EDTX & NDTX Monthly Wrap-Up — January 2020

This post analyzes five January 2020 opinions from the Eastern District of Texas on the issue of whether to grant leave to amend invalidity contentions.[1]

The Eastern District of Texas Patent Rules allow for infringement or invalidity contentions to be amended "only upon a showing of good cause."[2] The Federal Circuit has stated that "good cause requires a showing of diligence."[3] In assessing whether a party has been diligent, "the critical issue is not what the party did after they discovered the prior art; rather, the critical issue is whether or not the party seeking to amend exercised diligence in discovering the prior art.'"[4]

This diligence inquiry is part of the first of four factors that courts in the District analyze when considering a motion for leave to amend invalidity contentions:

(1) The explanation for the failure to meet the deadline;

(2) The importance of the thing that would be excluded;

(3) Potential prejudice in allowing the thing that would be excluded;

(4) The availability of a continuance to cure such prejudice.[5]

Of the five opinions analyzed, the Court granted leave to amend in only one of them. In each case, the question of the defendant's diligence in discovering the additional reference was the critical factor.

Factor	Sol v. AT&T   2:18-cv-526	Peloton v. Flywheel   2:18-cv-390	Uniloc 2017 v. Google   2:18-cv-496	Uniloc 2017 v. Google   2:18-cv-504	Uniloc 2017 v. Google   2:18-cv-550
(1)	Not Diligent	Not Diligent	Not Diligent	Diligent	Not Diligent
(2)	Not Important	Not Important	Not Important	Important	Neutral
(3)	Moot	Prejudicial	Moot	Limited Prejudice	Neutral
(4)	Moot	Not Viable	Moot	Unnecessary	Neutral
	Denied	Denied	Denied	Granted	Denied

 

Diligence

Sol v. AT&T, 2:18-cv-526

Defendants sought leave to include the IEEE 802.11n standard as an anticipatory reference to the asserted claims of one of the asserted patents. They argued that the large number of asserted patents and claims (27 and 497, respectively) was a factor in why they "did not appreciate the direct applicability of the 802.11n standard" to one particular asserted patent. Upon learning of this omission, the defendants notified plaintiff of their desire to amend and provided plaintiff with a proposed claim chart within a week.

Despite this diligence after discovering the omitted reference, the Court found no diligence in discovering the omission in the first place, which occurred three months after the deadline for invalidity contentions. In addition, the Court observed that the defendants knew of the 802.11n standard because they cited it as prior art to other asserted patents. Accordingly the Court determined that the defendants did not show sufficient diligence.

Peloton v. Flywheel, 2:18-cv-390

The defendant moved to amend its invalidity contentions to add a reference that allegedly demonstrated its "prior and independent development of the subject matter" of plaintiff's patents. In arguing it was diligent, the defendant claimed that it had extensive employee turnover, which complicated discovering this reference in time. However, the Court was unsympathetic, noting that the defendant discovered this reference more than five months after invalidity contentions on an initial set of asserted patents was due. The Court also found it relevant that the defendant's discovery was generally delayed, including producing the majority of documents two months before the close of discovery. The Court concluded that the defendant failed to show it was diligent.

Uniloc 2017 v. Google, 2:18-cv-496

The Court found that the defendant failed to show it was diligent in searching for the requested additional reference to its invalidity contentions. The defendant argued that it was diligent in preparing proposed supplemental contentions and providing them to the plaintiff three weeks after discovering the additional reference. This showing was insufficient, however, because the Court focused on "whether or not the party seeking to amend exercised diligence in discovering the prior art." The fact that the defendant discovered the additional reference ten weeks after the deadline for invalidity contentions weighed heavily against finding diligence.

Uniloc 2017 v. Google, 2:18-cv-504

The defendant requested leave to add newly-discovered information to its invalidity conditions regarding a reference that was previously included. This newly-discovered information was non-public, and was in the possession of a third party from whom the defendant requested the information nearly three months before the deadline for invalidity contentions. The third party was initially unable to address the defendant's request due to pre-scheduled personal conflicts. After the third-party was available, there was an additional delay in obtaining the sought-after information because it was placed in long-term storage to which the third-party had limited availability to search.

The Court observed that the defendant was diligent in seeking this information well in advance of the deadline for invalidity contentions, and that the subsequent delay was outside of the defendant's control. These facts led the Court to conclude that the defendant exercised diligence.

Uniloc 2017 v. Google, 2:18-cv-550

The defendant moved for leave to supplement its invalidity contentions with three new patent references. In support of the first factor, the defendant showed that it was diligent in providing the plaintiff with the proposed supplemental contentions and claim chart "within 11 days after discovering these new references." The defendant cited plaintiff's "unforeseen" claim construction proposals as the reason for the delay in discovering the references.

The Court disagreed that the defendant was diligent in discovering the additional references and gave no credit to the defendant's argument that the plaintiff's unforeseen claim construction positions excused the delay. The opinion cited the defendant's failure to identify which particular claim construction terms were at issue as a key consideration in finding that the defendant failed to show diligence.

Importance of Amendment

Sol v. AT&T, 2:18-cv-526

The Court found limited evidence that the proposed amendment was important. The defendants did not assert that the reference to be added was the "only prior art reference being asserted for [one of the asserted patents], or that the standard provides critical information that is not present in other prior-art references." In addition, the defendants' inclusion of this reference against six other asserted patents suggested limited important in applying this reference against an additional asserted patent, as requested.

Peloton v. Flywheel, 2:18-cv-390

The defendant argued that the additional reference was important because it showed the defendant's independent conception and rebutted the plaintiff's allegations of copying and willful infringement. The Court faulted the defendant's failure to prepare proposed invalidity contentions, and stated that this fact both complicated the Court's ability to assess this factor and weighed against a finding of importance. Because the defendant also did not show how a reduction to practice occurred, the Court deemed the reference's qualification as prior art speculative, and found that the importance factor weighed against finding good cause to amend.

Uniloc 2017 v. Google, 2:18-cv-496

The defendant intended to use the additional reference to add "six or seven more prior art reference combinations for each asserted claim." The Court found that this addition was not of "great importance" in light of the twenty-four other prior art combinations already provided for each asserted claim.

Uniloc 2017 v. Google, 2:18-cv-504

The plaintiff argued that the additional information is "cumulative of information that was already within the invalidity contentions." The Court disagreed, and determined that the amendments "appear to provide further detail," enough to support a finding that the additional information was important to include.

Uniloc 2017 v. Google, 2:18-cv-550

The Court instructed that "the importance of a given reference rises in proportion to the uniqueness of its substantive disclosures relative to other, previously-disclosed prior art." Further, "[w]hen a proposed reference's disclosures are substantively cumulative of the disclosures in other references that have already been identified in a party's invalidity charts, such proposed reference offers little or no value probative value and is unlikely to be important." Because neither party identified any disclosure that is distinct from the other prior art that was provided in the defendant's original invalidity contentions, the Court found this factor to be neutral.

Potential Prejudice to Plaintiff

Sol v. AT&T, 2:18-cv-526

The Court declined to analyze this factor because the diligence and importance factors weighed against granting leave to amend to such a degree to warrant denial of the motion.

Peloton v. Flywheel, 2:18-cv-390

The six month delay between the deadline for invalidity contentions and the defendant's discovery of this reference was sufficient for the Court to determine that an amendment would be unduly prejudicial to the plaintiff. The Court credited that the defendant notified the plaintiff of this reference four months before the close of fact discovery, but this could not overcome how the plaintiff "relied upon the invalidity contentions in its strategic decisions about the case" for six months prior.

Uniloc 2017 v. Google, 2:18-cv-496

The Court determined that the defendant had not shown good cause under the diligence and importance factors, and so did not analyze this factor.

Uniloc 2017 v. Google, 2:18-cv-504

The defendant's invalidity contentions already included a discussion of the public information related to the subject prior art system, and the proposed supplementation would add non-public information "to add further detail to the contentions." Because the defendant did "not seek to add wholly new invalidity theories" to which the plaintiff had no previous notice, the Court found that granting leave to amend would cause limited prejudice to the plaintiff.

Uniloc 2017 v. Google, 2:18-cv-550

The opinion reasoned that "the prejudice and importance questions are intimately linked, both turning on the degree to which the [additional references] are similar or distinct from the other prior art which has already been listed in [the defendant's] existing invalidity contentions." The Court reasoned that these two factors are in tension because the greater a reference's importance due to its distinct disclosure, the greater the prejudice to plaintiff in having to respond to novel material. Similar to the importance factor, because neither party identified any disclosure that is distinct from existing prior art references, the Court concluded that this factor was neutral.

Availability of a Continuance to Cure any Prejudice

Sol v. AT&T, 2:18-cv-526

The Court declined to analyze this factor because the diligence and importance factors weighed against granting leave to amend to such a degree to warrant denial of the motion.

Peloton v. Flywheel, 2:18-cv-390

The Court found that a continuance would actually cause "even greater prejudice" to the plaintiff, as it would delay the plaintiff's requested permanent injunction. This factor weighed against finding good cause for leave to amend.

Uniloc 2017 v. Google, 2:18-cv-496

The Court determined that the defendant had not shown good cause under the diligence and importance factors, and so did not analyze this factor.

Uniloc 2017 v. Google, 2:18-cv-504

The Court found that a continuance would not be necessary because granting the motion would cause limited prejudice to the plaintiff.

Uniloc 2017 v. Google, 2:18-cv-550

Neither party sought a continuance, so the Court found this factor to be neutral.

 

[1] Sol IP, LLC v. AT&T Mobility LLC, No. 2:18-cv-526-RWS-RSP, Dkt. 293 (E.D. Tex. Jan. 7, 2020); Peloton Interactive, Inc. v. Flywheel Sports, Inc., No. 2:18-cv-390-RWS-RSP, Dkt. 187 (E.D. Tex. Jan. 20, 2020); Uniloc 2017 LLC v. Google LLC, No. 2:18-cv-496-JRG-RSP, Dkt. 157 (E.D. Tex. Jan. 5, 2020); Uniloc 2017 LLC v. Google LLC, No. 2:18-cv-504-JRG-RSP, Dkt. 159 (E.D. Tex. Jan. 20, 2020); Uniloc 2017 LLC v. Google LLC, No. 2:18-cv-550-JRP, Dkt. 133 (E.D. Tex. Jan. 16, 2020).

[2] E.D. Tex. P.R. 3-6(b).

[3] O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006).

[4] Invensys Sys, Inc. v. Emerson Elec. Co., No. 6:12-CV-799, 2014 WL 12598865, at *3 (E.D. Tex. Dec. 3, 2014) (citing Symantec Corp. v. Acronis Corp., 2013 WL 5368053, at *5 (N.D. Cal. Sept. 25, 2013)) (quotations and brackets omitted).

[5] Uniloc 2017 LLC v. Google LLC, No. 2:18-cv-496-JRG-RSP (E.D. Tex. Jan. 5, 2020).