CBS Interactive, Inc. v. Etilize, Inc.
2009 U.S. Dist. LEXIS 593, 257 F.R.D. 195, 2009 WL 55947 (2009)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under the Northern District of California's Patent Local Rules, a party may amend its invalidity contentions only upon a showing of "good cause," which requires demonstrating diligence in discovering new information and promptly moving to amend after the discovery.
Facts:
- CBS Interactive, Inc. (CBSI) sued Etilize, Inc. for infringing two patents related to online product cataloguing systems.
- During the litigation, Etilize deposed two of the patents' inventors, Robin Walsh and Timothy Musgrove, on June 20 and June 23, 2008.
- In these depositions, Etilize learned details about the technology of a company called Smartshop, which Etilize believed constituted prior art that could invalidate CBSI's patents.
- Etilize also identified another potential prior art reference, WebSphinx, an open-source software, but did not analyze its relevance until after July 21, 2008.
- Etilize did not move to amend its invalidity contentions to include Smartshop and WebSphinx until after expert discovery closed on September 25, 2008, which was months after learning the relevant information.
Procedural Posture:
- CBSI sued Etilize for patent infringement in the U.S. District Court for the Northern District of California.
- The court set a deadline of May 26, 2008 for Final Invalidity Contentions.
- On July 31, 2008, Etilize moved to amend its answer to add defenses based on the Smartshop technology, a motion the court subsequently denied.
- Fact discovery closed on June 27, 2008, and expert discovery closed on September 25, 2008.
- After the close of all discovery, Etilize filed a motion for leave to amend its final invalidity contentions.
- CBSI filed two opposing motions: one to strike Etilize's final invalidity contentions (regarding different prior art) and another to modify the case's protective order.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a defendant in a patent infringement case demonstrate "good cause" to amend its invalidity contentions to add new prior art after the close of fact and expert discovery, when it waited several months after discovering the relevant information to file its motion?
Opinions:
Majority - Judge Marilyn Hall Patel
No. A defendant does not show good cause to amend its invalidity contentions when it fails to act diligently after discovering the new information. The court first addressed Etilize's motion to amend its invalidity contentions. The "good cause" standard under Patent Local Rule 3-7 requires diligence. Etilize was not diligent, as it failed to explain why it waited months after the June depositions to file its motion, a silence the court found "deafening." The court rejected Etilize's argument that it was reacting to new infringement theories from CBSI, finding that CBSI's theories had been consistent. Allowing such a late amendment would be prejudicial to CBSI and would violate the spirit of the Patent Local Rules, which aim to prevent "piecemeal" litigation and a "shifting sands" approach. The motion was therefore denied. The court then denied CBSI's motion to strike Etilize's separate final invalidity contentions concerning the Liaison software. While Etilize failed to follow disclosure rules, this failure ultimately harms Etilize's own case, as it bears the high burden of proving invalidity and will struggle to do so without the proper evidence. Finally, the court granted CBSI's motion to modify the protective order. Applying a balancing test, the court found that CBSI showed good cause by presenting evidence of Etilize's questionable use of proprietary information. Ninth Circuit policy favors allowing access to discovery for collateral litigation, and Etilize failed to show any specific harm or legitimate reliance interest that would be prejudiced by the modification.
Analysis:
This order highlights the strict enforcement of procedural deadlines and diligence requirements under the Patent Local Rules of the Northern District of California. It demonstrates that courts will not hesitate to deny late-stage amendments to a party's core legal theories, even if new evidence has been discovered, if the party was not diligent in bringing that evidence forward. The decision serves as a strong reminder to litigants to crystallize their case theories early and act promptly, as "gamesmanship or mere ineptitude" will not be excused, especially as trial approaches.
