DCT

6:16-cv-00366

Taser Intl Inc v. Phazzer Electronics Inc

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Key Events
Amended Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 6:16-cv-00366, M.D. Fla., 04/11/2023
  • Venue Allegations: The complaint is a supplemental proceeding in a case with previously established venue. It alleges that impleaded defendant Steven Abboud is a Florida citizen and that the impleaded corporate entities operate from his Florida residence.
  • Core Dispute: Plaintiff, a judgment creditor, alleges that the individual principal of the judgment debtor, along with related entities, has engaged in fraudulent transfers and operated as alter egos to evade a multi-million dollar patent infringement judgment.
  • Technical Context: The underlying dispute involves conducted electrical weapons (CEWs), which are designed to incapacitate a target non-lethally and are widely used in law enforcement.
  • Key Procedural History: In a prior action, Plaintiff Axon obtained a default judgment and a permanent injunction against Phazzer Electronics for patent infringement in 2017, which was affirmed by the Federal Circuit. A final judgment of over $7.8 million was entered in 2018 and remains unsatisfied. Notably, the patent file for U.S. Patent No. 7,234,262, a basis for the original litigation, includes a Reexamination Certificate issued in February 2020 cancelling all claims. The current supplemental complaint seeks to enforce the judgment against the original defendant and newly impleaded parties, alleging they are alter egos or successors who have received fraudulent transfers.

Case Timeline

Date Event
1999-09-17 '262 Patent Earliest Priority Date
2007-06-26 '262 Patent Issue Date
2016-03-02 Underlying patent infringement action filed (Compl. ¶1)
2017-07-21 Court entered default judgment and permanent injunction (Compl. ¶2)
2018-05-11 Court entered final judgment of $7,869,578.74 (Compl. ¶3)
2018-10-26 Federal Circuit affirmed the Court's order (Compl. ¶2)
2020-02-10 USPTO issued Ex Parte Reexamination Certificate (C2) cancelling all claims (1-18) of the '262 Patent
2023-04-11 Plaintiff filed Judgment Creditor's Second Amended Proceedings Supplemental Complaint

II. Technology and Patent(s)-in-Suit Analysis

This analysis focuses on the representative patent from the underlying litigation that resulted in the judgment at issue.

U.S. Patent No. 7,234,262 - "Electrical Weapon Having Controller for Timed Current Through Target and Date/Time Recording"

The Invention Explained

  • Problem Addressed: The patent’s background section describes a critical flaw in conventional dart-based electrical weapons: a "minor percentage of individuals" were not immobilized and could "walk through" the electrical pulses to continue an attack (’262 Patent, col. 1:48-54). This created a significant risk for law enforcement officers who relied on these devices as a non-lethal means of control (’262 Patent, col. 2:3-9).
  • The Patented Solution: The invention proposes a weapon that delivers a higher-energy electrical pulse designed to produce "contractions of skeletal muscles sufficient to prevent the voluntary use of the muscles for normal locomotion" (’262 Patent, col. 4:18-22). A key feature is a microprocessor-based controller that not only manages the timed delivery of this current but is also programmed to "track date and time" and "record tracked date and time" for each firing event, creating an evidentiary log of the weapon's use (’262 Patent, Abstract; col. 2:25-33).
  • Technical Importance: The technology sought to substantially increase the incapacitating reliability of non-lethal weapons while simultaneously enhancing accountability by creating an unalterable digital record of when the weapon was deployed (’262 Patent, col. 2:17-22).

Key Claims at a Glance

  • The ’262 Patent, prior to the cancellation of its claims, asserted several independent claims. The complaint does not specify which claims were part of the original judgment. The key independent claims included:
    • Claim 1 (as amended): A dart weapon comprising a trigger, a receiver for a cartridge, a power supply, and a microprocessor programmed to:
      • track date and time
      • activate the propellant
      • maintain the current for a period
      • record the date and time of firing in response to a trigger operation
    • Claim 13: An apparatus for causing involuntary muscle contractions, comprising a circuit with a microprocessor programmed to:
      • track date and time
      • initiate a high voltage pulsed current
      • record the date and time for each initiation of the current

III. The Accused Instrumentality

Product Identification

The "Phazzer Enforcer CEWs" and associated ammunition cartridges (Compl. ¶¶ 59, 61, 63).

Functionality and Market Context

The complaint identifies these products as the "infringing products at issue in the underlying litigation" (Compl. ¶66). The complaint alleges that after the original defendant, Phazzer Electronics, was enjoined, its business was continued by newly formed entities under the control of Steven Abboud (Compl. ¶¶ 80, 83). These entities allegedly continued to sell the Phazzer Enforcer CEWs using the same business assets, including customer lists and domain names transferred from Phazzer Electronics (Compl. ¶¶ 58, 67, 82). The complaint provides a link to what it claims is a list of 225 law enforcement agencies that were using Phazzer Enforcer CEWs, allegedly transferred from the original defendant to a successor entity (Compl. ¶59).

IV. Analysis of Infringement Allegations

The Second Amended Supplemental Complaint is a post-judgment enforcement action and does not contain new, specific allegations of patent infringement. The complaint's purpose is not to prove infringement, but to collect on a prior judgment where infringement was already established by default (Compl. ¶¶ 2, 3). It refers to the "Phazzer Enforcer CEWs" as the "infringing products at issue in the underlying litigation" (Compl. ¶66) and focuses on the alleged post-judgment conduct of the defendants to evade payment. Therefore, a claim chart analysis is not applicable to the current pleading.

V. Key Claim Terms for Construction

While this complaint does not raise claim construction issues, analysis of the underlying litigation that led to the judgment would have centered on the meaning of key terms in the ’262 Patent.

  • The Term: "a microprocessor programmed to...record tracked date and time" (from claim 1).
  • Context and Importance: This data-logging functionality is a core element of the asserted invention, distinguishing it from simpler prior art devices. The infringement analysis in the original case would have depended on whether the accused Phazzer Enforcer CEWs contained a microprocessor performing this specific recording function upon firing.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The plain language of the claim does not limit the method of recording, the data format, or the permanence of the storage, which could support an interpretation covering any form of electronic time-stamping associated with a firing event (’262 Patent, col. 8:54-56).
    • Evidence for a Narrower Interpretation: A defendant might argue that the specification, which states the microprocessor "retains a record of the date and time the weapon was fired," implies a requirement for persistent, non-volatile memory that cannot be easily erased, a feature potentially not present in the accused device (’262 Patent, col. 4:43-45).

VI. Post-Judgment Enforcement Allegations

  • Alter Ego / Veil Piercing (Count One): The complaint alleges that Steven Abboud was the "intended owner" and "true owner" of Phazzer Electronics, who used the company as his personal "cash cow" (Compl. ¶¶ 10, 20, 73). It alleges a complete disregard for corporate formalities, such as failing to hold meetings or issue stock, and the commingling of corporate assets to pay for Abboud's personal expenses, including a Mercedes Benz and mortgage payments (Compl. ¶¶ 14, 20-22, 75). Based on these allegations, the plaintiff seeks to pierce the corporate veil and hold Abboud personally liable for the judgment against Phazzer Electronics (Compl. ¶78).
  • Mere Continuation (Count Two): The complaint alleges that Phazzer Global is a "mere continuation" of Phazzer Electronics, established to continue the enjoined business while avoiding its liabilities (Compl. ¶80). The allegations point to shared management (Abboud), personnel, location, inventory, and intellectual property (Compl. ¶80). The complaint alleges a direct transfer of Phazzer Electronics' customer lists and the redirection of its website to Phazzer Global's site (Compl. ¶¶ 58, 82).
  • Fraudulent Transfers (Count Three): The complaint alleges that Abboud directed numerous transfers of assets from Phazzer Electronics to Phazzer IP and Phazzer Global "in anticipation of this Court's default and Judgment" (Compl. ¶88). These transfers allegedly included cash payments for "back royalties" that were never actually owed, customer contracts, and intellectual property, all for less than reasonably equivalent value (Compl. ¶¶ 87-89, 96). The complaint alleges these transfers exhibit multiple "badges of fraud" under Florida Statutes, including that they were made to insiders and rendered Phazzer Electronics insolvent (Compl. ¶¶ 94-95).

VII. Analyst’s Conclusion: Key Questions for the Case

The central issues in this supplemental proceeding are not related to patent infringement, but to corporate and commercial law concerning the enforcement of a judgment. The case will likely turn on the following questions:

  • A central issue will be one of corporate personality: will the court find that Steven Abboud exercised such complete control over Phazzer Electronics and so disregarded the corporate form that the veil should be pierced, making him personally liable for the corporate judgment debt?
  • A key evidentiary question will be one of successor liability and fraudulent intent: can Axon prove that Phazzer Global was a "mere continuation" of the enjoined Phazzer Electronics business and that the transfers of assets to it and other entities were fraudulent conveyances under Florida law, intended to hinder or defraud the collection of the judgment?
  • A foundational legal question will be the effect of post-judgment claim cancellation: what is the legal significance, if any, of the USPTO's 2020 cancellation of all claims of the '262 patent on the enforceability of the 2018 judgment predicated upon it?