Synopsys, Inc. v. Atoptech, Inc

Filing 848

ORDER Denying Synopsys's Motion for Leave to Amend Infringement Contentions 815 ; granting 830 Administrative Motion to File Under Seal. Order by Magistrate Judge Donna M. Ryu. (dmrlc3, COURT STAFF) (Filed on 9/16/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SYNOPSYS, INC.,

Case No. 13-cv-02965-MMC (DMR)

Plaintiff,
ORDER DENYING SYNOPSYS’S
MOTION FOR LEAVE TO AMEND ITS
INFRINGEMENT CONTENTIONS

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v.
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ATOPTECH, INC,

Re: Dkt. Nos. 815, 830

Defendant.

United States District Court
Northern District of California

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On July 20, 2016, the court held a telephonic hearing on the parties’ joint discovery letter

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regarding Plaintiff Synopsys, Inc.’s motion for leave to amend its infringement contentions.

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[Docket No. 764]. July 20, 2016 Minute Order [Docket No. 800]. During the hearing, the court

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gave guidance to the parties and explained that the joint letter did not provide adequate

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information for the court to analyze the dispute. In order to give Synopsys a more expansive

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opportunity to set forth its arguments in greater detail, the court denied the joint discovery letter

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without prejudice, and granted Synopsys leave to file a motion on the topic. Id. Synopsys filed its

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motion on July 25, 2016. Mot. to Amend Infringement Contentions (“Mot.”) [Docket No. 815].

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Defendant ATopTech, Inc. opposes it. Opp’n [Docket No. 828].
The court finds that Synopsys’s motion for leave to amend its infringement contentions is

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suitable for determination without additional oral argument. Civil L.R. 7-1(b). Having

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considered the parties’ briefing and oral argument, Synopsys’s motion to amend its infringement

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contentions is denied.

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I.

BACKGROUND

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A.

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The factual allegations in this case have been summarized elsewhere. See Docket Nos.

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Factual Allegations

197, 255. In brief, Synopsys is a company in the electronic design automation (“EDA”) and

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semiconductor intellectual property industry that “develops, manufactures, sells and licenses

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products and services that enable designers to create, model and verify complex integrated circuit

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designs.” Am. Compl. [Docket No. 43] at ¶ 2; First Suppl. Am. Compl. [Docket No. 523] at ¶ 2.

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Synopsys has a software product called PrimeTime that “provides customers with a trusted

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solution for timing sign-off, a required verification step before manufacturing” a digital circuit.

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First Suppl. Am. Compl. at ¶ 3.
ATopTech is an EDA company that develops tools for the physical design of integrated

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circuits. Id. at ¶ 4. ATopTech makes a “place and route” tool known as Aprisa/Apogee that can

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“talk to” the PrimeTime tool. Id.; Docket No. 188 at 3.
In the First Supplemental Amended Complaint, Synopsys brings claims for copyright

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United States District Court
Northern District of California

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infringement and breach of contract. Synopsys also brings claims of patent infringement that

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allege that “ATopTech products . . . includ[ing], but not limited to, its Aprisa or Apogee software

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products” infringe Synopsys’s United States Patent Nos. 6,507,941 (“the ’941 Patent”); 6,237,127

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(“the ’127 Patent”); and 6,567,967 (“the ’967 Patent”). Am. Compl. at ¶¶ 61-92; First Suppl. Am.

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Compl. [Docket No. 523] at ¶¶ 61- 92. On August 15, 2016, the court entered the parties’

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stipulation of partial dismissal for Synopsys’s claims of infringement of the ’348 patent. Order of

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Partial Dismissal [Docket No. 839].1

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B.

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On July 22, 2014, the presiding judge entered the parties’ proposed stipulated order to stay

Procedural History

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Synopsys’s patent claims pending a decision by the Patent Trial and Appeal Board (“PTAB”) on

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whether to institute inter partes review of the four Patents-in-Suit. See Order Staying Patent

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Claims Pending Inter Partes Review [Docket No. 142] at ¶ 1. That order stated that “Synopsys

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will serve ATopTech with its identification of asserted claims for each of the Patents-in-Suit on or

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before August 8, 2014, but all other deadlines pursuant to the Patent Local Rules are suspended.”

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Id.
The presiding judge lifted the stay relating to two of the patents on March 27, 2015, and on

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The court refers to the remaining patents collectively as the “Patents-in-Suit.”
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the remaining two patents on April 9, 2015. [Docket Nos. 267, 280.] On April 27, 2015, the

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presiding judge signed the parties’ “Joint Proposed Order Regarding Deadlines and Discovery

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Limits for Synopsys’s Patent Claims.” [Docket No. 291.] In the April 27 Order, the parties

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agreed to a May 15, 2015 deadline for “Disclosure of Asserted Claims and Infringement

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Contentions, and Production of Related Documents (PLR [Patent Local Rule] 3-1, 3-2).” Id. at 2.
On May 15, 2015, Synopsys served an additional identification of asserted claims and

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infringement contentions, and produced related documents. On September 11, 2015, Synopsys

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served amended infringement contentions. Synopsys now moves for leave to serve second

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amended infringement contentions.
For the patent portion of the case, fact discovery closed on July 15, 2016, and expert

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United States District Court
Northern District of California

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discovery will close on October 15, 2016. Order Regarding Deadlines and Discovery for

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Synopsys’s Patent Claims [Docket No. 291].

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II.

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LEGAL STANDARDS
The local rules of the Northern District of California require parties to define their theories

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of patent infringement and invalidity early on in the course of litigation. O2 Micro Int’l Ltd. v.

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Monolithic Power Sys., Inc., 467 F.3d 1355, 1359 (Fed. Cir. 2006). “In contrast to the more

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liberal policy for amending pleadings, the philosophy behind amending claim charts is decidedly

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conservative, and designed to prevent the shifting sands approach to claim construction.” Positive

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Techs., Inc. v. Sony Elecs., Inc., No. C. 11-2226-SI, 2013 WL 322556, at *2 (N.D. Cal. Jan. 28,

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2013) (citation omitted). Thus, this district’s Patent Local Rules permit parties to amend their

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infringement contentions “only by order of the Court upon a timely showing of good cause.”

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Patent L.R. 3-6. The Patent Local Rules provide a non-exhaustive list of circumstances that

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support a finding of good cause, provided there is no prejudice to the non-moving party. These

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include “(a) claim construction by the Court different from that proposed by the party seeking

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amendment; (b) recent discovery of material, prior art despite earlier diligent search; and (c) recent

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discovery of nonpublic information about the Accused Instrumentality which was not discovered,

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despite diligent efforts, before the service of the Infringement Contentions.” Patent L.R. 3-6. By

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requiring a showing of good cause, “Local Rule 3-6 serves to balance the parties’ rights to develop
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new information in discovery along with the need for certainty in legal theories at the start of the

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case.” Open DNS, Inc. v. Select Notifications Media, LLC, No. C-11-5101 EJD (HRL), 2013 WL

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2422623, at *2 (N.D. Cal. June 3, 2013) (citing O2 Micro, 467 F.3d at 1366).
The court may deny a motion for leave to amend infringement contentions if it would

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cause “undue prejudice to the non-moving party.” Patent L.R. 3-6. Where the moving party is

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unable to show diligence, there is “no need to consider the question of prejudice,” see O2 Micro,

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467 F.3d at 1368, although a court in its discretion may elect to do so, see, e.g., Dynetix Design

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Solutions Inc. v. Synopsys Inc., No. Cv-11-5973-PSG, 2012 WL 6019898, at *1 (N.D. Cal. Dec. 3,

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2012). The moving party bears the burden of establishing diligence. See O2 Micro, 467 F.3d at
1366.

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United States District Court
Northern District of California

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III.

DISCUSSION
Synopsys now seeks leave to serve second amended infringement contentions. Synopsys

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asserts that the amendments are based on information learned from the review of ATopTech’s

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source code. ATopTech produced portions of its source code on October 6, 2015, November 6,

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2015, and December 28-30, 2015. ATopTech made full source code available for four releases of

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the accused product on March 22, 2016. On July 14, 2016, the day before the close of fact

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discovery, ATopTech produced source code for all 85 accused versions of the product.2 Mot. at 7.
ATopTech opposes the amendment, arguing that Synopsys has not shown the required

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diligence necessary to establish “good cause,” because most of the amendments could have been

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included in the prior contentions or at an earlier time. ATopTech further contends that it would be

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prejudiced by the amendment, and argues in the alternative that the proposed amendments fail to

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comply with the specificity requirements of the Patent Local Rules.

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A.

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Courts in this district consider both how quickly the party moves to amend its contentions

Diligence

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once a new theory of infringement comes to light and whether the party was diligent in

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discovering the basis for the proposed amendment. Acer, Inc. v. Tech. Properties Ltd., No. 5:08-

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The present motion is not based on ATopTech’s July 2016 production of source code.
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CV-00877 JF/HRL, 2010 WL 3618687, at *3 (N.D. Cal. Sept. 10, 2010) (citations omitted). “The

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burden is on the movant to establish diligence rather than on the opposing party to establish lack

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of diligence.” O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir.

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2006); Delphix Corp. v. Actifio, Inc., 2015 WL 5693722 (N.D. Cal. Sept. 21, 2015) (citations

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omitted). “In considering the party's diligence, the critical question is whether the party could

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have discovered the new information earlier had it acted with the requisite diligence.” Apple Inc. v.

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Samsung Elecs. Co., Ltd., No. C12-00630 LHK, 2012 WL 5632618, at *2 (N.D. Cal. Nov. 15,

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2012) (internal quotation marks omitted).

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Synopsys argues that it acted diligently and devotes a large portion of its motion to
chronicling its attempts to procure production of ATopTech’s source code. Mot. at 3-6.

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United States District Court
Northern District of California

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ATopTech produced limited portions of its source code on October 6, 2015. Synopsys believed

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that ATopTech’s production was insufficient, and the parties met and conferred. On November 6,

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2015, Synopsys provided ATopTech with a draft discovery letter on the issue, and ATopTech

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responded by supplementing its production. Synopsys still believed that the supplementation was

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insufficient and provided ATopTech with another draft discovery letter. ATopTech provided an

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additional supplement on December 30, 2015. Synopsys contended that ATopTech’s production

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did not provide all of the code for the accused functionality, and requested another meet and

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confer on February 5, 2016. Synopsys attempted to resume review of ATopTech’s source code

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with its expert, Dr. Guthaus, at ATopTech’s counsel’s office on February 26, 2016. Synopsys

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Ritchie Declaration Ex. 8 [Docket No. 815-1 at ECF at 80-81] (email exchange between Ritchie

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and Marsh). However, ATopTech did not permit Synopsys to conduct a further review of the

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source code until after the trial on the copyright portion of the case, which was completed on

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March 10, 2016. Id.; March 10, 2016 Minute Entry [Docket No. 686]. On March 22, 2016,

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ATopTech made full source code available for four releases of the accused product. Synopsys

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contends that over the next nine weeks, its expert analyzed the code, which included over a million

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lines of code in thousands of separate files, and Synopsys revised its infringement contentions.

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The parties began conferring about the proposed amendments on May 23, 2016.

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Based on this undisputed history, it is clear that Synopsys diligently sought production of
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ATopTech’s source code, which was not produced in full form for four versions of the accused

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products until March 22, 2016. This does not end the analysis, however, for a key question

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remains. “Courts typically grant leave to amend infringement contentions after a patentee has

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been given the opportunity to inspect relevant source code.” Linex Techs., Inc. v. Hewlett-

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Packard Co., No. C 13-159 CW, 2013 WL 5955548, at *2 (N.D. Cal. Nov. 6, 2013) (citing Big

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Baboon Corp. v. Dell, Inc., 723 F. Supp. 2d 1224, 1228 (C.D. Cal. 2010)). However, the critical

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question is whether Synopsys can establish its diligence in seeking amendment by adequately

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tying its proposed amendments to ATopTech’s late production of source code.

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Synopsys first received portions of ATopTech’s source code in October 2015 and obtained
full versions of the source code for four releases of the accused products in March 2016.

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United States District Court
Northern District of California

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Synopsys filed its joint discovery letter seeking leave to amend its infringement contentions on

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June 14, 2016. [Docket No. 764.] During the July 20, 2016 telephonic hearing, the court told the

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parties that it was unclear which of Synopsys’s proposed amendments were based on newly

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discovered source code, as opposed to source code produced between October and December

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2015. Such facts would be critical to the court’s analysis. For example, if Synopsys’s proposed

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amendments are based on source code produced in October 2015, it may be challenging for

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Synopsys to establish diligence in seeking leave to amend seven months later. See, e.g., Apple v.

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Samsung, No. 12-cv-00630-LHK PSG, Docket No. 636 at 22 (June 26, 2013) (noting that

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Samsung sought to add citations to source code it had had for about four months, a time period

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that other courts had found failed to suffice for diligence, but finding the four month period

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sufficiently diligent for good cause due to the size of the case and necessity for processing

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thousands of lines of code); Acer, Inc., 2010 WL 3618687, at *4 (finding three month delay too

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long for diligence). At the end of the telephonic hearing, the court allowed Synopsys to replace

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the joint discovery letter with a more expansive motion, specifically to give Synopsys the

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opportunity to set forth the missing key facts and details for the court’s analysis.

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Unfortunately, Synopsys’s motion remains murky on whether it acted diligently to amend

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its contentions. Synopsys sticks to conclusory statements, rather than providing facts and details

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to give life to its broad assertions. For example, in its opening brief, Synopsys asserts that it “was
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only able to discern the inner workings of ATopTech’s products through access, inspection, and

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analysis of the complete source versions.” Mot. at 9. Synopsys makes similar generalized

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statements in its reply brief. Reply [Docket No. 833] at 1 (“Synopsys required more complete

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source code than ATopTech produced by December 30, 2015 to conduct its infringement analysis.

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. . . In particular, the entire source code was necessary to provide context and to trace through its

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operation. ”); 4 (“ATopTech also complains that selected amendments cite to material available

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earlier. [] These amendments are related to the cited source code and were identified based on

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further insight gained from analyzing the source code.”).

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In support of its diligence argument, Synopsys submitted the declaration of its expert, Dr.
Matthew Guthaus [Docket No. 815-1 at ECF 87-89]. Dr. Guthaus generally declares that his

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United States District Court
Northern District of California

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“analysis of the ATopTech source code provided insight into the design and operation of the

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product that could not have been known by analyzing user manuals or operating the product,” but

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he makes no attempt to clarify whether the proposed amendments could have been made earlier

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based on the source code released from October to December 2015. Guthaus Decl. at ¶ 4. Dr.

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Guthaus could have provided a specific example to illustrate why Synopsys was unable to make

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the proposed amendments based on the earlier productions of source code, but he did not do so.

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Indeed, despite the court’s specific inquiries into this issue at the July 20, 2016 hearing, as well as

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its grant of additional briefing, Synopsys’s motion remains largely silent on this question.

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ATopTech contends that the vast majority of the source code at issue — “at least one

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version of 58 of the 63 source code files cited in Synopsys’s proposed amended contentions” —

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had already been produced by December 30, 2015. Opp’n at 7; see also Marsh Decl. ¶ 2, Ex. A.

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In its reply, Synopsys responds “[n]or does ATopTech contend that the 58 files are the same as

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other files having the same name in other versions that were produced on March 22.” Reply at 3.

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This bare and cryptic statement does not advance Synopsys’s diligence argument; it is Synopsys’s

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burden to establish diligence, rather than ATopTech’s burden to demonstrate lack of it. See O2

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Micro, 467 F.3d at 1366.

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ATopTech raises a number of additional arguments regarding Synopsys’s diligence. First,
ATopTech argues that Synopsys’s proposed amendments cite to information available to
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Synopsys through documents produced in 2014 and publically available websites. Opp’n at 7.

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Synopsys does not address this argument in its reply.
ATopTech also contends that “Synopsys did not attempt to tie its new doctrine of

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equivalents (“DOE”) contentions — which are also conclusory — to any newly produced

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information or to argue diligence with respect to these amendments.” Opp’n at 8. Again,

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Synopsys fails to respond to this argument in its reply. Synopsys’s prior contentions only alluded

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to the DOE in the most general of terms. See Ex. 2 at 7. Synopsys has not cited any prior

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infringement contentions specifically raising a DOE theory. Synopsys fails to demonstrate its

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diligence, or explain a change in circumstances to justify a change in theory after the case has

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progressed. See, e.g., Apple v. Samsung, No. 12-cv-00630-LHK PSG, Docket No. 636 at 6-7

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United States District Court
Northern District of California

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(N.D. Ca. June 26, 2013) (denying leave to amend infringement contentions to assert DOE

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theories where patentee failed to explain why it had good faith basis to assert DOE theories later

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than at beginning of case).
ATopTech also argues that “Synopsys is attempting to change admissions it made about its

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own products upon which ATopTech has relied for invalidity arguments.” Opp’n at 9 (citing

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Redlined Contentions at 7). This appears to reference Synopsys’s proposed amendments to its

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own Patent Local Rule 3-1(g) disclosures3, in which Synopsys seeks to remove certain versions of

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its own products and claims. Synopsys fails to explain why ATopTech’s late production of source

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code would lead to a change in position regarding whether Synopsys’s own products incorporate

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or reflect particular patent claims. Indeed, once again, Synopsys does not address this argument in

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its reply. See Reply at 5.
Because Synopsys has not met its burden of establishing diligence, the court need not

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reach the issue of prejudice to ATopTech. See O2 Micro, 467 F.3d at 1368.

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Under Patent Local Rule 3-1(g), “If a party claiming patent infringement wishes to preserve the
right to rely, for any purpose, on the assertion that its own apparatus, product, device, process,
method, act, or other instrumentality practices the claimed invention, the party shall identify,
separately for each asserted claim, each such apparatus, product, device, process, method, act, or
other instrumentality that incorporates or reflects that particular claim.”
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IV.

CONCLUSION
In light of Synopsys’s inadequate demonstration of diligence — specifically, the fact that

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Synopsys has not shown how the proposed amendments are tied to newly discovered information
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— the court finds that Synopsys has not established good cause for its proposed amendments

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pursuant to Patent Local Rule 3-6.
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V.

MOTION TO SEAL
ATopTech moves to file under seal Exhibit A and a redacted portion of Exhibit B to the

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Declaration of Philip W. Marsh in Support of ATopTech’s Opposition to Synopsys’s Motion for

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Leave to Amend Infringement Contentions [Docket No. 828]. Mot. to Seal [Docket No. 830].
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ATopTech has provided a declaration stating that the designated information in the two
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exhibits contains information describing properties of ATopTech’s confidential source code for its

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United States District Court
Northern District of California

Aprisa product. Philip W. Marsh Declaration [Docket No. 830-1]. The court has reviewed the
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designated information and finds that good cause exists for sealing this confidential technical
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information about the working of ATopTech’s product. See Kamakana v. City & Cty. of

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Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006).
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ATopTech’s motion to file under seal [Docket No. 830] is granted.

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IT IS SO ORDERED.
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Dated: September 16, 2016
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______________________________________
Donna M. Ryu
United States Magistrate Judge

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