Invalidity contentions

The Local Patent Rules have been designed to require parties to solidify their theories in the early stages of litigation and adhere to them as the case progresses. Yet, the rules are not an entirely rigid structure. They retain some flexibility by providing a non-exhaustive list of circumstances that may warrant an amendment to parties’ original contentions. However, this flexibility decreases the predictability of which amendments will be successful under the rules. 

In Depomed Inc. v. Actavis Elizabeth LLC (.pdf), 2014 WL 1877613 (D.N.J. May 8, 2014), Judge Pisano ruled that a defendant, after unreasonable delay, could not amend its Invalidity Contentions without a good cause to permit the amendment. On August 24, 2012, defendant stated in its Invalidity Contentions that the disputed patent was invalid due to an indefinite size claim, which read “is of a size exceeding the pyloric diameter in the fed mode.” On April 11, 2014, the last day of expert discovery, during defendant’s deposition of plaintiff’s expert, the expert admitted that he could not determine what size would satisfy the claim. On April 14, 2014, defendant informed the plaintiff and the court that it would like to amend its invalidity contention by including the expert’s admission. On April 15, 2014, defendant served its amended invalidity contentions on the plaintiff. On April 17, 2014 the plaintiff notified the defendant that it intended to object to the amendment and filed its objection on April 22, 2014. In its reasoning, the Court applied Local Patent Rule 3.7 and denied defendant’s motion to amend its contentions. The Court found that even though defendant had asserted a general indefiniteness in its 2012 contention, it had not raised this specific issue until the eve of trial, which created an unreasonable delay and unduly prejudiced the plaintiff. Additionally, the Court found no good cause to permit the amendment because defendant was aware of the issue of indefiniteness but failed to assert it during either expert discovery or claim construction. Key takeaway: The Local Patent Rules are flexible when it comes to amending invalidity contentions, but contenders should present new issues at the earliest possible time and should continuously maintain important issues in order to preserve their relevance. Otherwise, a court may prevent a party from supplementing its invalidity contention for lack of good cause and unreasonable delay even if the issue has been previously raised. The author thanks Josh Nosal, a student at the University of Texas School of Law, for his assistance in writing this post.

Patent litigators sometimes face issues resembling the age old debate: which came first, the chicken or the egg?   While local patent rules require a plaintiff to assert its infringement contentions on all infringing products, the plaintiff sometimes cannot do so on all products because it lacks the necessary discovery to understand certain non-public products such as software.  At the same time, without first asserting those products in its infringement contentions, courts sometimes deny any discovery on those same non-public products.  Similarly, an accused infringer will sometimes need discovery on prior art, but the court will not allow discovery on that prior art until such time it is asserted in an invalidity contention.  In Nippon Steel v. Posco et al. (.pdf), 2014 WL 1266219, *1 (D.N.J. March 26, 2014), the District Court denied a defendant’s requested discovery on plaintiff’s own prior art manufacturing process.  The Court reasoned that because the defendant did not assert the plaintiff’s manufacturing process as prior art in its invalidity contentions, no further discovery would be permitted on that process.  The Court further relied upon Local Rule 3.3(a) which requires that all prior art be asserted in the invalidity contentions.  The Court further implied that the defendant should have asserted all the potential prior art even if it did not possess all the details required by the local rule. “[Defendant] never sought to assert any contentions, detailed or not, regarding what they now allege is prior art.  If our Local Patent Rules are to have any impact, they cannot create an incentive for parties to evade disclosure of their positions until deadlines have expired.” Key Takeaway: At least according to this Court, a defendant would be well advised to assert all potential prior art in its invalidity contention even if it does not yet possess all relevant details concerning the prior art.  Otherwise, the defendant may well be denied discovery and the ultimate use of the prior art to prove invalidity.    

On July 26, 2013, the Federal Circuit Advisory Council issued a Model Order Limiting Excess Patent Claims and Prior Art (.pdf).   The Model Order requires a successive narrowing of elected patent claims by limiting the patent owner to no more than five asserted claims per patent after issuance of the claim construction order.  Also at that time, the accused infringer is limited to no more than six asserted prior art references per patent.   If the patent owner asserts infringement of only one patent, all per-patent limits are increased by 50%.  The purpose of the Model Order is to control the cost and complexity of patent litigation.  While the patent bar has waited to see how many Courts would adopt the Model Order since July, this author has located only one court to adopt some form of the Model Order, the Eastern District of Texas.  On October 29, 2013, Chief District Judge Leonard Davis of the U.S. District Court for the Eastern District of Texas issued General Order 13-20 (.pdf) that adopted many provisions of the Federal Circuit’s Model Order.  The General Order slightly differs from the Model Order with respect to the timing in electing patent claims and prior art.  Two months prior to the General Order, Judge Michael Schneider issued an opinion in Keranos, LLC v. Silicon Storage Tech. et al., (.pdf), 2013 WL 5763738, *4 (E.D. Tex. Aug. 5, 2013), relying upon the Federal Circuit Model Order in limiting the accused infringer to two or three prior art references per claim. Key Takeaway: Although some anticipated that many District Courts would be quick to adopt the Federal Circuit’s Model Order, adoption of the Model Order has been rare.

In defending a patent infringement claim, an accused infringer will often locate additional prior art in the course of its case investigation.  When the prior art is located after the accused infringer has already disclosed its invalidity contentions, a question often arises under the local patent rules as to whether the accused infringer is permitted to include the new prior art in revised contentions.  Recently, the District Court of New Jersey analyzed this question and provided some additional guidance regarding the relevant factors of good cause and timeliness in seeking to amend the invalidity contentions. In  Jazz Pharmaceuticals v. Roxane Laboratories (.pdf), Case No. 2:10-cv-6108 (D.N.J. Feb. 28, 2013), the Court ruled that the accused infringer was not allowed to amend its invalidity contentions with additional prior art from the FDA.  On the issue of good cause for the requested amendment, the Court stated that “the Federal Circuit has stated that parties must ‘proceed with diligence in amending when new information comes to light in the course of discovery.’ O2 Micro, 467 F.3d at 1366-68.  Thus, to illustrate good cause, the moving party must demonstrate its diligence. (Id at 1366).”   The Court rejected the accused infringer’s argument that it was diligent in a five month delay in finding the FDA prior art because FDA materials are not the type of materials that is customarily searched for in an initial prior art search.  On the issues of timeliness, the court rejected the accused infringer’s argument that a delay in amending its contentions was justified because it needed to confirm that the prior art-at-issue was not cumulative of the art already disclosed in its initial contentions, as well as to confirm that the prior art was publicly available. Key Takeaways: At least one court has determined that the unique type of prior art located does not excuse its late disclosure.  Moreover, taking additional time to confirm that new prior art is not cumulative of other prior art or to confirm the new prior art is public may not justify an otherwise untimely disclosure.

Because of perceived advantages in different courts, defendants are increasingly filing motions to transfer to a venue they believe will be more favorable and/or convenient to their interests.  The increased number of pending motions to transfer has caused delays in obtaining rulings on motions to transfer.  The Eastern District of Texas has expressly stated its concern about being able to timely rule on all pending motions to transfer.   Disclosures under the local patent rules will sometimes be required before the Court is able to rule on a motion to transfer.  Thus, the question arises as to whether the disclosures must be served before the motion to transfer is ruled upon because the case may be transferred to another district where no such disclosures are required.  In B.E. Technology, LLC v. Sony Computer Entertainment et al. (.pdf), 2013 WL 524893 ( W.D.Tenn. Feb. 11, 2013), the Court ruled that the local patent rule disclosures should be stayed until such time as the court rules on the pending motions to transfer.  In its reasoning, the Court recognized that “[t]he decision whether to grant a stay of a particular action is within the inherent power of the Court and is discretionary.”  The Court further relied upon the Federal Circuit decision In re Fusion-IO, Inc., 489 Fed.App’x 465 (Fed.Cir. 2012) wherein the CAFC directed the litigants to file a motion to stay proceedings and for the district court to decide the motion to stay and a pending motion to transfer venue “before proceeding to any motion on the merits of the action.” Key Takeaway: Defendants seeking a motion to transfer should also consider whether to file a motion to stay application of the local patent rules.  A stay of the local patent rules may provide a defendant more time to prepare its local patent rule contentions or avoid preparing the local patent rule contentions altogether if the case is transferred to a district with no local patent rules.

When defending a patent infringement case, an accused infringer often needs to provide many details concerning its patent invalidity contentions under the local patent rules.  Whether the accused infringer’s contentions also should include the priority date to be used for prior art invalidity purposes is an open question.  A priority date may be important in determining whether patent claims are invalid as anticipated by the prior art.   In the District Court of Colorado, the Court recently ruled that an accused infringer need not make such a priority date disclosure under the local patent rules. In Health Grades, Inc. v. MDX Medical, Inc. (.pdf), 2013 WL 136187  (D.Col. Jan. 10, 2013), the District Court of Colorado adopted the local patent rules from the Northern District of California at the request of the parties “to reduce discovery and other litigation costs….”  Contrary to his expectation, Magistrate Boland found that the parties “employed those rules to greatly increase their discovery and pretrial conflicts, not reduce them.”  (Opinion, p. 2) The accused infringer disclosed a first and second supplemental set of invalidity contentions with no mention as to the proper priority date for prior art purposes.  Previously, the patent owner disclosed that it was relying on a priority date at least as early as the filing date of provisional application no. 60/771,757, which was filed on Feb. 8, 2006.  In its third supplemental set of invalidity contentions, the accused infringer asserted for the first time that “[t]he ‘060 Patent is not entitled to benefit from the earlier filing date of provisional application no. 60/771,757 (the ” ‘757 application”) because the ‘757 application does not meet the requirements of 35 U.S.C. § 112, first paragraph, with respect to the patented claims of the ‘060 Patent.  For example, the ‘757 application does not contain a written description of at least the following features of the’060 Patent: [citing absent features].  Therefore, the ‘060 Patent cannot benefit from the earlier filing date of the ‘757 application under 35 U.S.C. § 119(e).” (Opinion, p. 3) Reviewing Local Patent Rule 3-3 from the Northern District of California, the Court found no express requirement that invalidity contentions take a position on a priority date for prior art purposes.  Accordingly, no leave to amend the invalidity contentions for good cause was required by the local patent rules. Key Takeaway: Without an express requirement in the local patent rules that a priority date position is required in invalidity contentions, accused infringers now have at least one precedent supporting their ability to amend invalidity contentions on this issue late in discovery.

When defending a patent infringement claim, an accused infringer often possesses dozens of prior art references that could render the patent claims obvious.   Often the local patent rules are vague as to whether an accused infringer must disclose every precise combination of prior art references rendering the claims invalid or whether the accused infringer can generally identify the types of combinations of prior art that could render the claims invalid.

In Rambus v. Nvidia Corporation, Case No. C-08-3343 (N.D.Cal. Nov. 29, 2011), the plaintiff Rambus moved to strike Nvidia’s invalidity contentions on the basis that Nvidia did not identify each and every precise combination of prior art that could render the patent claims obvious.  Nvidia defended its contentions explaining that “Nvidia provided charts for each primary reference that included all of the secondary references [in a group] that, when combined with the primary reference…render the asserted claims obvious.”  In his finding that the contentions were acceptable, Special Master Infante cited to Keithley v. The, Inc., 553 F.Supp.2d 1148, 1149-51 (N.D.Cal. 2008) and Avago Technologies General IP PTE Ltd. v. Elan Microelectronics Corp., 2007 WL 951818 (N.D. Cal. Mar. 8, 2007) which held that it was acceptable for a defendant to organize its prior art references into groups and then claim that its theory of obviousness was true for every possible combination between the groups.  Although the Avago court recognized that this method could result in billions of possible obviousness contentions, the disclosure still satisfied the local patent rule because it “reasonably specifies the combination of prior art references that allegedly render Avago’s patents obvious.”  Accordingly, Rambus’s motion to strike the invalidity contentions was denied.

Key Takeaway:  Should a litigant have a large number of prior art references, that when combined in many different ways could render the patent claims obvious, the litigant should consider asserting invalidity combinations in group format if permitted by the local patent rules and corresponding case law.

For a different perspective, see Eastern District of Texas Local Patent Rule 3-3(b) requiring the following for invalidity contentions, “If a combination of items of prior art makes a claim obvious, each such combination, and the motivation to combine such items, must be identified;…”  (emphasis added)

After serving its invalidity contentions, an accused infringer sometimes discovers the existence of additional prior art that may invalidate the patent.  Upon discovery of this additional prior art, accused infringers sometimes seek permission to amend their invalidity contentions to include the new prior art.   Although courts have differed on whether such amendments should be allowed, the amount of delay in seeking the amendments is often considered. In Oy Ajat, Ltd. v. Vatech America, Inc., 2012 WL 1067900 (D.N.J. March 29, 2012), the Court granted the defendant’s motion to amend its invalidity contentions concerning several x-ray machine patents even though the formal request was not made until several months after becoming aware of the prior art.  On July 20, 2011, the defendant served its original invalidity contentions.  At the same time of the lawsuit, an inter partes reexamination was pending on the at-issue patents.  Defendant argued that its two new prior art references and corresponding contentions did not become truly material to the lawsuit until plaintiff made certain arguments for the first time in its August 23, 2011 reexamination arguments to the USPTO.  In response to plaintiff’s reexamination arguments, the defendant submitted to the USPTO “supplemental comments in the reexamination proceeding including copies of the now material prior art …, narrative descriptions of its arguments, and detailed claim charts” and that all of this material “was served on [Plaintiff’s] … counsel … in late September [2011]”.  Id. at 11.  Notwithstanding the relatively late request for a formal amendment of the invalidity contentions, the Court permitted the amended contentions finding that Amended Invalidity Contentions would “not unduly prejudice Plaintiff given that Defendant presented the USPTO examiner and Plaintiff with the same additional prior art references in September 2011… .”   Also relevant to the Court’s finding was the litigation was to be stayed because of the reexamination proceeding, that fact discovery had not yet been completed and that although Markman briefs had been submitted, no hearing had been scheduled such that any additional discovery and/or revisions to Markman briefs could not be made.  Id. at 22. Key Takeaway:  Diligence in seeking to amend contentions is not the only factor considered by Court.  Courts will excuse a late amendment if it can be shown no real prejudice to the defendant because of a previous disclosure of the new contentions in a different form. For a different Court perspective, see Apple, Inc. v. Samsung Electronics Co., Ltd., 2012 WL 1067548 (N.D. Cal. March 27, 2012)(denying request to amend invalidity contentions with recently discovered prior art).

When defending a patent case, an accused infringer often becomes aware additional prior art even after serving its original invalidity contentions.  Questions often arise as to when an accused infringer should disclose this new prior art and in what form.  Some litigants feel comfortable informally disclosing the new prior art in letter form while others immediately seek formal amendments to their invalidity contentions.  Courts have differed on how and when an accused infringer should supplement its invalidity contentions.

In Apple, Inc. v. Samsung Electronics, Inc., 2012 WL 1067548 (N.D. Cal. March 27, 2012), the Court denied Samsung’s request to amend its invalidity contentions with new prior art.  On October 7, 2012, Samsung served its original invalidity contentions.  On November 10, 2011, Samsung learned of two more alleged invalidity references and sent a letter to Apple stating that the “Mac OS X 10.0” and “Super Clock” references rendered the Apple patents invalid.   Samsung further stated that “[b]ased on these facts, Samsung has good cause to amend its Invalidity Contentions…”.   Id. at *2-3.  Notwithstanding the notice by letter, Samsung did not formally move to amend its invalidity contention until January 26, 2012.  The Court denied Samsung’s motion to amend the invalidity contention because they did not show sufficient diligence in formally requesting amendment.  Id. at *2-3 (citing CBS Interactive, Inc. v. Etilize, Inc., 257 F.R.D. 195, 201 (N.D. Cal. 2009) and Acer, Inc. v. Tech. Prop. Ltd., No. 08-cv-00877, 2010 WL 3618687 at *3 (N.D. Cal. 2010) (“[The moving party] must demonstrate good cause, an inquiry that considers first whether the moving party was diligent in amending contentions and then whether the nonmoving party would suffer prejudice if the motion to amend were granted … .  If [the moving party] was not diligent, an inquiry should end.”))  The Court held that “[b]ecause Samsung has not established that it was diligent in seeking leave to amend its invalidity contentions after it admittedly had good cause to do so, the motion to supplement Samsung’s invalidity contentions with the [prior art reference] is DENIED.”

Key Takeaway:  Do not assume that providing written notice of additional invalidity contentions will be sufficient.   Some courts require an accused infringer to formally and diligently move to amend invalidity contentions soon after learning of the new alleged prior art reference(s).

For a different Court perspective, see Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., No. C 05-04158 MHP, 2008 WL 624771, at *2 (N.D. Cal. Mar. 4, 2008) (granting leave to amend infringement contentions four months after detailed notice of infringement was given of the newly accused product).