Bridgeilne Emergency Motion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

) ) INGENIADOR, LLC,

) )

Plaintiff ) ) Case No. 3:11-cv-1840 v. ) ) ALFRESCO SOFTWARE, INC., et al.,

) )

Defendants. ) )

DEFENDANT BRIDGELINE DIGITAL, INC.’S MOTION TO SET ASIDE ENTRY OF DEFAULT AND DEFAULT JUDGMENT

Ricardo Casellas (Bar No. 203114) CASELLAS, ALCOVER & BURGOS PSC Suite 1400, Popular Center Bldg. 208 Ponce de Leon Ave. Hato Rey, PR 00918 P.O. Box 364924 San Juan, PR 00936-4924 787-756-1400 (t) 787-756-1401 (f) [email protected] Of Counsel: T. Christopher Donnelly Adam B. Ziegler DONNELLY, CONROY & GELHAAR, LLP One Beacon Street, 33rd Floor Boston, MA 02108 617-720-2880 (t) 617-720-3554 (f) [email protected] [email protected] Pro Hac Vice Application Forthcoming

Case 3:11-cv-01840-GAG Document 241 Filed 05/07/12 Page 1 of 23

mailto:[email protected]



TABLE OF CONTENTS INTRODUCTION......................................................................................................................... 1

FACTS ........................................................................................................................................... 2

A. Ingeniador’s Complaint .............................................................................. 2

B. Ingeniador’s Failure to Properly Serve Bridgeline ..................................... 3

C. Bridgeline’s Lack of Contacts with Puerto Rico ........................................ 3

D. Bridgeline’s Unequivocal Expression of Intent to Defend Against Ingeniador’s Claims .................................................................................... 4

E. The Clerk’s Entry of Default against Bridgeline ........................................ 5

F. Ingeniador’s Failure to Provide Bridgeline With Written Notice of its Motion for Entry of Default Judgment ....................................................... 5

G. The Court’s Entry of Default Judgment...................................................... 6

GOVERNING RULES ................................................................................................................. 6

ARGUMENT ................................................................................................................................. 7

I. The Default Judgment is Void and Must Be Set Aside .......................................... 7

A. The Default Judgment is Void Due to Improper Service of Process .......... 7

B. The Default Judgment is Void for Lack of Personal Jurisdiction ............. 10

C. The Default Judgment is Void Due to Ingeniador’s Failure to Comply with FRCP 55(b)(2) .......................................................................................... 13

II. The Default Judgment Also Should Be Set Aside Pursuant to FRCP 60(b) ........ 15

A. Bridgeline’s Motion Was Promptly Filed ................................................. 16

B. Bridgeline Has Numerous Meritorious Defenses ..................................... 16

C. Ingeniador Will Suffer No Unfair Prejudice ............................................. 19

D. The Balance Between Finality and Merits-Based Resolution Favors Bridgeline .................................................................................................. 20

CONCLUSION ........................................................................................................................... 20


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INTRODUCTION

Pursuant to Fed. R. Civ. P. 55(c) and 60(b), defendant Bridgeline Digital, Inc.

(“Bridgeline”) respectfully requests that the Court set aside the default and default judgment

entered against Bridgeline in this case. See Order Granting Motion for Entry of Default (Dkt.

No. 73); Default Judgment (Dkt. No. 235). Both the default and default judgment entered

against Bridgeline should be set aside for four reasons.

First, they are void and must be set aside because Bridgeline was never served properly

with the summons and complaint, although Bridgeline did have actual knowledge of the

complaint. See M&K Welding, Inc. v. Leasing Partners, LLC, 386 F.3d 361, 364 (1st Cir.

2004); Echevarria-Gonzalez v. Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir. 1988).

Second, they are void and must be set aside because the Court’s exercise of personal

jurisdiction over Bridgeline, which has no contacts whatsoever with Puerto Rico, would violate

due process. See M&K Welding, 386 F.3d at 364; see also Elecs. for Imaging, Inc. v. Coyle, 340

F.3d 1344, 1350 (Fed Cir. 2003); Int’l Shoe v. Washington, 326 U.S. 310, 316 (1945).

Third, they are void and must be set aside because plaintiff Ingeniador, LLC

(“Ingeniador”) did not provide Bridgeline with written notice of Ingeniador’s motion for default

judgment at least 7 days prior to the Court’s entry of default judgment, as required by Fed. R.

Civ. P. 55(b)(2). See Key Bank of Maine v. Tablecloth Textile Co. Corp., 74 F.3d 349, 351-56

(1st Cir. 1996); Muniz v. Vidal, 739 F.2d 699 (1st Cir. 1984). Although Bridgeline did not

formally appear in this matter, Bridgeline had multiple direct communications with Ingeniador’s

counsel, in which Bridgeline rejected Ingeniador’s allegations and expressed Bridgeline’s

unequivocal intent to defend itself against Ingeniador’s claim. As Judge Torruella made clear in

the First Circuit’s decision in Key Bank of Maine, 74 F.3d 355, and as then-Judge Breyer made

clear in Muniz, 739 F.2d at701, a defendant’s expression of a clear “intent to defend” triggers


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Fed. R. Civ. P. 55(b)(2)’s written notice requirement, even when the defendant has not formally

appeared or made any submissions in court. The failure to give the mandatory written notice at

least seven days prior to entry of default judgment requires that the default judgment be set aside.

Fourth, even if the default and default judgment were not void, the Court should set them

aside pursuant to Fed. R. Civ. P. 55(c) and 60(b). Bridgeline filed the instant motion promptly

upon learning of the default judgment. Bridgeline has numerous meritorious procedural and

substantive defenses both to liability and to damages. Bridgeline’s default was not willful but

instead resulted from Ingeniador’s improper service and Bridgeline’s lack of knowledge of the

default proceedings. And Ingeniador will suffer no unfair prejudice from a ruling setting aside

the default and default judgment, given that the case has not progressed beyond the motion to

dismiss stage.

For these reasons, pursuant to Fed. R. Civ. P. 55(c) and 60(b), Bridgeline respectfully

requests that the Court set aside the default and default judgment. In addition, given the

deficiencies in service, the lack of personal jurisdiction, the failure to state a claim against

Bridgeline, and the misjoinder of Bridgeline with the other defendants, Bridgeline respectfully

requests that the Court dismiss the claims against Bridgeline pursuant to Fed. R. Civ. P. 12(b)(2),

12(b)(5), 12(b)(6) and 20(a)(2).

FACTS

A. Ingeniador’s Complaint

Ingeniador commenced this patent infringement action on August 26, 2011. Ingenaidor’s

complaint asserts that a hodge-podge of 16 unrelated corporate defendants infringed U.S. Patent

No. 6,990,629 (the ‘629 Patent), which relates to “a web-based editing and publishing system

comprising a network of client computers, network file server and a Light Weight Directory

Access Protocol (LDAP) directory server….” See ‘629 Patent (Claim 1) (Dkt. No. 1-3).


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Bridgeline was one of the 16 named defendants. In a single paragraph, the Complaint

asserts “[u]pon information and belief,” that Bridgeline’s “iAPPS Content Manager” product

infringes unspecified claims of the ‘629 Patent in unspecified ways. Compl. ¶ 27 (Dkt. No. 1).

B. Ingeniador’s Failure to Properly Serve Bridgeline

Bridgeline has been unable to locate any record of being served with the summons and

complaint in this case. (Prinn Decl. ¶ 24). The Proof of Service filed by Ingeniador (Dkt. No.

26) states that someone named Thomas F. Cabral of Capitol Process Services, Inc., in

Washington, DC, served the summons on Kelly Quinlan, an executive assistant at Bridgeline, on

September 15, 2011, at “10 Sixth Street, Woburn, MA.”1 In its motion for entry of default,

Ingeniador falsely reported to this Court that Ms. Quinlan “represented to be the person

designated to accept service of process on behalf of defendant,” and that Mr. Cabral had so

declared under penalty of perjury. See Motion for Entry of Default ¶ 2 (Dkt. No. 72). Mr.

Cabral did not declare that Ms. Quinlan had made such a representation, see Proof of Service

(Dkt. No. 26), and Ms. Quinlan has no recollection of communicating with or receiving anything

from Mr. Cabral, let alone representing that she was authorized to accept service. (Quinlan Decl.

¶¶ 3-4). In fact, Ms. Quinlan is not an officer or managing or general agent of Bridgeline, and

she is not authorized to accept service of process for Bridgeline. (Quinlan Decl. ¶ 5; Prinn

Decl.¶ 25).

C. Bridgeline’s Lack of Contacts with Puerto Rico

Bridgeline is a Delaware corporation with its principal place of business in Burlington,

Massachusetts. (Prinn Decl. ¶¶ 3-4). Bridgeline is not licensed, qualified or registered to do

business in Puerto Rico and has never had a registered agent for service of process in Puerto

1 Bridgeline’s address at the time was 10 Sixth Road, Woburn, Massachusetts, and in February 2012, it moved its offices from Woburn, Massachusetts to Burlington, Massachusetts. (Prinn Decl. ¶ 4).


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Rico. (Prinn Decl. ¶¶ 16-17). Bridgeline has never conducted any business in Puerto Rico.

(Prinn Decl. ¶ 18). Bridgeline has never had any offices or facilities in Puerto Rico, owned or

rented any property in Puerto Rico, or maintained any telephone numbers, fax numbers, mailing

addresses in Puerto Rico. (Prinn Decl. ¶¶ 5-8). Bridgeline has never had any bank accounts or

other assets in Puerto Rico. (Prinn Decl. ¶¶ 6-7). Bridgeline has never had any employees,

agents, representatives, independent contractors, distributors, resellers, or channel partners in

Puerto Rico. (Prinn Decl. ¶¶ 9-11). Bridgeline has never had any customers in Puerto Rico, paid

any taxes in Puerto Rico, or generated any revenue from Puerto Rico. (Prinn Decl. ¶¶ 12-15,

19). Bridgeline has never made, used, offered to sell, or sold any of its products in Puerto Rico,

including the accused product – the iAPPs Content Manager. (Prinn Decl. ¶¶ 13-14, 20).

Bridgeline maintains a website, which does not permit interactive commercial

transactions and has never permitted visitors to purchase products. (Prinn Decl. ¶ 22).

Bridgeline has never offered its iAPPS products, including Content Manager, for sale through its

website. (Prinn Decl. ¶ 21). Bridgeline’s software products, including the iAPPS Content

Manager, are sold through direct interactions between its sales force and potential customers,

require significant financial commitment by customers, and consequently have a lengthy sales

cycle that typically runs from 4 to 6 months. (Prinn Decl. ¶ 21).

D. Bridgeline’s Unequivocal Expression of Intent to Defend Against Ingeniador’s Claims

Although Bridgeline was not properly served with the summons and complaint,

Bridgeline did have actual knowledge of Ingeniador’s complaint. (Zucker Decl.¶ 5). In the

week before Ingeniador purportedly attempted service by delivery to Ms. Quinlan, Ingeniador’s

counsel, Adam Saxon, and Bridgeline’s Chief Technology Officer, Brett Zucker, had multiple

written communications and two telephone conversations about Ingeniador’s claim and the


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meritlessness of allegations of infringement against Bridgeline. (Zucker Decl. ¶¶ 5-6; Zucker

Exh. A). These communications included Ingeniador’s transmission of a document summarizing

the ‘629 Patent and Ingeniador’s allegations, which Mr. Zucker reviewed and then discussed

with Ingeniador’s counsel, explaining in detail that Bridgeline’s technology did not practice the

patented invention at all. (Zucker Decl. ¶ 7; Zucker Exh. B). Ingeniador’s counsel stated that he

would relay the information to his client and would be back in touch with Bridgeline, which he

did not do. (Zucker Decl. ¶¶ 7-8). On at least two separate occasions, including immediately

after that telephone discussion, Mr. Zucker reiterated to Ingeniador’s counsel, in writing, that

Ingeniador’s patent claim was meritless. (Zucker Decl.¶¶ 6-7; Zucker Exhs. A-B).

E. The Clerk’s Entry of Default against Bridgeline

On October 19, 2011, Ingeniador moved for entry of default against Bridgeline. See

Motion for Entry of Default (Dkt. No. 72). In its motion, Ingeniador falsely stated that

Bridgeline had been served and that the alleged process server, Mr. Cabral, had declared under

penalty of perjury that Ms. Quinlan had “represented to be the person designated to accept

service of process on behalf of defendant.” Motion ¶ 2. Ingeniador did not disclose to the Court

that it had had direct communications with Bridgeline just weeks before, and Ingeniador did not

send Bridgeline any notice of the motion for entry of default. The Court immediately entered

default against Bridgeline on October 19, 2011, the day the motion was filed. (Dkt No. 73).

F. Ingeniador’s Failure to Provide Bridgeline With Written Notice of its Motion for Entry of Default Judgment

Ingeniador filed its motion for entry of default judgment on April 25, 2012 (Dkt. No.

235). Despite the fact that Bridgeline had expressly denied liability during multiple oral and

written communications between the parties, Ingeniador’s motion falsely asserted that Bridgeline

had done nothing “showing any intent to defend from or contest the infringement of U.S. Patent


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No. 6,990,629.” Motion at 2. Ingeniador requested the Court to enter default judgment and

award damages of $1,437,000, based on a hypothetical royalty rate of 1.5% of Bridgeline’s total

revenues from all services and products, only one of which was the accused product.

Ingeniador again failed to inform this Court of its repeated interactions with Bridgeline.

Nor did Ingeniador provide Bridgeline with written notice of its motion for entry of default

judgment seven days prior to the Court’s ruling. Ingeniador’s motion certifies that, on April 25,

2012, it mailed the motion to Bridgeline’s old address in Woburn, Massachusetts, which

Bridgeline had not occupied since February 2012. Ingeniador did not send the motion to

Bridgeline’s actual address, which is reported on the very corporate website from which

Ingeniador selected the pages it presented to the Court in support of its motion for entry of

default judgment. See Motion for Entry of Default Judgment, at 5 n.1 & n.2 (relying on

information retrieved by Ingeniador from Bridgeline’s website).

G. The Court’s Entry of Default Judgment

On April 26, 2012, one day after Ingeniador filed its motion, the Court entered a default

judgment against Bridgeline awarding the requested damages. See Order and Default Judgment

(Dkt. Nos. 234-235).

GOVERNING RULES

Fed. R. Civ. P. 55(c) provides: “The court may set aside an entry of default for good

cause, and it may set aside a default judgment under Rule 60(b).”

Fed. R. Civ. P. 60(b) in turn provides:

On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;


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(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or

(6) any other reason that justifies relief.

ARGUMENT

I. The Default Judgment is Void and Must Be Set Aside

“[A] default judgment issued without jurisdiction over a defendant is void” and “remains

vulnerable to being vacated at any time.” M&K Welding, Inc., 386 F.3d at 364; see Precision

Etchings & Findings, Inc. v. LGP Gem, Ltd., 953 F.2d 21, 23 (1st Cir. 1992) (same). “If the

judgment is void, the district court has no discretion but to set aside the entry of default

judgment.” Echevarria-Gonzalez v. Gonzalez-Chapel, 849 F.2d at 28.

The default judgment entered against Bridgeline is void and must be set aside for three

reasons: (1) Bridgeline was not properly served; (2) Bridgeline does not have sufficient contacts

with Puerto Rico to permit this Court to exercise personal jurisdiction; and (3) Ingeniador did not

comply with Fed. R. Civ. P. 55(b)(2) by giving Bridgeline written notice of its motion for entry

of default judgment at least seven days prior to entry of default judgment.

A. The Default Judgment is Void Due to Improper Service of Process

Fed. R. Civ. P. 4(h)(1) provides that a corporation must be served in a judicial district of

the United States:

(A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or


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(B) by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and – if the agent is one authorized by statute and the statute so requires – by also mailing a copy of each to the defendant.

Ingeniador has the “burden of proving proper service” on Bridgeline in compliance with Rule

4(h)(1). Rivera-Lopez v. Municipality of Dorado, 979 F.2d 885, 886 (1st Cir. 1992). As shown

below, Ingeniador cannot carry this burden.

1. Ingeniador Did Not Serve Bridgeline At All

Ingeniador did not deliver the summons and complaint to Kelly Quinlan, an executive

assistant at Bridgeline, on September 15, 2011, as reported on the Proof of Service. Ingeniador

has found no record of any service, and Ms. Quinlan has no memory of receiving such service.

(Quinlan Decl. ¶¶ 3-4; Prinn Decl. ¶ 24). Bridgeline was not served at all.

2. Ingeniador Did Not Serve Bridgeline In A Manner Prescribed By Rule 4(e)(1)

Even if Ingeniador had delivered the summons and complaint to Ms. Quinlan, as claimed,

delivery to Ms. Quinlan would not have been effective service on Bridgeline under Fed. R. Civ.

P. 4(e)(1), which permits a defendant to be served by “following state law for serving a summons

in an action brought in courts of general jurisdiction in the state where the district court is located

or where service is made.”

(a) Service Pursuant to Puerto Rico Law

Puerto Rico has two sources of law governing service upon corporations: (1) Puerto Rico

Rule of Civil Procedure 4.4(e) and (2) the Puerto Rico Law on Corporations. See Gonzalez v.

Ritz Carlton Hotel Co. of Puerto Rico, 241 F.Supp.2d 142, 147 (D.P.R. 2003). Both sources

confirm that any attempted service on Ms. Quinlan would be ineffective.

First, Puerto Rico Rule of Civil Procedure 4.4(e) provides that service upon a corporation


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may be made “by delivering a copy of the summons and of the complaint to an officer, managing

or general agent, or to any other agent authorized by appointment or designated by law to receive

service of process. 32 L.P.R.A.App. III R. 4.4(e), quoted in Miranda v. IPR Pharmaceuticals,

Case No. 10-2238, 2011 WL 5977813 at *6 (D. P. R. Nov. 29, 2011)(holding that attempted

service on security guard was ineffective). Ms. Quinlan is an executive assistant, who is not an

officer, a general agent, or a managing agent of Bridgeline, and she is not authorized to accept

service on behalf of Bridgeline. (Quinlan Decl. ¶ 5; Prinn Decl. ¶ 25). The law is clear that

attempted service on such persons is ineffective. See, e.g., Miranda, 2011 WL 5977813 at *5-6

(D. P. R. Nov. 29, 2011)(holding that attempted service on security guard was ineffective);

Turpin v. Wellpoint Companies, Inc., Case No. 3:10CV850, 2011 WL 1086482 at *2 n.6 (E.D.

Va. Mar. 23, 2011) (service on administrative assistant ineffective); Bender v. Broadcom Corp.,

Case No. 09-1147, 2009 WL 3571286 at *3 (N.D. Cal. Oct. 30, 2009) (service on a receptionist

or administrative assistant ineffective); Carlyn Dairy Products, Inc. v. First Intern., Inc., Case

No. 03-C-1168, 2003 WL 21800065 at *1 (N.D. Ill. Jul. 29, 2003) (service on administrative

assistant ineffective).

Second, Ingeniador’s attempted service is not valid under the Puerto Rico Law on

Corporations, 14 L.P.R. § 3781(a), which provides:

Service of legal process upon any corporation of the Commonwealth shall be made by delivering a copy personally to any officer or director of the corporation in the Commonwealth, or the registered agent of the corporation in the Commonwealth, or by leaving it at the dwelling house or usual place of abode in the Commonwealth of any officer, director or registered agent (if the registered agent be an individual), or at the registered office or other place of business of the corporation in the Commonwealth.

Bridgeline is not a Puerto Rico corporation and has no officers, directors, registered agents, or

places of business in Puerto Rico and, in any event, the alleged service on Bridgeline was


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attempted in Massachusetts, not in Puerto Rico.

(b) Service Pursuant to Massachusetts Law

Ingeniador’s alleged attempted service likewise was defective under Massachusetts law.

Mass. R. Civ. P. 4(d)(2) requires that service on a corporation be made:

[B]y delivering a copy of the summons and the complaint to an officer, to a managing or general agent, or to the person in charge of the business at the principal place of business thereof within the Commonwealth, if any; or by delivery delivering such copies to any other agent authorized by appointment or by law to receive service of process, provided that any further notice required by law be given.

Similarly, Mass. Gen. Laws c. 223 § 37 requires that service be made by delivering the summons

and complaint to a corporation’s “president, treasurer, clerk, resident agent … cashier, secretary,

agent or other officer in charge of its business.” Again, Ms. Quinlan - even if she had received

the summons and complaint – was not an officer, managing or general agent, or person in charge

of the office, and she was not authorized to accept service for Bridgeline.

3. Ingeniador Did Not Serve Bridgeline by Delivering the Summons and Complaint to an Officer or Agent Authorized to Accept Service of Process

Ingeniador’s attempted service – even if it occurred – also was ineffective pursuant to

Fed. R. Civ. P. 4(h)(1)(B), which authorizes service on a corporation by “delivering a copy of the

summons and of the complaint to an officer, a managing or general agent, or any other agent

authorized by appointment or by law to receive service of process.” For the reasons explained

above, Ms. Quinlan fits none of those categories. Ingeniador therefore failed to make effective

service on Bridgeline, and the default judgment must be set aside as void.

B. The Default Judgment is Void for Lack of Personal Jurisdiction

Even if Ingeniador had properly served Bridgeline, the default judgment still would be

void because Bridgeline lacks sufficient contacts with Puerto Rico to permit this Court to


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exercise personal jurisdiction.

Because this is a patent infringement action, Federal Circuit law controls the personal

jurisdiction analysis. See Silent Drive, Inc. v. Strong Indus., 326 F.3d 1194, 1201 (Fed. Cir.

2003). Ingeniador has the burden to prove that the Court has jurisdiction over Bridgeline.

Campbell Pet Co. v. Miale, 542 F.3d 879, 888-89 (Fed. Cir. 2008). The existence of personal

jurisdiction over an out-of-state defendant involves two inquires: (1) whether the forum state’s

long-arm statute permits service of process, and (2) whether the assertion of personal jurisdiction

would violate due process. See Genetic Implant Sys. Inc. v. Core-Vent Corp., 123 F.3d 1455,

1458 (Fed. Cir. 1997). Because Puerto Rico’s long-arm statute reaches “up to the point allowed

by the Constitution,” the two inquiries collapse into a single inquiry focused on whether the

exercise of personal jurisdiction would violate due process. Negron-Terros v. Verizon

Communications, Inc., 478 F.3d 19, 24 (1st Cir. 2007).

The federal due process inquiry requires the defendant to have “certain minimum

contacts with the forum such that the maintenance of the suit does not offend traditional notions

of fair play and substantial justice.” Elecs. for Imaging, Inc. v. Coyle, 340 F.3d at 1350, quoting

Int’l Shoe v. Washington, 326 U.S. 310, 316 (1945)). For due process purposes, “[t]he Supreme

Court has drawn a distinction between ‘specific’ jurisdiction and ‘general’ jurisdiction.”

Avocent Huntsville Corp. v. Aten Int’l Co., Ltd., 552 F.3d 1324, 1330 (Fed. Cir. 2008). “To

establish specific jurisdiction, a plaintiff must demonstrate that the defendant has ‘purposefully

directed’ his activities at residents of the forum, and that the litigation results from alleged

injuries that ‘arise out of or relate to’ those activities.” Id. (internal citations and quotation marks

omitted). “To establish the minimum contacts necessary to establish general personal

jurisdiction, plaintiffs bear a higher burden” and must establish “that the defendant ha[s]


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continuous and systematic contacts with the forum state.” Id. at 1331-32.

1. The Court Does Not Have Specific Jurisdiction Over Bridgeline

In patent infringement suits, “for purposes of specific jurisdiction, the jurisdictional

inquiry is relatively easily discerned from the nature and extent of the commercialization of the

accused products or services by the defendant in the forum.” Avocent, 552 F.3d at 1332.

Ingeniador has accused only Bridgeline’s iAPPS Content Manager product. See Compl.

¶ 27. Bridgeline does not sell any products in Puerto Rico, including the iAPPS Content

Manager product. (Prinn Decl. ¶¶ 13-14). No person or entity in Puerto Rico has ever purchased

anything from Bridgeline, including the iAPPS Content Manager product. (Prinn Decl.¶¶ 12-13,

19). Bridgeline has not “commercializ[ed]” the accused product at all in Puerto Rico. Moroever,

Bridgeline’s website does not permit interactive commercial transactions. (Prinn Decl.¶ 22).

Potential customers cannot purchase the accused product through the website, but instead acquire

Bridgeline’s products through a lengthy, person-to-person sales process. (Prinn Decl. ¶ 21).

Accordingly, there is no specific personal jurisdiction over Bridgeline.

2. The Court Does Not Have General Jurisdiction Over Bridgeline

General jurisdiction requires “continuous and systematic contacts” with a forum, and the

law is clear that “sporadic and insubstantial contacts” do not suffice to subject a defendant to

general jurisdiction. Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed. Cir. 2008). Bridgeline

has no contacts whatsoever with Puerto Rico. It is a Delaware corporation with its principal

offices in Massachusetts and no offices in Puerto Rico. (Prinn Decl. ¶¶ 3-5). It has no property,

assets, employees, customers, or business partners in Puerto Rico. (Prinn Decl. ¶¶ 6-12). It

derives no revenue from Puerto Rico and pays no taxes in Puerto Rico. (Prinn Decl. ¶¶ 15,19).


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Bridgeline is not subject to general jurisdiction in Puerto Rico. Because this Court does not have

personal jurisdiction over Bridgeline, the default judgment is void and must be vacated.2

C. The Default Judgment is Void Due to Ingeniador’s Failure to Comply with FRCP 55(b)(2)

When a defendant “has appeared,” Rule 55(b)(2) requires a plaintiff seeking entry of

default judgment to provide the defendant with at least 7 days’ written notice of its application

for entry of default judgment. It is black letter law that an “appearance” sufficient to trigger the

requirement of Rule 55(b)(2) need not be a formal “presentation or submission[] to the court.”

Key Bank of Maine, 74 F.3d at 353; Muniz, 739 F.2d at 700. Rather, the First Circuit has made

clear in multiple cases that “a defaulting party ‘has appeared’ for Rule 55 purposes if it has

‘indicated to the moving party a clear purpose to defend the suit.’” Key Bank of Maine, 74 F.3d

at 353 (quoting Muniz, 739 F.2d at 799). In particular, “informal contacts” in the nature of

settlement discussions and presentations of defenses are sufficient to constitute an “appearance”

triggering Rule 55(b)(2)’s requirement of written notice. Key Bank of Maine, 74 F.3d at 353-

354; see Muniz, 739 F.2d at 700-701. In short, any expression by a defendant of a “clear intent

to defend” triggers the Rule 55(b)(2) requirement of seven days’ advance written of a motion for

entry of default judgment.

As Judge Torruella explained in Key Bank of Maine, 74 F.3d at 354, the party seeking

entry of default and default judgment has a duty “to apprise the district court” of a defendant’s

prior expressions of intent to defend and to give the required written notice. The “failure to

provide the requisite notice [is] a grave error.” Id. at 355. Rule 55(b)(2) reflects the practical 2 Bridgeline respectfully requests that the Court, upon vacating the default judgment, order the dismissal of all claims against Bridgeline pursuant to Fed. R. Civ. P. 12(b)(2), 12(b)(5), 12(b)(6), and 20(a)(2). If necessary, once the default judgment has been vacated, Bridgeline will separately file a motion to dismiss; however, Bridgeline respectfully submits that additional motion practice is unnecessary given that the arguments made in such motion would be identical to arguments included in this motion. In addition, the Court already has the benefit of parallel motions and extensive briefing from the other defendants, which fully address the critical issues, and which Bridgeline hereby joins.


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and equitable reality that it is “a simple matter” for plaintiff’s counsel to notify a defendant of a

default proceeding when the parties have previously communicated about the substance of the

claim, and the rule is “designed to prevent” plaintiffs from seeking “to reap tactical advantage

from defendant’s prior neglect by acquiring by stealth a decision sheltered by the rules which

protect final judgments.” Key Bank of Maine, 74 F.3d at 356 (quoting Charlton L. Davis & Co.,

P.C. v. Fedder Data Center, Inc., 556 F.2d 308, 309 (5th Cir. 1977)). The rule also “rests upon

the view that the Federal Rules of Civil Procedure are designed to be fair, that Rule 55(b)(2) was

promulgated to protect ‘parties who, although delaying in a formal sense by failing to file

pleadings within the twenty-one day period, have otherwise indicated to the moving party a clear

purpose to defend the suit,…and our traditional preference for resolution of cases on the merits

while giving due consideration to practical requirements of judicial administration.” Key Bank

of Maine, 74 F.3d at 356 (internal citations and quotation marks omitted).3

No question exists in this case that Bridgeline expressed a “clear intent to defend” against

Ingeniador’s meritless claims and thus “appeared” for purposes of Rule 55(b)(2). On September

9, 2012, Bridgeline’s CTO stated to Ingeniador’s counsel in an email, following a telephone

conversation: “As I mentioned in our conversation, I have read through the filing in detail and

Bridgeline's position is this is a nuisance suit with little to no tangible evidence existing since it

has no merit whatsoever.” (Zucker Decl. ¶ 6; Zucker Exh. A). On September 22, 2011,

Ingeniador’s counsel sent Bridgeline a document summarizing Ingeniador’s purported claim, and

the parties had a telephone conversation in which Bridgeline’s CTO again rejected Ingeniador’s

allegations and explained in detail why they had no merit, including the basic fact that the

accused product – iAPPS Content Manager – does not use a core element of what is claimed in

3 Local Rule 55(a) reflects similar values by imposing a burden on plaintiffs seeking default judgment to send notice of the motion directly to the party and to the party’s counsel, whenever the plaintiff knows or “reasonably should know” the party’s attorney.


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the ‘629 patent. (Zucker Decl. ¶ 7). That same day, following the conversation, Bridgeline’s

CTO sent another email to Ingeniador’s counsel stating: “Bridgeline reiterates its position that

we are not in violation of your client's patent claim and, with your client fully bearing the cost, if

you'd like to spend some time with us we are willing to do so in good faith. As the next step

discussed, I will wait to hear back from you after you talk with your client.” (Zucker Decl. ¶ 7;

Zucker Exh. B). Ingeniador did not respond, but instead proceeded to acquire a default and

default judgment against Bridgeline. (Zucker Decl. ¶ 8).

Bridgeline could not have been any clearer in expressing to Ingeniador its intent to

defend against Ingeniador’s meritless claims. Bridgeline therefore was entitled to written notice

pursuant to Rule 55(b)(2), and Ingeniador’s failure to fulfill its duty to provide such notice

renders the default judgment void. As Judge Torruella emphasized in Key Bank of Maine, 74

F.3d at 356, it would have been a “simple matter” for Ingeniador or its counsel to communicate

directly with Bridgeline about the default proceedings. Instead, Ingeniador remained silent,

“acquir[] by stealth” a default and default judgment against Bridgeline, and violated Rule

55(b)(2). Id. at 357. The default and default judgment therefore must be set aside.

II. The Default Judgment Also Should Be Set Aside Pursuant to FRCP 60(b)

Even if the entry of default and default judgment were not void, the Court still should

vacate them pursuant to Rule 60(b). As the First Circuit has emphasized, “such decisions tend to

rest on fact-specific considerations informed by the nature and circumstances of the particular

case.” Ungar v. Palestine Liberation Organization, 599 F.3d 79, 83 (1st Cir. 2010) (vacating

order denying motion to set aside default judgment). The Court should undertake a “holistic

appraisal of the circumstances,” including factors such as “the timing of the request for relief, the

extent of any prejudice to the opposing party, the existence or non-existence of meritorious

claims of defense, and the presence or absence of exceptional circumstances.” Id. The Court


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also should balance “the importance of finality in litigation against the desirability of deciding

cases on the merits.” Id. at 83. These factors are “neither exclusive nor rigidly applied.” Id. at

83-84. A district court must “analyze the totality of the circumstances,” and cannot rest on

categorical rules. Id. at 87. Based on the circumstances here, including all of the common

factors, the Court should set aside the default and default judgment entered against Bridgeline.

A. Bridgeline’s Motion Was Promptly Filed

Bridgeline acted promptly. Ingeniador’s motion for entry of default judgment was filed

just days ago on April 25, 2012, and default was entered a day later on April 26, 2012.

Immediately upon learning of the default judgment, Bridgeline retained litigation counsel, and

Bridgeline now files this motion to set aside the default and default judgment only days after the

default judgment was entered.

B. Bridgeline Has Numerous Meritorious Defenses

Bridgeline has multiple meritorious defenses to Ingeniador’s patent infringement claims.

Because a complete recitation of all of Ingeniador’s defenses is neither practical nor possible,

given the conclusory and insufficient allegations in the Complaint, below is a brief non-

exhaustive summary of certain of Ingeniador’s defenses.

1. Failure to State a Claim

Ingeniador’s allegations against Bridgeline consist of a single paragraph, asserted entirely

“upon information and belief,” which lists one product – the iAPPS Content Manager – and then

makes perfunctory, conclusory assertions that Bridgeline directly infringes the ‘629 Patent in

some unspecified way, “and/or” induces the infringement by unspecified others of unspecified

claims of the ‘629 Patent, “and/or” contributes to the infringement by unspecified others of

unspecified claims of the ‘629 Patent. These broad-brush, generic allegations fall far short of the

minimum pleading standards established in Ashcroft v. Iqbal, 556 U.S. 7 (2009), and Bell


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Atlantic Co. v. Twombly, 550 U.S. 544 (2007), and they fail to state a claim against Bridgeline,

for all of the reasons argued in the Joint Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)

filed by the other defendants in this action. See Joint Motion (Dkt. No. 96).4

2. Misjoinder

In violation of Fed. R. Civ. P. 20(a)(2), Ingeniador has attempted to join Bridgeline with

15 other unrelated defendants solely on the basis that all defendants are asserted to have

infringed the same patent. Ingeniador does not assert – nor can it – that Bridgeline is jointly and

severally liable to any defendant or that its claims against the defendants all arise out of the same

transaction, occurrence or series of transactions or occurrences. As other defendants have

pointed out in their various motions to dismiss, given the dissimilarity of facts and issues, it

would be prejudicial for Bridgeline to have to defend itself alongside all of the other defendants

in this case.5

3. Non-Infringement

Bridgeline’s iAPPS Content Manager does not infringe the ‘629 Patent. An essential

element of each of the claims of the ‘629 Patent is the use of a “Light Weight Directory Access

Protocol (LDAP) directory server” to, among other things, “stor[e]…information defining and

limiting the rights of authors and readers in the system” and to store, for purposes of retrieval,

“directory content.” See ‘629 Patent (Independent Claims 1 and 20). The use of an LDAP

directory server for these purposes is critical to the patented invention and an essential element

of both independent claims (Claim 1 and Claim 20) – and thus all claims – of the ‘629 Patent. A

4 Bridgeline respectfully joins and incorporates by reference the Joint Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) by Defendants Microsoft, Hewlett-Packard, EMC, Nuxeo, Informatica, Oracle, SAP America, and Lexmark International (Dkt. No. 96). 5 For the sake of brevity and avoiding duplication of arguments, Bridgeline respectfully incorporates the arguments made regarding misjoinder by defendants SDL Tridion, Inc. (Dkt. No. 139), EMC (Dkt. No. 99), and Blackboard (Dkt. No. 106).


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technology that makes no use of an LDAP directory server for these purposes cannot possibly

infringe the ‘629 Patent.6

As Bridgeline’s Chief Technology Officer has testified, the iAPPS Content Manager –

the Bridgeline product Ingeniador accuses of infringement – does not make any use of a “Light

Weight Directory Access Protocol (LDAP) directory server” to (a) store “information defining

and limiting the rights of authors and readers” or (b) to store or retrieve “directory content.”

(Zucker Decl. ¶ 4). The iAPPS Content Manager does not use LDAP directory servers at all for

these purposes; instead, these functions are performed internally within the iAPPS Content

Manager application itself. (Zucker Decl. ¶ 4). Because Bridgeline’s accused product does not

involve using an LDAP directory server for these purposes, neither Bridgeline nor anyone using

the iAPPS Content Manager can even practice the invention claimed by the ‘629 Patent.

Accordingly, Bridgeline cannot possibly be liable to Ingeniador for any form of patent

infringement.

4. Damages

Ingeniador’s damages argument, as made in its Motion for Entry of Default Judgment, is

blatantly false and disingenuous, even if there were some basis to believe that Bridgeline could

be liable for infringement. First, Ingeniador based its purported “reasonable royalty” calculation

of 1.5% on all of Bridgeline’s annual revenues, rather than just revenues associated with the only

accused product, iAPPS Content Manager. See Motion for Entry of Default, at 6 (Dkt. No. 233).

Thus, Ingeniador calculated the royalty based on $95.8 million in revenues between 2008 and

2011, when the revenues derived by Bridgeline from licensing the accused product are only a

very small portion of total revenues. (Prinn Decl. ¶ 23). Second, Ingeniador based its purported

6 Bridgeline notes that during prosecution of the patent, following an initial rejection of the claims, the patent applicant argued specifically that it was the “the use of the LDAP directory server” for these purposes that showed the claimed invention not to be anticipated by prior art. (Ziegler Exh. A).


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calculation on gross revenues, not profits attributable to the patented invention, even though the

“factor” it cited to this Court and relied upon focuses much more narrowly on the “portion of

realizable profit attributable to invention.” See Motion for Entry of Default, at 5. Bridgeline’s

profits are significantly less than its revenues, like all companies. Moreover, even if Bridgeline’s

product infringed the ‘629 Patent, the patented invention would be but one component of the

accused product. Ingeniador could never obtain more than the portion of profit attributable to the

patented invention. Third, the “1.5%” royalty rate requested by Ingeniador is totally arbitrary,

self-serving, and unsupported by any evidence of royalty rates obtained by Ingeniador from any

actual licensees. For all of these reasons, the “reasonably royalty” calculation proffered by

Ingeniador and accepted by this Court has no basis.

5. Other Potential Defenses

Bridgeline has not yet had an opportunity to perform a complete investigation of other

possible defenses to Ingeniador’s claims. Should Ingeniador’s claims against Bridgeline survive

dismissal, despite the grounds argued above, Bridgeline expects to pursue any and all additional

defenses, including without limitation defenses relating to Ingeniador’s purported standing to

assert the ‘629 Patent and defenses relating to the invalidity of the ‘629 Patent.

C. Ingeniador Will Suffer No Unfair Prejudice

Ingeniador will suffer no unfair prejudice from the setting aside of the default and default

judgment entered against Bridgeline. This case is still in its infancy, and the Court has pending

before it a variety of motions to dismiss filed by all of the other defendants. If Ingeniador’s

claims survive those motions to dismiss, which they should not, then Bridgeline can simply take

its place alongside the other defendants. This clearly is not a situation in which Ingeniador

would have to relitigate issues already addressed or put on hold its prosecution of claims against

other defendants while it dealt with Bridgeline. Nor is this a situation in which so much time has


20

passed that relevant witnesses and documentary evidence would have been lost, such that it

would be unfair to put Ingeniador to the burden of proving its claims. To the contrary, there has

been no claim construction, no discovery, no analysis of the validity of the patent, and no other

action taken by Ingeniador other than to oppose the other defendants’ motions to dismiss.

D. The Balance Between Finality and Merits-Based Resolution Favors Bridgeline

For similar reasons, the importance of finality in litigation is not a factor that favors

Ingeniador. In the event Ingeniador survives dismissal, this litigation is a long way from finality.

Setting aside the default and default judgment against Bridgeline does not threaten finality.

The judicial preference for resolution on the merits, however, strongly favors Bridgeline

and a decision setting aside the default and default judgment. Particularly when a non-practicing

alleged patent-holder like Ingeniador, on the barest possible allegations, asserts a host of generic,

cookie-cutter claims against a group of unrelated defendants, the courts should permit a

defendant like Bridgeline to present its defenses rather than allow a plaintiff to profit from its

questionable tactics. This is especially so when a case is still at its early stages.

CONCLUSION

For the foregoing reasons, Bridgeline respectfully requests the Court to set aside the entry

of default and default judgment, and dismiss all claims asserted against Bridgeline.

BRIDGELINE DIGITAL, INC. /s/ Ricardo Casellas______________ Ricardo Casellas (Bar No. 203114) CASELLAS, ALCOVER & BURGOS PSC Suite 1400, Popular Center Bldg. 208 Ponce de Leon Ave. Hato Rey, PR 00918 P.O. Box 364924 San Juan, PR 00936-4924 787-756-1400 (t) 787-756-1401 (f) [email protected]



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Of Counsel: T. Christopher Donnelly Adam B. Ziegler DONNELLY, CONROY & GELHAAR, LLP One Beacon Street, 33rd Floor Boston, MA 02108 617-720-2880 (t) 617-720-3554 (f) [email protected] [email protected] Pro Hac Vice Application Forthcoming

CERTIFICATE OF SERVICE

I hereby certify that on May 7, 2012, I electronically filed the foregoing paper with the

Clerk of the Court using the ECF system which will send notification to all counsel.

/s/ Ricardo Casellas




Documents

Bridgeilne Emergency Motion