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In re Papst Licensing GMBH & Co. KG Patent Litigation

United States District Court, District of Columbia

August 24, 2017

IN RE PAPST LICENSING GMBH & CO. KG PATENT LITIGATION MDL No. 1880

          MEMORANDUM OPINION AND ORDER

          RANDOLPH D. MOSS UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the Camera Manufacturers' Motion for Leave to Amend Invalidity Contentions as to the “new patents” (U.S. Pat. Nos. 8, 966, 144 and 8, 504, 746) asserted by Papst in this multidistrict litigation.[1] Dkt. 662. The Camera Manufacturers contend that they recently discovered a break in the chain of priority that links Papst's new patents to its “old patents” (U.S. Pat. Nos. 6, 470, 399 and 6, 895, 449) rendering “Papst's own earlier published patent applications prior art to the [n]ew [p]atents.” Id. at 4; see also id. at 5-9, 12. Because this theory was not set forth in the Camera Manufacturers' invalidity contentions, they seek leave to amend those contentions. Id. Papst opposes the Camera Manufacturers' motion, arguing that the Camera Manufacturers have failed to meet their burden of establishing “good cause” for amending their invalidity contentions. Dkt. 669.

         For the reasons explained below, the Court will GRANT the Camera Manufacturers' motion for leave to amend their invalidity contentions.

         I. BACKGROUND

         Initiated almost a decade ago, this multidistrict litigation originally concerned two patents-U.S. Patent Nos. 6, 470, 399 ('399 patent) and 6, 895, 449 ('449 patent). After extended proceedings, the Court entered final judgment of non-infringement pursuant to Rule 54(b) with respect to certain defendants, Dkts. 559, 560, and the plaintiff-Papst Licensing GMBH & Co. KG (“Papst”)-appealed that partial final judgment, Dkt. 561. In February 2015, the Federal Circuit concluded that the Court had incorrectly construed various claims terms and, accordingly, vacated the Court's entry of summary judgment. In re Papst Licensing Digital Camera Patent Lit., 778 F.3d 1255 (Fed. Cir. 2015). After the case was remanded, Papst asserted two additional patents-U.S. Patent Nos. 8, 504, 746 ('746 patent) and 8, 966, 144 ('144 patent)-against the defendants, and, over Papst's objection, those new patent infringement actions were transferred to this Court in October 2015 for inclusion in the pending multidistrict litigation. See Dkt. 606.

         Following the transfer of the new cases asserting the '746 and '144 patents, the Court issued its Ninth Practice and Procedure Order. Dkt. 608. Among other things, that Order designated which cases would be included in the “First Wave” cases and designated the defendants in those cases as the “Camera Manufacturers;” affirmed that the litigation would be governed by the Patent Local Rules of the Northern District of California (“Patent Local Rules”); stayed all discovery other than discovery relating to claims construction; and directed that the Camera Manufacturers file their invalidity contentions no later than February 12, 2016. Id. at 1- 5. The Order emphasized that the Camera Manufacturers would be permitted to amend their invalidity contentions only “by order of the Court upon a timely showing of good cause, ” as provided in Patent Local Rule 3-6. Id. at 6 (quoting Patent L.R. 3-6). The Camera Manufacturers filed their invalidity contentions on January 29, 2016. Dkt. 620.

         In July 2016, the multidistrict litigation was transferred to the undersigned judge, Dkt. 632, and the Court held a four-day claims construction hearing in November and December 2016. On October 17, 2016, roughly a month before the claims construction hearing, counsel for the Camera Manufacturers wrote to Papst indicating that they intended to seek leave of the Court, pursuant to Patent Local Rule 3-6, to amend their invalidity contentions with respect to the '746 and '144 patents, and asking whether Papst would consent to the proposed amendment. Dkt. 662-3 at 2. As explained in the October 17, 2016, letter, the Camera Manufacturers asserted that the new patents were “not entitled to claim priority” back to the old patents because the chain of priority linking them together “was broken.” Id. Specifically, the Camera Manufacturers pointed out that patent application '778-the application that the new patents cite to support their priority claim back to the old patents, see Dkt. 662 at 6-7-failed to claim priority to the '399 patent or its application, Dkt. 662-3 at 2. Accordingly, the Camera Manufacturers continued, “all asserted claims in the [new patents] [we]re invalid as anticipated . . . by” the inventor's “earlier publications” and applications. Id.; see also Dkt. 662 at 9. On October 28, 2016, Papst responded in a letter that posed a series of questions relating to whether the standards set forth in Patent Local Rule 3-6 were satisfied, denied that “there [wa]s any break in the priority chain for” the new patents, and indicated that, “[b]ased on [the] October 17, 2016[, ] letter, Papst [could not] consent to the [Camera Manufacturers'] proposed amendment to [their] invalidity contentions.” Dkt. 662-4 at 2.

         Notwithstanding Papst's denial that there was a break in the priority chain, on November 10, 2016, Papst filed a petition with the U.S. Patent and Trademark Office (“PTO”) for a “delayed claim of priority, ” arguing that the failure of the '778 patent application to claim priority to the '399 patent was the “result of an administrative error” that had only “recently come to [Papst's] attention.” Dkt. 662-1 at 4. The parties continued to correspond with each other over the next several months. On December 7, 2016, the Camera Manufacturers responded to the list of questions posed by Papst on October 28, 2016. Dkt. 662-5 at 2. They explained that the '778 application was not the application for either of the new patents, but rather was “one of many applications related to” those patents; that the prosecution of the new patents “spanned a period of [eighteen] years” and that the prosecution history included “tens of thousands of pages;” that the Camera Manufacturers informed Papst of the issue “[u]pon discover[y]” of the alleged priority defect; that Papst has been on notice of the issue “since at least August” when it was raised in a similar case “pending in the Eastern District of Texas;” and that Papst would suffer no prejudice by permitting the amendment. Id. About three weeks later, Papst responded more definitively than in its first letter, asserting that “it is apparent that the Camera Manufacturers . . . cannot demonstrate the requisite diligence for amending [their] invalidity contentions” and that, accordingly, Papst would oppose their motion for leave to amend. Dkt. 662-6 at 2.

         By mid-January 2017, the Camera Manufacturers had learned that Papst had filed a petition with the PTO for a delayed claim of priority with respect to the '778 patent application, and, on that basis, they asked, once “again[, ] that Papst consent to the proposed amendment to the invalidity contentions” in order to “avoid wasting the parties' and the Court's time with an unnecessary dispute.” Dkt. 662-7 at 2. If Papst would not consent, the Camera Manufacturers continued, they intended to “request a telephonic conference [with the Court, as required by the Court's procedures] to discuss the parties' dispute and [to] seek leave to file a motion for leave to amend [their] invalidity contentions.” Id. The next day, Papst responded succinctly: “Papst does not consent to the [Camera Manufacturers'] request to amend their invalidity contentions.” Dkt. 662-8 at 2. At a telephonic status conference held on January 27, 2017, the Court granted the Camera Manufacturers leave to file the pending motion. See Minute Entry (Jan. 27, 2017).

         II. ANALYSIS

         As the parties have agreed and the Court has repeatedly confirmed, unless otherwise ordered, the Patent Local Rules for the Northern District of California apply to this litigation. See, e.g., Dkt. 628 at 2. As relevant here, Patent Local Rule 3-6, provides that invalidity contentions may be amended “only by order of the Court upon a timely showing of good cause.” Patent L.R. 3-6. The moving party bears the burden of establishing good cause. See O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006). To do so, it must demonstrate that it “acted with diligence in promptly moving to amend.” Id. at 1363. If the moving party is able to show sufficient diligence, the Court “then must determine whether the non-moving party would suffer [undue] prejudice if the motion to amend were granted.” Tech. Licensing Corp. v. Blackmagic Design Pty Ltd., No. 13-cv-05184, 2014 WL 5499511, at *2 (N.D. Cal. Oct. 30, 2014) (internal quotation marks omitted) (citing Patent L.R. 3-6).

         Determining whether “good cause” exists is not a mechanical process. The Court must consider all of the relevant circumstances, including the extent to which permitting an amendment would interfere with the purposes of requiring the early disclosure of invalidity contentions, and whether permitting an amendment would facilitate the “just, speedy, and inexpensive determination” of the litigation, see Fed. R. Civ. P. 1.

         A. Diligence

         As explained below, the Court concludes that the Camera Manufacturers have acted with sufficient diligence at this early stage of the proceeding concerning the new patents. “The diligence required for a showing of good cause has two phases: (1) diligence in discovering the basis for amendment; and (2) diligence in seeking amendment once the basis for amendment has been discovered.” Tech. Props. Ltd. LLC v. Canon Inc., No. 14-cv-03640, 2016 WL 1570163, at *2 (N.D. ...


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