Finjan, Inc. v. Proofpoint, Inc. et al

Filing 97

ORDER by Judge Beth Labson Freeman granting 80 Motion to Amend/Correct ; Plaintiff is required to E-FILE the amended document no later than 11/21/2014. (blflc3S, COURT STAFF) (Filed on 11/14/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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FINJAN, INC.,

Case No. 13-cv-05808-BLF

Plaintiff,
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v.
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PROOFPOINT, INC., et al.,
Defendants.

ORDER GRANTING PLAINTIFF'S
MOTION TO AMEND THE
COMPLAINT
[Re: ECF 80]

United States District Court
Northern District of California

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Before the Court is Plaintiff’s Motion for Leave to Amend or Supplement the Complaint,

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which Defendants oppose. Plaintiff seeks leave in order to add a certificate of correction for U.S.

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Patent No. 8,141,154 (“the ‘154 Patent”). Having reviewed the submissions and argument of the

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parties, the Court GRANTS Plaintiff’s Motion, and permits it to file a supplemental complaint to

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add the certificate of correction.

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I.

BACKGROUND
Plaintiff filed suit on December 16, 2013, asserting claims that included infringement of

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the ‘154 Patent. On February 25, 2014, the United States Patent and Trademark Office (“USPTO”)

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issued a certificate of correction on the ‘154 Patent which clarified that the priority date of the

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‘154 Patent is December 12, 2005. This priority date was included in the September 30, 2010

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publication of the ‘154 Patent’s application, but was omitted, unintentionally, from the final issued

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‘154 Patent.

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According to the scheduling order entered in this case, the final day to amend the pleadings

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was May 28, 2014. See ECF 42. After an unsuccessful attempt to convince Defendants to stipulate

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to Plaintiff’s amendment, Plaintiff filed the instant motion on September 29, 2014. Following

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briefing, the Court heard oral argument on November 13, 2014.

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II.

LEGAL STANDARD
When the deadline for amending pleadings set by a court’s scheduling order has passed, a

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request for leave to amend must first be evaluated under the “good cause” standard of Federal

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Rule of Civil Produce 16, which is primarily concerned with the diligence of the party seeking

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amendment. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-09 (9th Cir. 1991);

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see also Kuschner v. Nationwide Credit, Inc., 256 F.R.D. 684, 687 (E.D. Cal. 2009) (“If the

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moving party was not diligent, the inquiry should end.”).
If a party shows compliance with Rule 16, the Court then must consider the permissibility

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of amendment under Rule 15. See Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712

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(9th Cir. 2001) (noting that the Ninth Circuit permits amendment under Rule 15 with “extreme

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United States District Court
Northern District of California

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liberality”). A district court may consider four factors when determining whether to grant leave to

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amend under Rule 15: (1) bad faith on behalf of the moving party, (2) whether amendment would

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cause undue delay, (3) prejudice to the opposing party, and (4) futility. Id., see also Bowles v.

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Reade, 198 F.3d 752, 758-59 (9th Cir. 1999) (noting that undue delay on its own does not justify

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denying leave to amend under Rule 15). Rule 15(d) permits a party to supplement its complaint in

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order to include “any transaction, occurrence, or event that happened after the date of the pleading

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to be supplemented.” Fed. R. Civ. P. 15(d); see also William Inglis & Sons Baking Co. v. ITT

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Cont’l Baking Co., 668 F.2d 1014, 1057 (9th Cir. 1982) (“The purpose of Rule 15(d) is to promote

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as complete an adjudication of the dispute between the parties as possible.”).

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III.

DISCUSSION
Certificates of correction can be obtained through the USPTO in order to fix small

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typographical or clerical errors in issued patents. See 35 U.S.C. §§ 254-255. These errors are

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frequently the byproduct of inadvertent mistake by the applicant or PTO. A certificate of

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correction is “only effective for causes of action arising after it was issued.” Sw. Software, Inc. v.

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Harlequin, Inc., 226 F.3d 1280, 1294-95 (Fed. Cir. 2000).

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Plaintiff contends that it does not need to file an amended or supplemental complaint in

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order for the certificate of correction to apply to Defendants’ ongoing infringement in this action.

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See, e.g., Mot. to Amend at 10. However, Plaintiff states that it brought its Motion to Amend after
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receiving guidance from the Special Master in another action involving the ‘154 Patent, Finjan,

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Inc. v. Websense, Inc., Case No. 13-cv-04398-BLF (N.D. Cal. 2013), who indicated that amending

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the complaint would be appropriate in order to ensure that the certificate of correction would apply

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to infringing acts occurring after the date the certificate was issued, February 25, 2014. See Mot. to

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Amend at 11 (citing Hannah Decl. Exh. E at 130-31). In making this recommendation, the Special

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Master relied on a recent Federal Circuit decision, H-W Technology, L.C. v. Overstock.com, Inc.,

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758 F.3d 1329 (Fed. Cir. 2014). See Hannah Decl. Exh. E at 128 (“[Y]ou have the option of either

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filing an amendment – seeking an amendment in this case based upon the corrected patent, which

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is presumably a valid patent – and that’s the way I read the case we’ve been talking about, the HW

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Technology case.”).

United States District Court
Northern District of California

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In H-W Technology, the Federal Circuit briefly contemplates whether or not a party needs

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to seek leave to amend to add a certificate of correction to ongoing litigation. See 758 F.3d 1329,

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1334 (“Indeed, it appears that H-W never even sought to amend the complaint to reflect the

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correction of claim 9. Thus, the district court was correct not to consider the certificate of

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correction when determining whether H-W could assert claim 9.”). The Federal Circuit, however,

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made no holding requiring a party to seek amendment to inject a certificate of correction into

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ongoing litigation, as neither party in H-W Technology argued that the suit involved causes of

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action that arose after the certificate of correction issued. Id.

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This Court does not read H-W Technology to be a sea change that requires a party to seek

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leave to amend to add a certificate of correction where there are claims of ongoing infringement,

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but does agree with Plaintiff that there is no reason to deny leave to file a supplemental complaint

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to add the ‘154 Patent’s certificate of correction to this action. Many courts have found that

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amending or supplementing the complaint to add a certificate of correction is appropriate in order

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to apply the certificate of correction to infringing acts that occur after the date the certificate

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issues. See, e.g., Lamoureux v. AmazaoHealth Corp., 669 F. Supp. 2d 227, 236-37 (D. Conn.

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2009); LG Elecs., Inc. v. Quanta Computer, Inc., 566 F. Supp. 2d 910, 912 (“[Plaintiff] also knew

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that any certificate of correction it received from the patent office would not be effective for the

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purpose of enforcement unless it filed a new lawsuit or amended its complaint.”); Natural Prods.,
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Inc. v. Palmetto W. Trading Co., LLC, 2006 WL 1207895, at *9 (W.D. Wash. May 4, 2006) (“[I]f

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the parties wish to amend their allegations of infringement or invalidity based on the recently filed

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Correction, the court directs the parties to consult the court’s original scheduling order.”); Alltrade

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Tools, LLC v. Olympia Grp., Inc., 2003 U.S. Dist. LEXIS 26248, at *10 (C.D. Cal. Oct. 8, 2003);

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Quintec Films, Corp. v. Pinnacle Films, Inc., 2009 WL 3065044, at *1 (E.D. Tenn. Sept. 18,

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2009) (twice permitting amendment because two certificates of correction issued during the

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lawsuit).

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Though Defendants point to several cases within this district in which courts have declined
to permit amendment to add a certificate of correction that issues during the litigation, the posture

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of this case strongly favors permitting amendment. At oral argument, both parties agreed that were

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United States District Court
Northern District of California

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the Court to deny amendment nothing would preclude Plaintiff from filing a new action for

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infringement that occurred after February 25, 2014, then seeking relation of that action to this

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case—relation that would be automatic under this district’s local rules. Moreover, it seems likely

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that Plaintiff would request consolidation of these cases. From a case management perspective,

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granting Plaintiff’s motion would prevent the delay that would be caused by those new filings.

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Further, Plaintiff has made the requisite showings under Rules 16 and 15(d). Plaintiff

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sought leave to amend the Complaint soon after receiving the Special Master’s guidance in the

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Websense action. As such, Plaintiff has shown “good cause” and the necessary diligence under

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Rule 16. Plaintiff’s filing of a supplemental pleading will not cause undue delay in this litigation

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or prejudice to the Defendants. Cf. SAP Aktiengesellschaft v. i2 Techs., Inc., 250 F.R.D. 472, 473-

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74 (N.D. Cal. 2008) (permitting amendment to add a new patent to the complaint following the

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parties serving preliminary infringement and invalidity contentions, and finding that such

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amendment would not cause undue prejudice). This case is in its early stages and, as discussed

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above, granting Plaintiff’s motion to amend likely prevents delay that would occur were Plaintiff

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to file a new action and seek relation (and thereafter consolidation) of that action with this case. As

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such, Plaintiff has made the necessary showing under Rule 15(d) to be permitted to supplement

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the complaint.

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IV.

ORDER
For the foregoing reasons, the Court GRANTS Plaintiff’s Motion. Plaintiff may file a

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supplemental complaint in this action to add the certificate of correction for the ‘154 Patent.

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Plaintiff must file this supplemental complaint no later than November 21, 2014.

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IT IS SO ORDERED.
Dated: November 14, 2014.
______________________________________
BETH LABSON FREEMAN
United States District Judge

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United States District Court
Northern District of California

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