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IXI Mobile (R&D) Ltd. v. Samsung Electronics Co. Ltd.

United States District Court, N.D. California

October 11, 2019

IXI MOBILE (R&D) LTD., et al., Plaintiffs,
v.
SAMSUNG ELECTRONICS CO LTD, et al., Defendants. IXI MOBILE (R&D) LTD., et al., Plaintiffs,
v.
APPLE INC, Defendant.

          ORDER DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND INFRINGEMENT CONTENTIONS AND ASSERTED CLAIMS RE: DKT. NO. 166, RE: DKT. NO. 157

          HAYWOOD S GILLIAM, JR. UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiffs' motion for leave to amend their infringement contentions and asserted claims in the above-captioned actions. Case No. 15-cv-3752-HSG, Dkt. No. 166 (“Mot.”)[1]; Case No. 15-cv-03755-HSG, Dkt. No. 157. The Court finds that this matter is appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons stated below, the Court DENIES Plaintiffs' motion.

         I. BACKGROUND

         Plaintiffs filed these patent infringement actions in 2014 against Defendants Samsung and Apple in the Southern District of New York, alleging that Defendants infringed the following patents owned by IXI: U.S. Patent No. 7, 295, 532 (the “'532 Patent”), U.S. Patent No. 7, 039, 033 (the “'033 Patent”); and U.S. Patent No. 7, 016, 648 (the “'648 Patent”).[2] See Dkt. No. 1 ¶ 15. The patents are related to “mobile tethering” technology. Id. ¶ 12. The cases were transferred to this Court in August 2015. Dkt. Nos. 79, 90.

         In June 2015, Defendants Apple and Samsung filed petitions for inter partes review (“IPR”) by the Patent Trial and Appeal Board (“PTAB”), challenging the validity of each asserted claim of all three patents at issue.[3] Dkt. No. 119-1 ¶ 5. After filing the IPR petitions, Defendants moved to stay the litigation, and the Court granted the stay on November 12, 2015. Dkt. Nos. 119, 133. The PTAB instituted review of all the challenged claims except claim 10 of the '532 Patent. Dkt. No. 142. In December 2016, the PTAB found all the instituted claims unpatentable. Dkt. No. 147, Exs. 2-5. Plaintiffs appealed the PTAB's decision regarding the '033 Patent. Dkt. No. 142. On September 10, 2018, the Federal Circuit affirmed the PTAB's decision invalidating the challenged claims of the '033 Patent. Dkt. No. 147, Ex. 6. The final result of Defendants' 2015 IPRs was the invalidation of every claim asserted in this case other than claim 10 of the '532 Patent.

         In March 2017, while the Federal Circuit appeal was pending, Plaintiffs sought ex parte reexamination of the '033 Patent with the United States Patent and Trademark Office (“PTO”) and submitted a set of amended and new claims. Dkt. No. 173-6, Ex. 5. The PTO issued an ex parte reexamination certificate on February 1, 2018, amending claim 56 and adding claims 57-124 to the '033 Patent. Id. Apple filed a request for ex parte reexamination of certain challenged claims of the '532 Patent. Id. The PTO rejected all the challenged claims, including claim 10. Dkt. No. 173-3, Ex. 2. Plaintiffs then filed a supplemental response and proposed adding claims 64-98. Dkt. No. 173-4, Ex. 3. Reexamination of the proposed '532 Patent claims is still ongoing.

         On February 21, 2019, the Court lifted the stay. Dkt. Nos. 162, 176.

         II. LEGAL STADNARD

         The Patent Local Rules seek to “balance the right to develop new information in discovery with the need for certainty as to the legal theories.” O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006). Accordingly, under Patent Local Rule 3-6, amendment to infringement contentions “may be made only by order of the Court upon a timely showing of good cause.” In determining whether good cause exists, the Court considers (1) whether the moving party was diligent in moving to amend its contentions, and (2) whether the non-moving party would suffer prejudice if leave to amend were granted. Koninklijke Philips N.V. v. Acer Inc., No. 18-CV-01885-HSG, 2019 WL 652868, at *1 (N.D. Cal. Feb. 15, 2019) (citation omitted). “The party seeking to amend its contentions bears the burden of establishing diligence.” Id. (citation and quotations omitted). The moving party must establish diligence in two distinct phases: “(1) diligence in discovering the basis for amendment; and (2) diligence in seeking amendment once the basis for amendment has been discovered.” Id. (citation and quotations omitted). However, good cause “does not require perfect diligence.” Id. (citation and quotations omitted). Absent undue prejudice to the non-moving party, good cause may be supported by “[r]ecent discovery of material, prior art despite earlier diligent search.” Patent L.R. 3-6(b).

         “In contrast to the more liberal policy for amending pleadings, ‘the philosophy behind amending claim charts is decidedly conservative, and designed to prevent the ‘shifting sands' approach to claim construction.'” Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 236 F.Supp.3d 1110, 1113 (N.D. Cal. 2017) (citation omitted). The rules were “designed to require parties to crystallize their theories of the case early in the litigation and to adhere to those theories once they have been disclosed.” O2 Micro, 467 F.3d at 1366 n.12 (citation and quotations omitted).

         III. DISCUSSION

         Before the Court begins its analysis, it is important to note the posture of these cases, which were filed over five years ago, and transferred to this district over four years ago. In November 2015, the Court stayed the cases pending resolution of the IPR proceedings, primarily because the case could be substantially streamlined if the PTAB invalidated some or all of the asserted claims. See Dkt. No. 133 at 7. And that is exactly what happened: the IPR resulted in the invalidation of all but one of the forty-one claims asserted by Plaintiffs in this litigation, meaning that the current scope of the case is down to a single claim. But Plaintiffs now seek to re-expand the scope of the case, dramatically, by asserting what could be more than a hundred new claims generated in the reexamination proceedings, including some undetermined number of claims that may result from the ongoing review of proposed claims of the '532 Patent. So it is no exaggeration to observe that if Plaintiffs are allowed to proceed as they propose, the Court's stay to permit completion of the IPR was essentially pointless, and accomplished nothing other than delaying resolution of this case by several years. Plaintiffs will not be surprised to hear that the Court did not anticipate, or intend, that result.

         Defendants argue that res judicata, or claim preclusion, bars Plaintiffs' assertion of the new claims for the '033 Patent. Dkt. No. 173 (“Opp.”) at 5. With respect to the proposed claims for the '532 Patent, Defendants contend that Plaintiffs cannot assert claims the PTO has not yet issued. Opp. at 11. And Defendants contend more broadly that Plaintiffs have not shown good cause to amend, given their lack of diligence and the prejudice that would result from the proposed amendments. Id. at 15-16.

         The Court finds that at this stage, it need not decide whether claim or issue preclusion bars the new reexamination claims, because Plaintiffs have not established they were diligent in seeking amendment.[4] And even if Plaintiffs did establish diligence, Defendants would suffer undue prejudice if ...


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