Abaxis, Inc. v. Cepheid

Filing 161

ORDER by Magistrate Judge Howard R. Lloyd denying 154 plaintiff's Motion Leave to Serve Amended Infringement Contentions.(hrllc2, COURT STAFF) (Filed on 4/9/2012)

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*E-FILED: April 9, 2012*

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NOT FOR CITATION

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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

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For the Northern District of California

United States District Court

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No. C10-02840 LHK (HRL)

ABAXIS, INC.,

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Plaintiff,

ORDER DENYING PLAINTIFF’S
MOTION FOR LEAVE TO SERVE
AMENDED INFRINGEMENT
CONTENTIONS

Defendant.

[Re: Docket No. 154]

v.
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CEPHEID,
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/
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Plaintiff Abaxis, Inc. (Abaxis) sues defendant Cepheid for alleged infringement of

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several patents, as well as for alleged breach of a license agreement. Although Cepheid

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previously was licensed under Abaxis’ patents, Abaxis terminated that license in or around

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October 2010, several months after the instant lawsuit was filed. This court is told that fact

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discovery closed on February 16, 2012 and that the parties are in the midst of expert disclosures

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and expert discovery. Abaxis now moves for leave to amend its infringement contentions to

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add willful infringement assertions. Cepheid opposes the motion. The matter is deemed

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suitable for determination without oral argument. Civ. L.R. 7-1(b). For the reasons stated

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below, the motion is denied.

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A party may amend its infringement contentions “only by order of the Court upon a

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timely showing of good cause.” Patent L.R. 3-6. “Good cause” requires “a showing that the

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party seeking leave to amend acted with diligence in promptly moving to amend when new

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evidence is revealed in discovery.” O2 Micro Int’l Limited v. Monolithic Power Sys., Inc., 467

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F.3d 1355, 1363 (Fed. Cir. 2006)). “The rules thus seek to balance the right to develop new

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information in discovery with the need for certainty as to the legal theories.” Id. at 1366. “The

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

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lack of diligence.” Id. Good cause may be supported by, among other things, the recent

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discovery of nonpublic information that was not discovered, despite diligent efforts, before

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service of the infringement contentions. Patent L.R. 3-6(c). Only if the party seeking

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amendment shows diligence will the court consider prejudice to the non-moving party. See O2

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Micro Int’l Ltd., 467 F.3d at 1366-68 (concluding that where the moving party did not
demonstrate diligence, there was “no need to consider the question of prejudice.”); see also

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For the Northern District of California

United States District Court

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CBS Interactive, Inc. v. Etilize, Inc., 257 F.R.D. 195, 201 (N.D. Cal., 2009) (“This inquiry first

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considers whether plaintiff was diligent in amending its contentions and then considers

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prejudice to the non-moving party.”); Acer, Inc. v. Technology Properties Ltd., No. 08-cv-

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00877 JF, 2010 WL 3618687 at *3 (N.D. Cal., Sept. 10, 2010) (the moving party “must

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demonstrate good cause, an inquiry that considers first whether the moving party was diligent in

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amending its contentions and then whether the non-moving party would suffer prejudice if the

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motion to amend were granted . . . If that party was not diligent, the inquiry should end.”).

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In essence, Abaxis argues that it could not have sought leave to amend sooner because it

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only recently obtained discovery pertaining to several theories by which it believes it may

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establish willful infringement. Here, plaintiff points out that, although it served document

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requests in December 2010, Cepheid did not produce the bulk of discovery pertaining to willful

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infringement issues until very late in the case—including last fall and earlier this year. Given

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defendant’s belated document production, Abaxis says that it was justified in waiting to depose

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Cepheid’s witnesses until late in the fact discovery period and in seeking leave to amend its

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infringement contentions after fact discovery closed. Cepheid does not deny the timing of its

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document production. Instead, defendant argues that Abaxis has had information pertaining to

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alleged willful infringement issues since before the lawsuit was filed, but failed to do anything

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about it until after the fact discovery cutoff.
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This court certainly does not commend defendant for its tardy document production. If

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Cepheid has a good explanation, it has not provided one. At the same time, however, the record

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indicates that Abaxis had reason to know of its various theories of willful infringement at least

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as early as mid-October 2011 (if not earlier). Abaxis’ original and amended complaints allege

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willful infringement. By Abaxis’ own account, it had some information early on and began

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receiving additional key documents in September 2011 and October 2011. This brings us to

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October 14, 2011 when Abaxis apparently felt it had sufficient evidence to prepare proposed

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amended infringement contentions that included assertions of willful infringement, which it sent

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to Cepheid. (Rodriguez Decl., Ex. 33). Cepheid, who reportedly had prepared its own
proposed amended invalidity contentions, refused to stipulate to Abaxis’ proposed amendments.

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For the Northern District of California

United States District Court

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This court does not understand why plaintiff did not move quickly to seek amendment at that

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point, notwithstanding that Abaxis says it obtained even more information afterward. Plaintiff

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says only that the parties were unable to agree upon their respective proposed amended

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contentions last fall and neither side sought leave to amend at that time. (Mot. at 12). Abaxis

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points out that it subsequently agreed in January 2012 to Cepheid’s proposed amended

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invalidity contentions, but Cepheid refused Abaxis’ renewed request in mid-February 2012 to

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stipulate to plaintiff’s proposed amended infringement contentions. It is not clear how Cepheid

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succeeded in inveigling plaintiff to subsequently agree to its amended invalidity contentions.

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Nevertheless, there is no indication or assertion that Cepheid misled Abaxis into believing that

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defendant would agree to plaintiff’s proposed amendments. Under the circumstances presented,

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this court finds that plaintiff could have and should have sought amendment sooner than it did.

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Accordingly, plaintiff’s motion is denied.

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SO ORDERED.
Dated: April 9, 2012

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HOWARD R. LLOYD
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UNITED STATES MAGISTRATE JUDGE

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5:10-cv-02840-LHK Notice has been electronically mailed to:

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Bryan John Boyle

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Carolyn Chang

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David James Miclean [e-mail], [e-mail],
[e-mail]

[e-mail], [e-mail]
[e-mail], [e-mail]

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Jonathan Elliot Singer

[e-mail], [e-mail]

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Lam Khanh Nguyen

[e-mail], [e-mail]

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Limin Zheng

[e-mail], [e-mail]

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Lynn Harold Pasahow

[e-mail], [e-mail]

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Rebecca Charnas Grant

[e-mail], [e-mail]

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For the Northern District of California

United States District Court

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Ricardo Rodriguez [e-mail], [e-mail], [e-mail],
[e-mail]

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Ryan Aftel Tyz

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Steven C. Carlson

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Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.

[e-mail], [e-mail]
[e-mail], [e-mail], [e-mail]

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