The defendant, Echoworx, brought a motion to strike ZixCorp's infringement contentions. ZixCorp had served its original infringement contentions on Echoworx, contending that the elements of the patent-in-suit are software limitations, and stated that it intended to supplement its infringement contentions after Echoworx produced source code for each of Echoworx's accused instrumentalities.

After Echoworx produced its source code for review, ZixCorp served P.R. 3-1(g) Amendments to Its Infringement Contentions ("amended contentions"). Echoworx then complained to ZixCorp that ZixCorp's amended infringement contentions were deficient under 3-1(c) and ZixCorp had violated the Discovery Order by refusing to provide the identifications of source code for software limitations required by P.R. 3-1(g).

As explained by the district court, under P.R. 3-1(g), ZixCorp had an obligation to serve amended infringement contentions that identify, "on an element-by-element basis for each asserted claim, what source code of each Accused Instrumentality allegedly satisfies the software limitations of the asserted claim elements." The district further explained: As ZixCorp recognized in its initial infringement contentions, the claims in this case include software limitations, which pose unique difficulties to plaintiffs drafting their initial infringement contentions before source code has been produced. This is one of those cases where, in order to "provide defendants with notice of infringement beyond that which is provided by the mere language of the patent [claims] themselves," production of source code was necessary in order to provide ZixCorp with sufficient information to draft complete infringement contentions. See STMicroelectronics, Inc. v. Motorola, Inc., 308 F. Supp. 2d 754, 755 (E.D. Tex. 2004).

The district court then concluded that "ZixCorp's amended infringement contentions do not comply with ZixCorp's obligation under P.R. 3-1(g) to identify the source code of each accused instrumentality that allegedly satisfies each claim element. Indeed, ZixCorp's amended infringement contentions are in several instances vague and conclusory. In other instances they merely recite claim language without providing Echoworx with notice as to what specific parts of the accused products practice the relevant software claim elements."

Accordingly, the district court struck ZixCorp's amended infringement contentions without prejudice.

The district court also found that sanctions were warranted as ZixCorp had previously recognized that the software limitation provision of the infringement contentions applied. "ZixCorp recognized in its initial infringement contentions that P.R. 3-1(g) applied to this case and it subsequently served amended infringement contentions under the provisions of P.R. 3-1(g). However, in refusing to amend its infringement contentions (and in opposing this motion), ZixCorp strangely took the opposite position that P.R. 3-1(g) does not apply to this case. (Resp. at 10 ("This case falls within the category in which 3-1(g) does not apply.")). ZixCorp should not be allowed to reverse course on whether or not P.R. 3-1(g) applies whenever it is either convenient or advantageous. ZixCorp cannot have it both ways. The Court finds that, in so doing, ZixCorp has acted failed to act in good faith, and therefore orders that up to $5,000 of Echoworx's costs related to this motion shall be shifted to ZixCorp. See Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991).

Zix Corp. v. Echoworx Corp., Case No. 2:15-cv-1272-JRG (E.D. Tex. May 2016)