Xlear et al v. STS Health

Filing 82

MEMORANDUM DECISION AND ORDER granting 63 Motion to Amend/Correct Scheduling Order. STS is granted leave to file its Supplemental Final Unenforceability and Invalidity Contentions as attached to the Motion with one modification on or before April 27, 2017. Signed by Judge David Nuffer on 4/20/2017. (jds)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
XLEAR, INC., a Utah corporation,
Plaintiff and
Counterclaim Defendant,

MEMORANDUM DECISION AND
ORDER GRANTING MOTION TO
AMEND SCHEDULING ORDER

v.
STS HEALTH, LLC, a Virginia limited
liability company,

Case No. 2:14-cv-00806-DN
District Judge David Nuffer

Defendant and
Counterclaim Plaintiff.
Defendant STS Health, LLC (“STS”) moves for leave to amend (“Motion”) 1 the June 3,
2016 Scheduling Order (“Scheduling Order”). 2 The Motion seeks leave to file Supplemental
Final Enforceability and Invalidity Contentions in addition to the Final Enforceability and
Invalidity Contentions that were filed pursuant to the Scheduling Order in December 2016. 3
Xlear opposes the Motion (“Opposition”). 4 STS filed a reply in support of the Motion
(“Reply”). 5 For the reasons set forth below, the Motion is GRANTED.

1

Motion for Leave to Amend the Patent Case Scheduling Order [Doc. No. 54] to File Supplemental Final
Unenforceability and Invalidity Contentions and Memorandum in Support (“Motion”), docket no. 63, filed Feb. 28,
2017.
2

Patent Case Scheduling Order and Order Vacating Hearing (“Scheduling Order”), docket no. 54, filed June 3,
2016.
3

Motion at 1.

4

Opposition to Defendant’s Motion for Leave to Amend the Patent Case Scheduling Order to File Supplemental
Final Unenforceability and Invalidity Contentions (“Opposition”), docket no. 72, filed Mar. 31, 2017.

5

Defendant’s Reply in Further Support of Its Motion for Leave to Amend the Patent Case Scheduling Order [Doc.
No. 54] to File Supplemental Final Unenforceability and Invalidity Contentions [Doc. No. 63] (“Reply”), docket no.
79, filed Apr. 14, 2017.

DISCUSSION
According to Rule 16(b), a Scheduling Order “may be modified only for good cause and
with the judge’s consent.” 6 “Rule 16(b) does not focus on the bad faith of the movant, or the
prejudice to the opposing party. Rather, it focuses on the diligence of the party seeking leave to
modify the scheduling order to permit the proposed amendment. Properly construed, ‘good
cause’ means that scheduling deadlines cannot be met despite a party’s diligent efforts.” 7
STS argues that amendment of the Scheduling Order is appropriate because it will allow
STS to file “relevant prior art in support of its non-infringement, unenforceability and invalidity
contentions . . . .” 8 STS explains that the parties are now in agreement, after a previous dispute,
that the phrase “‘xylitol/xylose’ encompasses either xylitol or xylose individually, or both
compounds.” 9 Based on this agreement, STS argues, “STS has recently located additional
invalidating prior art, and it would thus like to supplement its Final Unenforceability and
Infringement Contentions [Doc. No. 59] in support of its defenses.” 10 STS argues that it has been
diligent in requesting amendment, there have been no prior requests for extension, and the case is
still in relatively early stages, with no dates set for a claim construction hearing, a final pretrial
conference, or a trial. 11
Xlear, on the other hand, argues that amendment is not appropriate because the deadline
elapsed two months before STS filed its Motion. 12 Xlear also argues that STS has been aware of

6

Fed. R. Civ. P. 16(b)(4).

7

Colo. Visionary Acad. V. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000).

8

Motion at 2.

9

Id.

10

Id.

11

Id. at 3.

12

Opposition at 1.

2

Xlear’s ‘construction of xylitol/xylose’ from the outset of the case “because it comes directly
from the Patent.” 13 Finally, Xlear argues that amendment would be futile. 14 Xlear is incorrect.
First, a party is not barred from amending a scheduling order simply because the deadline
has elapsed. The plain language of Rule 16(b) envisions amendment to a scheduling order, but
conditions amendment on a showing of good cause. 15 Thus, Xlear is incorrect that amendment is
barred because the deadline elapsed before the Motion was filed.
Second, while Xlear is correct that the ‘143 Patent itself discloses that “‘xylitol/xylose’ is
used herein to mean ‘xylitol’ or ‘xylose’ or ‘xylitol and xylose[,]’” 16 Xlear is incorrect that this
precludes amendment of the Scheduling Order. The parties disputed the term “xylitol/xylose” as
late as January 24, 2017. 17 As STS explains:
As a grammatical issue, the use of a “backward slash,” also known as a slash or
slant or solidus or virgule [ / ], is construed in different ways. For example,
sometimes it serves as shorthand for and, as in: “He is enrolling in the JD/MBA
program at Harvard.” Other times it serves as shorthand for or, as in: “Each guest
must present his/her ticket prior to entry.” See, e.g.,
http://www.thepunctuationguide.com/slash.html. As such, STS’s initial
understanding of the slash between xylose and xylitol was “and” – whereas Xlear
expressed its initial belief that it meant “or.” The parties are now in agreement
that it should mean “or.” But this understandable initial difference of opinion on
its meaning certainly provides a rationale for “good cause” being demonstrated as
to why certain prior art was not earlier appreciated and located based on the
parties’ respective understanding of a critical patent term. This is not a situation
where a party already knew of the information “but simply failed to raise [their]
claims.” Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass’n, 771 F.3d 1230,
1240 (10th Cir. 2014). 18

13

Id. at 2, 3.

14

Id. at 2, 4.

15

See Fed. R. Civ. P. 16(b)(4) (stating that “[a] schedule may be modified only on good cause . . . .”).

16

U.S. Patent No. 6,054,143 (“‘143 Patent”), col. 1, ll. 22-23.

17

Defendant STS Health’s Disclosure of Terms to be Construed at 2, Ex. 1 to Reply, docket no. 79-1, filed Apr. 14,
2017.
18

Reply at 2-3.

3

Within a month of coming to an agreement that “xylitol/xylose” means “xylitol” or
“xylose,” STS filed its Motion. STS argues that there is prior art that is relevant to its Final
Enforceability and Invalidity Contentions. This memorandum decision and order makes no
conclusion about whether the prior art alleged by STS is persuasive regarding invalidity, but STS
is correct that this is not a situation where STS knew of relevant prior art and concealed it until
after the deadline passed. Instead, it appears that during the time when the parties disagreed
about the meaning of “xylitol/xylose,” the prior art “was not earlier appreciated and
located . . . .” 19 Now that the dispute is resolved, STS argues, it has found material that bears on
its positions in this case. This is a valid reason to allow amendment of the Scheduling Order to
allow STS to advance those arguments. And because STS appears to have moved diligently in
filing its Motion, there is good cause for modification of the Scheduling Order.
Third, while futility is not an element of Rule 16(b), it is not futile to allow STS to
supplement its Final Enforceability and Invalidity Contentions. Xlear is incorrect that this case
has already been decided on Step One of the Alice/Mayo analysis. Step One is to determine
whether the patent claims are directed to a patent-ineligible concept, such as a law of nature,
natural phenomena, or abstract idea. The December 14, 2015 Order 20 held that the ‘143 Patent
was not directed to a law of nature, natural phenomena, or abstract idea because it claimed
“methods for the delivery of xylitol/xylose, not the naturally occurring product itself.” 21 But the
December 14, 2015 Order also explained that there was more to the invalidity inquiry. 22 The
December 14, 2015 Order explained that “[t]he Supreme Court has long held that a patent is not
19

Id. at 3.

20

Memorandum Decision and Order Denying Motion to Dismiss (“December 14, 2015 Order”), docket no. 37,
entered Dec. 14, 2015.
21

Id. at 10.

22

Id.

4

automatically valid simply because it claims a process or method” and that, in order to be valid,
“the process or method must have ‘additional features that provide practical assurance that the
process is more than a drafting effort designed to monopolize the law of nature itself.’” 23 The
December 14, 2015 Order explained that it was a “very close call” whether the ‘143 Patent had
the necessary additional features to be valid: “[T]he record is not sufficient to conclusively
establish that the claims at issue are simply directed to a known natural sugar, xylitol, in known
pre-existing nasal solutions, and administered via a conventional nasal spray . . . .” 24 “Evidence
is needed to know if the nasal solutions were in fact pre-existing or if there were any similar
applications of xylitol prior to the ‘143 Patent that render the ‘143 Patent non-novel.” 25
STS argues that the prior art it has discovered will provide evidence related to this
inquiry. And it appears, after review of STS’s proposed Supplemental Final Unenforceability and
Invalidity Contentions, that STS is correct that the prior art will be relevant to the inquiry.
Accordingly, it would not be futile to allow STS to supplement its Final Enforceability and
Invalidity Contentions with the prior art it alleges shows invalidity.
CONCLUSION
Because the parties disputed the meaning of “xylitol/xylose” until at least January 24,
2017, and because there is no indication that STS unreasonably delayed its Motion, STS has
established good cause to amend the Scheduling Order. Additionally, it appears that STS’s
proposed supplementation will not be futile. Accordingly, the Motion will be granted.

23

Id. (quoting Mayo Collaborative Servs. V. Prometheus Labs., 132 S.Ct. 1289, 1297 (2012)).

24

December 14, 2015 Order at 12.

25

Id.

5

ORDER
IT IS HEREBY ORDERED that the Motion 26 is GRANTED. STS is granted leave to file
its Supplemental Final Unenforceability and Invalidity Contentions 27 as attached to the Motion
with one modification 28 on or before April 27, 2017.

Dated April 20, 2017.
BY THE COURT:
____________________________
David Nuffer
United States District Judge

26

Motion for Leave to Amend the Patent Case Scheduling Order [Doc. No. 54] to File Supplemental Final
Unenforceability and Invalidity Contentions and Memorandum in Support (“Motion”), docket no. 63, filed Feb. 28,
2017.
27

Defendant’s Supplemental Final Unenforceability and Invalidity Contentions, Ex. A to Motion, docket no. 63-1,
filed Feb. 28, 2017.
28
On page one of Defendant’s Supplemental Final Unenforceability and Invalidity Contentions, the original Final
Enforceability and Invalidity Contentions are identified as being filed at docket no. 59. This is incorrect. The correct
entry is docket no. 61. This change should be made to the filed document.

6