24/7 Customer, Inc. v. LivePerson, Inc.

Filing 103

ORDER by Judge Kandis A. Westmore regarding 92 Discovery Letter Brief. Defendant's request to amend the invalidity contentions is granted. Amended invalidity contentions are due by 12/5/2016. (kawlc1, COURT STAFF) (Filed on 11/14/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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24/7 CUSTOMER, INC.,

Case No. 3:15-cv-02897-JST (KAW)

Plaintiff,
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ORDER REGARDING 10/17/16 JOINT
DISCOVERY LETTER

v.
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Re: Dkt. No. 92

LIVEPERSON, INC.,
Defendant.

United States District Court
Northern District of California

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On October 17, 2016, the parties filed a joint letter concerning Defendant LivePerson,

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Inc.’s request to amend its invalidity contentions. (Joint Letter, Dkt. No. 92 at 1.) Plaintiff [24]7

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Customer, Inc. argues that good cause does not exist, because Defendant was not diligent in

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seeking leave to amend and [24]/7 will be prejudiced if leave to amend is granted. (Joint Letter at

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3.)

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Upon review of the joint letter, and for the reasons set forth below, the Court GRANTS
LivePerson’s request to amend its invalidity contentions.

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I.

BACKGROUND

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On June 22, 2015, Plaintiff [24]7 Customer, Inc. filed a lawsuit against Defendant

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LivePerson, Inc. alleging infringement on several patents pertaining to its customer engagement

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software platform.

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On March 23, 2016, [24]7 served its infringement contentions, which included 122

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asserted claims across 13 patents. (Joint Letter at 1.) On June 20, 2016, LivePerson served its

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invalidity contentions for all 122 claims. Id. The initial invalidity contentions broadly asserted that

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“[t]he asserted claims of the [patents-in-suit] are also invalid under 35 U.S.C. § 112.” Id.

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On July 25, 2016, LivePerson informed [24]7 of its intention to amend the invalidity

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contentions to assert that certain claims were invalid under 35 U.S.C. § 112 immediately after

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discovering its positions. Id. [24]7 contends that it responded immediately, stating that the newly

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disclosed positions were “improper, untimely, and ineffective.” (Joint Letter at 5.) [24]7 claims

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that LivePerson did not respond. Id.

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On September 1, 2016, LivePerson requested to meet and confer regarding a motion to

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amend the invalidity contentions. (Joint Letter at 2.) On September 19, 2016, [24]7 responded that

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it opposed such a motion. Id. It does not appear that the parties sufficiently engaged in good faith

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meet and confer efforts regarding the proposed amendment despite their attestations to the

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contrary.

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On October 17, 2016, the parties filed the instant joint letter in which LivePerson seeks

United States District Court
Northern District of California

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leave to amend its invalidity contentions, pursuant to Patent L.R. 3-6, to contend that certain

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claims are invalid under 35 U.S.C. § 112.

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II.

LEGAL STANDARD

“The local patent rules in the Northern District of California . . . require both the plaintiff

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and the defendant in patent cases to provide early notice of their infringement and invalidity

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contentions, and to proceed with diligence in amending those contentions when new information

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comes to light in the course of discovery.” O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467

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F.3d 1355, 1365–66 (Fed. Cir. 2006). The Patent Local Rules seek to achieve this objective by

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requiring invalidity contentions to be served early in the case to disclose:
(1) the identity of each item of prior art that allegedly anticipates
each asserted claim or renders it obvious, Patent L.R. 3–3(a); (2)
whether each of those items of prior art anticipates each asserted
claim or renders it obvious, Patent L.R. 3–3(b); (3) a chart
identifying where specifically in each alleged item of prior art each
limitation of each asserted claim is found, Patent L.R. 3–3(c); and
[(4)] any grounds of invalidity based on 35 U.S.C. § 101,
indefiniteness under 35 U.S.C. § 112(2) or enablement or written
description under 35 U.S.C. § 112(1) of any of the asserted claims,
Patent L.R. 3-3(d).

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Largan Precision Co., Ltd. v. Genius Elec. Optical Co., No. 13–CV–02502–JD, 2014 WL

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6882275, at *1 (N.D. Cal. Dec. 5, 2014).

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“Any invalidity theories not disclosed pursuant to Local Rule 3-3 are barred . . . from
presentation at trial (whether through expert opinion testimony or otherwise).” MediaTek Inc. v.
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Freescale Semiconductor, Inc., No. 11–CV–5341–YGR, 2014 WL 690161, at *1 (N.D. Cal. Feb.

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21, 2014) (citing Avago Techs. Gen. IP PTE Ltd. v. Elan Microelectronics Corp., 2007 WL

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2103896, at *1 (N.D. Cal. July 20, 2007)).

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Patent Local Rule 3-6 allows a party to amend its invalidity contentions only upon a

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showing of good cause:
Amendment of the Infringement Contentions or the Invalidity
Contentions may be made only by order of the Court upon a timely
showing of good cause. Non-exhaustive examples of circumstances
that may, absent undue prejudice to the non-moving party, support a
finding of good cause include:(a) A claim construction by the Court
different from that proposed by the party seeking amendment; (b)
Recent discovery of material, prior art despite earlier diligent search;
and (c) Recent discovery of nonpublic information about the
Accused Instrumentality which was not discovered, despite diligent
efforts, before the service of the Infringement Contentions.

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Patent L.R. 3-6. The good cause inquiry is two-fold: (1) whether the moving party was diligent in

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amending its contentions; and (2) whether the non-moving party would suffer prejudice if the

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motion to amend were granted. Barco N.V. v. Tech. Properties Ltd., 2011 WL 3957390, at * 1

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(N.D. Cal. Sept. 7, 2011). Other factors relevant to this inquiry include the “relevance of newly-

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discovered prior art, whether the request to amend is motivated by gamesmanship, and whether the

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opposing party will be prejudiced by the amendment.” West v. Jewelry Innovations, Inc., 2009 WL

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152136, at *2 (N.D. Cal. Jan. 22, 2009). The moving party has the burden of demonstrating good

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cause. O2 Micro Int'l, 467 F.3d at 1366.

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III.

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United States District Court
Northern District of California

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DISCUSSION

LivePerson argues that it has good cause to amend its invalidity contentions, because it
acted diligently and there is no prejudice to [24]7. (Joint Letter at 1-3.)

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A.

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LivePerson served its initial invalidity contentions on June 20, 2016, and claims that it first

Whether LivePerson was diligent in seeking amendment.

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made its § 112 positions known to [24]7 on July 25, 2016, immediately after discovery. (Joint

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Letter at 1.) Furthermore, LivePerson contends that its initial invalidity contentions already gave

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notice by broadly contending that “[t]he asserted claims of the [patents-in-suit] are also invalid

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under 35 U.S.C. § 112.” Id. LivePerson’s supplemental contentions, dated September 1, 2016,

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assert that several claims for the Asserted Patents are invalid as indefinite under § 112. (See Joint
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Letter, Ex. A.)
In opposition, [24]7 argues that LivePerson was not diligent, because the indefiniteness
contentions could have been identified based solely on the Asserted Patents, and, therefore, should

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have been in the initial contentions served on June 20, 2016. (Joint Letter at 3.) [24]7 argues that,

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as a result, any amendment is not timely. Id. [24]7 further argues that LivePerson missed the July

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5, 2016 deadline to identify those issues with the proposed claim terms for claim construction. Id.

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This, however, is not dispositive. Additionally, the cases [24]7 relies on are distinguishable. For

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example, in Hewlett Packard Co. v. ServiceNow, Inc., ServiceNow conceded that the invalidity

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contentions were defective during the technology tutorial, so the court advised counsel to seek

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leave to amend. Instead, counsel sought a ruling that its invalidity contentions did not require

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United States District Court
Northern District of California

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amendment on the grounds that it duly raised § 112(f) arguments against the asserted patents in its

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initial contentions. 2016 WL 692828, at *1 (N.D. Cal. Feb. 19, 2016). Here, the tutorial has

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recently occurred, and Defendant is proactively seeking to amend its contentions prior to the claim

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construction hearing.

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“The local rules on [invalidity] contentions are ‘not a straitjacket into which litigants are

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locked from the moment their contentions are served. There is a modest degree of flexibility, at

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least near the outset.’” Largin Precision Co, Ltd., 2014 WL 6882275, at *1 (quoting Comcast

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Cable Comm’ns Corp., LLC v. Finisar Corp., 2007 WL 716131, at *2 (N.D. Cal. Mar. 2, 2007)).

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Again, the parties here have only completed claim construction discovery and have not completed

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claim construction itself. Further, LivePerson informed [24]7 of its new § 112 position one month

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after it served the initial invalidity contentions, and sought to meet and confer regarding the

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supplemental contentions a little more than one month later, on September 1, 2016, prior to the

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close of claim construction discovery. [24]7 responded on September 19, 2016, more than two

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weeks later, stating that it opposed any amendment. Thus, the passage of a couple of months

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cannot be wholly attributed to LivePerson.

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Accordingly, the Court finds that LivePerson has been diligent in seeking amendment.

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B.

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[24]7 contends that it will be prejudiced if LivePerson is permitted leave to amend,

Whether [24]7 would be prejudiced if the motion to amend is granted.

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because [24]7 has already selected terms for claim construction, submitted its claim construction

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positions, filed its opening brief, and selected claims for assertion. (Joint Letter at 5.) The Court

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notes, however, that had [24]7 been amenable to amendment on September 1, 2016, prior to the

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close of claim construction discovery, most of those deadlines would not have passed. As such,

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[24]7’s contentions that, had LivePerson timely identified its § 112 arguments, it may have chosen

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different terms for claim construction and different claims for assertion, are not credible for two

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reasons. (See Joint Letter at 5.) First, at the latest, [24]7 was on notice of LivePerson’s § 112

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positions on September 1, 2016, when LivePerson served its supplemental invalidity contentions.

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While the proposed terms were already identified, [24]7 does not identify any of the terms that it

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believes would have to be construed given the new theories of invalidity, rendering the argument

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United States District Court
Northern District of California

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that different terms may have been chosen as mere speculation. Second, amendment to invalidity

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contentions may be permitted after the claim construction order is issued, so the fact that

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LivePerson seeks amendment prior to the order being issued is not dispositive. See Patent L.R. 3-

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Thus, [24]7 has failed to show that it would truly suffer prejudice if LivePerson is
permitted to amend its invalidity contentions.

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IV.

CONCLUSION

In light of the foregoing, LivePerson’s request to amend its invalidity contentions is
GRANTED, and LivePerson shall serve its amended contentions within 21 days.
IT IS SO ORDERED.
Dated: November 14, 2016
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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