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SKF Condition Monitoring, Inc. v. Invensys Systems

August 31, 2010

SKF CONDITION MONITORING, INC., PLAINTIFF AND COUNTER-DEFENDANT,
v.
INVENSYS SYSTEMS, INC., DEFENDANT AND COUNTER-CLAIMANT.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER GRANTING MOTION FOR LEAVE TO FILE SECOND AMENDED ANSWER AND COUNTERCLAIM

Defendant and Counter-Claimaint Invesys Systems, Inc. has filed a motion for leave to file a second amended answer and counterclaim [Doc. 72]. For the following reasons, the Court GRANTS the motion.

I. BACKGROUND

This is a patent-infringement case. The patent at issue, U.S. Patent No. 6,006,164 ('164 Patent), describes a portable vibration monitor used to detect vibrations and other movement in machines. The present dispute, however, has little to do with the substance of the patent.

Invensys seeks to add a counterclaim of inequitable conduct. Succeeding on the claim requires proving a person associated with filing a patent made a material misrepresentation or omission with the intent to deceive the Patent and Trademark Office ("PTO"). See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 n.3 (Fed. Cir. 2009). In this case, the proposed counterclaim would allege that people*fn1 involved in filing the '164 Patent application for SKF*fn2 intentionally failed to disclose material prior art to the PTO.

The Court would normally be required to freely grant Invensys's request to amend its answer, see Fed. R. Civ. P. 15(a)(2), but the deadline for amending the pleadings has passed. Invensys's burden is therefore heightened; it must show that it acted diligently and that, despite its diligence, it still could not meet the deadline. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607--09 (9th Cir. 1992). So in reciting the facts, the Court pays particular attention to exactly when Invensys's learned of the facts underlying its inequitable-conduct claim and whether it could have been more diligent in trying to meet the deadline for amending its answer.

Invensys claims there are two products which SKF knew were prior art but failed to disclose: the Picolog and the Vibrotip. Below, the Court examines separately the facts related to the Picolog and the Vibrotip

1. The Picolog

According to Invensys, the Picolog was prior art which SKF knew about and intentionally withheld from the PTO. There is no question that the Picolog is in the same product category as the '164 Patent. Nor is there any dispute that SKF was aware of it. In fact, SKF itself, the holder of the '164 Patent, actually sold the Picolog and even mentioned it in its application for the '164 Patent:

A commercially available device of this nature is the Picolog from SKF Condition Monitoring of San Diego, Calif. The Picolog system comprises a handheld probe capable of measuring and storing hundreds of separate vibration level measurements. These measurements are later uploaded to a host computer system for analysis. The Picolog (TM), however, does not provide a real-time output of the vibration measurement.

Other than making this reference in the '164 Patent application, neither SKF and nor anyone affiliated with it formally identified the Picolog as prior art to the PTO.

This reference to the Picolog in the '164 Patent application was not hidden from Invensys. Invensys was aware or should have been aware that the '164 Patent application included this reference to the Picolog. In November 2005, Invensys ordered the file wrapper for the '164 Patent, (Transier Decl. Ex. 8.), which would have included the patent application. So as early as 2005, Invensys knew that SKF believed the Picolog was related to the '164 Patent.

Invensys has not given the Court any evidence that it asked for more information related to the Picolog during pre-litigation discussions in 2005 and 2006.

Once Invensys filed suit and discovery began, it learned even more about the Picolog through an SKF product catalog. In April and May 2010, SKF produced several documents. Among those documents was an SKF product catalog, which included a description and specifications for the Picolog. The product catalog's description of the Picolog was far more specific than the description in the '164 Patent application. The product catalog was not confidential.

In addition to performing document discovery, in late May and early June 2010 Invensys deposed the four inventors of the product described in the '164 Patent. All four of them had heard of the Picolog but did not work on it or remember much about it. (Kjelland Decl., Thompson Dep., Ex. G, 25:1--10; McCarty Dep., Ex. H, 109:16--20; Drury Dep., Ex. I, 86--88; Calderwood Dep., Ex. J, 67:16--24.)

2. The Vibrotip

The Vibrotip was a product manufactured by a company called Pruftechnik. Although the parties have not given the Court much information about the Vibrotip, it appears that it is in a similar product category as the product described in the '164 Patent. Indeed, the SKF inventors acknowledged as much in a confidential document.

The confidential document, titled Record of Invention and Invention Disclosure, appears to be an internal, confidential SKF questionnaire which inventors complete in order to protect SKF intellectual property and to ensure proper disclosure to the PTO (the "Invention Disclosure"). It shows that three of the inventors*fn3 described the Vibrotip as the "closest prior art" to the '164 Patent. They identified the "Pruftechnik Vibrotip and stud, (no communications to data logger, route built inside)" as the "closest prior art" which "most closely related to the invention." (Kjelland Decl., Ex. B.) The parties do not dispute that the first time Invensys saw or had access to this document was when it was produced in discovery.

Despite the inventors belief that the Vibrotip was the closest prior art, neither SKF nor anyone affiliated with it disclosed the ...


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