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Eagle View Technologies, Inc. v. Xactware Solutions, Inc.

United States District Court, D. New Jersey, Camden Vicinage

November 29, 2017

EAGLE VIEW TECHNOLOGIES, INC., et al., Plaintiffs,
XACTWARE SOLUTIONS, INC. et al., Defendants.

          OPINION [DOC. NOS. 282, 293]


         This case is a classic example of the mischief that occurs when a party does not faithfully follow the requirements in the Local Patent Rules. As will be explained in more detail, as a result of plaintiffs' incomplete infringement contentions, and plaintiffs' four (4) versions of their answer to defendants' key interrogatory 7, the Court is now unfortunately compelled to wade through the parties' mind-numbing arguments and decide defendants' Motion to Strike New Infringement Theories and New Invention and Priority Dates [Doc. No. 282], and plaintiffs' Cross-Motion to Amend [Doc. No. 393]. The Court held oral argument on October 5 and 18, 2017, and pored over scores of technical and contention documents to get to the bottom of the complicated issues in dispute. For the reasons to be discussed, the parties' motions will be granted in part and denied in part.


         Plaintiffs filed this patent infringement action on September 23, 2015. The patents are generally directed to software technology for imaging, modeling and rendering aerial rooftop measurements and reports. Plaintiffs and defendants compete in this market. At present, seven (7) patents are at issue.

         After the December 9, 2015 Fed.R.Civ.P. 16 scheduling conference, the Court's Scheduling Order mirrored the deadlines in the Local Patent Rules. Plaintiffs served their infringement contentions on December 23, 2015. After the Court granted plaintiffs' motion to amend infringement contentions on October 28, 2016 [Doc. No. 139], plaintiffs served their first amended infringement contentions on November 4, 2016. Not being satisfied that the contentions supplied the necessary details required by the Local Rules, defendants attempted on numerous occasions to try and convince plaintiffs to serve fulsome contentions. Defendants' efforts were unsuccessful.[1] Justifiably not being satisfied that plaintiffs' infringement contentions were adequate, and that plaintiffs wrongfully insisted on taking defendants' deposition before they complied with the Local Rules, defendants filed their “Motion to Compel Amended Infringement Contentions to Comply with Local Patent Rule 3.1” [Doc. No. 158] on January 27, 2017. In short, defendants argued plaintiffs' infringement contentions lacked required detail and specificity, they provided no explanatory text or narrative analysis as to how or why the accused products infringed the asserted claims, or how plaintiffs' screenshots demonstrated the alleged infringement required by L. Pat. R. 3.1. See Defendants' Memorandum in Support of Motion at 1, Doc. No. 159. Defendants argued plaintiffs simply provided “picture books” without the textual analysis required by the Local Rules, and required defendants to guess at plaintiffs' infringement theories. Id. Not surprisingly, plaintiffs disagreed and insisted their infringement contentions complied with the Local Rules. Plaintiffs argued, “there is no question that Plaintiffs' contentions meet the standards of this District's Local Patent Rules.” Plaintiffs' Opposition at 1, Doc. No. 183.

         On May 1, 2017, the Court held oral argument on defendants' Motion to Compel and issued its Oral Opinion. The Court expressed its dismay at plaintiffs' position and ruled that plaintiffs' contentions were plainly deficient. See Transcript of May 1, 2017 Oral Argument at 42:7 - 53:1, Doc. No. 231. What was unsettling was the fact that even though plaintiffs argued their contentions were sufficient, plaintiffs' briefs provided explanatory text not included in their contentions. Plaintiffs also acknowledged source code citations were available to supplement their contentions that they did not identify. Thus, plaintiffs essentially acknowledged they did not produce the fulsome infringement contentions the Local Rules require. Id. at 51:2-20. The Court agreed. The Court, therefore, granted defendants' Motion to Compel on May 2, 2017, Doc. No. 213. Importantly, the Court merely granted plaintiffs leave to “supplement” their deficient contentions. On the same day the Court granted defendants' motion to amend their invalidity contentions to add the Sungevity reference as prior art. See May 2, 2017 Order, Doc. No. 212.

         Purporting to comply with the May 1, 2017 Order, plaintiffs served their amended supplemental infringement contentions on June 6, 2017. Plaintiffs also served a supplemental answer to defendants' interrogatory 7 on July 12, 2017, and amended the answer on July 19, 2017. Not coming as a surprise, defendants object to plaintiffs' supplement/amendment to their infringement contentions and July 12 and 19, 2017 answers to interrogatory 7. Defendants argue instead of supplementing, plaintiffs amended their contentions and required L. Pat. R. 32(b) disclosures.[2] Defendants' present motion argues plaintiffs cannot show good cause to amend and seeks to strike portions of plaintiffs' amendments. Defendants argue plaintiffs served “entirely new substantive technical and legal theories.” Defendants' Memorandum (“Defts.' Memo.”) at 5-6, Doc. No. 282. Defendants claim plaintiffs served “drastically new substantive infringement theories that differ substantially from those previously disclosed for a number of claim elements.” Id. at 6.

         Defendants' specific objections and requested relief seeks to strike references to the following:

• Plaintiffs' doctrine of equivalents theories;
• Plaintiffs' theories pursuant to 35 U.S.C. § 271(f)-(g);
• Plaintiffs' “ground point” theory offered in the ‘436 patent infringement contentions;
• Plaintiffs' “aerotriangulation” theory offered in the ‘436 patent infringement contentions;
• Plaintiffs' “aerotriangulation” theory offered in patent infringement contentions, particularly for the “receiving an indication of a feature” and “modifying a three-dimensional model” limitations;
• Plaintiffs' citations to Xactware source code Bates-numbered higher than XWSC648;
• Plaintiffs' amended L. Pat. R. 3.2(b) disclosures listed in their July 12 and 19, 2017 supplemental answers to interrogatory 7 regarding documents and source code evidencing conception and reduction to practice; and
• New conception and reduction to practice dates included in plaintiffs' July 12 and 19, 2017 answers to interrogatory 7.

         Plaintiffs' Cross-Motion to Amend seeks leave of court to assert the foregoing matters in the event the Court deems leave is necessary.

         Insofar as the general status of the case is concerned, the Markman hearing was recently held and the parties are awaiting the ruling. The fact discovery deadline expires on December 28, 2017, and no expert reports have been produced. No trial date has been set.


         1. May 1, 2017 Ruling

         Since plaintiffs mis-read the Court's May 1, 2017 ruling and accompanying May 2, 2017 Order, the Court's analysis starts with what it did and did not Order. To the extent plaintiffs assume the Court granted them carte blanche to amend their infringement contentions they are dead wrong. Plaintiffs were only granted leave to supplement their contentions to comply with the Local Rules. Plaintiffs are well aware that in order to amend contentions a motion to amend must be filed. Horizon Pharma AG v. Watson Laboratories, Inc. - Florida, C.A. No. 13-5124 (JEI/JS), 2015 WL 12850575, at *2 (D.N.J. Feb. 24, 2015)(“New Jersey L. Pat. R. 3.7 provides that contentions may only be amended upon Order of the Court ‘upon a timely application and showing of good cause.'”) The Court did not dispense with Local Rule 3.7. Instead, the Court directed plaintiffs to comply with the Local Rules requiring fulsome contentions. The Court could not have granted plaintiffs carte blanche to amend because it did not have a record on which to determine if good cause existed.

         If, as plaintiffs seem to argue, they were free to amend their contentions at their leisure, it would minimize the mandatory nature of the Local Rules. If the Court accepted plaintiffs' argument plaintiffs could amend without good cause simply by serving deficient infringement contentions and waiting for their adversary to ask for a supplement. This is unacceptable. The Court agrees with defendants that what the Court directed at the May 1, 2017 hearing and in its May 2, 2017 Order was that plaintiffs “would supplement their contentions to provide additional information and detail, not add entirely new theories of infringement.” Defendants' Reply (“Defts.' Reply”) 5-6, Doc. No. 298 (emphasis removed). See also Tr. at 52:12-13 (“We'll give plaintiffs a reasonable time to supplement their contentions. [Plaintiffs will] rise or fall with them.”)[3]

         Having made it clear that plaintiffs were only granted leave to supplement but not amend their infringement contentions, the Court must decide into what category plaintiffs' changes fit. Admittedly, the line is not always clear. However, supplementary disclosures “do not permit a party to introduce new opinions after the disclosure deadline under the guise of a supplement.” Medtronic Inc. v. Edwards Lifesciences Corp., Case No. SACV 12-00327-JFV (MLGx), 2013 WL 12131746, at *2 (C.D. Ca. July 24, 2013)(citation and quotation omitted). Claims and issues which should have been included in plaintiffs' original contentions may not be added under the guise of a supplement. See Plumley v. Mockett, 836 F.Supp.2d 1053, 1062 (C.D. Ca. 2010).

         If the Court determines plaintiffs merely supplemented their contentions, defendants' motion will be denied because plaintiffs will be in compliance with the Court's Order. If the Court decides plaintiffs amended rather than supplemented their contentions, the Court must then decide whether plaintiffs show good cause for the amendment. If good cause does not exist, plaintiffs' Motion to Strike will be granted and defendants' Cross-Motion to Amend will be denied.

         The standard to establish good cause to amend is well established. The key factor courts look at is the diligence of the moving party. O2 Micro Intern. Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006). Diligence has two aspects to it. One is whether the moving party acted diligently to discover that an amendment was appropriate. The second aspect is whether the moving party promptly moved to amend its contentions after it learned an amendment was necessary. See generally id.; AS America, Inc. v. Masco Corp. of Indiana, C.A. No. 13-05 (JBS/JS), 2013 WL 4084237, at *2 (D.N.J. Aug. 13, 2013). Other factors courts consider to determine whether good cause exists to grant an amendment are: (1) the reason for the delay, including whether it was within the reasonable control of the party responsible for it; (2) the importance of what is to be excluded; (3) the danger of unfair prejudice; and (4) the availability of a continuance and the potential impact of a delay on judicial proceedings. LMT Mercer Group, Inc. v. Maine Ornamental, LLC, C.A. Nos. 10-4615, 10-6699 (FLW), 2014 WL 2842338, at *6 (D.N.J. Jan. 24, 2014); see also Oyajt Ltd. v. Vatech Amer., Inc., C.A. No. 10-4875 (PGS/DEA), 2012 WL 1067900, at *20 (D.N.J. March 29, 2012). Only if the court finds diligence does it need to determine if the non-party would suffer prejudice as a result of an amendment. LMT Mercer Group, at *6.

         2. Plaintiffs' Supplements/Amendments

         The Court will separately address each of defendants' requests.

         A. Doctrine of Equivalents Theories

         L. Pat. R. 3.1(e) requires a plaintiff to identify whether a limitation is asserted to be met literally or under the doctrine of equivalents (hereinafter “DOE”), “[n]ot later than 14 days after the Initial Scheduling Conference.” Defendants argue plaintiffs' December 23, 2015 contentions and November 4, 2016 amended contentions did not contain any DOE contentions. According to defendants, plaintiffs did not add their DOE theory until their second amended contentions on June 6, 2017. Plaintiffs added allegations regarding DOE for only two specific claim requirements. The “memory” and “roof estimation module” references in claim 1 of the ‘436 Patent and claim 10 of the ‘840 Patent. Defendants ask the Court to strike these contentions because plaintiffs cannot show good cause to amend. Specifically, defendants argue plaintiffs did not act diligently and they will be prejudiced by the amendment.

         Plaintiffs respond by pointing out their November 4, 2016 amended contentions stated, “Xactware has directly infringed and continues to directly infringe, either literally or under the doctrine of equivalents claims … of the ‘436 Patent[.]” See Exhibit 1[4] at 3.[5] In addition, plaintiffs' L. Pat. R. 3.1(c) chart reserved the right to supplement plaintiffs' contentions as to the DOE. See Exhibit 4 (“Plaintiffs further reserve the right to supplement these contentions as to the Doctrine of Equivalents[.]”)

         In response to plaintiffs' arguments defendants counter that plaintiffs never articulated any DOE theory for any limitation of any asserted claim for any patent. And, therefore, plaintiffs' new DOE theories are entirely new. Defts' Reply at 8. ...

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