Chanel Patent Case Has Many New Changes

An article on the Patterson Belknap firm’s blog page analyzes a pending Chanel patent case in the Southern District of New York. Molo Design, Ltd sued Chanel Inc., alleging that Chanel used window installations that violated Molo’s patents. About a year after filing, Chanel asked for a stay pending inter partes review of Molo’s patent claims, and the Court granted the stay.

While the Chanel patent case was stayed, evidence came to light in a Canadian case brought by Molo against Chanel Canada ULC, Chanel SAS (“SAS”), and Procedes Chenel International. It led Molo to believe that Procedes had supplied Chanel’s allegedly infringing window installations and that SAS had encouraged the alleged infringement.

After the stay was lifted, Molo sought to amend its pleadings. The judge granted that motion, concluding that Molo was diligent in discovering new facts and had good cause to amend the complaint for several reasons.

The Court explained that Molo was unaware of the relevant facts about SAS and Procedes when it filed its initial complaint, and those facts weren’t revealed in discovery. Molo acted quickly once it became aware, and its delay in seeking leave to amend after the deadline for amendments was “largely” caused by the stay Chanel requested.

The Court ruled adding SAS and Procedes as defendants would not unduly prejudice Chanel because the parties had not completed discovery, and the Court had not entered a post-stay scheduling order; all three defendants’ positions were aligned in the Canadian case; and Molo’s claims against the proposed defendants arose from the same factual allegations against Chanel.

The authors of the blog, Lewis V. Popovski and Basil Williams say this case shows how circumstances can change during a stay, especially if the parties have another litigation proceeding elsewhere. It cautions defendants seeking a stay pending inter partes review to be aware of that possibility.