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DSS Technology Management, Inc. v. Apple, Inc.

United States District Court, N.D. California

January 14, 2020

APPLE, INC., Defendant.



         Pending before the Court is DSS's motion to amend infringement contentions, Dkt. Nos., 215 (“Mot.”), 220 (“Opp./XMot.”), 232 (“Reply”), and Apple's cross-motion to strike DSS's infringement expert report, Dkt. Nos. 220, 234 (“XOpp.”), 249 (“XReply”). The parties also filed related motions to seal portions of its briefs and accompanying exhibits. Dkt. Nos. 213, 219, 231, 233, 246. For the reasons provided below, the Court DENIES DSS's motion to amend infringement contentions and GRANTS Apple's cross-motion to strike DSS's infringement expert report.[1]

         I. BACKGROUND

         Plaintiff DSS Technology Management, Inc. filed its complaint against Defendant Apple, Inc. on November 26, 2013, in the Eastern District of Texas, alleging infringement of U.S. Patent Nos. 6, 128, 290 (the “'290 patent”) and 5, 699, 357 (the “'357 patent”). Dkt. No. 1. DSS later withdrew all infringement allegations as to the '357 patent, so presently only the '290 patent is at issue. See Dkt. No. 96 at 2, 4. DSS alleges that Apple's development and sale of computers and other devices (iMacs, Mac Minis, Mac Pros, iPhones, iPads, and iPods) that provide wireless Bluetooth connections to peripheral devices (such as keyboards and mice) infringes the '290 patent. Specifically, DSS alleges that the '290 patent "solved the problem of how to connect peripherals wirelessly to a computer but still have sufficient battery life to be practical." Mot. at 6. This was achieved by "a communication scheme whereby the computer would place the peripheral[ devices] on a schedule as to when the devices might periodically communicate with the computer." Id. As opposed to keeping the Bluetooth transmitter in these peripheral devices always on, this "low duty cycle" reduced the peripheral devices' battery power consumption by turning the transmitter on for only short periods. There are two modes hi which a device may operate to effectuate this "low duty cycle:" Bluetooth Sniff Mode and Sniff Subrating Mode. Dkt. No. 213-7 at 129. Both reduce batteiy power consumption by negotiating periods of time when the peripheral device's Bluetooth transmitter turns back on. Id. Sniff Subrating Mode "further reduc[es] the active duty cycle" and saves power by specifying lower maximum access points. Id.[2] Bluetooth Sniff Subrating Mode is an optional functionality. Id. at 668.

         On March 13, 2014, DSS seived initial Preliminary Infringement Contentions ("PICs") on Apple. See Dkt. No. 214-1 (Mot. Ex. 15). After correspondence with Apple, DSS seived Amended PICs on May 2, 2014, which added information about the accused products. Dkt. No. 214-3. The contentions contain three clahn charts-only Exhibit B (for the '290 patent for "Apple Bluetooth v4.0 Products") and Exhibit C (for the '290 patent for "Apple Bluetooth v2.1 Products") are at issue. Dkt. No. 215-18 (Ex. B, Ex. C). Exhibit B states that "[t]his particular set of Preliminary Infringement Contentions maps Apple's products that make use of the Bluetooth 4.0 standard ... for wireless communications between a device and its peripherals to the claims of. . . the '290 patent." Id. Ex. B at 1. Similarly, Exhibit C states that "[t]his particular set of Preliminary Infringement Contentions maps Apple's products that make use of versions of the Bluetooth standards between versions 2.1 .. . and 4.0 for wireless communications between a device and its peripherals to the claims of . . . the '290 patent.” Id. Ex. C at 1. As relevant to the issues presented in the parties' motions, Bluetooth version 2.1 introduced Sniff Subrating Mode. Dkt. No. 220-2 at 2. Previous versions relied on Sniff Mode only. Id.

         On November 7, 2014, the originally-assigned judge in the Eastern District of Texas granted Defendant's motion to transfer the case to the Northern District of California. Dkt. No. 85. On February 13, 2015, the case was reassigned to this Court. On December 4, 2014, Defendant filed two petitions for inter partes review (IPR) of the '290 patent. Dkt. No. 99 at 1. All of the '290 patent claims asserted by Plaintiff were covered by Defendant's petitions. Id. at 3. On May 1, 2015, the Court stayed this case pending results of the IPRs. Dkt. No. 122. Both IPRs resulted in a final decision in Plaintiff's favor, and the Court lifted the stay on July 27, 2018. Dkt. No. 145.

         After holding a technology tutorial hearing on September 14, 2018 and a claim construction hearing on September 21, 2018, the Court issued a claim construction order on December 6, 2018. See Dkt. No. 175. The Court construed the disputed terms from Claims 1 through 4 of the '290 Patent. Immediately following the hearing, the Court conducted a further Case Management Conference. The Court scheduled various dates in the action, including a fact discovery cut-off date of June 14, 2019. See Dkt. No. 183.


         The Patent Local Rules state that a plaintiff must provide:

(b) Separately for each asserted claim, each accused apparatus, product, device, process, method, act, or other instrumentality (“Accused Instrumentality”) of each opposing party of which the party is aware. This identification shall be as specific as possible. Each product, device, and apparatus shall be identified by name or model number, if known. Each method or process shall be identified by name, if known, or by any product, device, or apparatus which, when used, allegedly results in the practice of the claimed method or process; . . .
(e) A chart identifying specifically where each limitation of each asserted claim is found within each Accused Instrumentality, including for each limitation that such party contends is governed by 35 U.S.C. § 112(6), the identity of the structure(s), act(s), or material(s) in the Accused Instrumentality that performs the claimed function.

See Patent L.R. 3-1(b), (e). “[A]ll courts agree that the degree of specificity under Local Rule 3-1 must be sufficient to provide reasonable notice to the defendant why the plaintiff believes it has a ‘reasonable chance of proving infringement.'” Shared Memory Graphics LLC v. Apple, Inc., 812 F.Supp.2d 1022, 1025 (N.D. Cal. 2010) (quoting View Eng'g, Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed. Cir. 2000)).

         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 and quotations 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).

         “[A] party may not use an expert report to introduce new infringement theories, new infringing instrumentalities, new invalidity theories, or new prior art references not disclosed in the parties' infringement contentions or invalidity contentions.” ASUS Computer Int'l v. Round Rock Research, LLC, No. 12-CV-02099 JST (NC), 2014 WL 1463609, at *1 (N.D. Cal. Apr. 11, 2014). “The scope of contentions and expert reports are not, however, coextensive.” Apple Inc. v. Samsung Elecs. Co., No. 5:12-CV-0630-LHK-PSG, 2014 WL 173409, at *1 (N.D. Cal. Jan. 9, 2014). “Infringement contentions need not disclose specific evidence, whereas expert reports must include a complete statement of the expert's opinions, the basis and reasons for them, and any data or other information considered when forming them.” Digital Reg of Texas, LLC v. Adobe Sys. Inc., No. CV 12-01971-CW (KAW), 2014 WL 1653131, at *2 (N.D. Cal. Apr. 24, 2014) (internal quotation marks omitted). “The threshold question in deciding whether to strike an expert report is whether the expert has permissibly specified the application of a disclosed theory or impermissibly substituted a new theory altogether.” Id.

         III. ANALYSIS

         The motion to amend infringement contentions and the cross-motion to strike DSS's expert report put essentially DSS's entire case at issue. The Amended PICs allege that Apple's products using versions of Bluetooth between v.2.1 and 4.0 infringed the '290 patent. Bluetooth Sniff Subrating Mode became an optional feature beginning with v2.1; prior versions-v1.0 to 2.0- only had Bluetooth Sniff Mode. Without dispute, Apple's products XXXXX. In its motion, DSS asks the Court for leave to amend its infringement contentions to include contentions relating to Broadcom proprietary mode. DSS also argues that the Amended PICs put Apple on notice that its products operating in just Bluetooth Sniff Mode infringe the '290 patent. Apple disagrees and argues that DSS did not show diligence in seeking amendment, and that the Amended PICs do not allege that Apple's products operating in Sniff mode infringe the '290 patent. Accordingly, Apple asks the Court to strike DSS's expert report for impermissibly substituting two new theories. The Court addresses each motion in turn.

         A. Motion to Amend Infringement Contentions

         DSS seeks to add XXXXX as an infringing mode to its Amended Contentions. Mot. at 21-25. This proposed amendment arises out of DSS's purported recent discovery on May 15, 2019, during a Rule 30(b)(6) deposition, that Apple XXXXX. Mot. at 21-22. As noted above, the Court must consider whether DSS acted with diligence in moving ...

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