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Tas Energy, Inc. v. San Diego Gas & Electric Co.

United States District Court, Ninth Circuit

August 21, 2013

TAS ENERGY, INC., a Delaware corporation, Plaintiff,
v.
SAN DIEGO GAS & ELECTRIC CO., a California corporation; SEMPRA ENERGY, a California [Dkt. corporation; and PALOMAR ENERGY, LLC, a Delaware limited liability company, Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT [Dkt. No. 30.].

GONZALO P. CURIEL, District Judge.

Pending before the Court is Plaintiff TAS Energy, Inc.'s ("TAS") motion for leave to file an amended complaint in order to assert a patent that did not issue until March 19, 2013. (Dkt. No. 30.) Defendant San Diego Gas & Electric Co. ("SDGE") filed an opposition on June 7, 2013. (Dkt. No. 37.) On June 21, 2013, Plaintiff filed a reply. (Dkt. No. 42.) After a review of the briefs, the documentation, and the applicable law, the Court GRANTS Plaintiff's motion for leave to file an amended complaint.

Background

On November 16, 2012, TAS filed this action alleging violations of three related patents with a total of forty-nine (49) claims. (Dkt. No. 1, Compl.) Plaintiff is a "global leader in industrial temperature regulation, such as systems for cooling gas turbine-driven power plants." (Id. ¶ 10.) Specifically, Plaintiff has developed technology that cools the inlet air of gas turbines used to generate electricity and by cooling turbine inlet air, the efficiency of the gas turbines can be increased. (Id.) Plaintiff's research and development has led to multiple patents. (Id.) At issue in this case are U.S. Patent Nos. 6, 318, 065 (the 065 patent), 6, 470, 686 (the 686 patent), and 6, 769, 258 (the 258 patent). (Id.)

Defendant owns and operates the Palomar Energy Center ("PEC") near Escondido, California. (Id. ¶ 12.) In 2006, the PEC became operational and requested bids from contractors to provide a better cooling system. (Id.) Multiple parties, including TAS Energy and General Electric Co., provided confidential bids. (Id. ¶ 13.) TAS's bid included notification that the cooling system was "MANUFACTURED UNDER ONE OR MORE OF THE FOLLOWING U.S. PATENTS: 6318065, 6470686, 6769258." (Id. ¶ 14.) Defendant selected General Electric Co. to build and install a new cooling system at the PEC. (Id. ¶ 15.) Plaintiff alleges that this new cooling system uses technology protected by TAS' patents. (Id.)

On March 12, 2010, TAS applied to reissue a fourth related patent, No. 7, 343, 746 ("746 patent"), with amended and new claims on the ground it was flawed because the "patentee claim[ed] more or less, than he had the right to claim." (Dkt. No. 37-1, Cleveland Decl., Ex.1.) The U.S. Patent No. RE44, 079 (the079 patent) reissued on March 19, 2013, four months after the complaint was filed.

Shortly thereafter, on April 4, 2013, TAS asked SDGE to consent to the filing of a First Amended Complaint to include the 079 patent; however, Defendant refused to consent. (Dkt. No. 30-2, King Decl. ¶ 3, Ex. 2.) Hence, Plaintiff filed the instant motion on April 22, 2013. (Dkt. No. 30.)

Discussion

A. Legal Standard Under Federal Rule of Civil Procedure 15(a)[1]

Under Federal Rule of Civil Procedure 15(a), leave to amend a complaint after a responsive pleading may be allowed by leave of the court and such leave "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Granting leave to amend rests in the sound discretion of the trial court. Internat'l Ass'n of Machinists & Aerospace Workers v. Republic Airlines , 761 F.2d 1386, 1390 (9th Cir. 1985). This discretion must be guided by the strong federal policy favoring the disposition of cases on the merits and permitting amendments with "extreme liberality." DCD Programs Ltd. v. Leighton , 833 F.2d 183, 186 (9th Cir. 1987). "Five factors are taken into account to assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint." Johnson v. Buckley , 356 F.3d 1067, 1077 (9th Cir. 2004) (citing Nunes v. Ashcroft , 348 F.3d 815, 818 (9th Cir. 2003)). In practice, however, courts more freely grant plaintiffs leave to amend pleadings in order to add claims than new parties. Union Pacific R.R. Co. v. Nevada Power Co. , 950 F.2d 1429, 1432 (9th Cir. 1991).

In this case, the parties dispute whether the proposed amendment would be futile and cause prejudice.

B. Futility

Defendant argues that the proposed amendment is futile since the newly alleged claims are not "substantially identical" to the original claims and they are subject to the intervening rights doctrine. Plaintiff contends that determination whether the intervening rights doctrine applies is premature at this early stage of the proceedings and that leave to amend should be liberally construed.

"[A] proposed amendment is futile only if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense." Miller v. Rykoff-Sexton, Inc. , 845 F.2d 209, 214 (9th Cir. 1988). Courts ordinarily do not consider the validity of a proposed amended pleading in deciding whether to grant leave to amend and defer consideration of challenges to the merits of a proposed amendment until after leave to amend is granted and ...


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