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Finjan, Inc. v. Bitdefender Inc.

United States District Court, N.D. California

November 8, 2019

FINJAN, INC., Plaintiff,
BITDEFENDER INC., et al., Defendants.



         On August 16, 2017, Plaintiff Finjan, Inc. (“Finjan”) filed its complaint against Defendants Bitdefender Inc., and Bitdefender S.R.L. (collectively, “Bitdefender”). Dkt. No. 1. Bitdefender filed its answer and counterclaims on November 22, 2017. Dkt. No. 25. Bitdefender filed a first amended answer on May 8, 2018. Dkt. Nos. 78, 79. Finjan filed its answer to Bitdefender's counterclaims on May 22, 2018. Dkt. Nos. 82, 83. On June 8, 2019, Bitdefender filed this motion for leave to file an amended answer, to include a counterclaim for breach of contract. Dkt. No. 127 (“Mot.”). Finjan filed its opposition to this motion on July 2, 2019, Dkt. No. 132 (“Opp.”), and Bitdefender filed its reply on July 9, 2019, Dkt. No. 134 (“Reply”). Bitdefender also filed two motions to seal portions of its briefs and accompanying exhibits. Dkt. Nos. 126, 133.


         A. Amendment of Pleadings

         Generally, under Rule 15(a)(2), “leave to amend shall be freely granted ‘when justice so requires.'” Townsend v. Univ. of Alaska, 543 F.3d 478, 485 (9th Cir. 2008) (quoting Fed.R.Civ.P. 15(a)(2)). “This policy is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks omitted). However, “[o]nce the district court ha[s] filed a pretrial scheduling order pursuant to Federal Rule of Civil Procedure 16 which established a timetable for amending pleadings that rule's standards control.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992). Rule 16 provides that the Court

must issue a scheduling order [that] limit[s] the time to join other parties, amend the pleadings, complete discovery, and file motions . . . . A schedule may be modified only for good cause and with the judge's consent.

         Fed. R. Civ. P. 16(b). The “good cause” requirement of Rule 16 “primarily considers the diligence of the party seeking the amendment.” Johnson, 975 F.2d at 609.

         If the Court finds that the good cause requirement of Rule 16 is met, the moving party “must then demonstrate that the motion is also proper under Rule 15.” Rodarte v. Alameda Cty., No. 14-cv-00468-KAW, 2015 WL 5440788, at *2 (N.D. Cal. Sept. 15, 2015). The five factors relevant to determining proper amendment under Rule 15 are (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment, and (5) previous amendments. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Wash. State Republican Party v. Wash. State Grange, 676 F.3d 784, 797 (9th Cir. 2012) (same factors). The Court weighs prejudice to the opposing party most heavily. See Eminence Capital, 316 F.3d at 1052 (9th Cir. 2003). “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Id.

         B. File Under Seal

         Courts generally apply a “compelling reasons” standard when considering motions to seal documents. Pintos v. Pac. Creditors Ass'n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “This standard derives from the common law right ‘to inspect and copy public records and documents, including judicial records and documents.'” Id. (quoting Kamakana, 447 F.3d at 1178). “[A] strong presumption in favor of access is the starting point.” Kamakana, 447 F.3d at 1178 (quotations omitted). To overcome this strong presumption, the party seeking to seal a judicial record attached to a dispositive motion must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process” and “significant public events.” Id. at 1178-79 (quotations omitted).

         Records attached to nondispositive motions must meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure, as such records “are often unrelated, or only tangentially related, to the underlying cause of action.” Id. at 1179-80 (quotation omitted). This requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002); see also Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (quotation omitted).

         II. ANALYSIS

         A. Motion to Amend Answer

         Bitdefender argues that Rule 16's “good cause” standard does not apply because the Court's scheduling order stipulated only a deadline for amending pleadings without leave of court, and here it seeks such leave. Reply at 6. However, it is the Federal Rules of Civil Procedure that guide the “good cause” standard, not the Court's order. Still, the Court must look to the diligence of the moving party in determining whether the good cause standard under Rule 16(b) has been met, and Bitdefender meets the standard in this case. Finjan disclosed the alleged confidential information on April 5, 2019, Dkt. No. 128-3 at 20, well past the February 20, 2018 deadline to amend pleadings, Dkt. No. 27. Bitdefender then reached out to Finjan to remove the language. After Finjan refused, on May 29, 2019, Bitdefender filed a discovery motion ...

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