Corel Software v. Microsoft

Filing 205

MEMORANDUM DECISION AND ORDER granting 159 Corel Software, LLCs Motion to Amend Final Infringement Contentions. Corel shall have seven days from the date of this order to serve its amended Final Infringement Contentions. Signed by Judge Jill N. Parrish on 11/5/2018. (jds)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
COREL SOFTWARE, LLC,
Plaintiff,
v.

MEMORANDUM DECISION AND
ORDER GRANTING MOTION TO
AMEND FINAL INFRINGEMENT
CONTENTIONS

MICROSOFT CORPORATION,
Defendants.
Case No. 2:15-CV-00528-JNP-PMW
Judge Jill N. Parrish

Before the court is Corel Software, LLC’s motion to amend its Final Infringement
Contentions. [Docket 159.] The court GRANTS the motion.
BACKGROUND
Corel sued Microsoft Corporation, alleging that it infringed three patents: the ’309 patent,
the ’483 patent, and the ’996 patent. In November 2015, Corel served its Initial Infringement
Contentions. Pursuant to Rule 2.3 of this court’s Local Patent Rules (LPR), Corel asserted ten
initial claims for the ’996 patent. In April 2016, Corel asserted eight claims in its Final
Infringement Contentions for the ’996 patent. See LPR 3.1 (requiring a plaintiff to limit its Final
Infringement Contentions to eight claims per patent unless the court authorizes additional claims).
In August 2016, Judge Warner stayed the litigation pending the outcome of Microsoft’s
petition for inter partes review (IPR) before the United States Patent and Trademark Office (PTO).
On December 1, 2016, a panel of three administrative patent judges denied Microsoft’s request to
institute IPR of the ’483 patent. The panel concluded that the prior art identified by Microsoft did
not disclose the limitation of claim 1, which requires “identifying a font by hovering of the cursor

for a predetermined period of time over the font displayed in a menu or tool bar option of the
document display window.” The panel reasoned that the prior art did not disclose or suggest
“applying a ‘predetermined period of time’ in the context of ‘hovering.’” The panel did not address
whether pausing while hovering would have been obvious to a person of ordinary skill because
Microsoft did not adequately brief this issue.
On the same day that the panel denied IPR of the ’483 patent, it granted IPR for claims in
the ’996 patent. Corel moved for reconsideration of this decision. On February 22, 2017, the panel
denied Corel’s motion. On February 27, 2017, Corel canceled the ’996 patent claims that were still
at issue before the panel in an attempt to prevent further delay of this litigation. On February 28,
2017, the panel dismissed IPR of the ’996 patent. On the same day, Corel moved this court to lift
the litigation stay and to substitute two new claims from the ’996 patent to replace the claims that
it had canceled. This court denied Corel’s motion to lift the stay.
On June 6, 2018, after the PTO panel had resolved all pending issues, Judge Warner lifted
the stay. On June 8, 2018, Corel renewed its motion to amend its final infringement contentions
for the ’996 patent. Corel requests that this court grant leave to substitute two new claims in place
of the claims that it had previously asserted in its Initial and Final Infringement Contentions.
ANALYSIS
This court has adopted a set of Local Patent Rules to “provide a standard structure for
patent cases that will permit greater predictability and planning for the court and litigants.” LPR
Preamble. Under these rules, the plaintiff in a patent case must serve a set of “Initial Infringement
Contentions” LPR 2.3. “Without leave of court, [a plaintiff] must limit the allegedly infringed
claims to ten (10) per asserted patent.” Id. The plaintiff may amend these initial contentions if
“during discovery a party claiming patent infringement discovers an Accused Instrumentality [i.e.,

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an “accused apparatus, product, device, process, method, act or other instrumentality”] that was
not previously disclosed or known.” LPR 2.1 & 2.3.
After the defendant serves its Initial Non-Infringement, Unenforceability and Invalidity
Contentions, the plaintiff must then serve its Final Infringement Contentions, which “may rely on
no more than eight (8) asserted claims, from the set of previously-identified asserted claims, per
asserted patent without an order of the court upon a showing of good cause and absence of unfair
prejudice to opposing parties.” LPR 2.4 & 3.1. “A party may amend its Final Infringement
Contentions . . . only by order of the court upon a showing of good cause and absence of unfair
prejudice to opposing parties, made no later than fourteen (14) days of the discovery of the basis
for amendment. An example of a circumstance that may support a finding of good cause, absent
undue prejudice to the non-moving party, includes a claim construction by the court different from
that proposed by the party seeking amendment.” LPR 3.4.
Corel argues that this court should grant leave to amend its Final Infringement Contentions
for the ’996 patent. It wishes to abandon the eight claims that it previously asserted and substitute
two new claims. Corel asserts generally that the discovery that triggered the need for the
amendment was the “new information created at the PTO.” At some points in its briefing, Corel
implies that the triggering event was the PTO panel’s February 22, 2017 denial of its petition for
rehearing of the panel’s decision to grant IPR for the ’996 patent claims. At other points, Corel
suggests that the reasoning of the panel’s December 1, 2016 decision denying IPR for the ’483
patent supplied the new information that justifies amendment of the Final Infringement
Contentions. Taken together, it appears that the discoveries that Corel relies upon are: (1) the PTO
panel’s expressions of skepticism that the asserted claims for the ’996 patent were patentable and
(2) the panel’s reasoning that claim 1 of the ’483 patent may be patentable because the identifying

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limitation of hovering for a predetermined period of time was not disclosed in the prior art
identified by Microsoft. These discoveries obviously led Corel to believe that the asserted claims
for the ’996 patent were in danger of being invalidated and that two unasserted claims from the
’996 patent, which contained “hovering for a predetermined period of time” claim language, were
more likely to survive an invalidation challenge.
Given that the litigation was stayed when Corel made these discoveries, the 14-day
deadline to move for amendment of its Final Infringement Contentions was tolled. Thus, the
relevant questions before the court are whether Corel has made an adequate showing of good cause
to permit amendment and whether Microsoft would be unduly prejudiced.
I.

GOOD CAUSE
The Local Patent Rules provide little direct guidance on what constitutes good cause to

amend the Final Infringement Contentions. The court therefore looks to related provisions of the
Local Patent Rules to determine what may constitute good cause.
The most direct example of good cause is found within LPR 3.4 itself. The rule states that
“a claim construction by the court different from that proposed by the party seeking amendment”
is an instance where good cause may be found. Thus, under certain circumstances an adverse
litigation development can satisfy the good cause requirement. Another example of good cause
can be inferred from LPR 2.3, which permits amendment of a plaintiff’s Initial Infringement
Contentions if “during discovery a party claiming patent infringement discovers an Accused
Instrumentality that was not previously disclosed or known.” In other words, the discovery of new
facts, including new potentially infringing instrumentalities or previously unknown examples of
prior art, may also be the basis for good cause to amend.

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In this case, the rulings issued by the PTO panel are best categorized as a litigation
development. The only new information that Corel received was the panel’s favorable analysis of
the patentability of one of the claims asserted from the ’483 patent and the panel’s unfavorable
analysis of the patentability of the claims asserted from the ’996 patent. Microsoft argues that these
types of litigation developments should not give rise to good cause to amend because Corel had
the ability to analyze issues of patentability for itself. Microsoft contends that an adverse ruling
based upon known information does not justify amendment. The problem with Microsoft’s
argument, however, is that the Local Patent Rules specifically authorize amendment in response
to an adverse claim construction by the court. An adverse claim construction not only is a litigation
development based upon a court’s interpretation of known facts, it occurs at a later stage in the
litigation. See LPR 3.1–3.2 (describing the process for asserting Final Infringement Contentions
and Final Non-infringement Contentions); LPR 4.1 (explaining that 14 days after service of the
Final Contentions, the claim construction proceedings begin). It would be incongruous to deny
amendment now, at the final contentions stage of the litigation, only to grant amendment later
based upon a development in the claim construction stage of the litigation. The court, therefore,
finds there is good cause to amend.
II.

UNDUE PREJUDICE
Microsoft argues that it will be unduly prejudiced if Corel is permitted to amend its Final

Infringement Contentions because it will be required to expend additional time and expense to
defend against the new claims. But it is usually true that any amendment of the Final Contentions
would lead to additional work and expense on the part of the non-amending party. Thus, the
inconvenience and expense required by additional discovery and briefing of the new issues does
not generally rise to the level of undue prejudice. See Hydro Eng’g, Inc. v. Petter Investments, Inc.,

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No. 2:11-cv-139-TS, 2012 WL 2872628, at *3 (D. Utah July 12, 2012) (analyzing undue prejudice
in the context of a motion to amend a complaint); Cuffy v. Getty Ref. & Mktg. Co., 648 F. Supp.
802, 806 (D. Del. 1986) (“Prejudice does not mean inconvenience to a party.”). Instead, “an
amendment may be prejudicial if its timing prevents the defendant from pursuing a potentially
promising line of defense.” Minter v. Prime Equip. Co., 451 F.3d 1196, 1209 (10th Cir. 2006);
accord Trans Video Elecs., Ltd. v. Sony Elecs., Inc., 278 F.R.D. 505, 509 n.2 (N.D. Cal. 2011),
aff’d, 475 F. App’x 334 (Fed. Cir. 2012) (“Generally, the issue is not whether the defendant would
be required to engage in additional work in response to newly amended claims. The question is
what incremental prejudice results from the delay in asserting those claims (e.g., in ability to
complete discovery because of approaching trial date).”).
In this case, Microsoft’s ability to defend against the proposed new claims will not be
hampered. Although it might have been more convenient to the parties if Microsoft had been given
notice that it needed to challenge the patentability of the proposed new claims, it will have ample
opportunity to make these arguments before this court. Under the new scheduling order adopted
by the court, moreover, Microsoft will have an opportunity to conduct additional discovery
regarding the new claims and to amend its unenforceability, invalidity, and non-infringement
contentions. Therefore, any prejudice Microsoft will suffer by having to defend against the
proposed new claims does not rise to the level of undue prejudice.
CONCLUSION
Because there is good cause to amend and Microsoft will not be unduly prejudiced, the
court GRANTS Corel’s motion to amend its Final Infringement Contentions. [Docket 159.]
Pursuant to the amended scheduling order, [Docket 170], Corel shall have seven days from the
date of this order to serve its amended Final Infringement Contentions.

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DATED November 5, 2018.
BY THE COURT:

______________________________________
JILL N. PARRISH
United States District Judge

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