Deque Systems Inc. v. BrowserStack, Inc.

Background Deque Systems Inc. sued BrowserStack, Inc. alleging copyright infringement, false advertising, breach of contract, and unjust enrichment. Deque claimed BrowserStack reverse engineered its software to create a competing product. During discovery, Deque repeatedly failed to disclose its damages calculations or serve an expert report by the court-ordered deadlines. BrowserStack moved for summary judgment, arguing that Deque’s failure to disclose damages evidence warranted exclusion under Federal Rule of Civil Procedure thirty-seven and that Deque lacked evidence of ongoing infringement to support injunctive relief. The district court excluded Deque’s damages evidence and granted summary judgment for BrowserStack on all claims. The court’s reasoning The Court of Appeals reviewed the district court’s exclusion of damages evidence under Federal Rule of Civil Procedure thirty-seven, subsection C, one, applying the Southern States factors. The court found that Deque’s failure to disclose damages was neither substantially justified nor harmless because BrowserStack was surprised by the late disclosure, could not cure the surprise without disrupting the trial, and the evidence was critical to Deque’s case. The court also affirmed the summary judgment ruling, noting that Deque failed to provide evidence of ongoing infringement or false advertising necessary to support injunctive relief, and had abandoned claims for declaratory and nominal damages. Deque clearly and repeatedly failed to disclose adequately its damages claims in its initial disclosures, responses to BrowserStack’s damages interrogatories, or expert reports. J.A. 1241 What it means going forward This decision reinforces the strict enforcement of discovery deadlines in intellectual property litigation. It signals that parties must timely disclose damages calculations and expert reports, or risk having that evidence excluded, which can be fatal to their claims if damages are essential to the case.