District Court Denies Leave to Amend to Add Implied License Affirmative Defense Where Motion for Leave Was Filed Just Two Months Prior to Fact Discovery Cut-Off

July 5, 2016

Google, Inc. and YouTube, LLC (collectively "Google") filed a motion for leave to amend their answer to include an implied license affirmative defense. Because Google filed the motion to amend its answer more than two months after the district court's scheduling order's deadline to amend the pleadings, Google had to show good cause for the district court to grant its motion.

The district court noted that Google did not file its present motion to amend until December 22, 2015, near the end of the fact discovery deadline of February 26, 2016. The district court also noted that "[t]he basis of Google's implied license defense is VideoShare's June 21, 2013 covenant not to sue for infringement of U.S. Patent No. 7,987,492. Nonetheless, Google failed to include the implied license defense in its pleadings for a year and a half after VideoShare entered the covenant not to sue. Google has made no attempt to explain its delay in presenting this defense. Google does not contend that it lacked sufficient information to meet the amendment deadline, or that it discovered new information that could not be timely pled. Therefore, Google has not demonstrated why its amended defense could not have been sought in a timely manner."

The district court also rejected Google's contention that an implied license is intertwined with, related to, or necessarily encompassed by Google's already pled defenses of exhaustion, estoppel, and "other equitable defenses." "Google asserts that it is moving to amend its answer to avoid ambiguity and future disputes over VideoShare's 'hyper technical reading' of its defenses. The court is not persuaded. Indeed, a plain reading of the pleadings--not a hyper-technical one--indicates that Google's previously pled defenses do not include an implied license defense."

The district court further explained that "[a]lthough an implied license might relate, at least tangentially, to some of Google's already pled defenses, the court finds the incorporation of an implied license defense would represent a substantive change to the scope of Google's defenses. . . . What Google seeks here is not amplification, but represents an attempt to cull together a substantively different defense than those previously pled."

The district court also concluded that Google's motion would prejudice VideoShare due to unfair surprise. "Google contends that its previously pled exhaustion and estoppel defenses put Videoshare on notice of the implied license defense. The court disagrees. Because the exhaustion and estoppel defenses are substantively different, Videoshare could not have been on notice of the implied license defense."

As a result, the district court found that Google had waived the right to assert the affirmative defense. "Google bears the burden of asserting its defenses in a timely manner. Google has not shown good cause for its proposed amendment, which the court concludes is substantively different from Google's already plead exhaustion and estoppel defenses. Therefore, Google has waived its right to assert this defense."

Videoshare, LLC v. Google, Inc.,
Case No. 13-cv-990 (GMS) (D. Del. June 23, 2016)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.