Prism Technologies v. Adobe Systems Incorporated et al

Filing 759

MEMORANDUM AND ORDER - Prism's motion for leave to file amended complaint (Filing No. 656 ) is granted. Prism shall file its amended complaint by July 10, 2012. (Amended Complaint due by 7/10/2012.) Ordered by Senior Judge Lyle E. Strom. (TEL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
PRISM TECHNOLOGIES, LLC,

)
)
Plaintiff,
)
)
v.
)
)
ADOBE SYSTEMS, INCORPORATED; )
AUTODESK, INC.; McAFEE, INC.; )
SYMANTEC CORPORATION;
)
and TREND MICRO INCORPORATED, )
)
Defendants.
)
______________________________)

8:10CV220

MEMORANDUM AND ORDER

This matter is before the Court on the motion of
plaintiff Prism Technologies, LLC (“Prism”) for leave to file an
amended complaint, filed pursuant to Federal Rule of Civil
Procedure 15(a)(2), with accompanying brief and indices of
evidence (Filing Nos. 656, 657, 659, and 660).

The proposed

amended complaint includes an additional allegation of willful
patent infringement by defendant Symantec Corporation
(“Symantec”) only.

Symantec filed a brief opposing the motion

with indices of evidence (Filing Nos. 691, 692, and 693), and
Prism filed a reply brief with index of evidence (Filing Nos. 718
and 719).

The Court finds that Prism’s motion for leave to file

an amended complaint should be granted.
Prism filed its original complaint in this case on June
8, 2010, alleging infringement of its patent, U.S. Patent No.

7,290,288 (“’288 patent”) (Filing No. 1).

In preparation for a

deposition of a Symantec Rule 30(b)(6) witness, Brook Lewis,
Prism discovered that “Mr. Lewis was listed as a co-inventor on
U.S. Patent Application No. 10/937,893 (‘the ’893 application’),
filed with the [United States Patent and Trademark Office
(‘PTO’)] in 2004" (Filing No. 659, at 6).

“Prism also discovered

in those patent filings that in January 2008, two-and-a-half
years prior to the filing of the present action, the PTO issued
an Office Action rejecting claims of this patent application as
obvious in light of Prism’s ’288 patent” (Id.).
Subsequent to this discovery, during Mr. Lewis’
deposition on April 23, 2012, “Mr. Lewis confirmed that he was
indeed the named co-inventor on the ’893 application, and that he
submitted this patent application in 2004 while employed at
another company called Xtreamlok” (Id.). “Mr. Lewis further
testified that Xtreamlok was acquired by Symantec in 2005, at
which point he became an employee of Symantec, and Symantec took
over prosecution of his patent application” (Id.).
Prism concludes that Symantec was aware of the ’288
Patent as early as January 2008.

However, in response to Prism’s

relevant discovery requests, Symantec never disclosed that it had
any knowledge of the ’288 Patent prior to the filing of the
complaint in this action in June 2010.

Prism claims that

Symantec continued to infringe on the ’288 Patent despite knowing

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of its existence and “in reckless disregard of Prism’s patent
rights” (Filing No. 656, at 1).

Therefore, Prism wants to add a

paragraph in an amended complaint detailing what it sees as
willful infringement of the ’288 Patent by Symantec, along with
two paragraphs regarding willfulness and damages (Id. at 2).
Symantec, for its part, explains that the prosecution
of the ’893 application was handled exclusively by outside
counsel, Fenwick and West, and that Symantec was not aware of the
details of the prosecution of its patent, including the existence
of Prism’s ’288 Patent (Filing No. 692, at 3-5).

Symantec

maintains that Prism’s “bare allegations of pre-suit knowledge of
the ’288 Patent” cannot establish willful infringement, and so
the amendment to the complaint would be an exercise in futility
(Id. at 9).

In addition, Symantec maintains that because Prism’s

theories of infringement are “ever-changing,” “Symantec’s mere
notice as part of an Office Action received from the Patent
Office cannot constitute ‘willful infringement’”

(Id. at 12,

14).
If a party seeks to amend a pleading before trial but
after 21 days of serving the pleading, the party may amend “only
with the opposing party’s written consent or the court’s leave.
The court should freely give leave when justice so requires.”
Fed. R. Civ. P. 15(a)(2).

“There is no absolute right to amend.”

Becker v. Univ. of Neb. at Omaha, 191 F.3d 904, 908 (8th Cir.

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1999).

“A denial of leave to amend may be justified by undue

delay, bad faith on the part of the moving party, futility of the
amendment, or unfair prejudice to the opposing party.”
Brooks, 522 F.3d 823, 833 (8th Cir. 2008).

Amrine v.

“Likelihood of

success on the new claim or defenses is not a consideration for
denying leave to amend unless the claim is clearly frivolous.”
Becker, 191 F.3d at 908.
However, “A district court appropriately denies the
movant leave to amend if ‘there are compelling reasons such as
undue delay, bad faith, or dilatory motive, repeated failure to
cure deficiencies by amendments previously allowed, undue
prejudice to the non-moving party, or futility of the
amendment.’”

Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 715

(8th Cir. 2008) (quoting Moses.com Sec., Inc. v. Comprehensive
Software Sys., Inc., 406 F.3d 1052, 1065 (8th Cir. 2005)).
In Sherman, the defendant’s motion to amend its answer
to add an affirmative defense was made “seventeen months after
the established deadline for amending pleadings.”
F.3d at 716.

Sherman, 532

Thus, “the district court was required to apply

Rule 16(b)’s good-cause standard in ruling on [defendant’s]
motion.”

Id.

Rule 16(b)(4) states, “A schedul[ing order] may be

modified only for good cause and with the judge’s consent.”
R. Civ. Pro. 16(b)(4).

Fed.

The Eighth Circuit went on to say, “The

interplay between Rule 15(a) and Rule 16(b) is settled in this
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circuit.

In Popoalii, we stated that ‘[i]f a party files for

leave to amend outside of the court’s scheduling order, the party
must show cause to modify the schedule.’”

Sherman, 532 F.3d at

716 (quoting Popoalii v. Corr. Med. Servs., 512 F.3d 488, 497
(8th Cir. 2008)(emphasis added)).

“The primary measure of good

cause is the movant’s diligence in attempting to meet the order’s
requirements.”

Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir.

2006).
In this case, the parties agreed in their report of
parties’ planning conference that “Plaintiff may amend its
pleadings to add or modify claims and/or to allege (or add
further facts in support of) willfulness allegations, without
leave of court, by June 21, 2011" (Filing No. 155, at 8).

The

first Final Progression Order, issued after that date on July 22,
2011, adopted the provisions of the parties’ joint planning
conference report not otherwise addressed in the progression
order (Filing No. 199, at 4).

Therefore, the Court will analyze

the motion using the Rule 16(b)(4) standard.
Although the request for amending the complaint comes
almost twenty-three months after the original complaint was
filed, and five months before trial, the Court finds that Prism
has shown good cause in filing its motion to amend.

The Court

finds that Prism did not have all the information it needed to be
able to justify a motion to amend until the date of Mr. Lewis’

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deposition on April 23, 2012.
less than two weeks later.

Prism filed its motion to amend

While the willfulness allegation is

not certain to succeed, the Court finds that it is not clearly
frivolous, nor apparently futile.

Accordingly,

IT IS ORDERED that Prism’s motion for leave to file
amended complaint (Filing No. 656) is granted.

Prism shall file

its amended complaint by July 10, 2012.
DATED this 3rd day of July, 2012.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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