Hewlett Packard Company v. ServiceNow, Inc.

Filing 154

Order by Magistrate Judge Howard R. Lloyd denying 150 Motion for Leave to Amend Invalidity Contentions. (hrllc1, COURT STAFF) (Filed on 2/19/2016)

E-Filed 2/19/16

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

HEWLETT PACKARD COMPANY,
Plaintiff,

8
9
10

United States District Court
Northern District of California

11

Case No. 14-cv-00570-BLF (HRL)
ORDER DENYING MOTION FOR
LEAVE TO AMEND INVALIDITY
CONTENTIONS

v.
SERVICENOW, INC.,
Defendant.

Re: Dkt. No. 150

12

Hewlett Packard Enterprise Company (“HP”) sues ServiceNow, Inc. (“ServiceNow”) for

13

patent infringement. ServiceNow argued in a claim-construction brief that certain limitations

14

related to U.S. Patent Numbers 7,925,981 (“‘981”) and 7,945,860 (“‘860”) are fatally indefinite

15

“means-plus-functions” limitations under 35 U.S.C. § 112—they define functions by reference to

16

certain structures, as permitted by § 112(f), but those referenced structures are not, as required by

17

§ 112(b), actually defined anywhere else. HP replied that ServiceNow’s invalidity contentions did

18

not include any § 112(f) arguments with respect to those two patents and therefore ServiceNow

19

had failed to timely preserve those arguments in the manner required by Patent Local Rule 3-3.

20

During a technology tutorial, District Judge Beth L. Freeman asked ServiceNow’s counsel to

21

comment on HP’s procedural argument; counsel promptly conceded that ServiceNow needs to

22

amend its defective invalidity contentions and that ServiceNow should have more promptly

23

moved for leave to do so. Judge Freeman advised counsel to move for leave to amend.

24

ServiceNow has instead moved the court for a ruling that the invalidity contentions do not

25

need to be amended because those contentions already duly raised § 112(f) arguments against the

26

‘981 and ‘860 patents.

27

argument during the tech tutorial and that her concessions at the tutorial were, in retrospect,

28

wrong; ServiceNow asks for leave to amend only in the alternative. HP argues in opposition: (1)

Counsel explains she was not prepared to discuss HP’s procedural

1

ServiceNow plainly understands its own invalidity contentions are insufficient, even if

2

ServiceNow has changed its official stance on that issue; (2) ServiceNow’s invalidity contentions

3

fail to raise § 112(f) arguments against the ‘981 and ‘860 claims in the manner required by Patent

4

Local Rule 3-3; and (3) the court should not grant leave to amend because ServiceNow had no

5

good reason to wait nearly a year to seek leave to cure its defective contentions.
Discussion

6

This district’s Patent Local Rules require parties to promptly disclose their infringement

8

and invalidity contentions and to adhere to those contentions unless good cause arises to justify

9

amendment. See, e.g., Avago Technologies General IP PTE LTD. v. Elan Microelectronics Corp.,

10

04-cv-5385-JW-HRL, 2007 WL 951818 at * 1 (N.D. Cal. March 28, 2007) (collecting cases).

11
United States District Court
Northern District of California

7

This district adopted these rules to prevent vexatious “shifting sands” claim-construction strategies

12

and, accordingly, this court is “conservative” in granting leave to amend infringement or invalidity

13

contentions. Atmel Corp. v. Information Storage Devices, Inc., No. 95-cv-1987-FMS, 1998 WL

14

775115 at *2 (N.D. Cal. Nov. 5, 1998). When a litigant contends that 35 U.S.C. § 112(f) governs

15

a limitation in a patent claim, Patent Local Rule 3-3(c) requires that the invalidity contentions

16

include “[a] chart” that identifies, for each prior art reference, which structures “perform[] the

17

claimed function[.]” Invalidity contentions must also include “[a]ny grounds of invalidity based

18

on” 35 U.S.C. § 112(b). Pat. L.R. 3-3(d).

19

The parties’ briefs present a threshold question: do ServiceNow’s invalidity contentions

20

duly preserve § 112(f) theories? If ServiceNow’s contentions comply with Patent Local Rule 3-

21

3’s requirements, then ServiceNow has preserved its § 112(f) arguments; otherwise, the court shall

22

determine whether to grant leave to amend the defective invalidity contentions.

23

The court is not persuaded by HP’s argument that ServiceNow’s own counsel seems to

24

subjectively understand the inadequacy of her client’s invalidity contentions. Certainly counsel’s

25

concessions during the tech tutorial give the court good reason to carefully scrutinize

26

ServiceNow’s motion, but the court does not view those retracted concessions as dispositive.

27

Rather, the court shall directly compare the requirements in Patent Local Rule 3-3 with the

28

invalidity contentions at issue.
2

ServiceNow’s invalidity contentions, to the extent required by Patent Local Rule 3-3(d),

2

fairly identify § 112(f) arguments as the “grounds” for § 112(b) arguments against the ‘981 and

3

‘860 patents. HP asserts that any such argument must follow a general form: “identify the term

4

that is allegedly governed by § 112[(f)], and explain that there is no structure disclosed for

5

performing the claimed function[.]” Dkt. No. 151 at 11. ServiceNow argues it has complied with

6

HP’s proposed reading of Patent Local Rule 3-3(d) by asserting, for certain terms, that “no

7

structure was disclosed.” The undersigned agrees that ServiceNow’s invalidity contentions fairly

8

assert, with respect to the ‘981 and ‘860 patents, that certain claimed functions lack any defined

9

underlying structure. For example, as to claim 1 of the ‘981 patent, ServiceNow contends certain

10

claim terms “[are] indefinite because [they] improperly claim[] the function of the alleged

11
United States District Court
Northern District of California

1

invention without any structural limitations.” Dkt. No. 150 at 3. ServiceNow uses similar

12

language to contend that claim 1 of the ‘860 patent is invalid for claiming a function that lacks

13

“any structural limitations.” Dkt. No. 150 at 4. This language, notwithstanding the lack of

14

explicit statutory citations, fairly contends that certain § 112(f) claims are indefinite under §

15

112(b) because HP failed to disclose the structures underlying claimed functions.

16

The court rejects HP’s argument that Patent Local Rule 3-3(c) requires invalidity

17

contentions to include an explicit invocation of § 112(f). HP relies upon a decision in which the

18

Southern District of California applied a textually identical local rule to conclude that defendants

19

waive § 112(f) arguments when they fail to “identify . . . terms as means-plus-function elements in

20

their preliminary invalidity contentions[.]” I-Flow Corporation v. Apex Medical Technologies,

21

Inc., 07-cv-1200, 2008 WL 2899822 at *5 (S.D. Cal. July 25, 2008). The undersigned is not

22

persuaded by that decision, which cites to the Southern District’s analogous local rule but does not

23

analyze the text of the rule or otherwise support its conclusion on this issue. The undersigned

24

does not read this district’s Patent Local Rule 3-3(c) to require the use of any particular citation,

25

phrase, or keyword before a defendant may maintain an argument under § 112(f). HP did not cite,

26

and the undersigned has not found, a case in which this court has read into Patent Local Rule 3-

27

3(c) the formalistic requirement that invalidity contentions must explicitly cite § 112(f) or use any

28

specific phrase like “means-plus-function elements.” Rather, subsection (c) requires invalidity
3

1

contentions to include a chart that provides certain information about “each asserted claim” and

2

then, additionally, “for each limitation that such party contends is governed by 35 U.S.C. §

3

112([f]),” the chart shall also “identify . . . the structure[s] . . . in each item of prior art . . . that

4

perform[] the claimed function[.]” The undersigned reads this language to mean that § 112(f)

5

invalidity contentions must be accompanied by a chart which “identif[ies] . . . the structure[s] . . .

6

in each item of prior art . . . that perform[] the claimed function[s]” at issue in the § 112(f)

7

contentions.

8

contentions may be fairly raised in the first place.

The undersigned does not read this language to circumscribe how § 112(f)

The court turns to HP’s final argument under Patent Local Rule 3-3: ServiceNow’s “prior

10

art charts” failed to identify the structures that, under subsection (c), must be identified as part of

11
United States District Court
Northern District of California

9

any § 112(f) contentions against the ‘981 and ‘860 patents. Dkt. No. 151 at 14. ServiceNow, in

12

reply, does not actually contend it complied with the requirements of Patent Local Rule 3-3(c), but

13

instead argues subsection (c) is not “relevant” to the question of whether a “separate indefiniteness

14

challenge[]” has been adequately “identified under” subsection (d).

15

ServiceNow misreads how the different subsections of Patent Local Rule 3-3 relate to each other.

16

Each subsection describes “information” that complete invalidity contentions “shall contain[.]”

17

Pat. L.R. 3-3. Subsection (d) requires ServiceNow to disclose the grounds for indefiniteness

18

theories, and ServiceNow did adequately disclose those grounds here—the contentions that certain

19

claims lack “any” of the “structural limitations” required by § 112(f). Dkt. No. 150 at 3-4. But

20

subsection (c) requires that § 112(f) contentions be accompanied by a prior art chart that identifies

21

which structures in the prior art items perform the claimed functions; this co-extensive

22

requirement applies regardless of whether the § 112(f) contentions helped to satisfy subsection

23

(d)’s requirements.

Dkt. No. 152 at 4.

24

ServiceNow’s invalidity contentions do not include a prior-art chart that “identif[ies] . . .

25

the structure[s] . . . in each item of prior art . . . that perform[] the claimed function[s]” at issue in

26

ServiceNow’s § 112(f) contentions against the ‘981 and ‘860 patents. Dkt. No. 150-2 at 7-8.

27

ServiceNow’s defective invalidity contentions therefore failed to preserve § 112(f) arguments

28

against the ‘981 and ‘860 patents in the manner required by Patent Local Rule 3-3(c). The court
4

1

turns to the issue of whether good cause exists to grant leave to amend the defective invalidity

2

contentions.
Patent Local Rule 3-6 permits parties to amend patent contentions only “by order of the

4

Court upon a timely showing of good cause.” The good-cause inquiry depends on whether the

5

movant diligently discovered the information that might justify amending the contentions and then

6

promptly moved for leave to amend. E.g., Apple Inc. v. Samsung Elecs. Co., 12-cv-630-LHK-

7

PSG, 2012 WL 5632618 at *2 (N.D. Cal. Nov. 15, 2012). The movant has the burden to show

8

diligence. Id. at *6. A movant may show good cause to amend an unpreserved defense into its

9

contentions by promptly moving for leave to amend on the basis of new case law that “ma[d]e

10

available a defense that was previously unavailable.” Horus Vision, LLC v. Applied Ballistics,

11
United States District Court
Northern District of California

3

LLC, No. 13-cv-5460-BLF-HRL, 2014 WL 6895572 at *2 (N.D. Cal. Dec. 5, 2014). This court

12

often rules the movant has not been diligent and good cause has not been shown if the motion

13

relies on information that was discovered several months before the motion was filed. E.g., id. If

14

the movant was not diligent then “there is no need to consider the question of prejudice” and the

15

court may deny the motion for leave to amend without any further analysis, e.g., Apple Inc., supra,

16

but the court may, in its discretion, subsequently consider whether the non-movant would suffer

17

prejudice, Brandywine Commc’ns Techs., LLC v. AT&T Corp., 12-cv-2494-CW, 2014 WL

18

1569544 at *15 (N.D. Cal. Apr. 18, 2014) (citing Apple Inc., supra).

19

ServiceNow argues it has been diligent because: (1) intervening case law—Williamson v.

20

Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) and Media Rights Techs. v. Capital One Fin.

21

Corp., 800 F.3d 1366 (Fed. Cir. 2015)—gave ServiceNow “further confidence that its claim

22

construction arguments were supportable and correct” and therefore, notwithstanding cases like

23

Horus Vision, intervening cases have provided good cause to amend the § 112(f) contentions; (2)

24

ServiceNow amended its proposed claim constructions a few weeks after the Federal Circuit

25

issued Media Rights; and (3) “uncertainty as a result of motions to stay and settlement

26

negotiations” justified waiting for several months before ServiceNow moved for leave to amend.

27

Dkt. No. 150 at 8-9. HP responds ServiceNow has not been diligent because: (1) Williamson

28

altered the strength of a presumption that applies to § 112(f) defenses and Media Rights applied
5

1

Williamson to determine whether a district court had properly resolved a § 112(f) defenses, but

2

neither Williamson nor Media Rights provided ServiceNow with a new defense that had not

3

previously been available at the outset of this case; (2) even if Williamson and Media Rights are

4

taken as changes in the law that might justify leave to amend, ServiceNow has provided no

5

colorable explanation for waiting six months after Williamson issued or three months after Media

6

Rights issued to file its motion; and (3) ServiceNow’s own motion for a stay and the possibility of

7

settlement did not justify ServiceNow in waiting for several months to file a motion for leave to

8

amend. Dkt. No. 151 at 15-18.
The court agrees with HP that ServiceNow has not been diligent. Where a party seeks

10

leave to amend a “defense” into the case that was not duly preserved in the party’s initial

11
United States District Court
Northern District of California

9

contentions, ordinarily the party “must” justify the amendment by showing that intervening case

12

law provided the “previously . . . unavailable” defense.

13

elaborated on how courts should resolve a presumption that applies to § 112(f) arguments, 792

14

F.3d at 1349, and Media Rights relied upon Williamson to review a judgment granted on the

15

pleadings, 800 F.3d at 1372-73, but neither case provided a new defense that had previously been

16

unavailable to ServiceNow. Rather, ServiceNow’s § 112(f) arguments were available at the outset

17

of this case and ServiceNow’s invalidity contentions failed to preserve those arguments against the

18

‘981 and ‘860 patents in the manner required by Patent Local Rule 3-3(c). The court considers it

19

particularly clear that Media Rights, which merely applied Williamson, did not change the law in

20

any way that might justify a motion for leave to amend. See id.

Horus Vision, supra.

Williamson

21

Even if the court accepts for the sake of argument that Williamson changed the law enough

22

to justify a prompt motion for leave to amend, ServiceNow has still failed to provide a satisfactory

23

explanation for why it waited six months to file its motion—the Federal Circuit issued Williamson

24

on June 16 and ServiceNow moved for leave to amend on December 18. The court rejects the

25

argument that pending settlement talks and a pending motion for a stay justified a six-month delay

26

in filing ServiceNow’s motion. The looming possibility that the case might ultimately settle does

27

not excuse a party’s failure to comply with an imminent procedural requirement. The court also

28

agrees with HP’s response: ServiceNow fails to explain why, if ServiceNow was simply waiting
6

1

for these issues to be resolved, ServiceNow waited to move for leave to amend until more than

2

two months after Judge Freeman ruled on the motion for a stay and one month after settlement

3

negotiations concluded. Dkt. No. 151 at 18; see also Dkt. No. 132.
Moreover, the undersigned believes the proper question in this case is whether ServiceNow

5

diligently discovered that it had filed defective invalidity contentions in January of 2015 and

6

promptly filed a motion for leave to cure the defect. Horus Vision, supra, strongly suggests that a

7

party simply cannot show diligence under these circumstances—the § 112(f) arguments were

8

available to ServiceNow when it filed its initial invalidity contentions and ServiceNow’s failure to

9

initially preserve those arguments reflects a lack of due diligence. Even setting aside Horus

10

Vision, ServiceNow did not realize its contentions might be defective until nearly one year later,

11
United States District Court
Northern District of California

4

and even then the realization was not due to ServiceNow’s own diligence. Rather, HP discovered

12

and raised the issue of defective invalidity contentions when HP’s counsel were surprised to see §

13

112(f) claim-construction arguments ServiceNow had not properly preserved. ServiceNow has

14

therefore failed to carry its burden to show diligence. The information before the court tends to

15

show, instead, that for one year ServiceNow was not diligent in discovering and seeking leave to

16

amend the defects in its invalidity contentions.

17

In light of both ServiceNow’s substantial lack of diligence and this district’s firm policy

18

against permitting parties to “shift[]” the “sands” opponents stand upon in the midst of an ongoing

19

claim-construction battle, the court finds a lack of good cause and denies ServiceNow’s motion for

20

leave to amend the invalidity contentions. The court declines to consider prejudice. Brandywine,

21

supra.

22

Conclusion

23

ServiceNow’s invalidity contentions failed to preserve § 112(f) arguments against HP’s

24

claims under the ‘981 and ‘860 patents because the contentions did not include a chart that

25

identifies which structures in the prior-art references perform the claimed functions. For one year

26

ServiceNow showed a lack of diligence in discovering and seeking leave to cure the defects in the

27

§ 112(f) contentions. ServiceNow has failed to show intervening case law, or a pending motion

28

for a stay, or pending settlement talks could justify ServiceNow’s lack of diligence. Even if the
7

1

court assumes that ServiceNow’s justifications could show good cause under the right

2

circumstances, ServiceNow nevertheless failed to diligently and promptly move for leave to

3

amend after the intervening cases issued, after the court resolved the pending motion, or after the

4

settlement talks concluded.

5

diligence.

6
7

The motion for leave to amend is therefore denied for lack of

IT IS SO ORDERED.
Dated: 2/19/16

8
9
HOWARD R. LLOYD
United States Magistrate Judge

10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8