Match Group, LLC v. Bumble Trading Inc.

Western District of Texas, txwd-6:2018-cv-00080

Opposed MOTION for Leave to File Second Amended Complaint by Match Group, LLC.

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2 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION MATCH GROUP, LLC Plaintiff, No. 6:18-cv-00080-ADA v. BUMBLE TRADING INC. JURY TRIAL DEMANDED Defendant. PLAINTIFF MATCH GROUP, LLC'S OPPOSED MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT 2 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................. 1 II. BACKGROUND ................................................................................................................... 2 III. ARGUMENT ......................................................................................................................... 3 A. Good Cause Exists to Add the '854 Patent. ................................................................... 3 B. Bumble's Proposed "With Prejudice" Dismissal of the '314 Patent Is Inappropriate Because the Court Has No Jurisdiction Over It. ...................................... 5 IV. CONCLUSION ...................................................................................................................... 7 i 2 TABLE OF AUTHORITIES Cases Advanced Electrolyte Techs. LLC v. Samsung SDI Co., Ltd No. A:17-CV-0030-LY (W.D. Tex. June 8, 2018) ..................................................................... 3 Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180 (Fed. Cir. 2014) ...................................... 5 Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc. No. 2:14-CV-0911-JRG-RSP, 2016 WL 1105364 (E.D. Tex. Feb. 4, 2016) report and recommendation adopted, 2016 WL 1106442 (E.D. Tex. Mar. 20, 2016) ........... 5, 7 Ford Motor Co. v. Versata Software, Inc. No. 15-11624, 2016 WL 8315738 (E.D. Mich. Nov. 7, 2016) ................................................... 7 IDB Ventures, LLC v. Charlotte Russe Holdings, Inc. No. 2:17-CV-660-WCB-RSP, 2018 WL 6830058 (E.D. Tex. Dec. 28, 2018) ........................... 4 Intellectual Ventures II, LLC v. AT & T Corp. No. 1:13-CV-116-LY (W.D. Tex. July 8, 2015) ......................................................................... 3 Jervis B. Webb Co. v. S. Sys., Inc. 742 F.2d 1388 (Fed. Cir. 1984) ................................................................................................... 5 Lake Carriers' Ass'n v. MacMullan 406 U.S. 498 (1972) .................................................................................................................... 6 Metaswitch Networks Ltd. v. Genband US LLC No. 2:14-CV-744-JRG-RSP, 2016 WL 1426451 (E.D. Tex. Mar. 1, 2016) ............................... 7 Microsoft Corp. v. DataTern, Inc. 755 F.3d 899 (Fed. Cir. 2014) ..................................................................................................... 6 Realtime Data LLC v. EchoStar Corp. No. 6:17-cv-00084-JDL, 2018 WL 6267332 (E.D. Tex. Nov. 29, 2018) ............................... 5, 7 S&W Enterprises, L.L.C. v. SouthTrust Bank of Alabama, NA 315 F.3d 533 (5th Cir. 2003) ....................................................................................................... 3 SanDisk Corp. v. Kingston Tech. Co. 695 F.3d 1348 (Fed. Cir. 2012) ................................................................................................... 5 Streck, Inc. v. Research & Diagnostic Sys., Inc. 665 F.3d 1269 (Fed. Cir. 2012) ................................................................................................... 5 ii 2 U.S. ex rel. Bias v. Tangipahoa Parish Sch. Bd. 816 F.3d 315 (5th Cir. 2016) ....................................................................................................... 3 VirnetX Inc. v. Apple Inc. 925 F. Supp. 2d 816 (E.D. Tex. 2013) ........................................................................................ 5 Rules Fed. R. Civ. P. 15(a)(2) ................................................................................................................... 3 Fed. R. Civ. P. 16(b)(4)................................................................................................................... 3 iii 2 I. INTRODUCTION The Court should grant Match Group, LLC ("Match") leave to file a Second Amended Complaint (attached as Ex. 1). The proposed complaint adds newly granted U.S. Patent No. 10,203,854—which the PTO only just issued on February 12, 2019. The '854 Patent overlaps with the subject matter in this case. It shares the same specification as the '811 and '023 Patents and involves similar claim language. The amended complaint also corrects a few earlier typos, makes a few non-substantive stylistic changes, and removes a section related to Match's D798,314 patent. This last change conforms the pleadings to the current case scope. To narrow the issues in this already complex matter—particularly where Match's asserted trade dress claims protect a similar scope of design—Match notified Bumble of Match's withdrawal of the '314 Patent in Match's preliminary infringement contentions, served January 21, 2019. Given the overlap between the '854 Patent and the '811 and '023 Patents, the '854 Patent claims are most efficiently resolved in this lawsuit rather than a separate lawsuit, giving good cause to amend. It will also not upset the current schedule. Match already served its '854- related infringement contentions and has agreed to Bumble's proposed modifications to the schedule to accommodate Bumble's ability to serve invalidity contentions for all three utility patents at the same time. These minor changes can be accomplished without affecting the claim construction briefing. This motion would be unopposed but for one issue: Bumble demands that Match dismiss its design patent claim "with prejudice."1 This demand is improper. Match's withdrawal of the 1 The parties conferred on this issue via an e-mail chain on February 14 and 15. The parties could not come to an agreement because of Bumble's request that any dismissal be "with prejudice." 1 2 claim has already operated as a dismissal without prejudice, regardless of the Court's decision here. As it relates to the '314 Patent, the Second Amended Complaint merely operates to conform the pleadings to the true scope of the case. The Court should grant leave to amend without this improper condition. Therefore, Match respectfully requests the Court grant it leave to file the proposed Second Amended Complaint. II. BACKGROUND Match filed this suit on March 16, 2018, alleging, inter alia, infringement of U.S. Patent Nos. 9,733,811 (the "'811 Patent"). Complaint, Dkt. 1. On April 30, 2018, Match filed a First Amended Complaint, adding allegations of infringement of U.S. Patent No. 9,959,023 (the "'023 Patent"), which had just issued. Dkt. 10. The Court held a joint case management conference on December 10, 2018. That same day, the Court entered the parties' agreed scheduling order. Dkt. 41. Match was prepared to serve its infringement contentions in December. But due to several conflicts of Bumble's counsel in January, early February, and April 2019, the agreed schedule became somewhat more protracted. The current schedule set deadlines for Match's infringement contentions as January 21, 2019, Bumble's invalidity contentions as March 8, 2019, and the Markman hearing as May 23, 2019. Dkt. 41. Match served its infringement contentions on January 21, 2019, withdrawing the '314 Patent. Bumble served its Original Answer and Counterclaims four days later, on January 25, 2019. Bumble specifically elected to not file counterclaims for non-infringement or invalidity of any of the asserted patents, including the '314 Patent. Dkt. 52. Match then received a notice of allowance of the '854 Patent. On February 11, 2019, a day before it printed, Match asked Bumble whether it would oppose a motion for leave to add it. Match indicated it was hoping to 2 2 file its motion by "the end of the week"—i.e., February 15, 2019. As a courtesy, Match served infringement contentions for the '854 Patent on February 13, 2019. On February 14, 2019, Bumble indicated that it would not oppose a motion for leave on one condition: Match dismiss the '314 Patent with prejudice. On February 15, 2019—the same day Match had indicated it would likely file for leave—Bumble elected to amend its answer. Although Bumble was aware of Match's withdrawal when it filed its Original Answer, and although that answer contained no patent-related counterclaims, Bumble's Amended Answer alleged counterclaims of non- infringement and invalidity of the already withdrawn '314 Patent. III. ARGUMENT A. Good Cause Exists to Add the '854 Patent. The Federal Rules of Civil Procedure provide that leave to amend a complaint should be "freely given." Fed. R. Civ. P. 15(a)(2). Once a scheduling order has been entered, courts evaluate whether to grant leave to add a new patent under a "good cause" standard. See Fed. R. Civ. P. 16(b)(4). To evaluate good cause, district courts consider four factors "(1) the explanation for the party's failure to [meet the deadline]; (2) the importance of the [amendment]; (3) potential prejudice in allowing the [amendment]; and (4) the availability of a continuance to cure such prejudice." U.S. ex rel. Bias v. Tangipahoa Parish Sch. Bd., 816 F.3d 315, 328 (5th Cir. 2016) (quoting S&W Enterprises, L.L.C. v. SouthTrust Bank of Alabama, NA, 315 F.3d 533, 536 (5th Cir. 2003) (second and third alternations in the original)). Here, all four factors show there is good cause. Indeed, courts routinely allow newly issued patents to be added to a preexisting case. See e.g., Advanced Electrolyte Techs. LLC v. Samsung SDI Co., Ltd, No. A:17- CV-0030-LY, Dkt. 100 (W.D. Tex. June 8, 2018); Intellectual Ventures II, LLC v. AT & T Corp., No. 1:13-CV-116-LY, Dkt. 212 (W.D. Tex. July 8, 2015). 3 2 First, Match could not have included the '854 Patent in the case before the deadline for infringement contentions because the '854 Patent had not issued at that time. Once it was clear the '854 Patent would issue, Match diligently prepared contentions for the '854 Patent and provided them to Bumble just one day after the patent's issuance. This is the very definition of diligence. Second, the importance of this amendment also cuts in favor of allowing it. Importance is judged by a "pragmatic judgment on the likelihood that the newly asserted [claim] will succeed," and is met where "the amended claim would survive a motion to dismiss." IDB Ventures, LLC v. Charlotte Russe Holdings, Inc., No. 2:17-CV-660-WCB-RSP, 2018 WL 6830058, at *10 (E.D. Tex. Dec. 28, 2018) (citations omitted). Here, Match's claims related to the '854 Patent certainly meet this low threshold and would equally have survived Bumble's motion to dismiss with respect to Match's '811 and '023 Patents. Moreover, adding this patent is important to fully resolve the disputes among Match and Bumble without the need for additional litigation. Finally, the third and fourth factors also favor allowing Match's amendment. Bumble will not suffer prejudice from the addition of the '854 Patent, and no continuance is needed. Bumble has already indicated that, at a minimum, it can serve invalidity contentions addressing all asserted patents if given an extension until March 22, 2019 to do so, and Match has already indicated its non-opposition to that request. Thus, there is no scheduling-related prejudice related to this proposed amendment. In sum, as is clear from Bumble's non-opposition to adding the '854 Patent if Match agreed to its unrelated (and inappropriate) condition, good cause exists to allow Match to amend its complaint to add the '854 Patent. 4 2 B. Bumble's Proposed "With Prejudice" Dismissal of the '314 Patent Is Inappropriate Because the Court Has No Jurisdiction Over It. Despite the clear good cause to amend, Bumble withheld its approval of this motion because Match would not dismiss the withdrawn '314 Patent with prejudice. No such dismissal is required. In fact, the Court has no authority to grant Bumble's requested condition. "[T]he existence of a case or controversy must be evaluated on a claim-by-claim basis." Jervis B. Webb Co. v. S. Sys., Inc., 742 F.2d 1388, 1399 (Fed. Cir. 1984). "[J]urisdiction must exist at all stages of review, not merely at the time the complaint was filed." Streck, Inc. v. Research & Diagnostic Sys., Inc., 665 F.3d 1269, 1282 (Fed. Cir. 2012) (internal quotation marks omitted). "[A] patentee's announcement that it was no longer pursuing particular claims, coupled with its ceasing to litigate them, [is] sufficient to remove those claims from the case even without such formalities [as a motion to dismiss]." Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1193 (Fed. Cir. 2014) (citing SanDisk Corp. v. Kingston Tech. Co., 695 F.3d 1348, 1353 (Fed. Cir. 2012)).2 Patents and claims withdrawn in this way are "treated as dismissed without prejudice." Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., No. 2:14-CV- 0911-JRG-RSP, 2016 WL 1105364, at *1 (E.D. Tex. Feb. 4, 2016) (citing cases), report and recommendation adopted, 2016 WL 1106442 (E.D. Tex. Mar. 20, 2016). Here, in an effort to begin narrowing issues, Match provided Bumble notice that it was withdrawing the '314 Patent in Match's infringement contentions. This had the effect of 2 See also SanDisk, 695 F.3d at 1353 (finding notification by plaintiff that it was no longer pursuing certain claims "akin to either a Federal Rule of Civil Procedure 15 amendment to the complaint. . . or a Rule 41(a) voluntary dismissal of claims without prejudice"); Streck, 665 F.3d at 1284 (finding withdrawn claims did not present an Article III "case or controversy," and therefore fell outside the Court's jurisdiction); cf. VirnetX Inc. v. Apple Inc., 925 F. Supp. 2d 816, 849 (E.D. Tex. 2013) ("The Court encourages and requires the parties to narrow their case for trial. Accordingly, the Court will not penalize such attempts to narrow issues by entering judgment on issues not presented at trial."). 5 2 dismissing the '314 Patent without prejudice. See Core Wireless, 2016 WL 1105364 (holding "Core's Notice [of withdrawal] effected a dismissal without prejudice of Core's infringement claims for the Dropped Patents" and declining to dismiss with prejudice); Realtime Data LLC v. EchoStar Corp., No. 6:17-cv-00084-JDL, 2018 WL 6267332, at *4 (E.D. Tex. Nov. 29, 2018) ("As discussed. . . Plaintiff's voluntary election not to pursue certain claims at trial operates as a dismissal without prejudice."). Accordingly, because the '314 Patent has already been effectively dismissed without prejudice, Match's requested amendment should be granted without imposing a "with prejudice" dismissal. Nothing about this result changes based on Bumble's belated, reactionary counterclaims filed in its recent Amended Answer. Match has withdrawn the claim. Based on that unequivocal withdrawal, there was not case and controversy at the time the '314 Patent-related counterclaims were filed, and they should be dismissed (without prejudice) as well.3 This is so regardless of 3 Notably, this presents a markedly different scenario than the questions presented in Match's 18- cv-350 declaratory judgment counterclaims. Specifically, while Match's withdrawal here divests the Court of jurisdiction over the '314 allegations, Bumble's request to withdraw its own case does not impact the Court's declaratory judgment jurisdiction over Match's counterclaims. The facts are significantly different. For one, here Match's withdrawal of the '314 Patent has been unequivocal. Match does not presently intend to re-file these claims against Bumble in this forum or in any other, it merely objects to a with prejudice dismissal of the claim. See, e.g., Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 906 (Fed. Cir. 2014) ("Refusal to grant a covenant not to sue is not sufficient to create an actual controversy because a patentee has no obligation to make a definitive determination, at the time and place of the competitors' choosing, that it will never bring an infringement suit." (internal quotations, alterations, and citations omitted)). Bumble, in contrast, expressly indicated that it may re-file when it first sought dismissal. See 18-cv-350 Dkt. 46-1 at ¶¶ 4-5. Second, unlike Match's claims concerning the '314 Patent, there remains a "substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality" to warrant a declaratory judgment concerning Match's 18-cv-350 counterclaims. See, e.g., Lake Carriers' Ass'n v. MacMullan, 406 U.S. 498, 506 (1972). Match's live counterclaims seek relief that it did not engage in fraud and that it did not engage in tortious interference. 18-cv-350 Dkt. No. 30 at 42-43. Even assuming for sake of argument that Bumble's attempt to seek a "without prejudice" dismissal of its original case indicated that Bumble was formally withdrawing its contention that Match's conduct give rise to liability under those allegations (with no present 6 2 the fact that Match has declined to agree to dismiss its claims "with prejudice." See Metaswitch Networks Ltd. v. Genband US LLC, No. 2:14-CV-744-JRG-RSP, 2016 WL 1426451, at *1 (E.D. Tex. Mar. 1, 2016) (no case-and-controversy jurisdiction over withdrawn patent despite plaintiff's refusal to dismiss withdrawn patent with prejudice); Ford Motor Co. v. Versata Software, Inc., No. 15-11624, 2016 WL 8315738, at *24 (E.D. Mich. Nov. 7, 2016) (no case- and-controversy jurisdiction over DJ counterclaim despite plaintiff's refusal to dismiss withdrawn patent claims with prejudice); Realtime Data LLC, 2018 WL 6267332, at *3 (no case- and-controversy on DJ counterclaims related to withdrawn patent claims for which patent owner had refused to grant covenant not to sue). Accord Core Wireless, 2016 WL 1105364, at *2-3 (no case-and-controversy jurisdiction over invalidity affirmative defenses on voluntarily withdrawn patent). Match will file an appropriate motion to dismiss these improper counterclaims under the timelines provided by the Federal Rules of Civil Procedure. IV. CONCLUSION For the reasons stated above, Match respectfully requests that Court grant it leave to file its Second Amended Complaint, attached as Exhibit 1. intention of re-filing), Bumble is currently seeking to file new-but-related allegations that Match engaged in fraud and tortious interference, under the same nucleus of facts—simply raised as a slightly modified theory. In other words, even if Match's original counterclaims were based on Bumble's original allegations that Bumble now seeks to withdraw, the declaratory relief sought still presents an actual legal controversy that is sufficiently immediate to warrant declaratory judgment relief; indeed, the controversy is the same one, simply re-framed. Meanwhile, Bumble's retaliatory counterclaims concerning the '314 Patent have no "immediacy and reality" to them as Match has withdrawn those claims and Match has no intent to assert the patent against Bumble as it currently operates. 7 2 DATED: February 19, 2019 Respectfully submitted, Caldwell Cassady & Curry /s/ Bradley W. Caldwell Bradley W. Caldwell Texas State Bar No. 24040630 Email: bcaldwell@caldwellcc.com John F. Summers Texas State Bar No. 24079417 Email: jsummers@caldwellcc.com Warren J. McCarty, III Texas State Bar No. 24107857 Email: wmccarty@caldwellcc.com Caldwell Cassady Curry P.C. 2101 Cedar Springs Road, Suite 1000 Dallas, Texas 75201 Telephone: (214) 888-4848 Facsimile: (214) 888-4849 John P. Palmer State Bar. 15430600 Email: palmer@namanhowell.com Naman, Howell, Smith & Lee, PLLC 400 Austin Avenue, 8th Floor P.O. Box 1470 Waco, TX 76701 Telephone: (254) 755-4100 Facsimile: (254) 754-6331 ATTORNEYS FOR PLAINTIFF MATCH GROUP, LLC CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically with the Clerk of Court using the CM/ECF system which will send notification of such filing to all counsel registered as Filing Users on this 19th day of February, 2019. /s/ Bradley W. Caldwell Bradley W. Caldwell