Ixi Mobile (R&D) Ltd. et al v. Apple, Inc.

ORDER by Hon. Haywood S. Gilliam, Jr. DENYING (Docket Nos. 157 in 4:15-cv-03755-HSG and 166 in 4:15-cv-03752-HSG) Plaintiffs' Motion for Leave To Amend Infringement Contentions and Asserted Claims. The Court SETS a further Case Management Conference for October 22, 2019 at 2:00 PM. Case Management Statement due by October 15, 2019.(hsglc2S, COURT STAFF)

Northern District of California, cand-4:2015-cv-03755

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 IXI MOBILE (R&D) LTD., et al., Case No. 15-cv-03752-HSG 8 Plaintiffs, ORDER DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND 9 v. INFRINGEMENT CONTENTIONS AND ASSERTED CLAIMS 10 SAMSUNG ELECTRONICS CO LTD, et al., Re: Dkt. No. 166 11 Defendants. 12 Northern District of California United States District Court IXI MOBILE (R&D) LTD., et al., 13 Case No. 15-cv-03755-HSG Plaintiffs, 14 v. 15 APPLE INC, 16 Re: Dkt. No. 157 17 Defendant. 18 19 Pending before the Court is Plaintiffs' motion for leave to amend their infringement 20 contentions and asserted claims in the above-captioned actions. Case No. 15-cv-3752-HSG, Dkt. 21 No. 166 ("Mot.") 1; Case No. 15-cv-03755-HSG, Dkt. No. 157. The Court finds that this matter is 22 appropriate for disposition without oral argument and the matter is deemed submitted. See Civil 23 L.R. 7-1(b). For the reasons stated below, the Court DENIES Plaintiffs' motion. 24 I. BACKGROUND 25 Plaintiffs filed these patent infringement actions in 2014 against Defendants Samsung and 26 Apple in the Southern District of New York, alleging that Defendants infringed the following 27 1 28 All docket citations refer to the docket in IXI Mobile (R&D) Ltd., et al. v. Samsung Electronics Co. Ltd., et al., Case No. 15-cv-03752-HSG, unless otherwise indicated. 1 patents owned by IXI: U.S. Patent No. 7,295,532 (the "'532 Patent"), U.S. Patent No. 7,039,033 2 (the "'033 Patent"); and U.S. Patent No. 7,016,648 (the "'648 Patent").2 See Dkt. No. 1 ¶ 15. The 3 patents are related to "mobile tethering" technology. Id. ¶ 12. The cases were transferred to this 4 Court in August 2015. Dkt. Nos. 79, 90. 5 In June 2015, Defendants Apple and Samsung filed petitions for inter partes review 6 ("IPR") by the Patent Trial and Appeal Board ("PTAB"), challenging the validity of each asserted 7 claim of all three patents at issue.3 Dkt. No. 119-1 ¶ 5. After filing the IPR petitions, Defendants 8 moved to stay the litigation, and the Court granted the stay on November 12, 2015. Dkt. Nos. 119, 9 133. The PTAB instituted review of all the challenged claims except claim 10 of the '532 Patent. 10 Dkt. No. 142. In December 2016, the PTAB found all the instituted claims unpatentable. Dkt. 11 No. 147, Exs. 2–5. Plaintiffs appealed the PTAB's decision regarding the '033 Patent. Dkt. No. 12 142. On September 10, 2018, the Federal Circuit affirmed the PTAB's decision invalidating the Northern District of California United States District Court 13 challenged claims of the '033 Patent. Dkt. No. 147, Ex. 6. The final result of Defendants' 2015 14 IPRs was the invalidation of every claim asserted in this case other than claim 10 of the '532 15 Patent. 16 In March 2017, while the Federal Circuit appeal was pending, Plaintiffs sought ex parte 17 reexamination of the '033 Patent with the United States Patent and Trademark Office ("PTO") and 18 submitted a set of amended and new claims. Dkt. No. 173-6, Ex. 5. The PTO issued an ex parte 19 reexamination certificate on February 1, 2018, amending claim 56 and adding claims 57–124 to 20 the '033 Patent. Id. Apple filed a request for ex parte reexamination of certain challenged claims 21 of the '532 Patent. Id. The PTO rejected all the challenged claims, including claim 10. Dkt. No. 22 173-3, Ex. 2. Plaintiffs then filed a supplemental response and proposed adding claims 64–98. 23 Dkt. No. 173-4, Ex. 3. Reexamination of the proposed '532 Patent claims is still ongoing. 24 On February 21, 2019, the Court lifted the stay. Dkt. Nos. 162, 176. 25 2 26 The parties stipulated to dismiss all claims related to a fourth patent, U.S. Patent No. 7,426,398. Dkt. No. 64. 27 3 Plaintiffs' infringement contentions asserted the following claims from each patent (forty-one in total): 1, 4–7, 12, 14–15, 22–23, 25, 28, 34, 39, 40, 42, 46 of the '033 Patent (seventeen claims); 1, 28 4–5, 7–10, 12, 14–16, 23, 24 of the '532 Patent (thirteen claims); and 1–2, 7, 9, 14–16, 22–23, 27, 30 of the '648 Patent (eleven claims). Dkt. No. 173-2, Ex. 1. 2 1 II. LEGAL STADNARD 2 The Patent Local Rules seek to "balance the right to develop new information in discovery 3 with the need for certainty as to the legal theories." O2 Micro Int'l Ltd. v. Monolithic Power Sys., 4 Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006). Accordingly, under Patent Local Rule 3-6, 5 amendment to infringement contentions "may be made only by order of the Court upon a timely 6 showing of good cause." In determining whether good cause exists, the Court considers (1) 7 whether the moving party was diligent in moving to amend its contentions, and (2) whether the 8 non-moving party would suffer prejudice if leave to amend were granted. Koninklijke Philips N.V. 9 v. Acer Inc., No. 18-CV-01885-HSG, 2019 WL 652868, at *1 (N.D. Cal. Feb. 15, 2019) (citation 10 omitted). "The party seeking to amend its contentions bears the burden of establishing diligence." 11 Id. (citation and quotations omitted). The moving party must establish diligence in two distinct 12 phases: "(1) diligence in discovering the basis for amendment; and (2) diligence in seeking Northern District of California United States District Court 13 amendment once the basis for amendment has been discovered." Id. (citation and quotations 14 omitted). However, good cause "does not require perfect diligence." Id. (citation and quotations 15 omitted). Absent undue prejudice to the non-moving party, good cause may be supported by 16 "[r]ecent discovery of material, prior art despite earlier diligent search." Patent L.R. 3-6(b). 17 "In contrast to the more liberal policy for amending pleadings, 'the philosophy behind 18 amending claim charts is decidedly conservative, and designed to prevent the 'shifting sands' 19 approach to claim construction.'" Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 236 F. Supp. 20 3d 1110, 1113 (N.D. Cal. 2017) (citation omitted). The rules were "designed to require parties to 21 crystallize their theories of the case early in the litigation and to adhere to those theories once they 22 have been disclosed." O2 Micro, 467 F.3d at 1366 n.12 (citation and quotations omitted). 23 III. DISCUSSION 24 Before the Court begins its analysis, it is important to note the posture of these cases, 25 which were filed over five years ago, and transferred to this district over four years ago. In 26 November 2015, the Court stayed the cases pending resolution of the IPR proceedings, primarily 27 because the case could be substantially streamlined if the PTAB invalidated some or all of the 28 asserted claims. See Dkt. No. 133 at 7. And that is exactly what happened: the IPR resulted in 3 1 the invalidation of all but one of the forty-one claims asserted by Plaintiffs in this litigation, 2 meaning that the current scope of the case is down to a single claim. But Plaintiffs now seek to re- 3 expand the scope of the case, dramatically, by asserting what could be more than a hundred new 4 claims generated in the reexamination proceedings, including some undetermined number of 5 claims that may result from the ongoing review of proposed claims of the '532 Patent. So it is no 6 exaggeration to observe that if Plaintiffs are allowed to proceed as they propose, the Court's stay 7 to permit completion of the IPR was essentially pointless, and accomplished nothing other than 8 delaying resolution of this case by several years. Plaintiffs will not be surprised to hear that the 9 Court did not anticipate, or intend, that result. 10 Defendants argue that res judicata, or claim preclusion, bars Plaintiffs' assertion of the new 11 claims for the '033 Patent. Dkt. No. 173 ("Opp.") at 5. With respect to the proposed claims for 12 the '532 Patent, Defendants contend that Plaintiffs cannot assert claims the PTO has not yet Northern District of California United States District Court 13 issued. Opp. at 11. And Defendants contend more broadly that Plaintiffs have not shown good 14 cause to amend, given their lack of diligence and the prejudice that would result from the proposed 15 amendments. Id. at 15-16. 16 The Court finds that at this stage, it need not decide whether claim or issue preclusion bars 17 the new reexamination claims, because Plaintiffs have not established they were diligent in 18 seeking amendment.4 And even if Plaintiffs did establish diligence, Defendants would suffer 19 undue prejudice if Plaintiffs are allowed to radically expand this long-running litigation at this 20 stage. 21 22 23 4 Without deciding the preclusion issue, the Court notes that Defendants' claim that "[t]he Federal 24 Circuit's analysis in Senju Pharm.—where it found the patentee was barred from seeking a 'do- over' or 'obtaining a second bite at the apple' by asserting new reexamination claims after the 25 original claims were held to be invalid—applies directly to this case" is not self-evidently correct. Opp. at 10 (citing Senju Pharm. Co. v. Apotex, 746 F.3d 1344, 1353 (Fed. Cir. 2014)). As 26 Plaintiffs note, Senju Pharm. involved a district court judgment of invalidity rather than a PTAB decision. See 746 F.3d at 1347. While, for the reasons discussed below, there would appear to be 27 obvious inefficiency in allowing Plaintiffs to resurrect claims invalidated in IPR by turning to ex parte reexamination, this appears to be an unresolved issue not squarely addressed by Senju 28 Pharm. In any event, the Court need not resolve this question to decide the pending motion. 4 1 A. Diligence 2 The Court first determines whether Plaintiffs have established diligence in (1) discovering 3 the basis for amendment and (2) seeking leave to amend their invalidity contentions once the basis 4 for amendment was discovered. See Koninklijke, 2019 WL 652868, at *1. 5 That new claims have been added during reexamination proceedings does not 6 automatically entitle Plaintiffs to amend their infringement contentions and assert what could be 7 more than a hundred new claims, approximately thirty of which have not yet even been issued by 8 the PTO. Nor does it establish that Plaintiffs were diligent. As Defendants note, Plaintiffs have 9 not identified any of the new contentions or accused products they seek to add. Opp. at 13. 10 Plaintiffs' failure to proffer any of the proposed changes means that the Court cannot ascertain 11 how the new contentions differ from the initial contentions or when any newly-accused products 12 entered the market. See Karl Storz Endoscopy-Am., Inc. v. Stryker Corp., No. C 09-00355 WHA, Northern District of California United States District Court 13 2011 WL 5574807, at *2 (N.D. Cal. Nov. 16, 2011) ("[I]t is impossible to evaluate how the new 14 contentions differ from the initial contentions, what evidence supports the new contentions, when 15 that evidence was discovered, and whether the changes would prejudice [defendant]"). Plaintiffs 16 cannot amend their contentions simply because new claims were added during ex parte 17 reexaminations, and Plaintiffs' cited authorities do not stand for that proposition. The court in 18 Acer found it significant that the proposed amendments would add newly-accused products which 19 did not enter the market until after the initial contentions. See Acer, Inc. v. Tech. Properties Ltd., 20 No. 5:08-CV-00877 JF/HRL, 2011 WL 1838768, at *4 (N.D. Cal. May 13, 2011). But unlike the 21 moving party in Acer, Plaintiffs make no showing that they even investigated potentially 22 infringing products to determine whether they infringe the new claims. See id. at *3 ("With 23 respect to the '749 Patent, TPL offered to assert claims conditionally based on the [reexamination 24 certificate], and it completed its investigation of infringing products and served its proposed 25 amendment contentions approximately one month after the [reexamination certificate] issued."). 26 Plaintiffs blame Defendants for their failure to present proposed infringement co