West v. Jewelry Innovations, Inc. et al

Filing 212

ORDER BY JUDGE JEREMY FOGEL DENYING 187 MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS. (jflc2, COURT STAFF) (Filed on 10/8/2008)

1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8

**E-filed 10/8/08**

FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
1

TRENT WEST, Plaintiff, v. JEWELRY INNOVATIONS, INC., TOSYALI INTERNATIONAL, INC. (dba BENCHMARK), DIAMOND NORTHSTAR, INC. (dba TUNGSTEN MAGNUM), and A'JAMAIS DESIGNS, INC. (dba INFINITY RINGS); and CROWN RING, INC., Defendants.

Case Number C 07-1812 JF (HRL) ORDER1 DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS [re: docket no. 182, 187, 189]

Defendants Jewelry Innovations, Inc. and Tosyali International, Ltd dba Benchmark (collectively "Benchmark") seek leave to amend their preliminary invalidity contentions. Plaintiff Trent West ("West") opposes the motion. The Court has read the moving and responding papers and has considered the oral arguments of counsel presented on October 3, 2008. For the reasons set forth below, the motion will be denied.

This disposition is not designated for publication in the official reports.

C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
4

I. BACKGROUND The instant patent infringement case involves jewelry rings made of tungsten carbide and a method for making the rings. West alleges that Benchmark2 infringed four of his patents by selling or offering to sell patented tungsten carbide infringing finger rings, or making the finger rings in violation of his patented methods and processes. Benchmark has denied infringement and has counter-claimed for alleged antitrust violations. Pursuant to this Court's Patent Local Rules, West served preliminary infringement contentions, identifying his asserted claims and the allegedly infringing products. Benchmark filed its responsive preliminary invalidity contentions on September 24, 2007, identifying more than thirty items of prior art that allegedly anticipate each asserted claim or render it obvious. Following this exchange, the Court issued a Markman order construing disputed claim terms and a revised scheduling order extending the discovery cut-off date three months to November 11, 2008. In the instant motion, Benchmark alleges that it discovered additional prior art in July 2008, and that in August 2008 it realized that it inadvertently had omitted an additional patent. Benchmark filed the instant motion on July 28, 2008.3 II. LEGAL STANDARD The Patent Local Rules provide, in pertinent par that: "Amendment or modification of [...] the Preliminary or Final Invalidity Contentions [...] may be made only by order of the Court, which shall be entered only upon a showing of good cause." Patent L.R. 3-7.4 Under Patent Local Rule 3-7, the "good cause" inquiry first considers whether the moving party was diligent in amending its contentions and then considers prejudice to the non-moving party should the motion to amend be granted. O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355,

West also alleges patent infringement claims against Northstar Diamond, Inc. and Crown Rings, Inc., which are not parties to the instant motion.
3

2

Benchmark filed an amended motion on August 28, 2008.

The 2001 version of the Patent Local Rules governs here because the underlying action was filed before the March 1, 2008 effective date of the new rules. See Seiko Epson Corp. v. Coretronic Corp., 2008 WL 2563383 at *2 (N.D. Cal., June 23, 2008). 2
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1366-68 (Fed. Cir. 2006).5 The party seeking to amend its contentions bears the burden of establishing diligence. Id. at 1366-67. "Unlike the liberal policy for amending pleadings, the philosophy behind amending claim charts is decidedly conservative, and designed to prevent the `shifting sands' approach to claim construction." LG Electronics Inc. v. Q-Lity Computer Inc., 211 F.R.D. 360, 367 (N.D. Cal. 2002). The rules were "designed to require parties to crystallize their theories of the case early in the litigation and to adhere to those theories once they have been disclosed." O2 Micro, 467 F.3d at 1366 n. 12 (quoting Nova Measuring Instruments Ltd. v. Nanometrics, Inc., 417 F.Supp.2d 1121, 1123 (N.D. Cal .2006)). III. DISCUSSION Benchmark seeks leave to amend its Preliminary Invalidity Contentions for U.S. Patent No. 7,076,972; U.S. Patent No. 6,928,734; U.S. Patent No. 6,990,736; and U.S. Patent No. 7,032,314 (collectively, the "Patents"). The amendments seek to add two items of prior art to Benchmark's original contentions: (1) Lawrence Stanley's tungsten carbide finger ring (the "Stanley ring"); and (2) U.S. Patent No. 6,020,826 (the "Rein patent"). West argues both that Benchmark has failed to establish good cause and that the proposed amendments fail to conform to the procedural requirements of Patent Local Rule 3-3. A. Good Cause Under Patent Local Rule 3-7 In the leading case interpreting the "good cause" requirement of Patent Local Rule 3-7, the Federal Circuit held that parties in patent cases must "proceed with diligence in amending [their infringement and invalidity contentions] when new information comes to light in the course of discovery." O2 Micro, 467 F.3d at 1366 (emphasis added). Here, the parties dispute the boundaries of the diligence requirement. Benchmark argues that O2 Micro holds that parties must be diligent only in amendment of their preliminary contentions once new prior art is found.

Other factors relevant to this inquiry not addressed by the parties include "the relevance of the newly-discovered prior art, whether the request to amend is motivated by gamesmanship, [and] the difficulty of locating the prior art." Acco Brands, Inc. v. PC Guardian Anti-Theft Products, Inc., 2008 WL 2168379 at *1 (N.D. Cal., May 22, 2008). 3
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

West contends that a showing of good cause requires diligence throughout the discovery process and that the moving party not only must act promptly upon discovery of new prior art but also must establish that it was diligent in its search for prior art. As discussed below, the Court agrees with West's position on the scope of the diligence inquiry. In O2 Micro, "[t]he Federal Circuit merely held that the district court did not abuse its discretion by disallowing amendments brought after a three-month delay." The Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc., 2008 WL 624771 at *3 (N.D.Cal., Mar 04, 2008) (granting plaintiff's motion to amend its final infringement contentions even though plaintiff brought the motion four months after finding the prior art). However, O2 Micro did not address "whether the party was diligent in discovering the basis for amendment, and whether lack of such diligence precludes a finding of good cause." Yodlee, Inc. v. CashEdge, Inc., 2007 WL 1454259 at *3 (N.D. Cal., May 17, 2007) (finding O2 Micro "of little help" where Defendant was diligent in seeking amendment). Thus, a party's diligence in amending its preliminary invalidity contentions upon finding new prior art is only one factor to consider; the Court also must address whether the party was diligent in discovering the basis for the proposed amendment. 1. The Stanley ring Benchmark argues that it was diligent throughout the discovery process because it could not have found the Stanley ring any sooner and it moved to amend its preliminary invalidity contentions within ten days of the ring's discovery. Specifically, Benchmark asserts that in July 2008 ­ nearly ten months after it filed its preliminary invalidity contentions ­ it became aware of an individual, Lawrence Stanley, who had worn a tungsten carbide ring as a finger ring for six months in 1991. Allegedly, the Stanley ring had been made in accordance with the process specified in West's patents. Benchmark asserts that it made a diligent search of prior art before locating the Stanley ring, which came to its attention through inquiries made to contacts in the tungsten carbide industry. West argues that Benchmark makes only "conclusory declarations" claiming it could not have discovered the existence of the Stanley ring at an earlier date. Indeed, Benchmark does not 4
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

describe in any detail the efforts it undertook to discover additional prior art other than "diligent inquiries" to unidentified "contacts." It does not explain any impediments to finding the Stanley ring more expeditiously. Benchmark also claims that West would not be prejudiced by the addition of the Stanley ring as prior art because of the three-month window between disclosure of the Stanley ring and the close of discovery. See, e.g., Golden Hour Data Systems, Inc. v. Health Services Integration, Inc., 2008 WL 2622794 at *4 (N.D. Cal., July 1, 2008) (amended contentions left non-moving party with sufficient time "as an additional three months remain in the fact discovery period"). However, West asserts that adding the Stanley ring at this point in the case would present substantial discovery difficulties. West points out that fewer than forty days remain between the hearing date on the instant motion and the discovery cut-off date. See, e.g., Abbot Diabetes Care Inc. v. Roche Diagnostics Corp., 2007 WL 2221029 at *2 (N.D. Cal., July 30, 2007) (finding prejudice to the non-moving party where less than two months remained before discovery cutoff, and "addition of new products would likely derail the case management schedule, require additional claim construction, and delay trial"). West also points out that he has not been shown the actual Stanley ring, which was worn for only six months in 1991. West claims that the difficult and time consuming-task of finding witnesses to events that occurred seventeen years ago constitutes sufficient prejudice to justify denying the proposed amendment. The Court agrees with West. Benchmark argues that its "diligence" satisfies the good cause requirement because it made "diligent inquires" to its contacts in the tungsten carbide industry and the inquiries "bore fruit when they did." However, as noted above, it does not provide any information about when or why it began the inquires, how it inquired, who its contacts in the industry were, or event what it inquired about. The burden is on Benchmark to establish diligence, and merely asserting that it made "diligent" inquiries does not meet this burden. The court also finds that the amendment would result in prejudice to West. 2. The Rein patent Benchmark asserts that it sought to amend its preliminary invalidity contentions to include the Rein patent as soon as it came to its attention that the patent had been inadvertently 5
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

omitted from its original contentions. The Rein patent was cited and discussed in Benchmark's opposition to West's motion for preliminary injunction and West disclosed the Rein patent to the Patent and Trademark Office in connection with several of the patents-in-suit. Benchmark maintains that West's prior knowledge of the Rein patent precludes a finding of prejudice. Although Benchmark's motion to add the Rein patent to its preliminary invalidity contentions was timely filed, that fact alone does not establish diligence. While Benchmark's omission of the Rein patent may have been inadvertent, inadvertence is hardly the same as diligence. As this District has explained, "carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief." MEMC Electronic Materials v. Mitsubishi Materials Silicon Corp., 2004 WL 5363616 at *5 (N.D. Cal., March 2, 2004); see also Berger v. Rossignol Ski Co., Inc., 2006 WL 1095914 at *5 (N.D. Cal. Apr. 25, 2006) (premising its holding on a three-month delay and plaintiffs failure to provide "any justification for the amendment, other than mere error."). Benchmark cannot rely solely on the timeliness of its motion and an inadvertent omission does not establish diligence. Moreover, the mere fact that West was aware of the Rein patent prior to the filing of the instant motion does not mean that Benchmark can rely on it now. The Court is particularly reluctant to grant relief in this context post-Markman. If the moving party fails to establish diligence, the "good cause" inquiry should end. MEMC Electronic Materials, 2004 WL 5363616 at *5. B. Procedural Requirements of Patent Local Rule 3-3 West also challenges the procedural sufficiency of the proposed amendments on three grounds: (1) failure to show how the Stanley ring and Rein patent anticipate West's claims; (2) failure to articulate why one of skill in the art would find the asserted claims obvious in light of the Stanley ring or the Rein patent; and (3) failure to address where the elements of West's asserted claims are found in the Stanley ring or the Rein patent. As discussed above, Benchmark has failed to show good cause to add the Stanley ring and the Rein patent to its preliminary invalidity contentions. Because Benchmark's instant motion will be denied, the Court does not address the procedural issue. This ruling is without prejudice to the right of either party to make other, non-substantive amendments to its 6
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

preliminary invalidity or infringement contentions by stipulation or motion. IV. ORDER Good cause therefore appearing, IT IS HEREBY ORDERED that the motion for an order granting leave to amend preliminary invalidity contentions is DENIED and the proposed amended preliminary invalidity contentions are REJECTED.

DATED: October 8, 2008 ___________________________ JEREMY FOGEL United States District Judge

7
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

This Order has been served upon the following persons: Edward Vincent King King and Kelleher, LLP 20 California St., 7th Floor San Francisco, CA 94111 Fax: [phone] Email: [e-mail] Brett D. Ekins Jones Waldo Holbrook and McDonough 301 N. 200 E., Suite 3A St. George, UT 84770 Fax: [phone] Email: [e-mail] Brent T. Winder See Address Above Email: [e-mail] Andrew H. Stone Jones Waldo Holbrook and McDonough 170 S. Main St., Suite 1500 Salt Lake City, UT 84101 Fax: [phone] Email: [e-mail] Marc N. Bernstein The Bernstein Law Group, P.C. 555 Montgomery St., Suite 1650 San Francisco, CA 94111 Fax: [phone] Email: [e-mail] Raymond Joseph Trojan Trojan Law Offices 9250 Wilshire Blvd. Beverly Hills, CA 90212 Fax: [phone] Email: [e-mail] Smadar Dahan Crown Ring, Inc. 8290 St. Laurent Blvd. Montreal, Canada Fax: [phone]

8
C a s e No. C 07-1812 JF (HRL) O R D E R DENYING MOTION FOR LEAVE TO AMEND PRELIMINARY INVALIDITY CONTENTIONS ( JF E X 1 )