On September 7, 2012, ALJ David P. Shaw issued Order No. 9 denying complainant VirnetX, Inc.’s (“VirnetX”) motion for leave to amend the complaint in Certain Devices with Secure Communication Capabilities, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-818).
According to the Order, VirnetX sought to add Science Applications International Corporation (“SAIC”) as a complainant, arguing that good cause exists under Commission Rule 210.14(b)(1) based on the fact that in litigation brought by VirnetX against Cisco Systems and others in the Eastern District of Texas involving patents related to the patent at issue in the investigation (the ‘181 patent), the district court ruled in a March 2012 order that VirnetX was required to join SAIC as a party. Virnet also argued that no party would be prejudiced by the addition of SAIC because SAIC agreed to join the investigation, and because respondent Apple Inc. (“Apple”) previously asked VirnetX to confirm that SAIC would be joining the investigation, and has had access to any discovery from SAIC that Apple might need. Apple argued in opposition that VirnetX cannot show good cause because (1) VirnetX failed to join SAIC in the original complaint despite indications in district court litigation that SAIC is a necessary party, (2) VirnetX failed to disclose in its complaint that SAIC has an interest in the ‘181 patent, and (3) VirnetX failed to seek to join SAIC in a timely manner even after the district court determined that SAIC is a necessary party in the Eastern District of Texas. Apple also contended that it would be prejudiced by the addition of SAIC because fact discovery will be closed by the time SAIC could be joined as a party, and that it would still need to conduct discovery of SAIC relating to domestic industry (e.g., whether VirnetX was formed to develop and practice the patented technology, or merely to license and litigate in infringement actions).
ALJ Shaw found that the terms of SAIC’s assignment of the ‘181 patent to VirnetX are unclear, noting that VirnetX neither provided documentation concerning the ownership of the ‘181 patent with its motion, nor established the applicability of the district court’s order to the ‘181 patent (which was not mentioned in the court’s order inasmuch as the ‘181 patent is not asserted in the Cisco litigation). The ALJ also observed that the proposed amended complaint did not clarify the rights of VirnetX and SAIC with respect to the ‘181 patent (e.g., it identifies SAIC as a complainant in some parts, but an unspecified party in others; and states that “VirnetX owns by assignment all right, title, and interest in and to the ‘181 patent,” which is not accurate if SAIC is a necessary party). ALJ Shaw further found that VirnetX appears to have been aware that SAIC was a necessary party when litigating the ‘181 patent as early as 2008. Additionally, the ALJ noted that the motion in the Cisco litigation that resulted in the March 2012 order was pending when VirnetX filed its complaint in the investigation, and thus it should not have been a surprise that SAIC is a necessary party in the investigation. Accordingly, ALJ Shaw found that good cause for amending the complaint was not shown, and denied the motion.