Johnstech Int. Corp. v. JF Microtechnology SDN BHD, Case No. 14-cv-02864-JD (Judge James Donato)

Buddha said, “To be idle is a short road to death and to be diligent is a way of life; foolish people are idle, wise people are diligent.” This is a lesson Judge James Donato bestowed on the parties in Johnstech Int. Corp. v. JF Microtechnology SDN BHD, when he denied, in part, JF Microtechnology SDN BHD’s (“JFM”) motion to amend its invalidity contentions after the close of fact discovery to correct a clerical error and to add a new prior art reference and invalidity theories. Judge Donato allowed the clerical correction but denied JFM’s remaining amendments as JFM “failed to manifest the required degree of diligence.”

As background, plaintiff Johnstech International Corporation (“Johnstech”) sued JFM in June 2014, alleging JFM’s ZIGMA product infringes U.S. Patent No. 7,059,866 (“the ’866 Patent”). JMF served invalidity contentions in February 2015. In September, the parties presented their technology tutorials to Judge Donato, and the following month, Judge Donato held a claim construction hearing. Just weeks before the November 13, 2015 close of fact discovery, JFM deposed several Johnstech witnesses, including Matthew Gilk, the co-inventor of the ’866 Patent and Michael Andres, Johnstech’s corporate witness.

On November 24, 2015, JFM filed its motion to amend its invalidity contentions. In addition to correcting the clerical mistake, JFM’s sought to add: a new prior art reference, U.S. Patent No. 6,954,091 (“the ’091 Patent”); Section 112 indefiniteness theories based on a lack of written description and enablement; and Sections 101 and 102(f) invalidity theories based on Johnstech’s alleged failure to identify an inventor on the ’866 Patent. JFM argued its amendments stemmed from information it learned during the tutorial and recent depositions, and that it had not previously realized the importance of the ’091 Patent. Johnstech did not oppose the clerical corrections; however, it argued that much of the information underlying JFM’s remaining amendments was available to JFM in the Spring of 2015 or could have been discovered with reasonable diligence.

As noted, Judge Donato sided with Johnstech, allowing the clerical corrections but finding JFM had failed to demonstrate diligence in amending its invalidity contention. In so holding, Judge Donato rejected JFM’s argument that the importance of the ’091 Patent was not clear until after the parties’ tutorial and depositions. Rather, he noted that JFM was well aware of the ’091 Patent and could have disclosed it sooner. Judge Donato was not persuaded by JFM’s argument that the importance of the ’091 Patent was not clear until after the parties’ tutorial and depositions—specifically because JFM failed to explain why it had waited another two months after the tutorial before amending its contentions. As for JFM’s new Section 112 indefiniteness theories, Judge Donato found that JFM offered no explanation as to why it waited until the after the close of fact discovery before adding the new theories—based on the language in the asserted ’866 Patent— rather than including them its initial invalidity contentions. Finally, Judge Donato denied JFM’s requests to add Section 101 and 102 invalidity theories because JFM failed to provide any details about the degree of diligence in learning information underlying these theories.

Over the past few years, we have discussed several decisions granting and denying leave to amend infringement and invalidity contentions. See “Rules Aren’t Really Meant to be Broken,” “Window Wars: Magistrate Ryu Strikes Untimely Intervener Invalidity Contentions,” “Court Strikes Expert Opinions, No Punishment Intended,” “Motions to Amend Invalidity and Infringement Contentions Rejected as Untimely,” and “Watch Those Patent Local Rules: They Can Cause Your Expert Opinions To Be Stricken.” A common theme in each prior decision is the need for parties to exercise reasonable diligence. That continues to be the case. At a minimum, parties should be prepared to demonstrate why particular information was unavailable at the time of its initial contentions and what steps it took to find the “new” information underlying its amendments. Although a lack of diligence will likely not sound the death knell for a party or its case, it may severely limit the infringement or invalidity theories it can present at trial.