In a recent ruling from the United States District Court for the Sothern District of California, a Magistrate Judge allowed discovery to take place on an inequitable conduct defense after the discovery cut-off. The defendant propounded document requests a little more than 30 days before the discovery cut-off and plaintiff produced documents in response to those requests the day before the discovery cut-off. On the last day for discovery, defendant took the deposition of the inventor of the patent-in-suit.

Based on information learned during the deposition and documents produced by plaintiff at the close of discovery, defendant contended that the plaintiff made material misrepresentations to the Patent Office to overcome a section 112 rejection. Based on that contention, defendant sought leave to amend its answer, assert an affirmative defense of inequitable conduct and to pursue additional discovery directed toward that defense.

As part of its motion, defendant contended that plaintiff failed to provide a full disclosure of documents required by the Court's Patent Local Rule 3.2 and the Court's Scheduling Order and had plaintiff complied with the Local Rule and the Scheduling Order, the facts giving rise to defendant's inequitable conduct defense would have been known sooner and the discovery would have occurred well before the discovery cut-off. Plaintiff opposed reopening discovery, contended that it had complied with the local rules and the Court's Scheduling Order, and asserted that defendant's failure to seek discovery timely led to any delay. Plaintiff also contended that the inequitable conduct contentions could not meet the standard set forth in Thereasense, Inc. v. Becton, Dickison and Co., 2011 WL 2028255 (Fed. Cir. May 25, 2011).

On the issue of diligence, the district court found that both parties were at fault. "With regard to the matter of diligence, the Court finds that both parties contributed to the delay in identifying this potential issue. [Plaintiff] was obligated, pursuant to Patent Local Rule 3.2, to voluntarily provide 'all documents evidencing the conception, reduction to practice, design and development' of the invention, as well as development agreements with third parties. Much of this was not provided until [defendant] initiated its discovery request, contributing to the delay in the identification of the issues ..." The court also found fault with defendant: "[Defendant's] delay in pursuing this discovery further contributed to this problem."

The court declined to address the ultimate merits of the inequitable conduct allegations, finding that was a matter properly addressed to the trial judge. Nonetheless, the court permitted the requested discovery to proceed. "For purposes of discovery, this Court finds that [defendant] has identified an issue that it should be permitted to investigate for purposes of supporting its motion for leave to amend. Conversely, [plaintiff] will be afforded the opportunity to use the discovery to oppose the motion."

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In this case, the Magistrate Judge struck a balance, permitting the discovery but waiting to rule on the ultimate merits of the inequitable conduct defense until the discovery was completed. In this way, the court allowed the defendant to have the discovery to develop the defense but left room for the plaintiff to keep out the defense should the discovery prove inadequate. The defendant likely helped its argument by seeking limited discovery, depositions of the two people who provided affidavits to the Patent Office regarding the adequacy of the specification.

Fastek, LLC v. Steco, et al., Case No. 10 CV 0972-MMA (CAB) (S.D. Cal. Sept. 2, 2011)