TC Technology LLC v. Sprint Corporation et al

Filing 316

MEMORANDUM ORDER: The Motion for Leave to File Amended Complaint (D.I. 230 ) is GRANTED. Signed by Judge Richard G. Andrews on 2/11/2019. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

TC TECHNOLOGY LLC,
Plaintiff,
V.

No. 16-cv-153-RGA
SPRINT CORPORATION and SPRINT
SPECTRUM, L.P.,
Defendants.

MEMORANDUM ORDER
Presently before the Court is Plaintiff's motion for leave to amend complaint (D.I. 230).
I have considered the parties briefing. (D.I. 231, 240, 250).
I.

BACKGROUND
TC Technology LLC ("TC Tech") filed this action on March 10, 2016, alleging that

Sprint Corporation and Sprint Spectrum, L.P. (collectively, "Sprint") infringed U.S . Patent No.
5,815,488 ("the '488 patent") with certain wireless services on its LTE network. (D.I. 1).

In November 2016, Sprint stated in response to an interrogatory that it first became aware
of the '488 patent in February 2016. (D.I. 232, Ex. 5 at 15-16 (Interrogatory No. 5)).
In December 2017, Sprint amended its response to disclose that it received an email on
January 9, 2012, from IAG, the broker representing the prior owner of the '488 patent, with the
subject line "CableLabs Patent Sale Offering - IAG." Attached to the email was a 12-page
document titled, "CableLabs Patent Sale Offering Presented by IAG," which identified and
described the '488 patent. The attachment stated, in bold, "Any discussion of the use or potential

use of the referenced patents ... should not be construed as being ... notice of infringement, or
any form of actual or prospective infringement." The email was sent to Charlie Wunsch, then
general counsel at Sprint. Mr. Wunsch forwarded the email to Sprint employees Keith Cowan
and Harley Ball. Sprint stated that "after thorough investigation[,] Sprint believes that the
attachment was never opened by Messrs. Wunsch, Cowan, or Ball, that neither the email nor its
attachment was forwarded to anyone else at Sprint, and that Messrs. Wunsch, Cowan, and Ball,
while Sprint employees, never discussed this email or its attachment with each other or with any
other employee at Sprint," and, in fact, "have no recollection of the email whatsoever."
Therefore, Sprint maintained its position that it first became aware of the '488 patent in February
2016. (Id., Ex. 6 at 2- 3 (Interrogatory No. 5)). Accompanying the interrogatory response, Sprint
produced a February 24, 2012 follow-up email from IAG that Mr. Wunsch also forwarded to Mr.
Ball. (D.I. 241, Ex. J; D.I. 240 at 6).
Sprint designated Mr. Ball as its Rule 30(b)(6) witness regarding Sprint's pre-suit
knowledge and/or awareness of the '488 patent. (D.I. 232, Ex. 7 at 27:14-23 (Ball Deposition)).
TC Tech deposed Mr. Ball on July 18, 2018. (Id.). The parties met and conferred on August 29,
2018. (D.I. 231 at 4-5). TC Tech filed this motion for leave to amend on September 28, 2018.
(D.I. 230). The deadline to amend the pleadings under the Court's scheduling order was May 12,
2017. (D.I. 14).

II.

LEGAL STAND ARD
Federal Rule of Civil Procedure 15 governs amendments to the pleadings generally. Rule

15(a)(2) provides that "[t]he court should freely give leave [to amend] when justice so requires."
Fed. R. Civ. P. 15(a). "Among the grounds that could justify a denial of leave to amend are

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undue delay, bad faith, dilatory motive, prejudice, and futility." Shane v. Fauver, 213 F.3d 113,
115 (3d Cir. 2000).
Federal Rule of Civil Procedure 16(b) also applies when a party moves to amend past the
date set by the scheduling order. E. Minerals & Chemicals Co. v. Mahan, 225 F.3d 330, 340 (3d
Cir. 2000); Media Pharm. Inc. v. Teva Pharm. USA, Inc., 2016 WL 6693113 , at *1 & n.2 (D.
Del. Nov. 14, 2016). Rule 16(b)(4) provides, "A schedule may be modified only for good cause
and with the judge' s consent." Fed. R. Civ. P. 16(b)(4). "Good cause is present when the
schedule cannot be met despite the moving party's diligence." Media Pharm., 2016 WL
6693113, at * 1. "In contrast to Rule 15(a), the good cause standard under Rule 16(b) hinges on
diligence of the movant, and not on prejudice to the non-moving party." S. Track & Pump, Inc.
v. Terex Corp., 722 F. Supp. 2d 509, 521 (D. Del. 2010).

III.

ANALYSIS
A. TC Tech Meets Good Cause Under Rule 16(b)

Sprint argues that TC Tech has failed to show diligence in pursuit of its new willful
infringement claim, as required to show good cause under Rule 16(b). (D.I. 240 at 8-10). The
crux of the parties' dispute is whether TC Tech obtained new information related to willfulness
from Mr. Ball' s July 2018 deposition. Sprint argues that TC Tech has been in possession of all
relevant information since December 2017 when Sprint submitted its amended interrogatory
response and accompanying production. (Id. at 9-10). TC Tech argues that there are
inconsistencies between the December 2017 response and Mr. Ball's testimony, which support
its claim for willful infringement. (D.I. 231 at 7).
Sprint' s December 2017 response states that "after thorough investigation," Sprint
believed the attachment to the January 2012 IAG email, which includes references to the '488

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patent, was never opened by any Sprint employees, namely Messrs. Wunsch, Cowan, and Ball.
(D.I. 232, Ex. 6 at 2-3). Mr. Ball testified during deposition that "there was no way to verify one
way or the other" whether the attachment had been opened, other than the recollections of
himself, Mr. Wunsch, and Mr. Cowan that it was not opened. (Id., Ex. 7 at 194:8-196:4). Mr.
Ball also testified that he did not think he, Mr. Wunsch, or Mr. Cowan would have opened the
attachment in the normal course of business. (Id.). TC Tech argues that Mr. Ball's testimony
shows that Sprint did not investigate whether the IAG email attachment was opened, contrary to
its December 2017 response. (D.I. 231 at 3-4; D.I. 250 at 2). I agree that there is a meaningful
difference between a "thorough investigation," in the December 2017 response, and having "no
way to verify one way or the other," as stated by Mr. Ball.
I find TC Tech meets the good cause requirement of Rule 16(b). TC Tech's willful
infringement claim is based on new information obtained in Mr. Ball's July 2018 deposition. TC
Tech also appears to have worked diligently in the period between the deposition and this
motion-TC Tech followed up with Sprint two days after the deposition, arranged a meet and
confer shortly after receiving Mr. Ball's final deposition transcript, and filed this motion about a
month after the meet and confer. (D.I. 231 at 7). See Cornell Univ. v. Illumina, Inc., 2016 WL
3046258, at *5 (D. Del. May 27, 2016) (finding good cause met where the party's new
allegations were based on "a new set of facts obtained and confirmed during discovery which
took place after the Scheduling Order' s deadline for amending pleadings," and the party "worked
diligently to obtain and confirm facts" supporting its new allegations); Enzo Life Sciences, Inc. v.
Digene Corp., 270 F. Supp. 2d 484, 489 (D. Del. 2003) (allowing amendment to add new

allegations after the scheduling order deadline where the motion to amend was filed a month and
a half after depositions revealed new facts supporting the allegations).

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B. Rule lS(a) Supports Granting Leave to Amend
Sprint argues that leave to amend should be denied under Rule 15(a) because (1) TC
Tech acted with undue delay, (2) allowing amendment would cause Sprint undue prejudice, and
(3) TC Tech's proposed willfulness claim is futile. (D.I. 240 at 11-20).
I find no undue delay for the same reasons that I find TC Tech was diligent under Rule
16(b).
Regarding prejudice, Sprint argues that it is inherently prejudiced by any amendment
after the deadline to amend pleadings. (D.I. 240 at 12). In addition, Sprint claims that allowing
TC Tech to add a willful infringement claim will require Sprint to engage in substantial party and
third-party discovery. For example, discovery related to the general practices of in-house
counsel with respect to email solicitations, and third-party discovery on the responses of dozens
of other companies that received the same IAG email solicitation. (D.I. 240 at 13).
The fact that an amendment is made after the scheduling order deadline is not dispositive
for denying leave to amend. See, e.g., Enzo Life Sciences, 270 F. Supp. 2d at 490. I do not find
Sprint's alleged prejudices persuasive. Willfulness is based on Sprint's subjective state of
mind-the actions and policies of third parties are irrelevant. Halo Elecs., Inc. v. Pulse Elecs.,

Inc., 136 S. Ct. 1923, 1932-33 (2016). As for Sprint's general practices regarding email
solicitations, the relevant information is within Sprint's control. See Roquette Freres v. SP!

Pharma, Inc. , 2009 WL 1444835, at *5 (D. Del. May 21, 2009) (finding insufficient prejudice to
deny leave to amend in part because information addressing the new issue "would primarily be
within the control of [the non-moving party]"). In fact, Mr. Ball has already testified on his
general practices, as well as those of Mr. Wunsch and Mr. Cowan. (D.I. 232, Ex. 7 at 195:19-

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196:4) (noting that he, Mr. Wunsch, and Mr. Cowan would not have opened the IAG attachment
in the ordinary course of business)).
'" Futility' means that the complaint, as amended, would fail to state a claim upon which
relief could be granted. In assessing ' futility,' the District Court applies the same standard of
legal sufficiency as applies under Rule 12(6)(6)." Shane, 213 F.3d at 115. " [I]n order to
sufficiently plead willful infringement, a plaintiff must allege facts plausibly showing that as of
the time of the claim's filing, the accused infringer: (1) knew of the patent-in-suit; (2) after
acquiring that knowledge, it infringed the patent; and (3) in doing so, it knew, or should have
known, that its conduct amounted to infringement of the patent." Valinge Innovation AB v.

Halstead New England Corp. , 2018 WL 2411218, at *13 (D. Del. May 29, 2018). "At the
pleading stage, it is not necessary to show that the case is egregious." Bio-Rad Labs. Inc. v.

Thermo Fisher Sci. Inc., 267 F. Supp. 3d 499, 501 (D . Del. 2017).
Sprint argues that TC Tech's proposed amended complaint fails to allege facts plausibly
showing that Sprint knew of the ' 488 patent, or that Sprint knew or should have known that it
was infringing the ' 488 patent.
TC Tech' s amended complaint alleges that (1) in preparation for launching its allegedly
infringing LTE services, Sprint internally modeled projected costs of royalties for LTE patents,
but did not conduct a patent search and had an in-house counsel policy of not reviewing patent
sale offerings (D.I. 230-1 136), (2) Sprint received a patent offering from IAG in January 2012,
six months before launching its LTE services (Id.

1135, 37), (3) the IAG offering specifically

disclosed the '488 patent, its title, its filing date, a description of its claims, and a figure from the
patent, and stated that the ' 488 patent "may have significant value in the telecommunications
fields ," including "wireless networking," (Id. 139), (4) Sprint' s general counsel (Mr. Wunsch)

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forwarded the IAG offering to a high-level business executive (Mr. Cowan) and Sprint's vice
president of intellectual property (Mr. Ball) (Id.

~

42), (5) Sprint received a follow-up email from

IAG in February 2012, which Mr. Wunsch again forwarded to Mr. Ball (Id.

~~

43-44), and (6)

Sprint made no effort to design around the '488 patent or negotiate a license with IAG before
launching its LTE services (Id.

~

45).

The above allegations plausibly show that Sprint both knew of the '488 patent in January
2012 and knew or should have known that it would infringe the '488 patent with its LTE
services. At minimum, TC Tech has plead sufficient facts to support a theory of willful
blindness. See Intel Corp. v. Future Link Sys., LLC, 268 F. Supp. 3d 605, 623 (D. Del. 2017)
(denying summary judgment of non-willfulness where Intel employees stated that they avoided
reviewing non-Intel patents to avoid willfully infringing them, there was a lack of evidence that
Intel investigated whether its products infringed, and Intel had a "corporate atmosphere
encouraging employees to 'turn a blind eye' to patents").
Sprint also argues that TC Tech's willfulness claim fails because TC Tech is estopped
from relying on the IAG email, which explicitly stated that the IAG offering "should not be
construed as being .. . notice of infringement." (D.I. 240 at 19-20). Sprint essentially argues
that TC Tech has failed to meet the pleading standards for willful infringement because Sprint
would be successful on an equitable estoppel defense. Whether Sprint is likely to succeed on an
unpleaded affirmative defense is irrelevant to whether TC Tech has properly plead its willfulness
claim. Schmidt v. Skolas, 770 F.3d 241, 252 (3d Cir. 2014) ("The District Court effectively
required [plaintiff] to plead around an affirmative defense in his complaint, which is inconsistent
with Rules 8 and 12(b)(6)").
Therefore, I find futility does not support denying leave to amend.

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IV.

CONCLUSION
For the foregoing reasons, Plaintiffs motion (D.I. 230) is GRANTED.

IT IS SO ORDERED this

JL

day of February 2019.

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