Multimedia Patent Trust Is Not Permitted to Add New Products in Final Infringement Contentions Based on Court's Claim Construction Order

October 24, 2012

On December 20, 2010, Plaintiff Multimedia Patent Trust ("MPT") filed a patent infringement action against Defendants Apple, Inc. ("Apple"), LC Electronics, Inc., LC Electronics U.S.A., Inc., and LC Electronics Mobilecomm U.S.A., Inc. (collectively "LC"), and Canon USA, Inc. and Canon, Inc. (collectively "Canon"). The complaint alleged that Defendants are liable for infringement of four patents related to video compression technology: (U.S. Patent Nos. 4,958,226 ("the '266 patent"), 5,227,878 ("the '878 patent), 5,500,678 ("the '678 patent"), and 5,136,377 ("the '377 patent") (collectively the "patents-in-suit"). After MPT served final infringement contentions, Defendants Canon, LC and Apple, Inc. ("Apple") filed motions to strike the final infringement contentions.

Canon moved to strike MPT's final infringement contentions on the ground that that the final contentions alleged, for the first time, that Canon hardware infringes the '878 Patent and that these amendments were made without leave of the district court In response, MPT argued that it was allowed to amend its contentions based on the district court's claim construction order and newly produced discovery.

The district court disagreed with MPT. "MPT first argues that it is entitled to amend its contentions pursuant to Local Patent Rule 3.6 based on the Court's claim construction order. (Doc. No. 328 at 11-12.) However, not all of MPT's amendments are of the types permitted under Rule 3.6. Patent Local Rule 3.6 only allows a party to amend its contentions with respect to the information required by Patent Local Rules 3.1(c) and (d). These rules require counsel to provide a claim chart and provide a statement of whether there is literal infringement and/or infringement under the doctrine of equivalents, respectively. See Patent L.R. 3.1. MPT's final infringement contentions do not simply provide alterations to its claims charts or its statement about the types of infringement. MPT's final infringement contentions allege for the first time that the CAN-1 products infringe claims 31 and 32 of the '878 Patent. These changes are amendments with respect to the information required by Patent Local Rule 3.1(b). This rule requires counsel to provide a list of which accused products infringe which asserted claims. Therefore, MPT's amendments with respect to claims 31 and 32 of the '878 Patent are not permitted under Patent Local Rule 3.6."

The district court further explained that "[t]he only amendments that could be permitted under Rule 3.6 are amendments to the contentions related to claim 13 because that claim was asserted against the CAN-1 products in the prior contentions. However, even with respect to this claim, MPT is only allowed to amend its contentions under Rule 3.6 if the amending party believes in good faith that the Court's claim construction order so requires. See Patent L.R. 3.6(a)(1). MPT argues that the Court's claim construction order changed the construction of the term "fields" found in claim 13 from prior construction entered by the Court. (Doc. No. 328 at 11.) In the Court's claim construction order, the Court changed the construction of the term "fields" to include non-contiguous picture elements, in addition to contiguous picture elements. (Doc. No. 258 at 86, 119.) Canon argues that MPT could not have had a good faith belief that this new construction required amendment of its contentions because Canon's newly accused codecs [sic] do not use non-contiguous pixel arrangements, and MPT's new contentions are not based on any allegations that Canon is using non-contiguous pixel arrangements. (Doc. No. 301 at 6.) MPT provides no response to this argument in its opposition. Therefore, MPT has failed to show that it was entitled to amend its infringement contentions for claim 13 of the '878 Patent pursuant to Rule 3.6 based on the Court's construction of the term 'fields.'"

The district court nonetheless rejected this argument because MPT failed to show that it was entitled to amend its infringement contentions against Canon under Rule 3.6, MPT must show that it was entitled to make these amendments under Patent Local Rule 3.7. MPT asserted that good cause exists for amendment of its contention pursuant to Rule 3.7 because of newly produced discovery. But this argument was not persuasive because MPT could not establish that it was diligent. "However, this argument fails to establish MPT's diligence in seeking amendment. Because the final infringement contentions were served on September 4, 2012, it is clear that the contentions do not rely on any of the discovery that was obtained on September 13, 2012. Therefore, any possible delay in obtaining the September 13, 2012 discovery could have not served on the basis for MPT amending its infringement contentions on September 4, 2012. Accordingly, MPT has failed to establish diligence in seeking amendment, and therefore has also failed to establish "good cause" for amendment under Patent Local Rule 3.7."
Turning to Apple's motion, Apple asserted that the final infringement contentions asserted for the first time claims against Apple's iPhone 4S smartphone and contentions for claims 31 and 32 of the '878 Patent against Apple products other than the iPod Nano (5th Gen). In response, MPT again argued that it was permitted to make these changes and additions because of the district court's claim construction order and newly produced discovery.
As explained by the district court, "MPT's final infringement contentions change the accused products listed as infringing claims 31 and 32 of the '878 Patent, and add a new accused product, the iPhone 4S. These changes are amendments with respect to the information required by Patent Local Rule 3.1(b), which requires providing a list of which accused products infringe which asserted claims. Therefore, MPT's amendments are not permitted under Patent Local Rule 3.6, which only allows amendment with respect to the information required by Patent Local Rules 3.1(c) and (d). Accordingly, MPT's amendments are only valid if they are allowed pursuant to Patent Local Rule 3.7."
In response to this argument, Apple asserted it would be prejudiced because the expert reports on invalidity were due soon. The district court rejected this position. "Apple's claims of prejudice relate to the Court's scheduling order. On May 30, 2012, the Court entered a scheduling order after conferring with the parties, setting September 4, 2012 as the deadline for MPT to file any amendments to its infringement contentions. (Doc. No. 176.) Therefore, Apple was put on notice back in late May that MPT might seek to amend its infringement contention on September 4. Indeed, at the hearing regarding the scheduling order, MPT mentioned that it intended to amend its contentions. (See Doc. No. 177.) Moreover, on September 5, 2012, after Apple had received the amended infringement contentions, the Court held a telephonic status conference about the schedule, and the Defendants only requested to move the deadlines related to expert discovery back one week, which the Court granted. (Doc. Nos. 299, 300, 321.) Therefore, the Court concluded that Apple would not be unduly prejudiced by allowing MPT to amend its infringement contentions against the iPhone 4S and the iPad 2."

But the district court disagreed with MPT on the other products because MPT had the relevant source code for sufficient time. "With respect to the remaining products that were newly accused of infringing claims 31 and 32 of the '878 Patent, Apple asserts that it provided MPT with the relevant source code in March and April of 2012. (Doc. No. 316 at 3-4.) In its opposition, MPT acknowledges that Apple provided the relevant source code around March or April. (Doc. No. 328 at 18.) Therefore, MPT agrees that it had the relevant discovery to make its amendments related to the other products accused of infringing claims 31 and 32 of the '878 Patent by at least April 2012. Accordingly, MPT has failed to establish diligence in seeking amendment, and therefore has also failed to establish "good cause" for amendment under Patent Local Rule 3.7. See O2 Micro, 467 F.3d at 1367-68; Diagnostic Sys., 2009 U.S. Dist. LEXIS 53916, at *22."
Accordingly, these products were not permitted to be added.


Multimedia Patent Trust v. Apple Inc., et al., Case No. 10-CV-2618-H (KSC) (S.D. Cal. Sept. 28, 2012)

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.