Asia Vital Components Co., Ltd. v. Asetek Danmark A/S

Filing 100

ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO AMEND INVALIDITY CONTENTIONS by Judge Jon S. Tigar denying 81 Motion to Amend/Correct. (wsn, COURT STAFF) (Filed on 11/28/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ASIA VITAL COMPONENTS CO., LTD.,
Plaintiff,

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v.

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ASETEK DANMARK A/S,
Defendant.

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United States District Court
Northern District of California

Case No. 16-cv-07160-JST
ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO AMEND
INVALIDITY CONTENTIONS
Re: ECF No. 81

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Plaintiff Asia Vital Components Co., Ltd. (“AVC”) seeks “a declaratory judgment that

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U.S. Patent No. 8,240,362 (‘the ’362 Patent’) and U.S. Patent No. 8,245,764 (‘the ’764 Patent’)

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are invalid, unenforceable and not infringed by AVC.” ECF No. 1 ¶ 1. AVC obtained new

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counsel on May 18, 2017. ECF No. 67. In light of this change, the Court granted the parties’

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stipulation to extend the deadline for AVC to serve its invalidity contentions from May 30 to June

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30, 2017. ECF No. 70 at 2. AVC now seeks leave to amend its invalidity contentions. ECF No.

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81.

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I.

LEGAL STANDARD

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Patent Local Rule 3-6 allows amendment “upon a timely showing of good cause.” This

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inquiry “considers first whether the moving party was diligent in amending its contentions and

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then whether the nonmoving party would suffer prejudice if the motion to amend were granted.

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

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lack of diligence.” Radware Ltd. v. F5 Networks, Inc., No. C-13-02021-RMW, 2014 WL

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3728482, at *1 (N.D. Cal. 2014) (internal quotation marks and citations omitted). The moving

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party must demonstrate both “(1) diligence in discovering the basis for amendment” and “(2)

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diligence in seeking amendment once the basis for amendment has been discovered.” 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). If the moving party was not diligent, there is “no need to consider the question of

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prejudice.” O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1368 (Fed. Cir.

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2006).

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II.

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DISCUSSION
The parties characterize AVC’s request somewhat differently. AVC argues that its

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“proposed Amended Invalidity Contentions merely adds one more reference” to U.S. Patent No.

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6,019,165 (“the ‘165 Patent) and “now utilizes what was originally a secondary reference in . . .

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AVC’s Initial Invalidity Contentions [Chinese Patent No. CN2562368Y (‘the ‘368 patent’)] as a
primary reference.” Defendant Asetek Danmark A/S notes that AVC’s proposed amendments are

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United States District Court
Northern District of California

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actually much broader: they also include five new secondary references and thirty-four new

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positions based on 35 U.S.C. § 112. ECF No. 92 at 4. AVC’s reply does not contest this

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characterization of its proposed amendments. See ECF No. 93. Asetek argues that AVC has not

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demonstrated good cause for the proposed amendments, that AVC has not been diligent, and that

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Asetek would be prejudiced if the amendments were allowed.

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AVC asks that the Court find diligence based on “the volume of information AVC’s

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counsel had to digest” in a short period of time. ECF No. 93 at 5. The Court is not persuaded by

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this argument. While the Court recognizes that AVC obtained new counsel on May 18, the

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stipulated extension gave counsel until June 30 ‒ or 43 days later ‒ to serve invalidity contentions.

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Under Patent Local Rule 3-3, a party must serve invalidity contentions no later 45 days after

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service of the opposing party’s infringement contentions. Patent L.R. 3-3. Thus, AVC’s new

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counsel had substantially the same amount of time to prepare invalidity contentions as any counsel

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would have had after receiving Asetek’s infringement contentions.

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More significantly, AVC was aware of the ’368 patent and should have been aware of the

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’165 patent even prior to serving its original invalidity contentions. AVC included the ’368 patent

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patent’s as a secondary reference in its original invalidity contentions, and both patents-in-suit

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refer to the’165 patent. ECF No. 93 at 5. AVC also notes that, “[d]uring the prosecution of

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Asetek’s ’362 Patent, the examiner presented the ’165 Reference as a bar to patentability.” ECF
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No. 81 at 5. Thus, the ’165 patent was “straightforward to discover,” and a diligent search would

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have uncovered its existence. Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., No. 12-

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CV-03844-JST, 2014 WL 6879428, at *3 (N.D. Cal. Dec. 5, 2014) (finding that a diligent search

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would not “necessarily have uncovered” a patent where “there is no suggestion that this 1895

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patent is well-known or otherwise should have been straightforward to discover”); see also Catch

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A Wave Techs., Inc. v. Sirius XM Radio, Inc., No. C 12-05791 WHA, 2014 WL 186405, at *2

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(N.D. Cal. Jan. 16, 2014) (finding that a “diligent search would have revealed the Moose

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reference,” which “is a patent issued in 1991, more than ten years before this action commenced,”

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and where “the asserted patent on its face cites another patent which cites the Moose reference”).
AVC argues that good cause for amendment exists because the ’165 patent’s “relevance

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United States District Court
Northern District of California

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did not become apparent until Asetek’s counsel offered a construction of ‘substantially circular

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passageway’ that differed from AVC’s understanding of the phrase,” which caused AVC to

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“look[] at the ’165 patent in a different light . . . . The same is true of AVC’s decision to include

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the ’368 reference as a primary reference and not simply a secondary reference, and its decision to

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include arguments concerning lack of written description and indefiniteness.” ECF No. 93 at 5.

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However, a party cannot establish good cause for leave to amend when it had the relevant

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documents in its possession but “simply did not recognize [their] significance” until a later date.

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Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., No. 12-CV-03844-JST, 2014 WL

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5361643, at *3 (N.D. Cal. Oct. 20, 2014). Patent Local Rule 3-3 requires a party “to include in its

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invalidity contentions all prior art references of which it was aware and that it believed were

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relevant, regardless of whether subsequent events rendered those references more significant.”

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MLC Intellectual Prop., LLC v. Micron Tech., Inc., No. 14-CV-03657-SI, 2016 WL 3648594, at

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*3 (N.D. Cal. July 6, 2016). Another court in this district rejected leave to amend in similar

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circumstances, when the defendant sought leave to include a reference of which it was previously

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aware, but which defendant argued “‘only became relevant’ as plaintiff’s claim construction

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position expanded.” Catch a Wave Techs., 2014 WL 186405, at *2. The court concluded:

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[T]he patent local rules in this district are clear. Invalidity
contentions must identify “[t]he identity of each item of prior art that
allegedly anticipates each asserted claim or renders it obvious.”
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Rule 3-3(a). The rules do not state that defendants can limit
themselves to only references they believe are relevant to plaintiff’s
read of the patent. Defendant could have (and perhaps should have)
charted the reference but defendant did not. Defendant must now
live with that choice.

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Id. The Court sees no reason not to apply these same principles to documents of which a
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reasonable party performing a diligent search would have been aware, and not just to documents
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actually in that party’s possession. Accordingly, AVC has not shown good cause for amending its

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invalidity contentions.
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CONCLUSION
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For all of the above reasons, AVC’s motion for leave to amend its invalidity contentions is

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denied.
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IT IS SO ORDERED.
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United States District Court
Northern District of California

Dated: November 28, 2017
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______________________________________
JON S. TIGAR
United States District Judge

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