United States District Court, D. New Jersey, Camden Vicinage
MEMORANDUM OPINION AND ORDER
SCHNEIDER, UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on defendants' “Motion
for Leave to Amend Defendants' Second Amended Answer,
Affirmative Defenses, Counterclaims, and Jury Demand.”
[Doc. No. 374]. Defendants seek to amend their answer to add:
(1) a Fourteenth Affirmative Defense that plaintiffs'
‘152, ‘840, ‘770, ‘454, ‘376
and ‘737 patents are invalid for “mis-joinder of
inventors”; (2) a Fifteenth Affirmative Defense that
the patents are “unenforceable due to inequitable
conduct”; (3) a Sixteenth Affirmative Defense that all
necessary parties have not been joined; (4) Count XVI to
their counterclaim seeking a declaratory judgment that the
patents are invalid for incorrect inventorship; and (5) Count
XVII to their counterclaim seeking a declaratory judgment of
unenforceability (inequitable conduct) as to the
patents. The Court received plaintiffs'
opposition [Doc. No. 401], defendants' reply [Doc. No.
407], and held oral argument. For the reasons to be
discussed, defendants' Motion to Amend is
a bitter patent dispute between business competitors that was
filed on September 23, 2015. The patents at issue are
generally directed to software technology for imaging,
modeling and rendering aerial rooftop measurements and
reports. Plaintiffs are the owners of the patents at issue.
Defendant Xactware Solutions is a subsidiary of defendant
Verisk Analytics, and provides online tools and systems for
determining replacement-cost calculations for damaged
buildings and construction estimates. The amended complaint
alleges defendants infringe seven patents: ‘436,
‘840, ‘152, ‘770, ‘454, ‘376
and ‘737. The ‘436 patent was filed on October
16, 2008 and names Christopher Pershing and David P. Carlson
as co-inventors. The other six patents at issue name Pershing
as the sole inventor.
proposed amendments essentially raise two new defenses. One,
defendants claim Carlson was improperly omitted as an
inventor on the six patents at issue thus rendering the
patents invalid. Two, defendants engaged in inequitable
conduct by providing incorrect inventorship information to
the Patent Office with an intent to deceive the Patent
procedural history of the case is instructive. After the
December 9, 2015 Fed.R.Civ.P. 16 scheduling conference, the
Court's first Scheduling Order mirrored the deadlines in
the Local Patent Rules. The first deadline to amend
pleadings, including amendments to add claims as to
inequitable conduct, was set for September 6, 2016.
See December 10, 2015 Order, Doc. No. 38. At the
parties' request the amendment deadline was later
extended to February 28, 2017, May 12, 2017, May 15, 2017 and
eventually to May 16, 2017. See Doc. Nos. 148, 163,
224, 226 and 228. Defendants filed the present motion to
amend on February 9, 2018, approximately nine (9) months
after the last deadline to move to amend pleadings, and
seventeen (17) months after the first deadline to amend
pleadings was set. The Markman Opinion and Order were filed
on December 5, 2017. [Doc. No. 332].
that their motion is late, defendants attempt to explain away
their delay by arguing they filed their motion “as soon
as it had sufficient evidence to support all of its
allegations.” Defendants' Memorandum in Support of
Motion at 2 (“Defts.' Memo.”), Doc. No. 375.
Carlson and Pershing founded Eagle View. Carlson was deposed
on September 28, 2017 and Pershing was deposed on November 7
and 8, 2017. After Pershing was deposed, defendants served
plaintiffs with supplemental interrogatories asking
plaintiffs to describe the contributions of Carlson.
Plaintiffs answered the interrogatories on December 21, 2017
and supplemented the response on January 21,
their new inventorship defense, defendants aver that Pershing
and Carlson testified at deposition that Carlson contributed
to conception of the roof estimate reports recited in the
claims of the ‘436 patent. See Proposed
Amended Counterclaim (“PAC”) ¶122, Doc. No.
376-1. However, although Pershing and Carlson are listed as
co-inventors on the ‘436 patent, defendants emphasize
only Pershing is listed as the inventor on the six patents at
issue even though plaintiffs' patents contain nearly
identical roof estimate report limitations. Defendants argue
Carlson should, therefore, be listed as a co-inventor on the
background of defendants' new inequitable conduct defense
is more involved. In February 2016 plaintiffs produced
portions of Thornberry deposition transcripts from a patent
suit Eagle View filed against Aerialogics in 2012. Dale and
Chris Thornberry worked for Thornberry Consulting, a company
that developed a program that competed with Eagle View.
Defendants contend that in November 2009, after Carlson left
Eagle View in early 2009, he explored employment with Eagle
View's competitor, Aerialogics. The Thornberrys'
deposition testimony confirmed this fact. Defendants argue
because Carlson did not assign his rights in the ‘904
Provisional to Eagle View, and because he could transfer this
interest to any competitor, this gave Eagle View, Pershing
and Eagle View's attorneys an incentive not to identify
Carlson as a co-inventor on the six patents at issue.
portions of the Thornberrys' transcripts were produced as
early as February 2016, defendants did not follow up and
request a full copy of the transcripts until November 21,
2017 (Defts.' Memo. at 18-19), which was produced on
December 20, 2017. Id. at 20. The exhibits to the
deposition were produced on January 25, 2018. Id.
Defendants argue the transcripts “revealed an entirely
new and important fact, ” i.e., that Eagle
View knew about Carlson's conversation with the
Thornberrys shortly after the conversation occurred.
Id. According to defendants, this shows plaintiffs
were “concerned about Mr. Carlson's career path
after Eagle View” and, therefore, plaintiffs “had
reason to prefer Mr. Carlson not be included as an inventor
on the remaining patents.” Id. at 21. In
addition, defendants surmise that plaintiffs did not name
Carlson as a co-inventor on the six patents because he had
knowledge of prior art plaintiffs did not want to disclose.
opposition to defendants' motion, plaintiffs argue the
motion was filed late and will prejudice them if granted. In
addition, plaintiffs argue defendants' inventorship and
inequitable conduct claims are futile. Plaintiffs also argue
defendants' proposed amendment does not sufficiently
plead facts to support their inequitable conduct claim. In
particular, plaintiffs argue defendants have not pleaded
sufficient facts to show plaintiffs intended to deceive the
Leave to Amend
to Fed.R.Civ.P. 15(a)(2), courts “should freely give
leave [to amend pleadings] when justice so requires.” A
court should allow a party to amend its pleading so long as
there is no undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies,
undue prejudice or futility of the amendment. See Shane
v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). Despite
this liberal standard for permitting amendments, a motion to
amend is committed to the “sound discretion of the
district court.” Cureton v. Nat'l Collegiate
Athletic Ass'n, 252 F.3d 267, 272 (3d Cir. 2001).
“mere passage of time does not require that a motion to
amend a complaint be denied on grounds of delay ... at some
point, the delay will become ‘undue, ' placing an
unwarranted burden on the court, or will become
‘prejudicial, ' placing an unfair burden on the
opposing party.” Id. at 283 (quoting Adams
v. Gould Inc., 739 F.2d 858, 868 (3d Cir. 1984)). Delay
is “undue” if plaintiff had previous
opportunities to amend. In re Caterpillar Inc., 67
F.Supp.3d 663, 668 (D.N.J. 2014) (citing Estate of Oliva
ex rel. McHugh v. New Jersey, 604 F.3d 788, 803 (3d Cir.
2010)). Therefore, the issue of undue delay requires courts
to “focus on the movant's reasons for not amending
sooner.” CMR D.N. Corp. v. City of
Philadelphia, 703 F.3d 612, 629 (3d Cir. 2013)
(explaining that the Third Circuit has “refused to
overturn denials of motions for leave to amend where the
moving party offered no cogent reason for the delay in
seeking the amendment”).
assessing futility, the District Court applies the same
standard of legal sufficiency as applies under Rule 12(b)(6).
Travelers Indemnity Co. v. Dammann & Co., Inc.,
594 F.3d 238, 243 (3d Cir. 2010) (citation omitted).
Accordingly, the Court must accept as true all well-pleaded
factual allegations and must determine whether the facts as
alleged raise a facially plausible claim on the grounds
asserted. Warren Gen. Hosp. v. Amgen Inc., 643 F.3d
77, 84 (3d Cir. 2011). A complaint need not provide detailed
factual allegations but must provide facts sufficient to show
a plausible cause of action. Ashcroft v. Iqbal, 129
S.Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
Good Cause, Excusable Neglect and Undue Delay
addition to the requirements under Rule 15(a), Rule 16(b)
regarding scheduling orders must also be satisfied. There is
no dispute defendants' motion to amend filed on February
9, 2018 was filed after the May 17, 2017 deadline to amend
pleadings. Nonetheless, although late, the late filing is not
necessarily fatal to defendants. Pursuant to Rule 16(b)(4), a
Scheduling Order may be modified for good cause. Pursuant to
Rule 6(b)(1)(B), the court may extend a deadline for good
cause “after the time has expired if the party failed
to act because of excusable neglect.” Since
defendants' motion was filed after May 17, 2017,
defendants must meet the good cause and excusable neglect
standards to be granted.
cause requires that a party demonstrate that an existing
schedule cannot be met despite the diligence of the party
seeking the extension. See Rule 16, Advisory
Committee Note on Subdivision (b). The determination of good
cause depends upon the diligence of the moving party.