Convergence Technologies (USA), LLC v. Microloops Corporation et al

Filing 100

ORDER granting 89 Motion for Leave to File Second Amended Complaint. The Tutorial and Claims Construction hearing scheduled for 1/3/2012, is VACATED and re-scheduled to 5/3/2012, at 9:00 a.m. for one full day. Signed by Judge Edward J. Davila on 12/27/2012. (ejdlc1, COURT STAFF) (Filed on 12/27/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION
CONVERGENCE TECHNOLOGIES
(USA), LLC,

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For the Northern District of California

United States District Court

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Plaintiff(s),

CASE NO. 5:10-cv-02051 EJD
ORDER GRANTING PLAINTIFF’S
MOTION FOR LEAVE TO FILE SECOND
AMENDED COMPLAINT

v.
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MICROLOOPS CORPORATION, et. al.,

[Docket Item No. 89]

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Defendant(s).

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/
In this patent infringement action, Plaintiff Convergence Technologies (USA), LLC

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(“Convergence”) seeks leave to file a Second Amended Complaint in order to add four new

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defendants (collectively, the “New Defendants”).1 Convergence contends that, through discovery, it

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learned the New Defendants are each parties in the chain of custody of the infringing products from

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Defendant Microloops Corporation (“Microloops”) to Defendants Hewlett Packard (“HP”) and

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Dynatron. According to Convergence, the proposed amendment is intended solely to add parties; no

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new technology or products will be added. As such, Convergence argues the amendment is

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appropriate at this time since the case remains in the early stages of litigation.

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Microloops, HP and Dynatron believe the motion for leave to amend should be denied for

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several reasons. First, they argue Convergence delayed in bringing this motion since it was aware of

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the New Defendants for more than a year. Second, they argue the proposed amendment will cause

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The four new defendants are: Molex Incorporated, Dynaeon Industrial Company, Inventec
Corporation, and Foxconn Technology Group.
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CASE NO. 5:10-cv-02051 EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

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undue delay in the litigation and in turn prejudice all defendants since briefs for a fast-approaching

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claims construction hearing were filed long ago. Third, they believe the amendment will be futile

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because Convergence will be unable to establish jurisdiction over the New Defendants, some of

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which are foreign corporations.

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Federal jurisdiction arises under 28 U.S.C. §§ 1331 and 1338(a). The court has carefully

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reviewed the pleadings filed by both parties and finds this matter suitable for decision without oral

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argument pursuant to Civil Local Rule 7-1(b). Accordingly, the motion hearing scheduled for

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January 3, 2012, is vacated. For the reasons explained more fully below, Convergence’s motion will

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be granted.

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For the Northern District of California

United States District Court

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I.

DISCUSSION

Ordinarily, leave to amend is granted with liberality. Fed. R. Civ. P. 15(a)(2) (“The court

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should freely give leave when justice so requires.”); Morongo Band of Mission Indians v.

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Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). Leave need not be granted, however, where the

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amendment of the complaint would cause the opposing party undue prejudice, is sought in bad faith,

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constitutes an exercise in futility, or creates undue delay. Foman v. Davis, 371 U.S. 178, 182

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(1962); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 (9th Cir. 1994). “The district court’s

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discretion to deny leave to amend is particularly broad where plaintiff has previously amended the

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complaint.” Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989).

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Not all of the Rule 15 considerations are created equal; “it is the consideration of prejudice to

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the opposing party that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316

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F.3d 1048, 1052 (9th Cir. 2003). “The party opposing the amendment bears the burden of showing

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prejudice.” In re Fritz Cos. Sec. Litig., 282 F. Supp. 2d 1105, 1109 (N.D. Cal. Aug. 27. 2003)

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(citing DCD Programs Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987)).

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The court begins with an examination of prejudice since it is the critical factor. Despite the

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representation otherwise, the court does not agree that Microloops, HP and Dynatron would be

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unduly prejudiced by the allowing leave to amend. In their opposition, the current defendants equate

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prejudice with delay, but such a comparison is unwarranted here. Discovery has not closed and

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claims construction has not occurred in this case. Although there is some inconvenience inherent to
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CASE NO. 5:10-cv-02051 EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

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any delay of litigation, that is simply not enough to support a finding of undue prejudice or itself

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counter the liberal standard required by Rule 15. See League to Save Lake Tahoe v. City of South

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Lake Tahoe, No. 2:11-cv-01648-GEB-GGH, 2011 U.S. Dist. LEXIS 115027, at *2 (E.D. Cal. Oct. 5,

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2011).

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Moreover, the court is not convinced that a further delay of this case will result in an

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increased financial burden to the current defendants. Notably, a temporary restraining order has not

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issued. Thus, it is unclear to what additional business costs defendants refer in the opposition brief.

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Furthermore, the court is not persuaded that Microloops, HP and Dynatron will incur significant

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legal fees as a result of the amendment. As already noted, Convergence does not seek to add new
technology or products. The briefing already submitted by the current defendants’ common counsel

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For the Northern District of California

United States District Court

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should therefore be sufficient without a need for significant revision.

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The court is also not persuaded that this request is untimely. In response to the allegation

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that it waited over a year to file this motion, Convergence explains that its prior knowledge of the

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New Defendants’ existence is not the same as knowledge of their direct involvement with the

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accused infringing products. And as Convergence points out, the motion was filed within the

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timeframe allowed by the court’s Scheduling Order after having been presented to the current

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defendants nearly three weeks before the deadline.

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Finally, the court does not agree that the proposed amended would be futile. While it is true

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that Convergence may face obstacles in establishing personal jurisdiction - particularly over foreign

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corporations - the mere possibility that Convergence will be unsuccessful cannot support a finding

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of futility, or itself justify a denial of this motion.

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Since the policy favoring amendment outweighs the delay and inconvenience that will result,

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the motion will be granted as stated in the order which follows. The Tutorial and Markman hearing

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will also be continued in order to alleviate any potential prejudice to the New Defendants.

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II.

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Based on the foregoing:

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1.

ORDER

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Convergence’s Motion for Leave to File a Second Amended Complaint is

GRANTED. Convergence shall forthwith file the Second Amended Complaint as a separate docket
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CASE NO. 5:10-cv-02051 EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

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entry on PACER/ECF. Once filed and Summonses issued, Convergence shall serve the new

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defendants without delay.

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2.

The Tutorial and Claims Construction hearing scheduled for January 3, 2012, is

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VACATED and re-scheduled to May 3, 2012, at 9:00 a.m. for one full day. The claims construction

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portion of the hearing shall immediately follow the tutorial.

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IT IS SO ORDERED.

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Dated: December 27, 2011
EDWARD J. DAVILA
United States District Judge

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For the Northern District of California

United States District Court

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CASE NO. 5:10-cv-02051 EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT