry, 186 F.3d at 446–48
`
`(ordering the plaintiff, an individual with “no independent
`
`income and [] no property in [plaintiff’s] own name,” to
`
`pay costs to the defendant corporation).
`
`OptoLum’s argument that it would be unjust to award
`
`costs should be rejected on this record.
`
`C.
`
`Cree’s Bill of Costs Is Proper
`
`Cree submitted a Bill of Cost for a total of
`
`$88,978.10. OptoLum contends that those costs should be
`
`reduced by $68,452.63. In contrast, Cree maintains that
`
`its requested costs are by no means unusual for a patent
`
`infringement case spanning almost seven years, especially
`
`one that includes a two-week trial, and a subsequent
`
`Federal Circuit appeal and argument. Cf. Bell v. Am. Int’l
`
`Indus., No. 1:17CV111, 2022 WL 4095903 (M.D.N.C. Sept. 7,
`
`
`
`- 7 -
`
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`
`
`2022) (Osteen, J.) (awarding $45,721.13 in costs for an
`
`asbestos litigation); Silicon Knights, Inc. v. Epic Games,
`
`Inc., 917 F. Supp. 2d 503, 515 (E.D.N.C. 2012) (awarding
`
`$277,852.13 in costs in breach of contract, copyright
`
`infringement, and trade secret misappropriation case).
`
`1.
`
`Hearing Transcripts and Rough Trial
`Transcripts
`
`OptoLum contends that transcripts for certain hearings
`
`and trial are not proper costs. But transcript costs are
`
`recoverable under 28 U.S.C. § 1920, which provides, in
`
`pertinent part, that “[a] judge or clerk of any court of
`
`the United States may tax as costs . . . [f]ees for
`
`printed or electronically recorded transcripts necessarily
`
`obtained for use in the case.” 28 U.S.C. § 1920(2).
`
`This Court is well-aware that numerous citations to
`
`hearing transcripts were provided in various pre-and-post
`
`trial briefs. Moreover, every transcript for trial was
`
`included in the subsequent appeal to the Federal Circuit.
`
`So, as this Court has previously recognized, “these
`
`transcripts were reasonably necessary to understand the
`
`contours of multiple oral orders contained therein” and
`
`address the challenges that OptoLum raised on appeal.
`
`Bell, 2022 WL 4095903, at *6.
`
`
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`- 8 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 10 of 21
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`
`
`OptoLum’s request should thus be summarily rejected.
`
`2.
`
`Deposition Transcripts
`
`OptoLum challenges the deposition transcript costs of
`
`witnesses who did not testify at trial or whose transcripts
`
`were not part of dispositive briefs. But that is not the
`
`test. As this Court has previously noted, the Fourth
`
`Circuit has not made “use of a transcript in a dispositive
`
`motion the test of whether the costs are taxable.” Bell,
`
`2022 WL 4095903, at *2. Instead, the deposition “only
`
`needs to have been reasonably necessary at the time of the
`
`taking of the deposition” to be taxable. Id. (citation
`
`omitted).
`
`OptoLum contests a total of eight depositions. Five of
`
`those depositions – Watson, Edmond, Vollers, Athalye,
`
`Baldwin – were noticed by OptoLum. Relating to those
`
`depositions, OptoLum seemingly takes the absurd position
`
`that depositions it noticed were not reasonably necessary
`
`at their time. This Court as specifically rejected that
`
`proposition. Bell, 2022 WL 4095903, at *3 (“Also
`
`reasonably necessary, indeed required, were the depositions
`
`of AII's experts because Plaintiff noticed these
`
`depositions.”).
`
`
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`- 9 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 11 of 21
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`
`
`With respect to the other three depositions – Hill,
`
`Lenkszus, and Nelson – each of them was reasonably
`
`necessary at the time. When these depositions were taken,
`
`Cree was investigating issues concerning inventorship.
`
`Hill and Nelson were engineers hired by the inventor on the
`
`face of the patents to model the design that resulted in
`
`the patent, and Lenkszus was the attorney who prosecuted
`
`the asserted patents. As such, in order to evaluate the
`
`veracity of the inventor’s claim of inventorship, these
`
`depositions were necessary.
`
`Accordingly, in view of the above, this Court should
`
`“conclude[] that all depositions are taxable because they
`
`were reasonably necessary when taken,” and deny OptoLum’s
`
`request. Bell, 2022 WL 4095903, at *3.
`
`3.
`
`Copying and Printing
`
`OptoLum’s apparent position is that Cree incurred no
`
`printing charges at all over the entire seven-year saga of
`
`defending this litigation through a plethora of hearings,
`
`trial, and appeal. On its face, that assertion is devoid
`
`of merit. Nevertheless, despite all the printing charges
`
`that Cree incurred over the years, the request in the bill
`
`of cost, for convenience and in an effort to minimize
`
`
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`- 10 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 12 of 21
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`
`
`disputes, was narrowly tailored specifically to those
`
`arising from trial, including the printing of trial
`
`exhibits that Cree submitted to the Court’s staff as
`
`requested when the exhibits were admitted into the record.
`
`These costs were therefore plainly necessary and should be
`
`allowed.
`
`4.
`
`Exemplification
`
`OptoLum contends that the $16,268.75 charge for
`
`demonstrative graphics should be excluded.
`
`This Court’s bill of cost guide explicitly states that
`
`exemplification costs “include the costs for producing a
`
`demonstrative aid.” Bill of Costs Guide at F. “A party
`
`may recover costs for creating demonstrative exhibits . .
`
`. if the exhibits were ‘necessarily obtained for use in the
`
`case.’” Silicon Knights, Inc., 917 F. Supp. 2d at 514. In
`
`making this determination courts consider if “the
`
`exemplification was vital to the presentation of the
`
`information, or whether it was . . . merely a convenience
`
`or, worse, an extravagance. To do so, courts may consider
`
`‘whether the nature and context of the information being
`
`presented genuinely called for the means of illustration
`
`that the party employed.’” Id. (cleaned up and internal
`
`
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`- 11 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 13 of 21
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`
`
`citations omitted).
`
`As this Court may recall, this patent-infringement
`
`action concerned complicated infringement theories of
`
`thermal dissipation inside LED light bulbs, including the
`
`construction of the LEDs themselves – the very issue that
`
`was appealed to the Federal Circuit. To aid the Court’s
`
`recollection, Cree includes below a few exemplary
`
`demonstrative aids that were used throughout trial.
`
`
`
`
`
`- 12 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 14 of 21
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`

`yo
`
`— Common Sense
`
`‘303 Patent
`
`ttt Opte Lum ra
`ATT bib wait be Jin ifrar
`
`Aue)
`
`in Size 10 Comsact
`
`
`PTX-621
`
`PTX-619
`
`
`
` PTX-635
`to be a chimneyinside globe.
`
`
`
`
`
`
`
`Cree bulbs designed to
`conduct heat to a heat sink.
`
`The heat conducts to fins
`outside the globe,
`then out to the atmosphere.
`
`The Cree bulbs are NOT
`specifically designed
`
`
`
`
`
`
`
`- 13 -
`- 13 -
`
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 15 of 21
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 15 of 21
`
`

`

`
`
`
`
`
`
`The nature and context of the information being
`
`presented in this case necessarily required means of
`
`illustration that would allow a jury to comprehend the
`
`relevant scientific principles and legal theories. Indeed,
`
`“[i]It is especially important in patent cases, because of
`
`their complexity, to present evidence in a manner that can
`
`be easily understood by a judge and jury,” so
`
`“demonstrative evidence at trial in these types of cases is
`
`therefore important for the fact-finder.” Merck Sharp &
`
`Dohme Pharms., SRL v. Teva Pharms. USA, Inc., No. CIVA 07-
`
`1596 (GEB), 2010 WL 1381413, at *5 (D.N.J. Mar. 31, 2010)
`
`(allowing costs of $89,026.55 for exemplification which
`
`included preparing demonstrative exhibits).
`
`
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`- 14 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 16 of 21
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`

`

`
`
`Demonstrative aids in this case thus required, for
`
`instance, (1) that Cree educate the jury on the physics
`
`behind heat dissipation, (2) that Cree illustrate OptoLum’s
`
`theories (which themselves relied on highly graphical heat
`
`simulations) and distinguish from them, and (3) that Cree
`
`show how the various components of the accused LED
`
`lightbulbs worked and how they actually dissipated heat.
`
`It is clear from the face of the supporting invoice
`
`produced, along with the bill of costs, that Cree is not
`
`merely capturing all of the time spent by its trial
`
`graphics vendor during trial. Instead, Cree is
`
`specifically requesting for the time spent only for
`
`creation of graphic demonstratives. These charges are
`
`reasonable. Cornell Univ. v. Hewlett-Packard Co., 2009 WL
`
`1405208, *2 (N.D. N.Y. 2009) (Rader J., sitting by
`
`designation) (rejecting argument that “charge for trial
`
`graphics is unreasonable and should be reduced to $114,851”
`
`and noting that “[t]rial graphics provide tremendous
`
`assistance to the sitting judge and jury” and that “graphic
`
`artists are highly skilled artisans trained at creating
`
`highly technical demonstratives”).
`
`Accordingly, Cree’s requested cost are proper and
`
`
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`- 15 -
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`
`
`OptoLum’s argument should be rejected.
`
`IV. CONCLUSION
`
`For the foregoing reasons, Cree respectfully requests
`
`that the Court deny OptoLum’s motion and sustain the
`
`reasonable costs Cree incurred in defense of this
`
`litigation as the prevailing party.
`
`
`
`
`
`
`
`- 16 -
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 18 of 21
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`
`
`Respectfully submitted, September 1, 2023.
`
`By: /s/ Blaney Harper
`Blaney Harper
`JONES DAY
`51 Louisiana Avenue, N.W.
`Washington, D.C. 20001-2113
`Telephone: (202) 879-3939
`Facsimile: (202) 626-1700
`Email: bharper@jonesday.com
`
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`NC State Bar No. 45647
`SAGE PATENT GROUP
`2301 Sugar Bush Road,
`Suite 200
`Raleigh, NC, 27612
`Telephone: 984-219-3358
`Facsimile: (984) 538-0416
`Email: psiddoway@sagepat.com
`
`
`
`
`
`Attorneys for Defendant Cree, Inc.
`
`
`
`- 17 -
`
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`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 19 of 21
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`GREENSBORO DIVISION
`
`OPTOLUM, INC.,
`
`Plaintiff,
`
`v.
`
`CREE, INC.,
`
`Defendant.
`
`
`Civ. Action No. 1:17-cv-
`00687
`
`CERTIFICATE OF WORD COUNT
`
`I hereby certify that the foregoing complies with the
`
`limitations set forth in Local Rule 7.3(d) by not exceeding
`
`6,250 words, including the body of the memorandum, headings
`
`and footnotes, but excluding the caption, signature lines,
`
`certificate of service, cover page, and index.
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`
`
`
`- 1 -
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 20 of 21
`
`
`
`

`

`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`OPTOLUM, INC.,
`
`Plaintiff,
`
`v.
`
`CREE, INC.,
`
`Defendant.
`
`
`Civ. Action No. 1:17-cv-
`00687
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on September 1, 2023, I
`
`electronically filed the foregoing with the Clerk of the
`
`Court using the CM/ECF system, which will send notification
`
`to counsel of record.
`
`/s/ Peter D. Siddoway
`Peter D. Siddoway
`
`
`
`
`
`- 1 -
`Case 1:17-cv-00687-WO-JLW Document 393 Filed 09/01/23 Page 21 of 21
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`
`
`

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