UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

Transcription

1 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA WAVE LOCH, INC., a California corporation, LIGHT WAVE, INC., a Utah limited partnership, v. Plaintiffs, AMERICAN WAVE MACHINES, INC., a California Corporation, Defendant. AMERICAN WAVE MACHINES, INC., v. Counter-Claimant, WAVE LOCH, INC., Counter-Defendant. Case No. 0-cv- BAS (NLS) ORDER: () DENYING PLAINTIFFS MOTION FOR LEAVE TO AMEND (ECF 0) () GRANTING DEFENDANT S MOTION FOR A JUDGMENT ON THE PLEADINGS (ECF ) Before the Court is Plaintiffs Wave Loch Inc. and Light Wave, Inc. s Motion for Leave to Amend the Complaint and For Leave to Amend the Preliminary Infringement Contentions (ECF 0) and Defendant American Wave Machines, Inc. s Motion for Judgment on the Pleadings (ECF ). For the following reasons, the Court DENIES Plaintiffs motion and GRANTS Defendant s motion. 0-cv- BAS (NLS)

2 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 PROCEDURAL AND FACTUAL BACKGROUND Plaintiffs filed a patent infringement suit against Defendant on May, 0. ECF. They alleged Defendant s stationary wave machines infringed on their patents, numbers,,0 ( 0 Patent),,,0 ( 0), and,, ( ). Defendant filed an answer and counterclaim on July 0, 0. ECF. In Plaintiffs infringement contentions, they asserted Claims,, 0,, and of the 0 Patent; Claims and of the 0 Patent; and Claims,, and 0 of the Patent. Before a claim construction hearing was held, Defendant filed a motion to stay the action until the U.S. Patent and Trademark Office ( USPTO ) completed reexamination of the patents in question. ECF. The court granted a stay on February, 0, over Plaintiffs objection. ECF. During the pendency of the stay, the USPTO cancelled all of Plaintiffs patent claims asserted against Defendant. Accordingly, Defendant moved ex parte to lift the stay so that it could file for a judgment on the pleadings. ECF. Defendant s application went unopposed. On April,, the court lifted the stay. ECF 0. The matter was then transferred to this Court on May,, and Defendant promptly moved for judgment on the pleadings. ECFs,. Soon thereafter, Plaintiffs applied ex parte to substitute counsel and to continue the hearing on Defendant s motion. ECFs,. The Court granted the application, extending the hearing date to August, and taking the matter under submission. ECF. Plaintiffs then filed a motion to amend or correct their complaint on July,. ECF 0. Both motions were taken under submission and set for hearing on August,. In their motion, Plaintiffs seek leave to amend the infringement contentions to assert Claim of the 0 Patent; Claims,, 0,,, and of the 0 Patent; and Claims,,,, and of the 0 Patent against different allegedly infringing products produced by Defendant. In 0-cv- BAS (NLS)

3 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 Plaintiff s Opposition to Defendant s second Motion to Stay (ECF ), Plaintiff anticipated asserting new claims from the patents at issue against AWM that are not under examination by the PTO. ECF, ii:. DISCUSSION. Plaintiffs Motion for Leave to Amend Both Federal Rule of Civil Procedure and the Patent Local Rules govern amendment in a patent case. See Trans Video Electronics, Ltd. v. Sony Electronics, Inc., F.R.D. 0, 0 (N.D. Cal. ) aff'd, F. App'x (Fed. Cir. ) ( Sony ). Patent Local Rule. permits serving amending infringement contentions as a matter of right only until the parties file their Joint Claim Construction Chart. Thereafter, amendment requires a timely motion showing good cause. Patent L.R...a.. Our sister districts and the Federal Circuit have defined good cause to require a showing of diligence. Sony, F.R.D. at 0. This is in contrast to Rule, wherein undue delay, by itself, is insufficient to justify denying a motion to amend. Id., quoting Bowles v. Reade, F.d, (th Cir. ). Without diligence, the court need not address the Rule requirement that amendment be granted unless there is either () prejudice to the opposing party, () bad faith by the moving party, or () futility of the amendment. Id. Even under Rule s more liberal amendment standard, [w]hether the movant seeks to assert mere variations of the original claims including claims which the original complaint may have forecasted or claims arising from the same set of operative facts or entirely new claims is of particular importance. Mahar v. U.S. Xpress Enterprises, Inc., F. Supp. d, 0 (N.D.N.Y. 0) Leave to amend may be denied where the movant appears to be raising a new claim in anticipation of an adverse ruling. Id. In Ansam Associates, Inc. v. Cola Petroleum, Ltd., 0 F.d,, the district court denied amendment because new claims 0-cv- BAS (NLS)

4 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 concerned a different period of time and were derived from a different statute. On appeal, the Second Circuit agreed with the district court s determination that the new claims allege an entirely new set of operative facts of which it cannot be said that the original complaint provided fair notice. Id. The movant s excuse that it was only after new counsel was substituted that it discovered the basis for the new claims was insufficient. Id. In Sony, the court found the movant did not act diligently when it delayed four months before moving for leave to amend. Sony, F.R.D. at 0. The movant sought to assert a new patent claim (claim ) under the previously asserted patent after the previous claim was invalidated on summary judgment (claim ). Id. The movant did little to explain how it acted with diligence. Id. Instead, the rightsholder criticized the alleged infringer for seeking and getting [a] stay so the USPTO could reconsider the patent at issue. Id. at 0. The court ultimately concluded that the movant failed to act with the requisite diligence and that its belated motion to amend was made in bad faith, only as a last-ditch attempt to avoid the summary judgment. Id. at 0. On the record present in this matter, the Court finds Plaintiffs appear to seek amendment in anticipation of an adverse ruling against them on Defendant s Motion for Judgment on the Pleadings. Their Opposition to the Motion for Judgment on the Pleadings does not challenge the merits of the dismissal, but only the scope of the justiciable issues under the operative Complaint. See ECF, :. It therefore appears from the record that Plaintiffs recognize the merits of Defendant s motion and are seeking to avoid an adverse ruling. As Plaintiffs admit, the proposed amendments relate to same or extraordinarily similar technology, require interpretation and analysis of the same patents already at issue, and involve substantial overlapping questions of fact and law. ECF 0, :. This begs the question: why, if the technology is the same or extraordinarily similar, did Plaintiffs not assert these fifty-one 0-cv- BAS (NLS)

5 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 patent claims against the allegedly infringing products in the original Complaint? It appears to the Court that Plaintiffs are attempting, at best, to take a second bite of the apple in the USPTO by asserting previously unasserted and therefore unchallenged provisions of their patents. At worst, Plaintiffs are attempting to prolong frivolous litigation to harass Defendant. In either scenario, the amendments appear to be undertaken in bad faith. The Court additionally finds that Plaintiffs have not met their burden to show diligence in pursuing these amendments. In their Motion, they rely exclusively on the stay of the case as an excuse for their failure to amend. However, the stay was lifted on April,, and they did not file their motion for leave to amend until July,. Although this delay would not independently require denial of their motion, Plaintiffs do have a burden to show diligence. Without such a showing, the Court cannot grant leave to amend. Further, although the stay itself did prevent Plaintiffs from filing a motion for leave to amend, it did not prevent them from filing an ex parte application to lift the stay so that they could move to amend the complaint. In fact, this procedure was used to great effect by Defendant to bring its motion for judgment on the pleadings. During this case s pendency, Plaintiffs have repeatedly but vaguely informed the court of their intention to amend the complaint, presumably based on information known at that time. It is therefore clear that some, if not all, of the infringement alleged in the proposed amended complaint was known to Plaintiffs prior to July,. Substitution of counsel alone is no excuse for failure to diligently seek amendment. See Ansam, 0 F.d at. In sum, the Court finds that Plaintiffs did not meet their burden to show diligence and that it appears they filed their late motion to amend to avoid an adverse ruling on Defendant s motion for judgment on the pleadings. Accordingly, 0-cv- BAS (NLS)

6 Case :0-cv-00-BAS-JLB Document Filed 0/0/ Page of 0 leave to amend the Complaint is DENIED.. Defendant s Motion for Judgment on the Pleadings The Court takes judicial notice of the U.S. Patent and Trademark Office cancellation of each patent claim asserted in the infringement contentions. Additionally, the Court takes judicial notice of the final ex parte reexaminations in the related patents, which are final and not appealable. Accordingly, taking into account the judicially-noticed USPTO determinations, the Court GRANTS Defendant s motion for a judgment on the pleadings and DISMISSES this case WITH PREJUDICE. IT IS SO ORDERED. DATED: September 0, The ability of Plaintiffs to reassert these patents against Defendant in future litigation may be significantly hampered by the doctrine of res judicata, but it is for subsequent courts to decide when presented with the issue. In similar circumstances, the Federal Circuit applied the doctrine to bar future claims predicated on previously asserted patents that had undergone reexamination in the USPTO. See generally Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., F.d (Fed. Cir. ). However, this issue is not before this Court. 0-cv- BAS (NLS)