Timeline helps in establishing diligence to amend invalidity contentions

In Positive Technologies, Inc. v. Sony Electronics, Inc. (January 28, 2013), Judge Illston (Northern District of California) granted Defendants Amazon.com, Inc.'s and Barnes & Nobles, Inc.'s motion to amend their invalidity contentions to add "conforming amendments" and "new-art amendments".  Both amendments are said to relate to the Court's claim construction order.  The Court focuses on the two aspects of good cause for the proposed amendments, including diligence in discovery the new information and the passage of time in seeking to add the new information to the contentions once discovered.  Defendants argue that the amendments, particularly the new prior art, relate to an expansive claim construction concerning two types of devices covered in the Court's claim construction order.  Although six months elapsed between the claim construction order and when the Defendants located the new prior art, the detail surrounding Defendants' efforts appears to have persuaded the Court the allow the proposed amendments. In this case, the Court ruled that since fact discovery had not yet closed, and in light of Plaintiff failing to articulate whether the prior art was relevant, whether Defendants were engaging in "gamesmanship" for the amendments, and what type of prejudice would result to the Plaintiff, the Court permitted the proposed amendments.

Takeaways - it appears to be increasingly relevant to track the timing contention efforts once the initial contentions have been served.  Details on these activities remain important to the Court when considering proposed amendments to invalidity contentions.

Rejected claim constructions pave way for invalidity contention supplement

In Baden Sports, Inc. v. Wilson Sporting Goods Co. (June 28, 2012), Judge Pechman (Western District of Washington) granted Defendant Wilson's request to supplement its invalidity contentions to add additional prior art references.  The main basis for Defendant Wilson's request focused on the Court's adoption of Plaintiff's proposed constructions for each of the four disputed terms. In permitting the requested supplement, the Court focuses on Local Patent Rule W.D. Wash. 124 of the Western District of Washington and notes that amendments to contentions require a "showing of good cause ... absent undue prejudice to the non-moving party."  (Order at 2).   The Court identified five factors underlying a good cause analysis including:

"(1) the reasons proffered for the need to amend after the deadline for submitting contentions had passed, (2) the diligence of the moving party, (3) the importance of the proposed amendments, together with any prejudice to the moving party if amendment is denied, (4) potential prejudice to the non-moving party, and (5) the availability of a continuance to cure any prejudice."  Convolve, Inc. v. Compaq Computer Corp., 2007 WL 700904 at *2 (S.D.N.Y Mar. 7, 2007).

In considering Defendant Wilson' request, the Court noted that it "adopted none of Wilson's proposed claim constructions."  (Order at 2).  Following the claim construction order, Wilson initiated an expanded search in light of the broader construction of the term "seam."  The Court recognized that although "Wilson should have perhaps conducted that broader search earlier, it is reasonable to grant leave given the completely adverse outcome of the Markman hearing, which is the precise situation contemplated by LPR 124."  (Order at 3).

As to diligence, Wilson conducted the search quickly, updated its contentions with the new information, and shortly thereafter moved to supplement.  The Court dispensed with any claim of prejudice noting that "the amendments are relatively minor and there is still time to allow Baden to conduct discovery and expert analysis relating to the amended material."  (Order at 3).

Takeaways - Diligence remains the main consideration for supplemental contentions.  Although the Court noted that Wilson likely should not have been so limiting in its initial search, the Court balanced the factors and permitted the supplement.  This process raises a question though - how was Wilson expected to know precisely the breadth of Plaintiff's proposed constructions when it served its invalidity contentions prior to the parties exchanging claim construction positions?

Cases weighing invalidity contention impact on claim construction process

We're going through our invalidity contention decisions database to identify cases where a Court's decision considers the impact of supplemental invalidity contentions on the claim construction process under local patent rules. We previously identified the following cases in other blog posts:

• CardSoft, Inc. v. VeriFone Systems, Inc. (May 28, 2012), Judge Payne (Eastern District of Texas)
• Nano-Second Technology Co., Ltd. v. Dynaflex Int'l (June 6, 2012), Judge Lew (Central District of California)
• Bayer Cropscience AG v. Dow Agrosciences LLC (June 7, 2012), Judge Schneider (District of Delaware)

We'll review our database of 85+ cases and eventually identify all relevant cases for this topic.

To start things off, let's consider Play Visions, Inc. v. Dollar Tree Stores, Inc. (November 30, 2010), Judge Pechman (Western District of Washington).

In this case, Judge Pechman granted Defendants' request to amend their preliminary invalidity contentions finding good cause for the proposed amendment, relying on Local Patent Rule LR 124.  The Court first determined that the Defendants had been diligent in searching for prior art, and that the contentions supplement were timely provided, with the motion to amend the contentions  was filed roughly two months after the contention deadline.

The Court weighed the potential prejudice to the plaintiff and determined that

There is no evidence of prejudice given that the parties have yet to engage in claims [sic] construction and discovery does not end for months.

(Order at 4).  Again we see a focus on the claim construction impact with respect to invalidity contentions supplement.  Here, the Court was entirely focused on prejudice to a party under the guise of claim construction.  From the outset, the Court frames the issue:

Restrictions on amendment to invalidity contentions are aimed at avoiding the "shifting sands" approach to claim construction.  See Halo Elecs., Inc. v. Bel Fuse Inc., 2010 WL 3489593, at *1 (N.D. Cal. Sept. 3, 2010) (granting motion for leave to amend invalidity contentions where the defendants argued they search diligently over a broad spectrum of prior art).

(Order at 2).  So again, the focus remains on whether allowing supplemental contentions will in some way impact claim construction discovery.  We've already explained our viewpoint that Phillips is at odds with how the local patent rules are being applied when prior art supplements are linked to the claim construction process.

We'll continue to report our findings in subsequent posts.

Claim construction process is not helped by invalidity contentions

In an earlier post, I discussed the following:

 I don't believe the rules were intended to exclude prior art because a plaintiff lacked non-intrinsic prior art during the claim construction process.  I continue to look at the evolution of the local rules for linkage between invalidity contentions and claim construction.  It would be helpful if someone could point me to any local patent rule comments on this issue.  I'm particularly interested in comments detailing why invalidity contentions must precede claim construction.  Is it to allow the patent owner to craft proposed constructions in light of prior art (extrinsic evidence)?  What principle of claim construction would that be based on?

Here are some further thoughts, after rereading and studying some cases.  First, for a district court civil action, "[t]he role [of claim construction] is neither to limit nor broaden the claim, but to define, as a matter of law, the invention that has been patented."  Netword, LLC v. Centraal Corp., 242 F.3d 1347, 1352 (Fed. Cir. 2001).  Nothing controversial there.

Next, we have the following notion that the rules of claim construction state that claims may not be revised to ignore explicit claim language.  See Generation II Orthotics Inc. v. Med. Tech. Inc., 263 F.3d 1356, 1365 (Fed. Cir. 2001) ("claims can only be construed to preserve their validity where the proposed claim construction is 'practicable,' is based on sound claim construction principles, and does not revise or ignore the explicit language of the claims.").  Essentially, claims may not be redrafted.

Taking these ideas further, it's not a stretch to surmise that invalidity contentions may impact the validity of the claims subject to construction, but that should not matter for purposes of defining the scope of the invention.  Lucent Technologies, Inc. v. Gateway, Inc., 525 F.3d 1200, 125-26 (Fed. Cir. 2008) ("This court has repeatedly held that courts may not redraft claims to cure a drafting error made by the patentee, whether to make them operable or to sustain their validity.  To do so 'would unduly interfere with the function of claims in putting competitors on notice of the scope of the claimed invention.'")

So what to make of the "preserving claim validity" maxim?  It would seem reasonable that the "preserving claim validity" maxim should only be invoked in such narrow circumstances where "'the court concludes, after applying all the available tools of claim construction, that the claim is still ambiguous.'"  Phillips v. AWH Corp., 415 F.3d 1303, 1327 (Fed. Cir. 2005) (en banc) (citing Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 911 (Fed. Cir. 2004)).

If all this is accurate, why are invalidity contentions required before the claim construction process has even started under local patent rules?  Are we presuming that claims will remain ambiguous after applying all available tools of claim construction?  Certainly requiring contentions before claim construction may be expedient, but what is being accomplished.  Moreover, prior art is applied to properly construed claims, so claim construction necessarily comes first.  Consider that Phillips specifically states

[W]e have certainly not endorsed a regime in which validity analysis is a regular component of claim construction.

Phillips, 415 F.3d at 1327 (emphasis added); see also Rhine v. Casio, Inc., 183 F.3d 1342, 1345 (Fed. Cir. 1999) ("if the only claim construction that is consistent with the claim's language and the written description renders the claim invalid, then the axiom does not apply and the claim is simply invalid.").

If validity analysis is not a regular component of claim construction, should we consider a change to patent local rules where claim construction discovery precedes contentions, instead of the current practice?

Court declines supplement to invalidity contentions despite importance

In CardSoft, Inc. v. VeriFone Systems, Inc. (May 28, 2012), Judge Payne (Eastern District of Texas) denied Defendant VeriFone's request to supplement its invalidity contentions to add two additional prior art references. In denying the requested supplement, the Court focuses on Patent Local Rule 3-6(b) of the Eastern District of Texas and notes that amendments to contentions require a "showing of good cause."  (Order at 1).   The four standard factors underlying a good cause analysis included:  (1) explanation for party's failure to timely move for leave to amend; (2) importance of the amendment; (3) potential prejudice resulting from amendment; and (4) availability of continuance to cure prejudice.  The Court then determined that the defendant was not diligent because it should have investigated prior art processing terminals based on plaintiff's identification of alleged infringing products.

The Court explained:

The Court is not satisfied that VeriFone acted diligently to discover the Omni 300 and OTA prior art.  These references are related to VeriFone's own products, which it should have uncovered even if CardSoft never accused the Omni 3200 payment terminals of infringement.  Furthermore, it took VeriFone nearly eight months to produce the references, and then another four months to disclose its invalidity contentions based upon the references.  The Court is not persuaded that this shows diligence on VeriFone's part.  Verifone's lack of an adequate explanation to explain its delay weighs strongly against granting leave.

(Order at 3).

In the end, the Court was not persuaded that diligence was shown.   We were surprised at how the Court resolved the other good cause prongs involving prejudice.  As to prejudice, the Court explained:

The importance of these references are quite clear, which weighs in favor of granting VeriFone leave to amend.  However, their importance only adds to the prejudice suffered by CardSoft because it was deprived of a meaningful opportunity to consider these references during the claim construction process.  Because claim construction was nearly over by the time VeriFone disclosed its invalidity contentions based on the Omni 300 and OTA prior art, and claim construction is now complete, a continuance is not available to cure CardSoft's prejudice.

If the impact on claim construction was not an appropriate factor for invalidity contention supplements, there would be little, if any, prejudice to CardSoft.  Maybe the supplement request would have been granted.  As we previously suggested here and here, the link between invalidity contentions and claim construction prejudice is tenuous.  In this case, the prior art is not part of the intrinsic evidence, and the court noted the importance of the prior art references, yet the supplement request was denied.  Although claim construction was concluded, should that fact really impact the inclusion of additional invalidity contentions?  The claims mean what they mean.  If the claims encompass the prior art then it is what it is.

Takeaways - Diligence is the paramount consideration for supplemental contentions.  This ruling indicates that although Defendant VeriFone continued its prior art investigation at a measured pace, the defendant did not move quick enough.  Tough case, tough decision.  I would prefer not to see the balance of a decision rest on how an invalidity contention supplement impacts claim construction as a reason for denying the supplement.  I don't believe the rules were intended to exclude prior art because a plaintiff lacked non-intrinsic prior art during the claim construction process.  I continue to look at the evolution of the local rules for linkage between invalidity contentions and claim construction.  It would be helpful if someone could point me to any local patent rule comments on this issue.  I'm particularly interested in comments detailing why invalidity contentions must precede claim construction.  Is it to allow the patent owner to craft proposed constructions in light of prior art (extrinsic evidence)?  What principle of claim construction would that be based on?  These are somewhat rhetorical questions.  Care to comment?

Court denies addition of single prior art reference to invalidity contentions

In Nano-Second Technology Co., Ltd. v. Dynaflex Int'l (June 6, 2012), Judge Lew (Central District of California) denied Defendants' request to supplement its invalidity contentions to add an additional prior art reference. In denying the requested supplement, the Court noted that pursuant to Patent Local Rule 3-6 of the Northern District of California, amendments to contentions require a "timely showing of good cause."  (Order at 3).   The Court determined that defendants were not diligent because they were presumably aware of the prior art reference as of the filing of the complaint.  The underlying facts of this motion is where things get interesting.

Plaintiff's patent alleged to be infringed by the defendants is U.S. Patent No. 5,800,311 ("the '311 patent").  The plaintiff's '311 patent was identified to the defendants when the complaint was served in 2010.  At some point after defendants served their invalidity contentions, they realized that the asserted '311 patent admitted the Figure 5 depiction of a "conventional wrist exerciser" was prior art.  For this reason, defendants wanted to rely on the conceded prior art disclosed in Figure 5 and use the '311 patent as prior art.  The Court determined that the defendants lacked the required diligence in identifying the '311 patent as prior art, explaining that:

Regarding the first prong of the good cause inquiry, the Court finds that Defendants cannot meet their burden to establish their diligence in seeking to amend their Preliminary Invalidity Contentions.  Defendants have had in their possession a copy of the '311 Patent since the filing of the Complaint on November 30, 2010, and the language of the '311 Patent is clear that FIG. 5 is a depiction of the prior art.

(Order at 3).

It seems understandable how the Court can reach this conclusion as to lack of diligence.  What's surprising about this decision is how the Court resolved the second good cause prong - prejudice.  For the second prong, the Court explained:

In addition, in addressing the second prong of the good cause inquiry, the Court finds that Plaintiff will be prejudiced by allowing the requested amendment.  Though expert reports are now not due until June 29, 2012, Plaintiff has stated that it prepared its claim construction briefing based in part on Defendants' original invalidity contentions.  The Court finds that allowing the proposed amendment now in light of Defendants' lack of diligence in seeking [sic] amendment "would undercut one of the purpose [sic] of the patent local rules to provide the parties with certainty as to the opposing party's legal theories."  Apple, Inc. v. Samsung Electronics Co. Ltd., 2012 WL 1067548, at *7 (N.D. Cal. Mar. 27, 2012) (citing 02 Micro, 467 F.3d at 1363).

As we suggested previously, the link between invalidity contentions and resulting prejudice in connection with claim construction preparation is fairly tenuous.  Although the prior art reference here, the '311 patent, is actually part of the intrinsic record and not extrinsic evidence, is it accurate for plaintiff to suggest that inclusion of prior art admissions for its own patent somehow results in prejudice to its claim construction preparation and strategy?  On the first prong of good cause, we take no issue with the Court's determination.  On the second prong though, plaintiff has stretched a bit.

Takeaways - Diligence is the driving consideration for supplemental contentions.  Organizing invalidity contentions at an early stage in the litigation is key to marshaling all information at the outset of the case, and managing information during the collection and review process.  Maybe if the Defendants had a better coordination tool like PatDek (shameless plug), then they would have had more time to consider and appreciate the prior art concessions in the asserted '311 patent.

Series: a deeper look at local patent rules and invalidity contentions (obviousness)

Today we'll take a look at the local patent rules across jurisdictions and the specificity required for obviousness contentions.  You can find an index of local patent rules here if you want to browse rules in different jurisdictions. Certain jurisdictions, like the Eastern District of Texas shown below, specify the following for  invalidity contentions relying on obviousness challenges.

L. Pat. R. 3-3(b) provides:

(b) Whether each item of prior art anticipates each asserted claim or renders it obvious. If a combination of items of prior art makes a claim obvious, each such combination, and the motivation to combine such items, must be identified;

Other jurisdictions, like the Northern District of California, do not recite the requirement to identify the motivation to combine prior art references when obviousness contentions are based on a combination of prior art.

L. Pat. R. 3-3(b) provides:

(b) Whether each item of prior art anticipates each asserted claim or renders it obvious. If obviousness is alleged, an explanation of why the prior art renders the asserted claim obvious, including an identification of any combinations of prior art showing obviousness;

In summary, certain jurisdictions specifically require a motivation to combine identification, while others do not.  We have summarized a list of the jurisdictions that include and do not include this requirement.  Certainly, for a given jurisdiction, Court decisions may indicate that motivations to combine must be included for obviousness-based contentions, even if not specifically recited in the local patent rules.

The following ten (10) jurisdictions recite that a motivation to combine prior art must be identified:  Northern District of Georgia; Northern District of Illinois; Eastern District of North Carolina; Western District of North Carolina; District of New Hampshire; Northern District of New York; Western District of Pennsylvania; Eastern District of Texas; Northern District of Texas; and District of Utah (J. Campbell).

The following thirteen (13) jurisdictions do not recite that a motivation to combine prior art must be identified:  Northern District of California; Southern District of California; District of Idaho; District of Maryland; Eastern District of Missouri; District of New Jersey; District of Nevada; Northern District of Ohio; Southern District of Ohio; Western District of Tennessee; Southern District of Texas; Eastern District of Washington; and Western District of Washington.

Let us know if you're aware of other differences of interest.

Third attempt to supplement invalidity contentions unsuccessful

In Bayer Cropscience AG v. Dow Agrosciences LLC (June 7, 2012), Judge Schneider (District of Delaware) denied Defendant Dow's third request to supplement its invalidity contentions. In denying the requested supplement, the Court noted that the diligence of the moving party is the "key" fact that courts consider when assessing good cause for amendments to contentions.   Relying on 02 Micro Intern. Ltd., 467 F.3d 1355, 1364-1367 (Fed. Cir. 2006), the Court explained:

Pursuant to the [02 Micro] decision, the key fact courts should look at to determine whether good cause exists to grant an amendment to a contention is the diligence of the moving party.  Diligence has two aspects to it.  One is whether the moving party acted diligently to discover that an amendment was appropriate.  The second aspect is whether the moving party promptly moved to amend its contentions after it learned an amendment was necessary.  The burden is on Dow to show diligence, rather than on Bayer to establish Down was not diligent.  Dow has not satisfied its burden.

(Order at 3).  Dow sought three sets of amendments.  One amendment concerned supplementing its contentions to include arguments, not prior art, that respond to Plaintiff's amended contentions.  This proposal was rejected.  The second amendment sought to incorporate by reference past briefing by Dow.  This proposal was also rejected.  The third set of amendments sought to add two recently discovered prior art references.  This third proposal was similarly rejected.  The reasoning underlying the third proposal is explored below.

For the prior art supplement, Plaintiff Bayer noted the following:

DAS makes no showing whatsoever that it has been diligently searching for prior art; provides no explanation as to how or why the two new pinches of prior art eluded that search; and does not even attempt to explain the circumstances as to how this alleged new prior art came to light.

(Order at 6-7) (citing Bayer Answering Brief at 10-11).  The Court essentially agreed with Bayer explaining that, as to the Perkins reference learned of by interviewing the reference's author, "Dow did not explain why it did not conduct its interview earlier" and as to the second Fraley reference, the Court rejected the premise that good cause exists when a reference is intended to rebut arguments by the opposing party.  (Order at 7).  The Court opined that if supplementing contentions to rebut arguments were permitted, "amended contentions would never cease."  (Order at 7).

Takeaways - Good cause and diligence continue to control supplemental contentions.  In future posts, I will comment on why invalidity contention supplements should continue to be governed by the good cause requirement, but that the stage of the litigation should be given minimal to no deference, unless expert discovery has commenced.

Judge Schneider in this case found it significant that

In view of the parties' efforts to date and the upcoming Markman hearing, Bayer will be prejudiced if it is now compelled to revise its prosecution and defense strategy to respond to Dow's 'shifting sands' defense.  This is the scenario the patent rules were designed to prevent.  

(Order at 8).

I respectfully disagree.  Supplementing prior art, specifically prior art not of record for the challenged patent, should have no bearing on the Markman hearing, and is unlikely to require a response by the plaintiff that rises to the level of "prejudice."  If the supplemented prior art is not compelling, the prior art will essentially be a non-issue.  If the prior art is compelling, the prior art rises in importance and should be part of the litigated merits.  Expert discovery has yet to begin, and the plaintiff can address the reference in due course with the aid of its expert.  Further, because no claim construction order has issued, it would appear to be entirely premature to exclude merit-based evidence.  Yes, the local patent rules specify disclosure time frames, but are those time frames justified or merely for expedience?

Series: a deeper look at local patent rules and invalidity contentions (NDNY)

Today we'll take a look at the local patent rules for the Northern District of New York, specifically obviousness contentions.  You can find an index of local patent rules here if you want to browse rules in different jurisdictions. The Northern District of New York specifies the following for invalidity charts and invalidity contentions relying on obviousness challenges:

L. Pat. R. 3.3(b)(2) provides:

(2) Whether each item of prior art anticipates each asserted claim or renders it obvious. If obviousness is alleged, an explanation of why the prior art renders the asserted claim obvious, including an identification of any combinations of prior art showing obviousness, the reason why one of ordinary skill in the art would have combined the references at the time of the invention in issue in the case, and identification of what the accused considers to be the primary reference.

L. Pat. R. 3.3(b)(3) provides:

(3) A chart identifying where specifically in each alleged item of prior art each limitation or view of each asserted claim is found, and for utility patents, including for each limitation that such party contends is governed by 35 U.S.C. § 112 ¶ 6, the identity of the structure(s), act(s), or material(s) in each item of prior art that performs the claimed function;

{C}Unlike most local patent rules, the NDNY requires an "identification of what the accused considers to be the primary reference."  NDNY L. Pat. R. 3-3(b)(2).  Not only does a defendant need to identify "any combinations" to show obviousness, but the primary reference needs to be identified.  Most jurisdictions merely require an identification of obviousness combinations, but not the primary reference.  In this Series on local patent rules, we'll address other nuances in jurisdictions for your consideration.

Let us know if you're aware of other differences of interest.

Although a close call, Court allows supplement to invalidity contentions

In Sloan v. Zurn (April 12, 2012), Judge St. Eve (Northern District of Illinois) allowed Defendant Zurn to supplement its invalidity contentions, despite misgivings about Defendant's dilatory disclosures. In granting the requested supplement as to a flush valve alleged to be in public use, Judge St. Eve explained:

The Court agrees that Zurn failed to properly disclose its Community Center Worn Valve invalidity contention. Although the Court agrees that Zurn’s two invalidity contentions are not the same, as is discussed further below, they are based on the same theory such that Zurn should be allowed to assert the newly-articulated defense. It is a close call, however, and it is apparent from the facts in the record that Zurn unexplainably failed to produce the underlying documentation regarding the Community Center Worn Valve to Sloan despite certifying numerous times that its document production was complete. Accordingly, the Court orders Zurn to pay Sloan’s reasonable costs and attorney’s fees incurred in conducting discovery related to the newly-articulated Community Center Worn Valve defense as set forth in the Order.

(Order at 7).  Despite the late identification of a new invalidity contention, the Court permitted the supplement.  Judge St. Eve appears to have balanced other factors in this case because the new invalidity contention was determined to be belatedly disclosed.  The Court was mindful to shift the costs of discovery for the new invalidity contention away from the Plaintiff and to the Defendant.  Although not explicitly addressed in the opinion, another factor may have a recently issued Reexamination Certificate issued for the asserted patent, reciting amended and added claims.

Takeaways - There's not much to say about this one.  The new contention was similar in theory to a previous contention, but relied on entirely different evidence (previous contention related to laboratory tests showing simulated valve wear while new contention based on valve wear over time at a public facility).  The Court does not really address why the new contention was permitted, except that it was a "close call" and that the two contentions "are based on the same theory.  (Order at 7).  All other factors appear to have favored the Plaintiff in support of its motion to strike the new contention.

Local patent rules by jurisdiction

We recently completed an update to our list of local patent rules.  You can now find a list of each jurisdiction that provides patent local rules, a corresponding link to the patent rules or PDF, and excerpts of the specific rules concerning invalidity contentions and invalidity charts. Take a look and let us know what you think.  We still need to add a couple of additional jurisdictions.

Different claim construction does not warrant invalidity contention supplement

In Patent Harbor, LLC v. Audiovox Corp., et al. (March 30, 2012), Judge Love (Eastern District of Texas) granted-in-part and denied-in-part Defendants' motion to supplement their invalidity contentions as to three prior art references.  Defendants were permitted to supplement their invalidity contentions as to two prior art systems, but were denied their supplement request as to one prior art patent ("Mills patent"). Defendants' requested supplementation to add the Mills patent on two grounds related to a changed claim construction - "good faith" (P.R. 3-6(a)(2)) and for "good cause" (P.R. 3-6(b)).

In denying the requested supplement for the Mills prior art patent under the "good faith" standard of P.R. 3-6(a) on the basis of a changed construction, the Court explained:

[Patent Rule 3-6(a)] is intended to allow a party to respond to an unexpected claim construction by the court. This does not mean that after every claim construction order, new infringement [or invalidity] contentions may be filed. That would destroy the effectiveness of the local rules in balancing the discovery rights and responsibilities of the parties.

Nike, 479 F. Supp. 2d at 667. ... Thus, Defendants must show that the Court’s construction was so different from the parties’ proposed constructions that amending their ICs is necessary.

(Order at 5).  The Court reasoned that it essentially adopted plaintiff's proposed construction for the term "content video image", except for replacing the word "visual" with "virtual."  Because the claim construction for "content video image" was not so different from the plaintiff's proposed construction, the Court determined that the proposed amended invalidity contention was not warranted.

Next the Court turned to the standard "good cause" factors in evaluating the Mills patent:

1. the reason for the delay and whether the party has been diligent;
2. the importance of what the court is excluding and the availability of lesser sanctions;
3. the danger of unfair prejudice; and
4. the availability of a continuance and the potential impact of a delay on judicial proceedings.

(Order at 3) (relying on Cummins-Allison Corp. v. SBM Co., Ltd. (E.D. Tex. Mar. 19, 2009).

Under the "good cause" standard, the Court was unpersuaded that the "publicly available reference" could not have been located sooner.  Because defendants did not sufficiently explain why the Mills patent was not included in the preliminary invalidity contentions, the diligence factor weighed against Defendants proposed amendment.  The Court further determined that the other factors of importance and prejudice each weighed against the Defendants as well.

For the proposed prior art systems supplements, the Court permitted these proposed supplements, reasoning that

Defendants included some documents regarding these systems in their initial [invalidity contentions] ICs, thus providing Patent Harbor notice of the prior art systems.

(Order at 8).  Further, the Court was not persuaded with plaintiff's attempt to show prejudice based on the proposed supplements as to these prior art systems.

Takeaways - this decision seems to follow the normal pattern.  Unless there is a strong justification for not locating a prior art patent earlier, Courts seem reluctant to permit such a supplement, absent other nuances.  The delay period in locating the prior art and requesting supplementation is often the overriding consideration in assessing diligence.

For the prior art systems, supplementing the contentions to include additional information about these prior art systems seemed to turn on the fact that these weren't newly identified systems, but merely additional documentation about systems identified in the preliminary contentions.  This factored into the lack of prejudice to the plaintiff, and diligence was established because the additional information was uncovered during discovery.

Despite four month delay, supplementing invalidity contentions warranted

In Oy Ajat, Ltd. v. Vatech America, Inc. [unpublished] (March 29, 2012), Judge Arpert (District of New Jersey) granted Defendant's motions to stay the case pending reexamination and also to supplement its invalidity contentions based on prior art in the reexamination request.  Relying on Patent Local Rule 3-7, Defendant requested a supplement to its prior art disclosures, arguing:

the two new prior art references cited in [its] proposed supplemental contentions became truly material...to the issue of invalidity of the patents-in-suit...[for the first time] on August 23, 2011 when [Plaintiff]...made arguments in [the] reexamination proceedings to avoid invalidity findings by the assigned examiner.  [Order at 18]

In a lengthy evaluation of the parties'  arguments, the Court considered the prevailing "good cause" factors in evaluating the proposed supplements:

1. the reason for the delay and whether a party has been diligent;
2. the importance of what is to be excluded;
3. the danger of unfair prejudice; and
4. the availability of a continuance and the potential impact of a delay on judicial proceedings.

(Order at 36).

The Court ultimately granted the stay, noting that the reexamination had reached ACP (Action Closing Prosecution).  With respect to Defendant's supplemental invalidity contentions, the Court explained:

the application itself comes approximately five (5) months after Plaintiff’s submissions to the USPTO, the Court finds that permitting Defendant to serve supplemental Invalidity Contentions at this time will not unduly prejudice Plaintiff given that Defendant presented the USPTO examiner and Plaintiff with the same additional prior art references in September 2011 ..., given that VAK’s recently filed Answer “asserted invalidity of the [patents-in-suit] on all art in the reexamination proceeding including the proposed supplemental prior art” ..., and given the imposition of a stay as set forth above. While noting that the parties may incur additional legal expenses, .... Fact discovery has yet to be completed and, although Markman briefs have been submitted, no hearing has been scheduled such that any additional discovery and/or revisions to Markman briefs may proceed when the stay is lifted.  [Order at 40-41]

We earlier commented on a different result where the Court (NDCA) determined that a two month delay in seeking leave to supplement invalidity contentions precluded the request to supplement.  In contrast, this New Jersey District Court decision was a bit surprising because there does not seem to be a sufficient justification by the Defendant in requesting a supplement when the relied on prior art was identified in a reexamination request filed months earlier.  The Court did not really explain the first "good cause" factor - reason for the delay and diligence, but rather relied on lack of prejudice to the Plaintiff.  See Order at 37-41.  Defendant's main argument to explain away the delay was that Plaintiff

made arguments in [the] reexamination proceedings to avoid invalidity findings by the assigned examiner.  [Order at 18]

This justification seems a bit weak.  The art was known at least as of the time of the reexamination filing.  Plaintiff's arguments in reexamination don't really explain why the request to supplement was delayed for four to five months.  The prior art was either relevant, or it wasn't relevant, despite Plaintiff's reexamination arguments.

Takeaways - this is a bit perplexing.  Defendant could have neutralized the delay issue if it would have filed a request to supplement its contentions when it was was drafting the reexamination request, or when it ultimately filed the reexamination request.  This seemed to be a close call and the Court's decision is understandable - let the PTO decide the validity issues by imposing a stay.  But if the PTO and BPAI are to decide the validity issues, why was it important to allow the supplement when defendant's delay/diligence justification was so thin?

Delays preclude invalidity contention supplements

In Apple v. Samsung (March 27, 2012), Judge Koh (Northern District of California) denied Samsung's request to supplement invalidity contentions.  Relying on Patent Local Rule 3-6, the Court noted that for amending prior art disclosures, good cause determination factors in the Northern District of California include:

Nonexhaustive examples of circumstances that may, absent undue prejudice to the non-moving party, support a finding of good cause include: (a) [a] claim construction order by the Court different from that proposed by the party seeking amendment; [or] (b) [r]ecent discovery of material, prior art despite earlier diligent search.

The Court further noted that prejudice only becomes a factor after diligence is first established.  Samsung unsuccessfully sought to amend its contentions for five prior art references.

For the Mac OS X 10.0 reference, diligence was not shown because "Samsung admittedly knew about the reference shortly after filing its initial invalidity contentions in October 2011."  Order at 3.  The Court rejected Samsung's argument that discovery delays by Apple excuse Samsung's delay in seeking an earlier supplement, based on Samsung's "acknowledgement" that it had good cause to supplement two and a half months earlier.

For the SuperClock reference, Samsung provided a proposed supplemental invalidity chart months earlier.  Diligence was again lacking because Samsung did not move to supplement the contention until several months after providing the invalidity chart for SuperClock.  Order at 5.

For the Glimpse prior art, Samsung admitted that it first became aware of the prior art, months before the requested supplement, during a deposition of an Apple employee.  Samsung, however, had difficulty utilizing a function version of the underlying source code.  Again the Court focused on the timeline of events, determining that the delay in moving to supplement negated the predicate diligence for the proposed supplement.  Order at 6-8.

For the Cirque GlidePoint reference, Samsung provided timely invalidity contentions that incorporated a patent directed to GlidePoint.  Samsung then sought discovery from Cirque for additional documentation about GlidePoint.  The Court focused on purported delays in seeking additional GlidePoint information through third party discovery, determining that Samsung had not established diligence in pursuing the additional discovery.  The Court therefore denied Samsung's request as to GlidePoint.  Order at 8-9.

For the Synaptics patent, the Court explained the different ways that Samsung was aware of the Synaptics patent.  Because Samsung did not provide an invalidity chart for this patent, the Court again determined Samsung failed to show diligence pursuing contentions involving the Synaptics patent.  Samsung relied on discovery issues involving third party discovery of Synaptics, but the Court focused on the requested supplement as to the patent itself, which Samsung was aware of earlier in the discovery period.  Order at 9-10.

Takeaways - this is a difficult case to reconcile.  It is understandable why Samsung did not seek immediate supplement for some of the prior art.  It lacked documentation to provide a compliant proposed supplement in support of its motion.  To avoid this problem in the future, it may be advisable to pursue a supplement once a party becomes aware of relevant prior art.  In other words, seek to amend contentions even without complete information to support the contentions, and be prepared to aggressively pursue discovery to obtain the missing information.  Although the proposed supplements will not necessarily include the actual contentions because of missing information, there will not be a time lag between first knowledge of the prior art and the underlying motion seeking to supplement your contentions, while you pursue the supporting documentation.

Cited prior art was a due diligence factor in denying invalidity contention supplement

In Nomadix, Inc. v. Hewlett-Packard Company et al. (March 22, 2012), Judge Pregerson (Central District of California) denied defendants' request to supplement their invalidity contentions.  The Court noted that for amending prior art disclosures, good cause determination factors include:

the relevance of the newly-discovered prior art, whether the request to amend is motivated by gamesmanship, the difficulty of locating the prior art, and whether the opposing party will be prejudiced by the amendment.

(quoting Acco Brands, 2008 WL 2168379, at *1 (N.D. Cal. May 22, 2008)).

The decision appears to suggest that the new prior art (the Vos article) is relevant and that the amendment request is not motivated by gamesmanship.  Although these factors may have favored the defendants, the Court seemed troubled that the defendants did not identify the Vos article sooner, noting that:

Defendants fail to adequately explain their delay in discovering the Vos article, when it was one of only eleven references cited in the 1997 SPINACH paper upon which they based their initial invalidity contentions. (p. 7).

As for prejudice to Plaintiff Nomadix, the supplemental contentions extend beyond the Vos article.

Defendants argue that there is no prejudice here, because they are not shifting or adding theories, but simply developing "the same theory set forth in the preliminary invalidity contentions in July 2010 and first supplemental invalidity contentions in July 2011."  (Reply at 8.)  Specifically, those contentions alleged that the '118 Patent and the SPINACH system rendered invalid Novadix's '894 and '716 Patents, respectively.  As Nomadix explains, however, Defendants seek to go well beyond developing these prior art theories.  Defendants now contend that the '118 Patent and SPINACH system invalidate several additional Nomadix patents.  Likewise, Defendants contend that three other patents are invalidated by a new reference - the Vos article.  In short, Defendants now theorize that prior art invalidates seven Nomadix patents, instead of only two.  Nomadix therefore reasonably argues that responding to these new contentions would require additional fact discovery, which is now closed.

Takeaways - allege invalidity against all asserted patents for each of your prior art references in your preliminary invalidity contentions, and, be sure to consider references to other prior art in your main prior documents because that may be a factor against you when requesting an invalidity contention supplement.

District Court decisions about invalidity contentions

We continue to update our collection of district court decisions addressing invalidity contentions.  The decisions include issues about supplementing contentions, motions to strike contentions, motions to amend contentions and late disclosure of contentions. We've now arranged the decisions by year of decision and jurisdiction.  With future updates to our case repository plug-in, we hope to provide a summary of the issues decided in each decision.

The decisions can be found here, or via links in the right hand side bar.

We are alerted to these decisions via daily email via an excellent case reporting service - DocketNavigator - this patent-related service reports on newly filed cases, verdict awards, claim construction terms and recent district court decisions.  We have no affiliation with DocketNavigator, although we highly recommend the service.

EDTX - Judge Folsom limits number of prior art references against asserted claims

In a recent Eastern District of Texas decision on February 14, 2012, Judge Folsom ruled that:

Defendants shall serve Invalidity Contentions that narrow the number of asserted prior art references in their Invalidity Contentions to no more than fifteen (15) individual references (i.e., not groups of references) asserted per claim or no more than eighteen (18) individual references per dependent claim where Plaintiff is also asserting a corresponding claim from which the dependent claim depends.  Defendants may not multiple [sic] the number of claims by fifteen or eighteen and arrive at a gross number of possible references.

While the result of this order might bring cheer to Plaintiffs' counsel in E.D. Tex., the order references an agreement memorialized in the Docket Control Order whereby "the parties had previously agreed that Defendants would narrow the number of asserted prior art references."  We're still reviewing the briefs (Plaintiff's Motion, Defendants' Opposition, Plaintiff's Reply) on this motion, but it appears that the Plaintiff agreed to limit the number of asserted claims in exchange for an agreement that the Defendants would consider limits on the number of relied upon prior art references.

Click the link to read the decision in MicroUnity Systems Engineering, Inc. v. Apple, Inc. et al.