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.

In this case, the Court ruled that Defendants may only rely on prior art references (and combinations) identified in invalidity contentions or expert reports.

Takeaways – Section 282 is not likely to save the day when trying to supplement invalidity contentions.

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The Court focused  on Patent Local Rule 3-6 of the Central District of California to consider permitting the requested supplements.  The Court explained that it “must first consider whether [Defendant] Edwards acted diligently in discovering the bases for the amendment and whether Edwards timely moved for leave to amend.”  (Order at 3).

The Court analyzed when the references were first identified by the Defendant, and then how long thereafter that the motion for leave to amend was filed.  As for prejudice, the Court noted that Plaintiff Medtronic has taken the position that is own infringement contentions are “preliminary,” and thus it would be unfair for Medtronic to reserve its right to amend, while not granting that same benefit to Defendant.

In further analyzing potential prejudice, the Court summarized another argument raised by Plaintiff:

On the other hand, Medtronic contends that it will be prejudiced by the amendment because the parties will have exchanged their claim terms and proposed constructions by June 20, 2012, five days before this motion will be heard by the Court.  (Opp’n Br. 11.)  Therefore, Medtronic “will … be forced to approach the early stages of claim construction without knowing whether the new references will be allowed into the case.”  (Id.)  Furthermore, Medtronic worries that if good cause for the amendment is found her, Edwards will “almost certainly continue its ‘search and analysis of relevant prior art’” and seek leave to amend the invalidity contentions again in the future.  (Id. at 12.)

The Court rejected this argument reasoning that the claim construction briefing is not due for several months, the trial is more than a year away, and further requests to supplement will require additional motion practice.  (Order at 6-7).

Takeaways – Diligence is the main focus of these types of motions.  Again, however, we see the consideration of a “claim construction” impact when evaluating a proposed invalidity contention supplement.   This prejudice to the claim construction process seems to be the main argument raised by a plaintiff when facing supplement requests.

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?

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 avoid 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.

 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, 125-16 (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.  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?

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:

(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?

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:

(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.

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.