Days Corporation v. Lippert Components Inc

Filing 117

ORDER GRANTING 107 First MOTION for Leave to File Sur-Reply by Plaintiff Days Corporation and DENYING 102 MOTION to Strike Days' Newly Added Invalidity Contentions by Plaintiff Innovative Design Solutions, Inc. Signed by Judge Philip P Simon on 12/17/2019. (bas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
DAYS CORPORATION,

)
)
Plaintiff,
)
)
vs.
)
)
LIPPERT COMPONENTS, INC. and
)
INNOVATIVE DESIGN SOLUTIONS, INC., )
)
Defendants.
)

NO. 3:17CV208-PPS /MGG

consolidated with
INNOVATIVE DESIGN SOLUTIONS, INC., )
)
Plaintiff,
)
)
vs.
)
)
DAYS CORPORATION,
)
)
Defendant.
)

NO. 3:17CV327-PPS/MGG

OPINION AND ORDER
Our Local Patent Rule 3-1 requires the parties to exchange, fairly early on in the
litigation, preliminary infringement contentions and then preliminary invalidity
contentions. Each of these disclosures is required to include a chart identifying the
patent claims at issue, and providing certain information about what is alleged in terms
of patent infringement or invalidity. Under N.D. Ind. L.P.R. 3-1(e) governing
preliminary invalidity contentions, the chart is required to identify ”each item of prior
art that anticipates or renders each claim obvious,” and then provide additional

prescribed detail fleshing out the party’s position on anticipation or obviousness based
on the identified prior art.
Later in the litigation, after claim construction, the parties are required by L.P.R.
5-1 to exchange final infringement contentions and final invalidity contentions. The
dispute now before the court concerns the fairness of Days Corporation’s final
invalidity contentions, with opponents Lippert Components and Innovative Design
Solutions invoking L.P.R. 5-1(b)(3)’s limitation on changes between the preliminary and
final versions. That provision (with my emphases in bold) reads:
Amendments. If the final invalidity contentions identify additional prior
art, the amendment must be supported by good cause (e.g., discovery of
previously undiscovered information or an unanticipated claimconstruction ruling) and the accused infringer must include a separate
statement providing the specific grounds establishing good cause for the
amendment.
The motion of Lippert and IDS is made under L.P.R. 5-1(b)(4), which allows that “[t]he
party asserting infringement may seek to exclude the amendment on grounds that good
cause does not exist.”
The Federal Circuit defers to district courts “when interpreting and enforcing
local rules so as not to frustrate local attempts to manage patent cases according to
prescribed guidelines.” Howmedica Osteonics Corp. v. Zimmer, Inc., 822 F.3d at 1312, 1324
(Fed.Cir. 2016), quoting Genentech, Inc. v. Amgen, Inc., 289 F.3d 761, 774 (Fed.Cir. 2002).
The Federal Circuit sees local patent rules as “essentially a series of case management
orders that fall within a district court’s broad power to control its docket and enforce its
order,” and so reviews the application of local rules under an abuse of discretion
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standard. Keranos, LLC v. Silicon Storage Technology, Inc., 797 F.3d 1025, 1035 (Fed. Cir.
2015).
Lippert and IDS seek to strike Days’ final invalidity contentions which introduce
four new prior art references, and no fewer than 39 new grounds of invalidity based on
that new prior art. Lippert claims that these new amendments are not supported by
“good cause” as L.P.R. 5-1(b)(3) requires. There’s a silly argument going on as to how
to count the number of new grounds (is it 39 or 42?), but there’s no argument that Days
has introduced four new prior art references.
The principal argument in support of the motion is the insufficiency of Days’
statement of good cause. [DE 103-2 at 4.] The good cause statement included in Days’
final contentions is a entirely summary assertion that most of the court’s claim
constructions were “unanticipated,” without any justification for that conclusion or any
explanation of how the surprise claim constructions relate to the additional contentions
of invalidity.
Lippert and IDS cite opinions from E.D. Texas, a popular patent district, with
what they characterize as an analogous local patent rule standard, holding that claim
construction is not “unanticipated” for the purpose of good cause just because it differs
from the party’s own proposed construction, or just because the court sided with the
opposing party’s claim construction. [DE 103 at 8-9.] See, e.g., IDB Ventures, LLC v.
Charlotte Russe Holdings, Inc., 360 F.Supp.3d 541, 549 (E.D. Tex. 2018). In opposition to
the motion, Days argues summarily that a number of my claim constructions were
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unanticipated because they were “rendered in favor of Lippert’s preferred constructions
and against Days.” [DE 105 at 11.] Days doesn’t say whole lot more than that. Instead,
it simply repeats it over an over again in the hopes that repetition will remedy the
perfunctory nature of the argument. [Id. at 12, 13, 16.]
Local patent rules often expressly address amendment of contentions after the
Markman ruling, allowing them only with leave of court for “good cause.” Some, like
the Eastern District of Texas, think a foreseeable claim construction by the court does
not provide good cause, and the Federal Circuit has affirmed that approach under such
a local rule. See Parallel Networks, LLC v. Abercrombie & Fitch Co., 704 F.3d 958, 971(Fed.
Cir. 2013) (amendment properly disallowed where the “claim construction was hardly
unanticipated”). Others, like those of the District of New Jersey in Howmedica Ostenoics
Corp. v. Zimmer, Inc., 822 F.3d 1312, 1324 (Fed.Cir. 2016), and the Western District of
Washington in Allvoice Developments US, LLC v. Miscrosoft Corp., 612 Fed.Appx. 1009,
1015 (Fed. Cir. 2015)), provide that any claim construction different from that proposed
by the party seeking amendment is adequate cause.
Unfortunately, the wording of our local rule merely states that an “unanticipated
claim construction ruling” can amount to good cause allowing for amendments of
contentions. But it does so without providing any meaningful guidance on what exactly
that means. In other words, when is something “unanticipated?”
Days attempts to distinguish the Texas case law supporting the motion by
arguing that the local rules of the E.D.Tex. are not analogous to ours, but more
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complicated, with three different standards for amendment to invalidity contentions,
none of which is analogous to ours. [DE 105 at 16-17.] In reply, Lippert and IDS
identify what they consider the most analogous E.D.Tex. provision, governing the
ability to amend infringement contentions in light of claim construction, and point out
that under the case law construing it, a similar “unanticipated” standard applies, which
isn’t met simply because the court went with an opponent’s proposed construction.
[DE 106 at 9.]
Days also points to language in its preliminary invalidity contentions “reserving
the right” to make changes to the contentions after claim construction. [DE 105 at 5, 7.]
That self-serving language cannot possibly modify the legal standard of “good cause”
imposed by the local patent rules. In a patent case, the Court of Federal Claims has said
as much: “It would be intolerable to case management if one party could simply
reserve to itself the right to change its substantive positions without cause.” Morpho
Trust USA, LLC v. United States, 132 Fed.Cl. 419, 421 (Ct. Fed. Claims 2017).
Days argues that Lippert and IDS are not prejudiced by the new invalidity
contentions (1) because discovery doesn’t close until February 12, 2020 (after a recent
agreed extension granted by Judge Gotsch, the date is now April 17), (2) because Days’
reservations of rights put Lippert and IDS on notice that Days might amend its
contentions following the Markman ruling, and (3) because the amendments actually
removed one theory of invalidity (indefiniteness) in light of the court’s claim
construction. [DE 105 at 17-19.] Lippert responds that additional discovery doesn’t
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mitigate the work required for it and its expert “to try and comprehend 42 new
positions with respect to the claims at issue in a relatively short amount of time.” [DE
106 at 15.]
The decisions and local rules of other districts cited above highlight that different
approaches can reasonably be taken as to when to allow amendments to contentions
following the claim construction decision. In some districts, the fact that the court
construed a claim as an opposing party advocated is enough to support amendment.
In other districts, that circumstance does not justify amendment, as the construction of a
claim in the manner advocated by an opponent is not considered to be unanticipated.
There is little precedent interpreting our local rule’s use of “unanticipated.” The only
reported case is Lippert Components Mfg., Inc. v. MOR/ryde International Inc., 2017 WL
6210884 (N.D. Ind. 2017), in which Judge Gotsch refers to a party “retain[ing] the right
to amend its invalidity contentions under Local Patent Rule 5-1(b)(3) after the Court
issues its claim construction order,” but also that “any such amendments must be
‘supported by good cause (e.g. discovery of previously undiscovered information or an
unanticipated claim-construction ruling).’” Id. at *1, quoting L.P.R. 5-1(b)(3).
Against this background, I find the intended scope of the term “unanticipated
claim-construction ruling” in our local patent rule is less than clear, and I’m not
strongly persuaded by either side’s advocacy on that point in this case. In any event, I
have the authority under N.D. Ind. L.R. 1-1(b) not to apply a local rule in a particular
case “in the interest of justice,” and, ultimately, this is what drives my resolution of the
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motion before me. It is my strong conviction that the interest of justice is generally best
served by a robust exploration and presentation of the merits of litigation, and I don’t
like to see that stymied or foreclosed by an overly persnickety application of procedural
rules.
I view the situation through a pragmatic lens. At oral argument, more than once
I pressed counsel for Lippert and IDS to explain any prejudice they would suffer if the
expanded invalidity contentions are permitted. Each time, counsel’s answer focused on
the compressed schedule they would have in which to conduct additional discovery
and work with their experts to respond to the amended contentions. I pointed out that
if the new contentions had been made in Day’s preliminary set of contentions, the same
amount of additional time and expense would presumably have been expended
already, so isn’t it simply a matter of earlier versus now? Furthermore, shortly before
oral argument on the motion to strike, Judge Gotsch granted the parties’ stipulation to
extend discovery deadlines by several months, starting with expert witness reports.
[DE 111.] As is often the case with matters essentially of case management, prejudice is
averted by simply allowing sufficient time for new developments to be reasonably
managed and responded to. For all these reasons, I am not persuaded to exclude the
amended invalidity contentions.
ACCORDINGLY:
Plaintiff Days Corporation’s Motion for Leave to File a Sur-Reply [DE 107] is
GRANTED.
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Defendants Lippert Components, Inc. and Innovative Design Solutions, Inc.’s
Motion to Exclude Newly Cited Prior Art and Accompanying Grounds of Invalidity
Included in Plaintiff’s Final Infringement Contentions [DE 102] is DENIED.
SO ORDERED this 17th day of December, 2019.
/s/ Philip P. Simon
UNITED STATES DISTRICT JUDGE

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