Defendant's Motion for Leave to Amend Invalidity Contentions Denied Where Defendant Failed to Show Good Cause for Amendment Based on Court Declining to Construe Certain Claims

February 20, 2012

Defendant Farpointe Data ("Farpointe") served invalidity contentions on HID Global that identified twenty-two prior art patents, as well as many devices and publications that Farpointe alleges constitute prior art. After the invalidity contentions were served, the parties exchanged claim construction positions and a claim construction hearing was held later in the year. The district court followed HID Global's recommendation and declined to construe some of the claims presented by the parties, which Farpointe argued caused it to revisit the invalidity contentions. As a result, Farpointe sought to add four patents and two HID Global products to the invalidity contentions.

The district court noted that it was following the Local Patent Rules from the Northern District of California and under Patent Local Rule 3-6, a party may amend its preliminary contentions "only by order of the Court upon a timely showing of good cause." The party seeking to amend its contentions bears the burden of establishing due diligence and must show "that it was diligent in moving to amendment of the invalidity contentions and diligent in discovering the basis for the proposed amendment."

Farpointe claimed that two events led to the changes it sought to make to the invalidity contentions. First, Farpointe asserted that the claim construction prompted it to revisit the invalidity contentions as a result of the district court's declining to construe certain terms which broadened the claim terms beyond Farpointe's initial understanding. The district court rejected this argument.

"Farpointe does not seem to argue that prior to the claim construction, it was unaware of the patents and HID Global products it seeks to add; rather, Farpointe argues that the construed claims "broadened the scope" of what could be considered prior art, and that the proposed additions fall into that new scope. . . . Farpointe, however, does not explain what characteristics of the proposed patents or HID global products match the supposedly "broadened" claims that the Court adopted. In other words, Farpointe does not show why its proposed addition as are prior art now and were not prior art before the claims were construed. Farpointe states that the MaxiProx Reader and Installation Manual "include aspects of the antenna arrangements as required in many of the asserted claims of the '862 patent," but Farpointe does not explain how that became evident only after the claim construction. Similarly, Farpointe argues that aspects of the programmable interrogatory in the '935 patent are described in the patents Farpointe seeks to add, but again, Farpointe does not explain how that came to light only after the claim construction. Farpointe's examples are conclusory and fail to show how the claim construction broadened the claims such that the proposed products and patents only now fall into the scope of prior art. Moreover, given that HID Global's constructions were also all disclosed in August 2011 in the Joint Claim Construction Statement, Farpointe cannot claim the constructions that the Court adopted came as a surprise "

Second, Farpointe claimed that it only received documents from a third party, Deister Electronics, after the invalidity contentions were served. The district court also found this argument lacking as Farpointe was not diligent in discovery.

"Farpointe was not diligent in procuring discovery from Deister because it knew Deister could have relevant publications and products as early s June 2011 when it included three Deister publications in its Invalidity Contentions, but Farpointe failed to subpoena Deister until October 2011. . . . Farpointe does not explain why Deister's publications on proximity card readers - publications Farpointe included in its prior art - did not prompt Farpointe to subpoena Deister in June 2011. Further, Farpointe does not explain why an email regarding a Deister reader made Farpointe realize that Deister could have relevant information on proximity card readers, but the Deister publications Farpointe cited in its prior art nearly six months before it discovered this email did not. Moreover, given the volume of Deister products Farpointe now seeks to add to the invalidity Contentions, it is implausible that Farpointe was not, at least, on inquiry notice that Deister produced readers that might serve as prior art, particularly in light of Farpointe's familiarity with Deister at the time it drafted the Invalidity Contentions. Accordingly, Farpointe was not diligent in waiting until October 2011 to subpoena Deister."

Finally, the district court concluded that allowing the amended infringement contentions would prejudice HID Global because HID Global would not have time to take discovery on the new prior art under the current schedule and would have no opportunity to present rebuttal reports.

Accordingly, the motion to amend the infringement contentions was denied.

HID Global Corp., et al. v. Farpointe Data, Inc., et al., Case No. SACV 10-01954-JVS (C.D. Cal. Feb. 6, 2012) (AJWx)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.