Order Granting Motion For Leave To Amend Infringement Contentions,Delphix Corp. v. Actifio, Inc., Case No: 13-CV-04613 BLF-HRL(Judge Howard R. Lloyd)

The NorCal IP Blog has reported on multiple decisions granting or denying leave to amend infringement contentions. See http://blogs.orrick.com/norcal-ip/?s=infringement+contentions. A constant theme throughout has been the Northern District’s strict adherence to the Patent Local Rules for guidance on allowing amendments. Magistrate Judge Howard R. Lloyd echoed that theme this week in Delphix Corp. v. Actifio, Inc., Case No. 13-cv-04613 BLF (HRL), when he granted defendant/counterclaim plaintiff Actifio, Inc.’s (“Actifio”) motion to amend its infringement contentions. Critical to his decision was plaintiff/counterclaim defendant Delphix Corp.’s (“Delphix”) production of source code and over 500,000 pages of new information about the accused product, not otherwise available to Actifio.

As background, in 2013, Delphix sued Actifio for infringing five patents. Actifio counterclaimed, alleging that Delphix’s Agile Data Management product uses a “ZFS” file system and infringes two of Actifio’s patents.

Actifio served its initial infringement contentions in May 2014. In April and May 2015, Delphix produced over 500,000 pages of documents and millions of lines of source code, prompting Actifio to serve amended infringement contentions in June 2015. After Delphix objected to the amendment, Actifio moved for leave to amend.

In its motion, Actifio argued that it “diligently pursued discovery regarding the accused product, including its use of ZFS” since serving initial infringement contentions.  In response, Delphix asserted that Actifio was already aware of certain non-public features before serving initial contentions, and that additional information about certain features of the accused technology, including the ZFS code, was publically available before May 2014.

Magistrate Judge Lloyd considered both the existence of new facts warranting amendment and Actifio’s efforts to obtain them, ultimately granting Actifio’s motion for leave to file amended contentions.

First, Magistrate Judge Lloyd rejected Delphix’s argument that Actifio had access to all information it needed by May 2014, specifically recognizing that Delphix had not produced the latest version of its non-ZFS source code until May 2015. He also was not persuaded by Delphix’s argument that the amended infringement contentions put forth new infringement theories. Relying on the Patent Local Rules and well-established case law, he reasoned that putting forth a new infringement theory is permissible when based on information not previously disclosed.

Second, Magistrate Judge Lloyd found that Actifio was diligent in amending its contentions. He reasoned that Actifio would have had a difficult time understanding the source code available in May 2014 without the technical documents Delphix provided the following year, as those documents “described the confidential details” on how the accused technology functioned.

Finally, Magistrate Judge Lloyd found Actifio’s amended infringement contentions would not prejudice Delphix because the case had been stayed pending inter partes review proceedings of Delphix’s asserted patents.

The Delphix decision underscores that a patentee’s diligence and persistence in seeking new information about the accused technology can support later amendment to contentions, and should encourage alleged infringers to produce the most relevant material information about the accused technology early in the discovery process or risk the possibility of amended infringement contentions.