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IXYS CORPORATION v. ADVANCED POWER TECHNOLOGY

January 22, 2004.

IXYS CORPORATION, Plaintiff,
v.
ADVANCED POWER TECHNOLOGY, INC., Defendant. AND RELATED COUNTERCLAIMS



The opinion of the court was delivered by: MARILYN PATEL, Chief Judge District

MEMORANDUM AND ORDER RE: MOTION FOR LEAVE TO AMEND
Defendant and counter-claimant Advanced Power Technology, Inc. (APT) has filed a motion for leave to amend seeking permission to counterclaim against plaintiff IXYS Corporation (IXYS) for infringement of its U.S. Patent No. 5,262,336 ("the 336 patent"), a patent not previously at suit. After having considered the parties' arguments and submissions, and for the reasons set forth below, the court rules as follows.

BACKGROUND

  On August 15, 2002, IXYS filed the present action against APT alleging infringement of U.S. Patents Nos. 5,486,715 ("the 715 patent") and 5,801,419 ("the `419 patent"), two patents for improved power MOSFET devices. Six weeks later, on October 1, 2002, APT filed an answer and counterclaimed against IXYS for infringement of its own patent, U.S. Patent No. 5,283,202 ("the `202 patent"), which Page 2 describes the invention of diodes with improved lifetime control. Per IXYS's request, APT filed amended counterclaims on October 18, 2002, that served mainly to clarify its allegations of inequitable conduct.

  The `336 patent made its first appearance in this case during a case management conference held on December 16, 2002. At that conference, APT informed the court that it intended to bring a motion for summary judgment before the court had construed the relevant claims; it alleged that IXYS's patents were invalid over the prior art of the `336 patent. Catalano Dec., Exh. 2., at 12:11-21. Continuing in this vein, APT officially included the 336 patent in its invalidity case by serving a claim chart of that patent on IXYS in March of 2003. During that same month, IXYS produced to APT all relevant documents describing the processes that are now accused of infringing both the `202 and `336 patents. APT has not yet filed this motion for summary judgment.

  As discovery in this case continued, the court held a technology tutorial on September 24, 2003, and a claim construction hearing on October 15, 2003, covering the subject matter and claims of IXYS's `715 and `419 patents, as well as APT's `202 patent. On October 24, 2003, IXYS served upon APT a 30(b)(6) deposition notice that referenced both the `202 and `336 patents. APT claims that it realized IXYS may be infringing the `336 patent only after reading this deposition notice; on November 14, 2003, it sent a letter to IXYS requesting that IXYS allow APT to amend its counterclaims to include infringement of the `336 patent. Catalano Dec., Exh. 11. IXYS did not so consent, and on December 1, 2003, APT filed this motion for leave to amend. As of December 1, 2003, neither the 30(b)(6) deposition addressing the `202 and `336 patents, nor, apparently, any other depositions, had yet taken place. Prior to the hearing on this matter, fact discovery in this case (on every subject other than willfulness) was set to end on January 20, 2004. Catalano Dec., Exh. 15, at 1. Trial is currently set for July 6, 2004.

 LEGAL STANDARD

  After responsive pleadings have been served, plaintiffs must seek the court's permission to amend their complaint. Determining whether to grant such leave "rests in the sound discretion of the trial court, and will be reversed only for abuse of discretion." Swanson v. United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). The Federal Rules of Civil Procedure provide that leave to amend be "freely given when Page 3 justice so requires." Fed.R.Civ.Pro. 15(a). The Ninth Circuit has construed this broadly, requiring leave to amend be granted with "extraordinary liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); see also PCD Programs, Ltd. v. Lexington, 833 F.2d 183, 186 (9th Cir. 1987) (Rule 15's policy of favoring amendments to pleadings should be applied with `extreme liberality'"); Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 989 F. Supp. 1237, 1241 (N.D. Cal. 1997) ("[T]he court must be very liberal in granting leave to amend").

  Despite this liberal policy of amendment, leave will not be given where the district court has "a substantial reason to deny" the motion. J.W. Moore et al., Moore's Federal Practice § 15.14[1] (3d ed. 2003) ("[D]istrict judge[s] should freely grant leave to amend when justice requires, absent a substantial reason to deny"). "The district court's discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Sisseton-Wahpeton Sioux Tribe v. United States, 90 F.3d 351, 355 (9th Cir 1996) (citation omitted). The court may decline to grant leave where there is "any apparent or declared reason" for doing so. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Lockman Found, v. Evangelical Alliance Mission 930 F.2d 764, 772 (9th Cir. 1991). The Ninth Circuit has interpreted Foman as identifying "four factors relevant to whether a motion for leave to amend pleadings should be denied: undue delay, bad faith or dilatory motive, futility of amendment, and prejudice to the opposing party." United States v. Webb, 655 F.2d 977, 980 (9th Cir. 1981). It has also determined that the enumerated factors are not of equal weight and that delay alone is insufficient to deny leave to amend. Id. (citing Howey v. United States, 481 F.2d 1187 (9th Cir. 1973)). By the same token, "[p]rejudice to the opposing party is the most important factor." Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). The party opposing leave to amend bears the burden of showing prejudice. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). In such cases, justice does not require amendment; to grant such amendment would further an injustice upon the defendant.

 DISCUSSION

  The advantages to the court (and to the parties) of allowing APT to litigate its additional counterclaim as part of this action are obvious and straightforward. Foremost are the self-evident gains in Page 4 judicial efficiency and consistent resolution of legal and factual questions to be realized from litigating related issues in the same court simultaneously. In addition — and of particular relevance to this action — nearly all patent cases involve technology that is outside of the core competency of a typical Article III judge, and therefore it is especially in the interests of judges and parties involved in patent litigation to consolidate all actions involving similar technology and related patents in the same court, rather than forcing the parties to repeatedly explain themselves to novel audiences.

  The question thus arises as to whether any of the four Webb factors are present here to the degree necessary to overcome the general presumption in favor of allowing amendment. IXYS does not allege that APT is acting in bad faith by seeking to amend its claims so close to the conclusion of fact discovery and more than seven months after it was first made aware of the processes it now claims infringe its patent. Nor does IXYS argue that APT's amended counterclaim would be futile. The court must therefore consider whether IXYS will be prejudiced if APT is allowed to amend, and whether such an amendment will result in undue delay. Webb, 655 F.2d at 980. This weighing of the factors, unlike many of its type, is not precisely disjunctive; the Ninth Circuit has stated explicitly that delay, standing alone, is not sufficient grounds for denying leave to amend. Id. (" . . . delay alone no matter how lengthy is an insufficient ground for denial of leave to amend."); see also Morongo, 893 F.2d at 1079. Moreover, prejudice to the non-moving party is considered the most important of the four factors. Jackson, 902 F.2d at 1387. The court will thus address the issue of prejudice before turning to the delay that will result from APT's proposed amendment.

 I. Prejudice

  IXYS argues that it will suffer prejudice if APT is allowed to amend its counterclaims because it will be forced to address a new legal theory (infringement of the `336 patent) and conduct extensive additional discovery. Indeed, the need for a party to conduct supplemental discovery or to consider a new line of legal argument are classic sources of prejudice that have regularly proven sufficient to defeat a motion for leave to amend. See Zikovic v. Southern California Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) ("requirement of additional discovery would have prejudiced Edison"); Morongo, 893 F.2d at 1079 (new legal theory). Despite IXYS's strident protestations, the "new legal theory" to which IXYS points would Page 5 not force it to undertake quite the "radical shift in direction" or "entirely new course of defense" described in several of the cases that relied upon the presentation of new legal avenues as grounds for refusing to allow amendment. Id. The `336 patent is a parent of the `202 patent and describes correspondingly similar technology; the majority of the claim terms in question in the `336 patent are repeated in the `202 patent. Nonetheless, IXYS notes correctly that this court would be forced to construe a number of new claim terms, and thus that amendment would force IXYS to address those new claim terms and their meaning within the particular context of the `336 patent, issues which are novel to this action.

  A more significant source of putative prejudice here is the additional discovery that APT's proposed amended claims would necessitate. In order to fully litigate the newly presented claims, IXYS would need to conduct a further round of typical patent discovery, undoubtedly involving the consultation of experts and the review of factual information relevant to both the construction of the patent's claims and its validity, in addition to the principal question of infringement. The fact that IXYS has already obtained the patent's file history and — somewhat more recently — APT's infringement contentions is helpful but not compelling; the necessity for IXYS to consult experts and conduct factual discovery regarding the novel questions raised by the `336 patent remains. If the `336 and `202 patents were sufficiently similar as ...


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