EAGLE VIEW TECHNOLOGIES, INC. et al v. XACTWARE SOLUTIONS, INC. et al
Filing
432
MEMORANDUM OPINION AND ORDER denying Defendants' 374 Motion to Amend. Signed by Magistrate Judge Joel Schneider on 5/31/2018. (dmr)
[Doc. No. 374]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
EAGLE VIEW TECHNOLOGIES, INC.,
et al.,
Civil No. 15-7025 (RBK/JS)
Plaintiffs,
v.
XACTWARE SOLUTIONS, INC. et
al.,
Defendants.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on defendants’ “Motion for
Leave to Amend Defendants’ Second Amended Answer, Affirmative
Defenses,
Counterclaims,
and
Jury
Demand.”
[Doc.
No.
374].
Defendants seek to amend their answer to add: (1) a Fourteenth
Affirmative
‘376
and
Defense
‘737
that
patents
plaintiffs’
are
‘152,
invalid
for
‘840,
‘770,
‘454,
“mis-joinder
of
inventors”; (2) a Fifteenth Affirmative Defense that the patents
are “unenforceable due to inequitable conduct”; (3) a Sixteenth
Affirmative Defense that all necessary parties have not been
joined;
(4)
Count
XVI
to
their
counterclaim
seeking
a
declaratory judgment that the patents are invalid for incorrect
inventorship; and (5) Count XVII to their counterclaim seeking a
declaratory judgment of unenforceability (inequitable conduct)
1
as to the patents. 1 The Court received plaintiffs’ opposition
[Doc. No. 401], defendants’ reply [Doc. No. 407], and held oral
argument. For the reasons to be discussed, defendants’ Motion to
Amend is denied. 2
Background
This
is
a
bitter
patent
dispute
between
business
competitors that was filed on September 23, 2015. The patents at
issue are generally directed to software technology for imaging,
modeling and rendering aerial rooftop measurements and reports.
Plaintiffs are the owners of the patents at issue. Defendant
Xactware
Solutions
is
a
subsidiary
of
defendant
Verisk
Analytics, and provides online tools and systems for determining
replacement-cost
calculations
for
damaged
buildings
and
construction estimates. The amended complaint alleges defendants
infringe seven patents: ‘436, ‘840, ‘152, ‘770, ‘454, ‘376 and
‘737. The ‘436 patent was filed on October 16, 2008 and names
Christopher Pershing and David P. Carlson as co-inventors. The
other six patents at issue name Pershing as the sole inventor.
1
See Defendants’ Proposed Amended Pleading, Doc. No. 376-2.
This is defendants’ second attempt to assert an inequitable
conduct defense. On March 28, 2018, the Honorable Robert B.
Kugler granted plaintiffs’ motions to dismiss and strike
defendants’ inequitable conduct counterclaim and affirmative
defense. See 2018 U.S. Dist. LEXIS 51192. Defendants alleged
plaintiffs’ prosecution attorneys deliberately withheld relevant
information regarding the prosecution of the ‘061 Kennedy patent
that was relevant to the patentability of the ‘436 patent.
Although the dismissal was without prejudice, defendants did not
move to amend the dismissed counterclaim and defense.
2
2
Defendants’ proposed amendments essentially raise two new
defenses. One, defendants claim Carlson was improperly omitted
as an inventor on the six patents at issue thus rendering the
patents invalid. 3 Two, defendants engaged in inequitable conduct
by providing incorrect inventorship information to the Patent
Office with an intent to deceive the Patent Office.
The procedural history of the case is instructive. After
the December 9, 2015 Fed. R. Civ. P. 16 scheduling conference,
the Court’s first Scheduling Order mirrored the deadlines in the
Local
Patent
Rules.
The
first
deadline
to
amend
pleadings,
including amendments to add claims as to inequitable conduct,
was set for September 6, 2016. See December 10, 2015 Order, Doc.
No. 38. At the parties’ request the amendment deadline was later
extended to February 28, 2017, May 12, 2017, May 15, 2017 and
eventually to May 16, 2017. See Doc. Nos. 148, 163, 224, 226 and
228. Defendants filed the present motion to amend on February 9,
2018, approximately nine (9) months after the last deadline to
move to amend pleadings, and seventeen (17) months after the
first deadline to amend pleadings was set. The Markman Opinion
and Order were filed on December 5, 2017. [Doc. No. 332].
Recognizing that their motion is late, defendants attempt
to explain away their delay by arguing they filed their motion
“as soon as it had sufficient evidence to support all of its
3
Pershing was listed as the sole inventor on the patents.
3
allegations.” Defendants’ Memorandum in Support of Motion at 2
(“Defts.’ Memo.”), Doc. No. 375. Carlson and Pershing founded
Eagle
View.
Carlson
was
deposed
on
September
28,
2017
and
Pershing was deposed on November 7 and 8, 2017. After Pershing
was
deposed,
defendants
served
plaintiffs
with
supplemental
interrogatories asking plaintiffs to describe the contributions
of Carlson. Plaintiffs answered the interrogatories on December
21, 2017 and supplemented the response on January 21, 2018. 4
As to their new inventorship defense, defendants aver that
Pershing
and
Carlson
testified
at
deposition
that
Carlson
contributed to conception of the roof estimate reports recited
in
the
claims
Counterclaim
Pershing
patent,
and
of
the
(“PAC”)
Carlson
defendants
‘436
patent.
¶122,
Doc.
No.
are
listed
as
emphasize
only
See
Proposed
Amended
376-1.
However,
although
co-inventors
Pershing
is
on
the
listed
as
‘436
the
inventor on the six patents at issue even though plaintiffs’
patents
contain
limitations.
nearly
Defendants
identical
argue
roof
Carlson
estimate
should,
report
therefore,
be
listed as a co-inventor on the six patents.
The
background
of
defendants’
new
inequitable
conduct
defense is more involved. In February 2016 plaintiffs produced
portions of Thornberry deposition transcripts from a patent suit
4
On January 26, 2018 [Doc. No. 363], the Court denied
defendants’ application that plaintiffs be Ordered to supplement
their response to interrogatory 22.
4
Eagle View filed against Aerialogics in 2012. Dale and Chris
Thornberry
worked
for
Thornberry
Consulting,
a
company
that
developed a program that competed with Eagle View. Defendants
contend that in November 2009, after Carlson left Eagle View in
early 2009, he explored employment with Eagle View’s competitor,
Aerialogics.
The
Thornberrys’
deposition
testimony
confirmed
this fact. Defendants argue because Carlson did not assign his
rights in the ‘904 Provisional to Eagle View, and because he
could transfer this interest to any competitor, this gave Eagle
View, Pershing and Eagle View’s attorneys an incentive not to
identify Carlson as a co-inventor on the six patents at issue.
Although
portions
of
the
Thornberrys’
transcripts
were
produced as early as February 2016, defendants did not follow up
and request a full copy of the transcripts until November 21,
2017 (Defts.’ Memo. at 18-19), which was produced on December
20,
2017.
produced
Id.
on
at
20.
January
The
25,
exhibits
2018.
to
Id.
the
deposition
Defendants
argue
were
the
transcripts “revealed an entirely new and important fact,” i.e.,
that
Eagle
Thornberrys
View
knew
shortly
about
after
Carlson’s
the
conversation
conversation
with
occurred.
the
Id.
According to defendants, this shows plaintiffs were “concerned
about
Mr.
Carlson’s
career
path
after
Eagle
View”
and,
therefore, plaintiffs “had reason to prefer Mr. Carlson not be
included as an inventor on the remaining patents.” Id. at 21. In
5
addition,
Carlson
defendants
as
a
surmise
co-inventor
on
that
the
plaintiffs
six
patents
did
not
because
name
he
had
knowledge of prior art plaintiffs did not want to disclose.
In opposition to defendants’ motion, plaintiffs argue the
motion was filed late and will prejudice them if granted. In
addition,
plaintiffs
inequitable
conduct
argue
claims
defendants’
are
futile.
inventorship
Plaintiffs
also
and
argue
defendants’ proposed amendment does not sufficiently plead facts
to
support
their
inequitable
conduct
claim.
In
particular,
plaintiffs argue defendants have not pleaded sufficient facts to
show plaintiffs intended to deceive the Patent Office.
Discussion
1.
Leave to Amend
Pursuant to Fed. R. Civ. P. 15(a)(2), courts “should freely
give leave [to amend pleadings] when justice so requires.” A
court should allow a party to amend its pleading so long as
there is no undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies, undue
prejudice or futility of the amendment. See Shane v. Fauver, 213
F.3d 113, 115 (3d Cir. 2000). Despite this liberal standard for
permitting amendments, a motion to amend is committed to the
“sound
discretion
of
the
district
court.”
Cureton
v.
Collegiate Athletic Ass'n, 252 F.3d 267, 272 (3d Cir. 2001).
6
Nat'l
While “mere passage of time does not require that a motion
to amend a complaint be denied on grounds of delay ... at some
point, the delay will become ‘undue,’ placing an unwarranted
burden on the court, or will become ‘prejudicial,’ placing an
unfair burden on the opposing party.” Id. at 283 (quoting Adams
v. Gould Inc., 739 F.2d 858, 868 (3d Cir. 1984)). Delay is
“undue” if plaintiff had previous opportunities to amend. In re
Caterpillar Inc., 67 F. Supp. 3d 663, 668 (D.N.J. 2014) (citing
Estate of Oliva ex rel. McHugh v. New Jersey, 604 F.3d 788, 803
(3d Cir. 2010)). Therefore, the issue of undue delay requires
courts
to
“focus
on
the
movant’s
reasons
for
not
amending
sooner.” CMR D.N. Corp. v. City of Philadelphia, 703 F.3d 612,
629
(3d
Cir.
2013)
(explaining
that
the
Third
Circuit
has
“refused to overturn denials of motions for leave to amend where
the
moving
party
offered
no
cogent
reason
for
the
delay
in
seeking the amendment”).
In assessing futility, the District Court applies the same
standard of legal sufficiency as applies under Rule 12(b)(6).
Travelers Indemnity Co. v. Dammann & Co., Inc., 594 F.3d 238,
243 (3d Cir. 2010) (citation omitted). Accordingly, the Court
must accept as true all well-pleaded factual allegations and
must determine whether the facts as alleged raise a facially
plausible claim on the grounds asserted. Warren Gen. Hosp. v.
Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011). A complaint need not
7
provide
detailed
sufficient
to
factual
show
a
allegations
plausible
cause
but
must
of
provide
action.
facts
Ashcroft
v.
Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007)).
2.
In
Good Cause, Excusable Neglect and Undue Delay
addition
to
the
requirements
under
Rule
15(a),
Rule
16(b) regarding scheduling orders must also be satisfied. There
is no dispute defendants’ motion to amend filed on February 9,
2018
was
filed
after
the
May
17,
2017
deadline
to
amend
pleadings. Nonetheless, although late, the late filing is not
necessarily fatal to defendants. Pursuant to Rule 16(b)(4), a
Scheduling Order may be modified for good cause. Pursuant to
Rule 6(b)(1)(B), the court may extend a deadline for good cause
“after the time has expired if the party failed to act because
of excusable neglect.” Since defendants’ motion was filed after
May 17, 2017, defendants must meet the good cause and excusable
neglect standards to be granted.
Good
cause
requires
that
a
party
demonstrate
that
an
existing schedule cannot be met despite the diligence of the
party seeking the extension. See Rule 16, Advisory Committee
Note on Subdivision (b). The determination of good cause depends
upon the diligence of the moving party. Spring Creek Holding Co.
v. Keith, C.A. No. 02376, 2006 WL 2403958, at *3 (D.N.J. Aug.
18, 2006).
8
In determining whether a party has demonstrated excusable
neglect the Court must consider the following factors:
1) whether the inadvertence reflected professional
incompetence such as ignorance of rules of procedure,
2) whether an asserted inadvertence reflects an easily
manufactured excuse incapable of verification by the
court, 3) counsel’s failure to provide for a readily
foreseeable
consequence,
4)
a
complete
lack
of
diligence or 5) whether the inadvertence resulted
despite counsel’s substantial good faith efforts
towards compliance.
Dominic v. Hess Oil V.I. Corp., 841 F.2d 513, 517 (3d Cir.
1988).
The
Supreme
Court
has
explained
that
the
“excusable
neglect” inquiry is “at bottom an equitable one, taking account
of all relevant circumstances surrounding the party’s omission,”
including, “the danger of prejudice to the [other party], the
length
of
the
delay
and
its
potential
impact
on
judicial
proceedings, the reason for the delay, including whether it was
within the reasonable control of the movant, and whether the
movant acted in good faith.” Pioneer Inv. Serv. Co. v. Brunswick
Assoc. Ltd. Partnership, 507 U.S. 380, 395 (1993).
For the reasons to be discussed, the Court finds defendants
have not shown good cause or excusable neglect to excuse their
late filing. The Court also finds defendants’ motion was unduly
delayed. Therefore, defendants’ motion will be denied.
As already noted, defendants’ motion was filed nine months
after the last deadline to amend pleadings. Not only is this
fact significant, but the motion was filed almost 2½ years after
9
the
case
was
filed
and
was
made
returnable
after
the
fact
discovery deadline expired. In addition, this Opinion and Order
is being filed after the deadline passed for the service of
expert reports. 5
Defendants argue they were diligent because they allegedly
filed their motion as soon as they learned of the information to
support their inventorship and inequitable conduct defenses. The
record does not support defendants’ argument. As to defendants’
inventorship claim, they were on notice of the defense no later
than
after
Carlson
was
deposed
on
September
28,
2017.
Nonetheless, defendants waited over four months to file their
motion to amend.
In addition, defendants’ proposed amended pleading relies
almost exclusively on the depositions of Carlson and Pershing.
(“[I]nventor
relative
testimony
contributions
was
of
critical
the
two
to
understanding
inventors[.]”
the
Defendants’
Reply (“Defts.’ Reply”) at 2, Doc. No. 407). Defendants do not
give a valid reason why they waited until September 28, 2017 to
depose Carlson and November 7 and 8, 2017 to depose Pershing.
These inventors were key witnesses whose depositions should not
have been saved for the tail end of discovery. Sophisticated
parties
and
attorneys
should
have
5
anticipated
the
inventors’
See January 26, 2018 Order, Doc. No. 364, setting an April 6,
2018 deadline for expert reports for parties with the burden of
proof on an issue and a May 4, 2018 deadline for responsive
expert reports.
10
testimony might lead to necessary follow up discovery. This must
be taken into account when scheduling depositions.
Two
decision
facts
finding
are
particularly
that
defendants’
significant
motion
was
to
the
unduly
Court’s
delayed.
One, the first scheduling order in the case deliberately set an
extended time for the parties to move to amend pleadings. The
Rule 16 Conference was held on December 9, 2016 and the deadline
to amend pleadings was set nine months later—September 6, 2016.
An extended deadline was given to assure that defendants had
sufficient
time
to
conduct
discovery
that
might
lead
to
potential counterclaims. Defense counsel stated as follows when
he
was
questioned
about
why
defendants
proposed
an
extended
amendment deadline:
THE COURT: Motions to amend or add parties, September
6th. Why so late?
MR. CHRISTIE: I think we want it to be later rather
and earlier in order to make sure we had enough
discovery to flesh out any potential counterclaims
that we might bring. Well, currently, we have
referring
to
noninfringement
and
invalidity,
declaratory judgment counterclaims, but we envision
that there may be others that discovery would prove
are warranted.
THE COURT: Inequitable conduct?
MR. CHRISTIE: Potentially, Judge. Yes.
THE COURT: Do you have reason to believe that might
happen? I might, are you just –
MR. CHRISTIE: No. I’m not really speculating. We have
certain theories that include inequitable conduct
11
which we’re hoping that discovery will flesh out, and
we’ll have the basis for properly alleging.
Transcript of December 9, 2015 Rule 16 Conference at 29:19 to
30:10, Doc. No. 431. Despite the fact the Court accommodated
defendants by setting an extended amendment deadline, defendants
filed their motion to amend seventeen months after the deadline.
This evidences defendants’ undue delay.
In addition, as early as November 30, 3016, the Court told
the parties they should start taking fact depositions regarding
potential inequitable conduct claims. See Transcript of November
30,
2016
Oral
Defendants
Carlson
Argument
ignored
and
the
Pershing
at
100:8
Court’s
until
to
101:6,
direction
months
and
later.
By
Doc.
did
the
No.
not
151.
depose
time
the
depositions were taken, the deadline to amend pleadings long
passed. Parties must accept the risk and consequences if they
save key depositions for after the deadline to amend pleadings
passes. See Pfizer Inc. v. Sandoz Inc., C.A. No. 12-654-GMS/MPT,
2013 WL 5934635 (D. Del. Nov. 4, 2013)(denying as unduly delayed
defendants’ motion to amend to add inequitable conduct defense
filed six months from the deadline to amend and after the close
of fact discovery); Carrier Corporation v. Goodman Global, Inc.,
49 F. Supp. 3d 430 (D. Del. 2014)(denying motion to amend to add
inequitable conduct defense filed ten months after the deadline
to amend and two months after the close of fact discovery).
12
Defendants argue they diligently sought to depose Pershing.
Defendants are mistaken. Defendants first contacted plaintiffs
about deposing Pershing in February 2017. However, they did not
follow up
on
the
request
until
August
2017.
See Defendants’
Reply (“Defts.’ Reply”) Exhibits A, B, and C, Doc. No. 407. This
hardly shows diligence. 6
Defendants argue they could not file their motion as to
their inequitable conduct claim until they received the complete
Thornberry
exhibits
statement,
deposition
on
January
defendants
testimony
25,
2018.
on
provide
December
Other
no
than
evidence
20,
their
to
2017,
and
conclusory
support
their
argument. The first set of Thornberry transcripts were produced
in February 2016. Defendants do not explain what they learned in
the full transcript and exhibits that they did not already know
in February 2016. Defendants also do not explain why they waited
“over 20 months after the production of the transcripts and over
six months after the extended amended pleading deadline, to seek
the full transcripts.” Plaintiffs’ Opposition (“Pltfs.’ Opp.”)
at 18, Doc. No. 401. Further, defendants do not explain why they
waited to file their inventorship claim when they had notice of
the claim no later than when Carlson was deposed in September
2017. In addition, if the Thornberrys’ transcripts and exhibits
6
No evidence exists to support the notion that plaintiffs
strategized to deliberately delay the depositions of Carlson and
Pershing to prejudice defendants.
13
were as important as defendants’ claim, defendants could have
and should have contacted the Court long ago about any problems
they were having regarding obtaining the information. Throughout
the
course
of
the
case
defendants
have
not
been
shy
about
bringing discovery disputes to the Court’s attention. Defendants
did not raise with the Court any problems about scheduling the
depositions of Carlson and Pershing. Nor did defendants raise
any issue about the Thornberry transcripts or exhibits. It is
too
late
to
rely
on
plaintiffs’
alleged
transgressions
when
defendants did not take diligent steps to request discovery they
supposedly needed to support their defenses.
Defendants’ lack of diligence is also demonstrated by the
fact that long before they filed their motion on February 8,
2018, they could have and should have asked for an extension of
the May 15, 2017 deadline to amend pleadings. See Stallings ex
rel.
Estate
of
Stallings
v.
IBM
Corp.,
C.A.
No.
08-3121
(RBK/JS), 2009 WL 2905471, at *16 (D.N.J. Sept. 8, 2009)(denying
late motion to amend where plaintiffs could have moved for an
extension of the amendment deadline, which was not done and not
explained); Assadourian v. Harb, C.A. No. 06-896 (JAG), 2008 WL
4056361, at *4 (D.N.J. Aug. 28, 2008)(denying plaintiff’s motion
to
amend
because,
in
part,
plaintiff
did
not
move
for
an
extension of time to file an amended pleading). Thus, not only
did defendants unduly delay taking the depositions of Carlson
14
and Pershing, but after taking Carlson’s deposition and being on
notice
of
their
potential
inventorship
defense,
they
delayed
filing their motion to amend. In addition, defendants did not
seek Court relief for allegedly delayed discovery, nor did they
seek to extend the Court Ordered deadline to amend pleadings.
The
nothing
Court
rejects
Defendants
defendants’
could
do
to
argument:
raise
[their
“[t]here
new]
was
defenses
earlier, no way to know what relevant, discoverable information
Plaintiff had failed to turn over, and no way to foresee the
startling testimony of the inventors.” Defts.’ Reply at 2. To
the contrary, defendants did not have to wait until the tail end
of the case to depose Carlson and Pershing, they could have
heeded the Court’s direction to take early fact depositions as
to inequitable conduct issues, they could have asked to extend
the deadline to amend pleadings, if genuinely needed they could
have
followed
transcripts
Carlson’s
up
and
earlier
exhibits,
inventorship
to
request
they
the
could
testimony
Thornberry
have
complete
followed
immediately
after
up
he
on
was
deposed, and they could have timely filed their motion to amend
so that it was not returnable after the fact discovery deadline.
The
Court
rejects
defendants’
excuse
they
were
stymied
by
plaintiffs’ delay as to the Thornberry transcripts and exhibits
and
the
inventors’
depositions.
As
noted,
defendants
never
brought these issues to the Court’s attention even though they
15
regularly raised discovery disputes throughout the course of the
case. Given defendants’ habit of raising discovery disputes with
the Court, if plaintiffs were as obstructive as defendants now
claim them to be, defendants most assuredly would have raised
the issue with the Court. In other words, the Court would not
have
heard
about
plaintiffs’
alleged
foot-dragging
until
defendants had to justify their late motion to amend. In sum,
therefore, the Court finds that defendants’ motion to amend was
unduly
delayed,
and
defendants
cannot
show
good
cause
or
excusable neglect for their late filing. Therefore, defendants’
motion to amend will be denied.
3.
Prejudice
Defendants’ undue delay, and their failure to show good
cause or excusable neglect to explain their late filing, is not
the only reason defendants’ motion is denied. Plaintiffs will be
materially prejudiced if defendants’ motion is granted. From the
outset of the case plaintiffs have pointed out defendants are
fierce competitors and plaintiffs are losing business on account
of
defendants’
granted,
it
alleged
will
infractions.
inevitably
lead
to
If
a
defendants’
further
motion
delay
in
is
the
resolution of the case. This is an appropriate basis upon which
to deny defendants’ motion. See BTG International Limited v.
Actavis Laboratories FL, Inc., C.A. No. 15-5909 (KM), 2017 WL
529446 (D.N.J. Feb. 8, 2017)(denying plaintiff’s motion to amend
16
complaint on ground, inter alia, the amendment would “needlessly
strain
an
already
tight
schedule
and
significantly
delay
resolution” of the case). Further, defendants’ amendments may
result in additional discovery and delay of an already old case.
Stallings, 2209 WL 2905471, at *17. (“Prejudice may … result
where the amendment will require re-opening of discovery, which
would delay resolution of the matter, or would unnecessarily
increase the cost of litigation”).
The Court credits plaintiffs’ argument that they need time
to conduct an investigation and additional discovery to rebut
defendants’ new inventorship and inequitable conduct defenses. 7
This is especially true since defendants will not commit that
their trial evidence will be limited to just the statements in
their
proposed
amendment.
Transcript
of
April
2,
2018
Oral
Argument at 41:15 to 42:4, Doc. No. 423. The Court also credits
plaintiffs’
testimony
to
assertion
rebut
that
they
defendants’
may
new
need
to
defenses.
retain
expert
Plaintiffs
are
prejudiced because of their compressed time frame for developing
a
response
to
defendants’
new
allegations
prior
to
trial.
Pfizer, Inc., 2013 WL 5934635, at *5. “[C]ertain prejudice to
7Similar
to the amendment deadline, the deadline to complete fact
discovery has also been extended numerous times. The original
December 1, 2016 deadline was extended to May 30, 2017,
September 15, 2017, October 23, 2017, December 28, 2017, January
31, 2018, and February 28, 2018. See Doc. Nos. 38, 163, 224,
285, 302, 344, 364. Defendants cannot be heard to argue they
have not had an adequate opportunity to complete discovery.
17
plaintiff[s]
is
Corporation,
49
inherent
F.
Supp.
on
3d
[such
at
a]
433
timeline.”
(citation
Carrier
omitted).
In
addition, granting defendants’ motion at this late stage of the
case and reopening liability discovery on a new defense theory
would place an unwarranted burden on the Court and prejudice
plaintiff. Id.; see also In re Caterpillar Inc., 67 F. Supp. 3d
663, 668 (D.N.J.
2014)(explaining
that
“[[p]rejudice
involves
the irretrievable loss of evidence, the dimming of witnesses’
memories, or the excessive irremediable burdens or costs imposed
on the non-moving party if an amendment is granted”).
4.
Futility
For
the
sake
of
completeness
the
Court
will
address
plaintiffs’ futility arguments.
(a) Inventorship
As
to
defendants’
new
inventorship
defense,
plaintiffs
claim the defense is futile for three reasons: (1) defendants
cannot meet the good cause standard under L. Pat. R.3.7 which is
necessary to amend their invalidity contentions, (2) defendants’
new
invalidity
counterclaim
fails
to
allege
sufficient
facts
establishing Carlson actually contributed to any claims in the
six patents at issue, and (3) even if Carlson should have been
named as an inventor, the Court can correct inventorship in the
course of the case.
18
The
Court
does
not
need
much
time
to
deny
plaintiffs’
futility arguments as to defendants’ inventorship defense. One,
it is premature to decide if defendants’ will meet the good
cause standard to amend invalidity claims pursuant to L. Pat. R.
3.7. That motion and record is not before the Court. Two, fact
questions
exist
as
to
whether
defendants
have
sufficiently
alleged Carlson actually contributed to any claims in the six
patents. See PAC ¶¶115-154. Three, at this time, and in the
present
context,
it
is
not
completely
beyond
doubt
that
inventorship can be corrected. Plaintiffs argue “[t]here is no
possibility
that
Plaintiffs
would
be
unable
to
correct
inventorship under §256.” Pltfs.’ Opp. at 26. Since defendants’
dispute
plaintiffs’
argument,
at
this
time
the
Court
is
not
prepared to accept plaintiffs’ argument that they are right and
defendants are wrong.
(b)
As
to
Inequitable Conduct
defendants’
inequitable
conduct
claim,
plaintiffs
argue the claim is futile because defendants have not pleaded
with
particularity
sufficient
facts
so
that
a
court
may
reasonably infer plaintiffs acted with the specific intent to
deceive the PTO by withholding relevant information. Defendants
argue plaintiffs intended to deceive the PTO by not including
Carlson
as
a
named
inventor
on
the
six
patents
at
issue.
Defendants argue that since Carlson did not assign his rights in
19
the
‘904
interest
Provisional
to
According
to
Eagle
plaintiffs’
to
View,
he
competitors.
defendants,
this
could
transfer
Defts.’
created
Memo.
his
17.
incentive
an
at
for
plaintiffs to deceive the PTO because plaintiffs knew Carlson
was speaking with plaintiffs’ competitors. Defendants argue:
If Mr. Carlson were properly named as an inventor on
the six asserted patents, he would be free to license
the patents to another company or practice the patents
himself. Whether or not Mr. Carlson in fact sought to
pursue these rights, Mr. Pershing and Eagle View had
reason to be concerned that he might, and therefore
had reason to prefer Mr. Carlson not be included as an
inventor on the remaining six patents.
Id. at 21.
For the same reasons Judge Kugler deemed defendants’ prior
inequitable conduct claim futile, the Court finds defendants’
new
claim
to
be
sufficient
facts
intent
deceive
to
deficient.
to
show
the
Defendants
plaintiffs
PTO.
The
acted
mere
have
not
pleaded
with
the
specific
possibility
of
legal
misconduct is insufficient. 2018 U.S. Dist. LEXIS 51192, at *6.
Defendants fact allegations “must suggest the deliberate nature
of the fraud on the PTO.” Id. at *8. Specifically, defendants
offer no evidence of plaintiffs’ scienter. Defendants have not
pleaded facts, for example, that plaintiffs or their attorneys
thought or believed Carlson was an inventor of the six patents.
Nor are there pleaded facts directly showing plaintiffs intended
to
deceive
the
PTO.
In
addition,
there
are
no
facts
that
plaintiffs were concerned that the prior art defendants cite to
20
was
material.
Nor
do
defendants
aver
that
plaintiffs
were
concerned Carlson was speaking with plaintiffs’ competitors. In
short, no facts have been pleaded to show deceptive intent on
the
part
of
plaintiffs.
circumstantial
facts
and
Instead,
defendants
merely
ask
Court
draw
the
to
plead
general
inferences from those facts. Thus, defendants new inequitable
conduct
Court
claim
is
based
aware
on
that
improper
if
this
inventorship
were
the
sole
is
futile.
basis
to
The
deny
defendants’ motion, the motion would be denied without prejudice
to leave to amend. Since defendants’ motion is denied on other
grounds,
their
motion
Further,
defendants’
to
amend
affirmative
is
denied
defense
with
raising
prejudice.
inequitable
conduct is denied for the same reasons Judge Kugler previously
expressed, i.e., the deficiencies in the defense are clearly
apparent. 2018 U.S. Dist. LEXIS 51192, at *24.
21
Conclusion
For all the foregoing reasons, defendants’ Motion for Leave
to Amend is DENIED.
ORDER
Accordingly, it is hereby ORDERED this 31st day of May,
2018, that defendants’ Motion for Leave to Amend is DENIED.
s/Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge
Dated: May 31, 2018
22
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