InterMetro Industries Corporation v. Enovate Medical, LLC

Filing 225

MEMORANDUM OPINION - For the foregoing reasons, Plaintiffs Motion for Leave to Amend Its Third Amended Complaint (Doc. 166) will be granted. A separate Order follows.Signed by Honorable Robert D. Mariani on 3/7/17. (jfg)

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

INTERMETRO INDUSTRIES CORP.,

Plaintiff,

v.

3:13·CV·02854
(JUDGE MARIANI)

ENOVATE MEDICAL, LLC,

Defendant.
MEMORANDUM OPINION
I. INTRODUCTION

Presently before the Court is Plaintiffs Motion for Leave to File a Third Amended
Complaint (Doc. 166). For the reasons that follow, the Court will grant the Motion.

II. PROCEDURAL HISTORY
Plaintiff, InterMetro Industries Corporation ("lnterMetro"), filed its first Complaint in
this action on November 22, 2013, alleging violations of its patent claims in certain mobile
medical point-of-care carts. (See Doc. 1). On September 30,2014, this Court granted
Motions to Dismiss by Defendant Enovate Medical, LLC ("Enovate") and by other similarlysituated Defendants in related cases. (See, e.g., Doc. 52). Plaintiff responded by filing an
Amended Complaint (Doc. 55) which Enovate moved to dismiss on October 31,2014 (Doc.
56). In late 2015, before the Court had ruled on the second Motion to Dismiss, Plaintiff
moved for leave to 'file a Second Amended Complaint. In February, 2016, the Court granted
Plaintiffs Motion subject to certain limitations. (See Docs. 140, 141).

Plaintiff's Second Amended Complaint asserted claims against Enovate for

infringement of 35 claims within the following six patents: 6,493,220 ("220"); 6,721,178
("178"); 7,612,999 ("999"); 7,791,866 r866"); 7,990,691 ("691"); 8,526,176 ("176"). (See
generally, Doc. 142). Defendant answered Plaintiff's Second Amended Complaint in
February, 2016 (Doc. 145) and asserted Counterclaims seeking a declaration of non­
infringement of the patents at issue, adeclaration of invalidity of the asserted claims by
Plaintiff, and adeclaration of unenforceability of the asserted patents for failure to disclose
co-inventors and failure to disclose information material to patentability (id. at 40-59).
On May 11, 2016, an Administrative Patent Judge on the Patent Trial and Appeal
Board ("PTAB") issued two decisions following Inter Paries Reviews, requested by Enovate,
of certain claims contained in Patents 178 and 220. The Judge found that claims 27, 28,
88,101, and 108 of U.S. Patent No. 6,721,178 B1 were unpatentable, as were claims 1and
2 of U.S. Patent No. 6,493,220 B1. (See Doc. 154; Enovate Med., LLC v. InterMetro Indus.
Corp., Case IPR2015-00300 (PTAB May 11,2016); Enovate Med., LLC v. InterMetro Indus.
Corp., Case IPR2015-00301 (PTAB May 11,2016)). On May 31,2016, InterMetro filed
notices of appeal of both decisions to the Federal Circuit (see Doc. 160, Ex. C, D) and the
cases have been consolidated for purposes of the appeal.
On July 28, 2016, Plaintiff moved for leave to file aThird Amended Complaint
pursuant to Federal Rule of Civil Procedure 15(d). (Doc. 166). Plaintiff's Third Amended
Complaint seeks to add a Count alleging that Enovate "has and is infringing, directly,
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indirectly, and willfully" Patent 9,389,643 ("643"). (ld. at 2). Patent 643 was issued on July

12, 2016, and is "part of the same family of patents that have been asserted against
Enovate in the original Complaint." (ld.). A review of Plaintiffs red-lined copy of the Third
Amended Complaint (Doc. 167-3) reveals that, with the exception of a typographical error in
paragraph 107, the only apparent alteration to the Complaint is the addition of Count VII,
alleging infringement of Patent 643. Enovate opposes InterMetro's Motion. (Doc. 220).

III. STANDARD OF REVIEW
Pursuant to the Federal Rules of Civil Procedure, "the court may, on just terms,
permit a party to serve a supplemental pleading setting out any transaction, occurrence, or
event that happened after the date of the pleading to be supplemented." Fed. R. Civ. P.
15(d). "Because it refers to events that occurred after the original pleading was filed, a
supplemental pleading differs from an amendment, which covers matters that occurred
before the filing of the original pleading but were overlooked at the time." Owens-Illinois,

Inc. v. Lake Shore Land Co., Inc., 610 F.2d 1185 (3d Cir. 1979). Nonetheless, "the
standard applicable to motions to amend under Fed. R. Civ. P. 15(d) is essentially the same
standard that applies to Fed. Civ. P. 15(a)." Medeva Pharma Ltd. v. Am. Home Prods.

Corp.,201 FRO 103, 104 n.3 (D. Del. 2001).
The application of Federal Rule of Civil Procedure 15(a) and (d) is within the "sound"
and "broad" discretion of the Court. Intel Corp. v. Amberwave Sys. Corp., 233 FRO 416,
418 (D. Del. 2005); Medeva Pharma, 201 FRO at 104. A party may amend its pleading with
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leave of court. The Court should "freely give" such leave "when justice so requires." Fed.

R. Civ. P. 15(a)(2). The Supreme Court has described this rule as follows:
[Rlile 15(a)(2)'s] mandate is to be heeded. If the underlying facts or
circumstances relied upon by a plaintiff may be a proper subject of relief, he
ought to be afforded an opportunity to test his claim on the merits. In the
absence of any apparent or declared reason-such as undue delay, bad faith
or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, futility of
amendment, etc.-the leave sought should, as the rules require, be "freely
given."
Foman v. Davis, 371 U.S. 178, 182,83 S.Ct. 227, 230, 9 L.Ed. 222 (1962) (internal citations

omitted); see also Arthur v. Maersk, Inc., 434 F.3d 196,204 (3d Cir. 2006) ("Among the
factors that may justify denial of leave to amend are undue delay, bad faith, and futility.").
The Third Circuit has "consistently recognized, however, that 'prejudice to the non-moving
party is the touchstone for the denial of an amendment."' Id. (quoting Lorenz v. CSX Corp.,
1 F.3d 1406, 1414 (3d Cir. 1993)). Similarly, "[I]eave to supplement should be granted if it
will promote the just disposition of the case, will not cause undue prejudice or delay and will
not prejudice the rights of any parties." Medeva Pharma, 201 FRO at 104 (citing Proctor &
Gamble Co. v. McNeil-PPC, Inc., 1998 WL 1745118 (0. Oe11998)).

IV. ANALYSIS
In light of the issuance of Patent 643 in July, 2016, over two and a half years after
the 'filing of the original Complaint, InterMetro's motion is properly brought as one to
supplement, as opposed to amend, its Complaint. InterMetro contends that the Court
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should grant its motion "because doing so will promote judicial efficiency by consolidating

into one action its entire dispute with" Enovate. (Doc. 169, at 1). Specifically, InterMetro
asserts that the claims relating the 643 Patent "involve the same parties, the same products,
and the same technology as its claims against Enovate relating to the other six patents-in­
suit." (Id. at 2).
Enovate's brief in opposition to InterMetro's motion fails to address in any detail the
arguments raised in InterMetro's brief with respect the whether the motion to
amend/supplement the Complaint should be granted. Instead, inexplicably, Enovate's brief
is simply a continuation of its arguments previously raised in support of staying the case.
(See generally, Doc. 220). Nonetheless, to the extent that Enovate raised any arguments

relevant to the motion currently before this Court, they are addressed below.
With respect to whether InterMetro's proposed supplementation is futile, the Court
notes that the only substantive difference between the Second and Third Amended
Complaint is the addition of Count VII. The Court has already ruled that Counts I-VI
sufficiently state a claim upon which relief can be granted, thereby refusing to deny
Plaintiffs prior motion to amend the complaint on the basis of futility. (Doc. 140, at 6-12).
With respect to Count VII, Plaintiff contends that its "amendments to assert Enovate's
infringement of the '643 Patent generally align with the allegations in [its] Second Amended
Complaint with respect to the other six patents". (Doc. 169, at 5). Defendant does not set
forth any argument in its brief in opposition to Plaintiffs motion to dispute Plaintiffs
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statement or contend that there is, in fact, some legally or factually significant difference

which should cause the Court to reach a different conclusion with respect to the futility of
Count VII than the Court did in its analysis of Counts I-VI; and a comparison of the Second
Amended Complaint and proposed Third Amended Complaint appears to support Plaintiffs
assertion.
Rather, with respect to the element of futility, Enovate attempts to establish the
similarities between the claims found unpatentable by the PTAB which are now before the
Federal Circuit and those claims at issue here in Patent 643. (Doc. 220, at 4-5). Enovate
argues that the claims of Patent 643 "are so 'closely related' to the claims of the current
patents-in-suit that they are similarly unpatentable [and c]onsequentially, an affirmance by
the Federal Circuit ... will help simplify this case by showing the futility of adding the '643
Patent to a Third Amended Complaint." (Id. at 4-5).
As noted by this Court in its Opinion denying Defendant's Motion to Stay, although
there is clearly an overlap of certain issues before this Court and the Federal Circuit, the
Federal Circuit is only examining six claims within Patents 178 and 220. Allowing Plaintiff to
assert an additional Patent, and certain claims therein, merely adds these claims to the four
patents, and 29 claims, that are not directly at issue in the Federal Circuit appeal. Given the
number of disagreements among the parties with respect to the validity and patentability of
the claims already in this case and not at issue in the Circuit case, the Court does not view
the addition of Plaintiffs Count VII as futile, as this Court will still be required to analyze the
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merits of Plaintiffs claims, regardless of the Federal Circuit's decision. Furthermore,

Defendant asserted in its Motion to Stay that it intends on moving for summary judgment
and that if the six claims currently before the Federal Circuit are held to be unpatentable,
this will be used as res judicata to establish that it has met its burden of proof as to
obviousness and unpatentability, at least to a preponderance of the evidence and that the
Circuit's decision will be relevant pursuant to Fed. R. Evid. 401 and 402 on summary
judgment. (Doc. 165, at 9-10). To the extent that Defendant believes that the Circuit's
decision with respect to the claims found in Patents 178 and 220 should affect this Court's
analysis of the other claims at issue in this case, as well as those claims within Patent 643,
such an issue is better left for summary judgment. At the current stage of litigation, Plaintiff
has adequately pleaded a cause of action for in'fringement of Patent 643 and adding Count
VII is not futile. 1
With respect to bad faith and delay, "[w]hen considering a motion for leave to amend,
the court should grant leave unless 'the motion is being made in bad faith.'" Trueposition,

Inc. v. Allen Telecon, Inc., 2002 WL 1558531, *2 (D. De/. 2002) (quoting B&R, Inc. v.
Donald Lake Const., 19 F.Supp.2d 217, 220 (D. Del. 1998)). "The scope of the court's
inquiry in therefore limited to whether the motion to amend itself is being made in bad faith,
1 Though the Court of course recognizes that Plaintiff's filing of a Third Amended Complaint carries
with it a corresponding right on the part of the Defendant to move once again pursuant to Federal Rule of
Civil Procedure 12(b)(6) to dismiss, the Court, without foreclosing this avenue for Defendant, does not see
a substantial basis for what would be athird Motion to Dismiss by Enovate. This is so principally because
the first six counts of the Third Amended Complaint are identical to those of the Second Amended
Complaint which this Court permitted Plaintiff to file and adds only an additional, seventh count, which is
legally indistinguishable from the causes of action set forth in the first six counts.

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not whether the original complaint was filed in bad faith or whether conduct outside the
motion to amend amounts to bad faith." Id.
Here, Plaintiff states that the 643 Patent issued on July 12, 2016. (Doc. 169, at 1, 5).
On June 16, 2016, Plaintiff informed the Court and Enovate during a conference call that it
had obtained a new patent and intended to file a motion to amend the complaint in the
following weeks. InterMetro asserts that it also provided Enovate with pre-suit notice "as to
Enovate's post-issuance infringement of the '643 Patent" the following day "when
[lnterMetro] served on Enovate claims charts directed to the '643 Patent." (Id. at 5 n.3). On
July 28,2016, approximately 6 weeks after providing pre-suit notice to Enovate and 16 days
after the issuance of Patent 643, InterMetro filed the motion to amend in order to add Count
VII. In light of the timing of these events, there is no indication of undue delay or bad faith in
the timing of the filing of Plaintiffs motion.
The Court also finds that Enovate will not suffer undue prejudice by the grant of
Plaintiffs motion. To demonstrate undue prejudice, the party opposing the motion to amend
must show that "it will be 'unfairly disadvantaged or deprived of the opportunity to present
facts or evidence' unless leave to amend is denied." Trueposition, 2002 WL 1558531, at *2
(quoting Bechtel v. Robinson, 886 F.2d 644, 652 (3d Cir. 1989)).
InterMetro asserts that Enovate will not be prejudiced because "643 is closely related
to the other patents-in-suit" and therefore Enovate will not need to conduct additional
discovery "and, even if it did, discovery remains open.... " (Doc. 169, at 6). InterMetro later
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reiterates its assertion that the new patents are closely related to the other patents, stating

that the "allegations that Enovate infringes the '643 Patent concern the same accused
products, the same technology, and the same parties." (Id. at 7). InterMetro further asserts
that it "does not believe additional claim construction will be necessary". (/d. at 6).
Enovate argues that "Courts have held that the addition of related patents, or even
additional claims from an asserted patent, in acase pending for several years is prejudicial
to the defendant when the case is at an advanced stage." (Doc. 220, at 6). First, it is
important to note that Enovate has consistently made clear, both in support of its motion to
stay the case and in opposition to Plaintiffs motion to amend the complaint, that it believes
this case is at an early stage in the proceedings (see e.g., Doc. 220, at 5-6), and therefore it
cannot reasonably argue that it believes it will suffer prejudice because of the stage of this
case. Second, even if the Court were to accept for purposes of Enovate's argument that the
case is at an advanced stage, the cases cited by Enovate all found prejudice due to
additional "voluminous discovery" or when the new claim would result in "at least six months
delay to take new discovery ...." (Doc. 220, at 6-7 {citing ACC Climate Control v.
Bergstrom, Inc., 2010 WL 746750, at *2 (N.D. Ind. 2010)2; Lemelson v. Gen. Mills, Inc.,

1986 WL 7067, at * 2 (N.D. III. 1986)). Here, Plaintiff asserts that "643 is closely related to
the other patents-in-suit" and therefore Enovate will not need to conduct additional
2 The Court further notes that in ACC Climate Control, Plaintiff moved to supplement the Complaint
with the addition of twelve additional claims based upon four new patents. ACC Climate Control, 2010 WL
746750, at * 2-3. Here, Plaintiff is only moving to add one patent, and has agreed to limit the number of
new asserted claims to five. Thus, the present motion presents a Significantly different factual situation
than that in ACC Climate Control.

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discovery "and, even if it did, discovery remains open... "and further that it "does not

believe additional claim construction will be necessary". (Doc. 169, at 6). Enovate does not
refute any of these statements or contend anywhere in its brief that the addition of Patent
643 will create any lengthy delay, an unreasonable amount of supplemental discovery, or
additional claim construction in this action. Therefore, Enovate has failed to show that it will
be unfairly disadvantaged or deprived of the opportunity to present facts or evidence if the
Court grants Plaintiffs motion. Enovate's argument with respect to any alleged prejudice to
it as a result of the current stage of the case is without merit. Further, even if there was
some prejudice, the apparent significant overlap between the six patents previously
asserted with Patent 643 reduces any prejudice that Enovate may suffer. Cf. Micron Tech.,
Inc. v. Rambus Inc., 409 F.Supp.2d 552,559 (D. Del. 2006) ("[E]ven if there were no
overlap, the trial date is not set in this action, and the schedule can be adjusted to allow for
necessary discovery.").
Plaintiffs Third Amended Complaint alleges that, in addition to the 35 claims within
the six patents-in-suit asserted in the Second Amended Complaint, Enovate additionally
violated "at least claims 1-3,5, and 9-17 of the '643 patent'''. (Doc. 171, ~ 463). In
Plaintiffs brief in support of its motion, InterMetro states that it liis willing to further promote
judicial efficiency by agreeing to reduce the number of asserted claims against Enovate to
Claims 1, 2, 13, 16, and 17 ...." (Doc. 169, at 8). Although InterMetro asserts that it is
"adhering to the spirit of the scheduling order" that the parties stipulated to, wherein they
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agreed that InterMetro would reduce the number of asserted claims against Enovate (as

well as against other Defendants in related suits) not to exceed 35 (Doc. 169, at 8 (citing
Doc. 54)), InterMetro's current proposal results in a violation of this agreement, namely,
Plaintiff is now attempting to assert the infringement of 40 claims. This results in some
prejudice to Enovate as Plaintiff is attempting to change the contents of the parties'
stipulation without any indication that it has obtained the approval of Defendant. However,
due to Enovate's failure to brief this issue in their opposition to Plaintiff's motion, the Court is
unable to determine Defendant's position with respect to a possible increase in asserted
claims or whether it would be amenable to a new stipulation with InterMetro with respect to
the number of asserted claims. Although the Court finds that this proposed alteration of the
stipulation does not constitute undue prejudice, it expects the parties to confer on the issue
in good faith and agree upon a modification of the previously agreed upon number of
asserted claims across all patents-in-suit in order to clearly identify those patent claims that
are now specifically at issue.
Additionally, as InterMetro notes, it could file a separate lawsuit alleging infringement
of the 643 Patent by Enovate. (See Doc. 169, at 2, 7). This would result in duplicative and
burdensome litigation for the parties as well as for the Court. As noted by the District Court
of Delaware:
Where the additional patents are closely related to the already asserted
patents and the patents involve similar technology, it is clearly in the interest
of judicial economy to dispose of all of the claims between the parties in one
proceeding. See Jenn-Air Products Co. v. Penn Ventilator, Inc., 283 F.Supp.
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591, 594 (E.D.Pa.1968). Since the accused products are the same, the
technology is the same, and the parties remain the same, the facts and the
issues will substantially overlap. Granting the motion to amend will therefore
enable the court to address all of these related issues simultaneously.
Conversely, if the motion to amend were denied, Trueposition could institute a
second action against Allen for infringement of the additional patents. The
court, therefore, finds that judicial economy weighs in favor of granting the
motion to amend.
Trueposition, 2002 WL 1558531 at *2. The same reasoning applies in the instant case and
the Court finds it persuasive that judicial economy will be benefitted by granting InterMetro's
motion.
Finally, while granting the supplementation may cause this litigation to continue
longer than it otherwise WOUld, this does not prejudice Enovate at this time; merely temporal
"prejudice" is not sufficient to overcome our directive to "freely grant" amendments. "The
passage of time, without more, does not require that a motion to amend a complaint be
denied; however 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." Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir. 1984). Here, Plaintiff is being
permitted to file its Third Amended Complaint due to the recent issuance of Patent 643.
However, Plaintiff gives no indication of whether it has other applications pending for
patents that it would also consider "closely related" to the patents-in-suit. It is undeniable
that at some point, the continued addition of patents and claims of infringement will
Significantly impede the progress of this case, impose unwarranted burdens on both the
Court and the defendant, and unduly prejudice Enovate. Although the Court is allowing
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InterMetro to amend its Complaint once more, InterMetro should not attempt to move to
further amend its complaint on the basis of the issuance of any new patents. This case
must move forward, and while InterMetro may fully adjudicate its claims, Enovate must also
be permitted to properly and fully defend against the claims asserted against it, without fear
that those allegations will continue to change and grow, even as the litigation progresses.
In light of the foregoing standards, the Court finds that leave to amend is appropriate
here. There is nothing facially unreasonable about Plaintiffs attempts to amend its
Complaint to add a new patent that Plaintiff asserts is "closely related" to the other patents
and claims in this case and which Plaintiff asserts will not Significantly impact the scope or
amount of discovery; nor does it appear that the grant of this motion will impede this case
from moving forward. Enovate has not set forth any persuasive argument to establish that
Plaintiffs supplementation would be futile, that it is the result of undue delay or bad faith, or
that Enovate would be prejudiced in any way, let alone unduly, by the addition of Patent 643
to the Complaint.

V. CONCLUSION
For the foregoing reasons, Plaintiffs Motion for Leave to Amend Its Third Amended
Complaint (Doc. 166) will be granted. Aseparate Order follows.

be
nI
United States District Judge
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