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Convolve, Inc. v. Compaq Computer Corp.

August 31, 2006

CONVOLVE, INC. AND MASSACHUSETTS INSTITUTE OF TECHNOLOGY, PLAINTIFFS,
v.
COMPAQ COMPUTER CORP. AND SEAGATE TECHNOLOGY, LLC, DEFENDANTS.



The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

MEMORANDUM AND ORDER

This is a motion by the plaintiffs to strike the defendants' amended invalidity contentions in a patent infringement dispute. The defendants, Seagate Technology, LLC ("Seagate") and Compaq Computer Corp. ("Compaq"), served amended invalidity contentions, without leave of court, after the Court issued a claim construction ruling. The plaintiffs, Convolve, Inc. and Massachusetts Institute of Technology (collectively, "Convolve"), move to strike the amendments on the grounds that, pursuant to scheduling orders issued earlier in the case, the defendants are not permitted to serve amendments as of right.

Background

Defendant Seagate manufactures disk drives, and defendant Compaq produces and distributes computer systems. Pursuant to a confidentiality agreement, Convolve shared proprietary information with the defendants concerning technology that allows a computer user to choose between faster and quieter modes of operation. On July 13, 2000, Convolve filed an action against Compaq and Seagate alleging breach of contract, misappropriation of trade secrets, and patent infringement. (Seagate Technology LLC's Memorandum of Law in Opposition to Plaintiff's Motion to Strike Defendant's Amended Invalidity Contentions ("Seagate Memo."), at 2).

The initial phases of discovery in this case were supervised by a Special Master, Pasquale A. Razzano. On April 16, 2002, Mr. Razzano issued an order entitled "Special Master's Report re: Scheduling and Discovery" (the "Scheduling Order"), which drew upon the Northern District of California Patent Local Rules. (Seagate Memo. at 2; Plaintiffs' Memorandum in Support of their Motion to Strike Defendants' Unauthorized Amended Invalidity Contentions ("Plaintiffs' Memo."), at 6). The Scheduling Order provided for disclosure of the plaintiffs' patent infringement contentions followed by the defendants' invalidity contentions. (Scheduling Order, attached as Exh. G to Affidavit of Kevin J. McNamee dated April 14, 2006 ("McNamee Aff.")). Under the Scheduling Order, the defendants were directed to serve Preliminary Invalidity Contentions by June 21, 2002, and Final Invalidity Contentions by September 20, 2002, which was later extended to October 14, 2002. (Scheduling Order, ¶¶ 3, 7; Seagate Memo. at 3). The Scheduling Order also provided that each party's final infringement and final invalidity allegations could not be amended, except as follows:

Not later than 50 days after service by the Court of its Claim Construction Ruling, each party opposing a claim of patent infringement may serve "Amended Invalidity Contentions" without leave of Court that amend its "Final Invalidity Contentions". . . if:

(1) a party claiming patent infringement has served "Amended Infringement Contentions," or

(2) the party opposing a claim of patent infringement believes in good faith that the Court's Claim Construction Ruling so requires.

Further amendment or modification of the Final Infringement Contentions or the Final Invalidity Contentions. . . shall be entered only upon a showing of good cause.

(Scheduling Order, ¶ 14(b), (c).

The Court issued its claim construction ruling on August 9, 2005, and the defendants moved for reconsideration. (Seagate Memo. at 3). After the reconsideration motion was briefed but before it was denied, the parties consented to modify the Scheduling Order, and on November 28, 2005, the Court issued an order entitled Stipulation and Order re: Amended Contentions (the "Stipulated Order," attached as Exh. F to McNamee Aff.). The Stipulated Order essentially adopted the same conditions for amendments as the Scheduling Order. However, the Stipulated Order modified the condition permitting the defendants to serve amended invalidity contentions, as of right, once Convolve had served its own amended infringement contentions. Under the Scheduling Order, the defendants could serve amended invalidity contentions, without leave of court, if Convolve served amended infringement contentions. (Scheduling Order, ¶ 14(b)(1)). However, under the Stipulated Order, Seagate and Compaq may serve amended invalidity contentions without leave of court only if Convolve has served amended infringement contentions based upon a good faith belief that the Court's claim construction ruling so requires. (Stipulated Order, ¶¶ 1(a), 1(b)(i)).

On January 23, 2006, Convolve moved to amend its infringement contentions pursuant to ¶ 1(d) of the Stipulated Order, which permits amendment only upon a showing of good cause. (Plaintiffs' Amended Final Disclosure of Asserted Claims and Infringement Allegations ("Plaintiffs' Amended Disclosure"), attached as Exh. 1 to Declaration of Elaine M. Heal dated May 26, 2006 ("Heal Decl.")). Seagate and Compaq each opposed Convolve's motion to amend, arguing that Convolve had failed to demonstrate good cause. (Seagate Technology LLC's Memorandum of Law in Support of its Opposition to Plaintiffs' Motion for Leave to File Amended Patent Infringement Contentions ("Seagate Opp. Memo.") at 5; Defendant Compaq Computer Corporation's Opposition to Plaintiffs' Motion for Leave to File Amended Infringement Contentions ("Compaq Opp. Memo.") at 11-12, attached as Exhs. 1 and 3 to Reply Affidavit of Kevin J. McNamee dated June 22, 2006 ("McNamee Reply Aff.")). On July 19, 2006, the court granted the motion in part and denied it in part. (Order dated July 19, 2006). In the meantime, on February 10, 2006, Seagate and Compaq served amended invalidity contentions without bringing a motion to amend. (Seagate Technology LLC's Post-Markman Invalidity Contentions ("Seagate Amendments"); Compaq Computer Corporation's Second Amended Final Invalidity Contentions ("Compaq Amendments"), attached as Exhs. A and B to McNamee Aff.). Subsequently, Convolve filed the instant motion to strike the defendants' amended invalidity contentions, asserting that the defendants are not entitled to amend without leave of court under the Stipulated Order. For the following reasons, the plaintiffs' motion is granted.

Discussion

The defendants include seventy-two new prior art references, thirty associated invalidity contentions, and five new non-prior art invalidity theories as amendments to their Final Invalidity Contentions. (Seagate Amendments; Compaq Amendments). Seagate and Compaq claim that they are entitled to amend these invalidity contentions without leave of court under ¶¶ 1(b)(i) and 1(b)(ii) of the Stipulated Order. Because a court has the inherent power to enforce its scheduling orders, ¶¶ (1)(b)(i) and 1(b)(ii) of the Stipulated Order govern the ruling on the plaintiffs' motion to strike the defendants' amended invalidity contentions. Finisar Corp. v. DirectTV Group, Inc., 424 F. Supp. 2d 896, 899 (E.D. Tex. 2006). While there may be other grounds under ΒΆ 1(d) of the Stipulated Order for allowing the defendants to amend their invalidity contentions, such as good cause, the defendants did not articulate these grounds in a motion to amend. ...


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