Pixion, Inc. v. Citrix Systems, Inc.
Filing
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ORDER DENYING DEFENDANTS' MOTION FOR LEAVE TO AMEND ANSWER AND COUNTERCLAIMS 107 110 (Illston, Susan) (Filed on 4/16/2012)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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PIXION, INC.,
No. C 09-03496-SI
Plaintiff,
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ORDER DENYING DEFENDANTS’
MOTION FOR LEAVE TO AMEND
ANSWER AND COUNTERCLAIMS
v.
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For the Northern District of California
UNITED STATES DISTRICT COURT
CITRIX SYSTEMS, INC., et al.,
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Defendants.
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AND RELATED COUNTERCLAIMS.
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Defendants/counter-claimants Citrix Systems, Inc. and Citrix Online, LLC (collectively,
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“Citrix”) have moved for leave to amend their answer to plaintiff Pixion, Inc.’s second amended
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complaint. Citrix wishes to add counterclaims alleging that Pixion engaged in inequitable conduct in
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the prosecution of U.S. Patent Nos. 7,369,515 and 7,426,191 by failing to disclose certain prior art, and
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that, through the doctrine of infectious unenforceability, this failure to disclose also renders U.S. Patent
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Nos. 7,715,331 and 7,813,304 unenforceable. A hearing on the motion was held on April 6, 2012. For
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the reasons set forth below, the Court DENIES the motion.
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BACKGROUND
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Pixion is a company formed in 1995 that focuses on developing “cost-effective interactive online
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meeting environments such as web conferencing solutions.” Second Am. Compl. at 2. Plaintiff alleges
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that defendants Citrix “makes, uses, offers to sell, and sells in the United States and imports into the
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United States online conferencing and collaboration systems” that infringe various patents belonging
7,369,515 (the “’515 Patent”), No. 7,426,191 (the “’191 Patent”), No. 7,715,331 (the “’331 Patent”),
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and No. 7,813,304 (the “’304 Patent”) (collectively, the “Patents-in-Suit”). The ’515 Patent was applied
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for in 2005 and issued in 2008, and its child, the ’304 Patent, issued in 2010. Similarly, the ’191 Patent
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was applied for in 2005 and issued in 2008, and its child, the ’331 Patent, issued in 2010. This Court
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previously granted Pixion’s motion to dismiss counterclaims alleging inequitable conduct for failure to
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disclose certain negative office actions occurring with respect to co-pending patent applications, without
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leave to amend, because Citrix did not, and could not, adequately plead intent to deceive. See Dkt. 113.
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Currently before the Court is Citrix’s motion for leave to amend its counterclaims to add
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additional counts of inequitable conduct distinct from those previously dismissed by the Court. Citrix
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seeks to add counterclaims alleging that Pixion failed to disclose to the United States Patent and
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For the Northern District of California
to plaintiff. Id. at 5. Specifically, plaintiff alleges infringement of four patents: U.S. Patent No.
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UNITED STATES DISTRICT COURT
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Trademark Office (“USPTO”) certain prior art during the prosecutions of the ’515 and ’191 Patents.
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Specifically, Citrix claims that Pixion failed to disclose references to software named “CU-SeeMe” in
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any patent applications to which the Patents-in-Suit claim priority or in the prosecutions of the ’515 and
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’191 Patents. Citrix’s Mem. for L. to Am. at 2; Dkt. 110. CU-SeeMe is web conferencing software
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developed at Cornell University in the 1990s that Citrix claims is “fundamentally similar” to the Pixion
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invention asserted in this case. Id. Citrix points out that Pixion produced a series of documents that
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“categorize the CU-SeeMe reference as ‘competition’ that is ‘fundamentally similar’ to the Pixion
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invention asserted in this case.” Id.
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Citrix claims that this motion was necessitated by the February 2012 deposition testimony of one
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of the listed inventors of the Patents-in-Suit, Mr. Peter Madams. At that deposition, Mr. Madams
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testified about similarities between CU-SeeMe and Pixion’s PictureTalk System1 (“PictureTalk”).
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Madams Dep., 140:18-22 (“Did you believe in August of 1995 that CU-SeeMe shared fundamental
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PictureTalk System is software, owned by Pixion, that “enables anyone connected to a network,
either locally or through the internet, to visually share anything on a PC, Mac, or Unix workstation with
any number of people simultaneously.” Mem. for L. to Am., Ex. C at 1. Pixion has “expressly
disclaimed any relationship between the PictureTalk system and the claims of the Patents-in-Suit.”
Opp’n at 5-6.
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similarities with PictureTalk?” “Yeah, they do.”). Mr. Madams also testified that he had used CU-
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SeeMe before the priority date of the parent patent. Id., 138:21-139:2. (“Did you download the CU-
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SeeMe software at any time?” “I think I did, yes.” “Did you download the CU-SeeMe software in
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August 1995?” “I actually think I used CU-SeeMe years before that.”) Citrix argues that “[b]ecause
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CU-SeeMe incorporated all the claims in the patents-in-suit, and its overarching similarity to the
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functioning of the patents-in-suit, it was material to the prosecution of the patents-in-suit, was not
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cumulative and should have been disclosed.” Id. at 4.2
Pixion, misleading, and futile. Pixion notes that CU-SeeMe appears in the References Cited section of
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both of the children ’304 and ’331 Patents. Further, Pixion points out that “CU-SeeMe was disclosed
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to the Patent Office in the ’304 Patent and ’331 Patent in addition to Citrix’s own January 19, 2010
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For the Northern District of California
Pixion contends that the motion for leave to amend is unnecessarily delayed, prejudicial to
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UNITED STATES DISTRICT COURT
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invalidity claim charts” and that “[t]he Examiner in the ’515 Patent, ’191 Patent, the ’304 Patent, and
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’331 Patent is the same.” Opp’n at 8.
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LEGAL STANDARD
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Federal Rule of Civil Procedure 15 governs amendment of the pleadings. It states that if a
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responsive pleading has already been filed, the party seeking amendment “may amend its pleading only
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with the opposing party’s written consent or the court’s leave. The court should freely give leave when
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justice so requires.” Fed. R. Civ. P. 15(a). Five factors inform a court’s decision whether to grant leave
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to amend: bad faith, undue delay, prejudice to the opposing party, whether the party has previously
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amended, and futility of amendment. United States v. Corinthian Colls., 655 F.3d 984, 995 (9th Cir.
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2011). Thus while courts do not ordinarily consider the validity of a proposed amended pleading in
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“Each individual associated with the filing and prosecution of a patent application has a duty of
candor and good faith in dealing with the [USPTO], which includes a duty to disclose to the [USPTO]
all information known to that individual to be material to patentability . . . .” 37 C.F.R. § 1.56(a). A
breach of the duty of candor may lead to a finding of inequitable conduct rendering the entire patent
unenforceable. See Honeywell Int’l Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982, 999-1000 (Fed.
Cir. 2007)
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deciding whether to grant leave to amend, leave may be denied if the proposed amendment is futile or
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would be subject to dismissal. See Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998).
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DISCUSSION
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Pixion argues that Citrix’s motion for leave to amend should be denied because it is
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unnecessarily delayed, would prejudice Pixion if granted, and is futile. Because the Court considers the
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issue of futility dispositive, it need not reach the issues of delay and prejudice.
during prosecution of the child patents, ’304 and ’331. CU-SeeMe appears in the child patents’
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respective References Cited sections. Because those patents issued despite reference to CU-SeeMe,
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Citrix cannot meet its burden showing the parents patents would not have issued had CU-SeeMe been
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For the Northern District of California
Pixion asserts that Citrix’s motion is futile because the Patent Examiner considered CU-SeeMe
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UNITED STATES DISTRICT COURT
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disclosed in an Information Disclosure Statement. Id. Moreover, while not disclosed in an Information
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Disclosure Statement, “CU-SeeMe was nevertheless provided to the [USPTO] and appears in the file
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wrapper for both [the ’515 and ’191] patents.” Opp’n at 7. Pixion references a Rule 131 declaration
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“swearing behind” another patent, which attached a 1995 PictureTalk Business Plan. On page 6 of that
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plan is the statement that “Intel’s ProShare Product, Fujitsu’s shared whiteboard, Mbone and CU-SeeMe
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all share some fundamental similarities with PictureTalk.” Opp’n, Ex. E at 19. Pixion argues that, had
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the examiner found the statements regarding CU-SeeMe to be of concern, the Examiner could have
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requested further information under Rule 105. See 37 C.F.R. § 1.105(a)(1)(viii). He did not do so.
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Citrix contends that, by whatever means CU-SeeMe was eventually disclosed to the USPTO,
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Pixion failed to comply with the duty of disclosure, codified at 37 C.F.R. § 1.56. Further, Citrix asserts
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that Pixion’s representation that “CU-SeeMe was provided to the Patent Office and ‘appears in the file
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wrapper’ is misleading, and does not prove that the reference was properly submitted to the examiner
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for consideration as prior art, or that it was even considered by the examiner at all.” Reply at 10.
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In the prosecution of a patent, applicants are charged with “a duty of candor and good faith in
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dealing with the [USPTO], which includes a duty to disclose to the [USPTO] all information known to
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that individual to be material to patentability.” 37 C.F.R. § 1.56(a). A breach of the duty of candor may
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lead to a finding of inequitable conduct rendering the entire patent unenforceable. See Honeywell Int’l
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Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982, 999-1000 (Fed. Cir. 2007). Inequitable conduct
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claims must “include sufficient allegations of underlying facts from which a court may reasonably infer
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that a specific individual (1) knew of the withheld material information or of the falsity of the material
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misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive
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the PTO.” Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1328-29 (Fed. Cir. 2009).
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inquiry to a but-for standard:
This court holds that, as a general matter, the materiality required to establish
inequitable conduct is but-for materiality. When an applicant fails to disclose prior art
to the PTO, that prior art is but-for material if the PTO would not have allowed a claim
had it been aware of the undisclosed prior art. Hence, in assessing the materiality of a
withheld reference, the court must determine whether the PTO would have allowed the
claim if it had been aware of the undisclosed reference.
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For the Northern District of California
UNITED STATES DISTRICT COURT
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The Federal Circuit has recently raised the standard of materiality for an inequitable conduct
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Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011) (en banc).
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Thus, to ultimately succeed on its claim for inequitable conduct, Citrix would have to prove that
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“submission of the withheld item would have led to a rejection.” Therasense, Inc. v. Becton, Dickinson
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and Co., No. C 04-02123 WHA, 2012 WL 1038715, at *1 (N.D. Cal. March 27, 2012) (on remand).
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Here, then, the relevant question as to materiality is whether the USPTO would have granted the
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applications for the ’515 and ’191 Patents had it been aware of the reference to CU-SeeMe. The Court
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finds that the answer is yes, the USPTO would have issued the ’515 and ’191 Patents had CU-SeeMe
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been disclosed in an Information Disclosure Statement. Citrix does not and cannot show that the
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USPTO would have rejected the ’515 and ’191 Patents had CU-SeeMe been disclosed.
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First, a reference to CU-SeeMe appears in the file wrapper of the ’515 and ’191 Patents because
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it was disclosed to the USPTO when Pixion swore behind a reference to prior art entitled Grimm. On
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April 27, 2006, Pixion submitted a Rule 131 declaration that states that “the subject matter described
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and claimed in this application was invented prior to March 21, 1996, which is the earliest possible
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effective filing date of United States patent number 6,345,297 to Grimm, et al.” Opp’n, Ex. E at 7.
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Attached to the Rule 131 Declaration was an August 1995 PictureTalk Business Plan, on page 6 of
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which is a statement that, “Intel’s Plowshare Product, Fujitsu’s shared whiteboard, MBONE and CU
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See Me all share some fundamental similarities with PictureTalk.” Opp’n, Ex. E at 19. CU-SeeMe was
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therefore disclosed to the USPTO, albeit not in an Information Disclosure Statement.
patents (the ’304 and ’331 Patents) and it appears in the Cited References of those issued patents. Dkt.
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62, Second Amended Complaint, Ex. C at 3-4, Ex. D at 2-4; See 37 C.F.R. 1.56(a) (“The duty to
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disclose all information known to be material to patentability is deemed to be satisfied if all information
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known to be material to patentability of any claim issued in a patent was cited by the Office . . . .”).
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Additionally, in its prosecution of the child patents, Pixion submitted to the USPTO Citrix’s invalidity
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charts, which included CU-SeeMe. Notwithstanding these references to CU-SeeMe, the USPTO issued
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the ’304 and ’331 Patents, and its actions are entitled to a presumption of validity. 35 U.S.C. § 282 (“A
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For the Northern District of California
More importantly, Pixion disclosed CU-SeeMe to the USPTO in its prosecution of the child
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UNITED STATES DISTRICT COURT
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patent shall be presumed valid.”); see Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1566
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(Fed. Cir. 1983) (“[T]he presumption of validity is not weakened or destroyed where merely pertinent
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non-considered prior art is introduced, but that the offering party is more likely to carry the burden of
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persuasion imposed by 35 U.S.C. § 282 when art more pertinent than that considered is introduced.”).
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The child patents are derivative of the parent patents. See Dkt. 91, Claim Construction Order,
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at 2-3 (“In the claims of the ’515 and ’304 Patents, the conference server assesses the capabilities of the
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attendee’s computer ‘after establishing the client-server connection but prior to [the] client joining the
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conference.’. . . The ’191 and ’331 patents focus on reading the client’s capabilities during a conference
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allowing the system to dynamically change the client’s class in real time.”) Citrix concedes that the
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’304 Patent is “substantially similar” to the ’515 Patent, Second Am. Ans. at ¶ 70, and that the ’331
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Patent is “substantially similar” to the ’191 Patent, id. at ¶ 102. Moreover, the Examiner, Robert
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Wilson, was the same for all four Patents-in-Suit.
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Thus, because the USPTO issued the child patents notwithstanding the reference to CU-SeeMe
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and because the child patents are derivative of and substantially similar to the parent patents, and
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because CU-SeeMe was disclosed in the Rule 131 Statement during prosecution, Citrix will not be able
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to prove that CU-SeeMe was but-for material to the ’515 and ’191 Patents. Because the Court finds the
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issue of but-for materiality dispositive, it need not address intent to deceive. Citrix’s motion is hereby
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DENIED.
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CONCLUSION
For the foregoing reasons and for good cause shown, the Court hereby DENIES Citrix’s motion
for leave to amend its answer and counterclaims.
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IT IS SO ORDERED.
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Dated: April 16, 2012
___________________________
SUSAN ILLSTON
United States District Judge
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For the Northern District of California
UNITED STATES DISTRICT COURT
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