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In re Chanbond, LLC Patent Litigation

United States District Court, D. Delaware

May 14, 2019

IN RE CHANBOND, LLC PATENT LITIGATION

          MEMORANDUM ORDER

         Presently before the Court is Defendants' motion regarding their invalidity combinations. (D.I. 353).[1] I have reviewed the parties' briefing and related letters. (D.I. 348, 349, 354, 382, 385). Defendants' motion builds on the issues discussed at the February 26, 2019 discovery conference. (D.I. 351).

         I. BACKGROUND

         In September 2015, Plaintiff ChanBond, LLC ("ChanBond") filed thirteen suits against numerous defendants (collectively, "Defendants"). (E.g., D.I. 1 (complaint against Atlantic Broadband Group, LLC)). On February 23, 2018, the Patent Trial and Appeal Board ("PTAB") issued a Final Written Decision invalidating certain asserted claims. (D.I. 244, Ex. A).[2] The PTAB decision is currently on appeal before the Federal Circuit. Fact discovery closed on July 6, 2018, and expert discovery closed on February 22, 2019. Opening summary judgment and Daubert briefs have been filed. (D.I. 358, 361, 364, 367, 370). No. trial date has been set in view of the pending appeal. (D.I. 347).

         The present dispute stems from a September 2017 agreement between the parties, which the Court adopted as a scheduling order. (D.I. 142). The parties stipulated to certain discovery deadlines, three of which are relevant here. First, by November 3, 2017, the parties agreed to "[substantially comply with outstanding written discovery and document production." Second, by November 10, 2017, ChanBond agreed to reduce its number of asserted claims to eighteen. Third, by December 4, 2017, Defendants agreed to reduce their number of prior art references to eighteen and their number of invalidity combinations to four per claim. (Id. at 2). The parties made their respective reductions.

         On January 4, 2019, Defendants introduced a new invalidity combination relating to U.S. Patent No. 8, 341, 679 ("the '679 patent") via the reply report of their invalidity expert, Dr. Prucnal. (D.I. 355, Ex. O). Dr. Prucnal combines two references-U.S. Patent Nos. 7, 017, 176 ("Lee") and 7, 274, 679 ("Amit")-that he independently addressed in his opening report. (Id., Ex. M §§ LX.A-B, X.A.2, X.C.2). Defendants argue that the Lee/Amit combination is in response to ChanBond's new validity argument presented by its expert, Dr. Akl, in his opposition report. (D.I. 354 at 6). Dr. Akl opined, "Lee's purported innovation only relates to the upstream transmission from the cable modem to the head end" (D.I. 355, Ex. N ¶ 154), and similarly, "Amit's purported innovation only relates to the downstream transmission from the [head end] to the cable modem" (id, ¶ 176). In response, Dr. Prucnal testified that a person of ordinary skill in the art would have been motivated to combine Lee and Amit to produce a "bidirectional" device, having both "upstream" and "downstream" transmission, as required by the '679 patent claims. (Id., Ex. O ¶ 495).

         ChanBond moved to strike Dr. Prucnal's reply testimony regarding the Lee/Amit combination as a violation of the September 2017 scheduling order. (D.I. 348). I heard argument at the February 26, 2019 discovery conference. (D.I. 351). I declined to decide the issue at the time but gave the parties the option of further briefing. (Id. at 27:25-28:21). Defendants then filed the present motion requesting an order allowing Defendants to rely on the Lee/Amit combination. (D.I. 353, 354).

         II. ANALYSIS

         The parties disagree on the legal standard that should apply. ChanBond argues that, since Defendants seek to add a new invalidity theory in violation of the September 2017 scheduling order, they must show good cause under Federal Rule of Civil Procedure 16. (D.I. 382 at 6-7). Defendants argue that this Court generally applies the Pennypack factors, under Federal Rule of Civil Procedure 37, to assess whether exclusion is an appropriate sanction. (D.I. 354 at 7-10).

         This Court addressed a similar situation in St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electric Industrial Co., 2012 WL 1015993 (D. Del. Mar. 26, 2012), aff'd, 522 Fed.Appx. 915 (Fed. Cir. 2013). In St. Clair, the plaintiff sought to add additional infringement theories past the Court's scheduling order deadline for serving infringement contentions. Id. at *5. The Court applied both Rule 16 and Pennypack, first finding no good cause under Rule 16 and then finding exclusion appropriate under the Pennypack factors. Id. at *5-9. Although I come out differently on good cause, I will still consider both standards. See Rowe v. E.I. du Pont de Nemours & Co., 2010 WL 703210, at *4-5 (D.N.J. Feb. 24, 2010) (finding an extension of time to serve expert reports and disclosures supported by good cause, as well as "further supported" by the Pennypack factors).

         A. Defendants Show Good Cause under Rule 16

         Rule 16(b)(4) provides, "A schedule may be modified only for good cause and with the judge's consent." Fed.R.Civ.P. 16(b)(4). "Good cause is present when the schedule cannot be met despite the moving party's diligence." Meda Pharm. Inc. v. Teva Pharm. USA, Inc., 2016 WL 6693113, at *1 (D.Del. Nov. 14, 2016).

         Defendants argue that they have been diligent because the new Lee/Amit combination is responsive to ChanBond's new validity theory that was first disclosed in Dr. Akl's opposition report, served on November 30, 2018. (D.I. 354 at 3-6, 13-15; D.I. 355, Ex. N). Defendants assert that prior to then, ChanBond had only provided boilerplate answers to discovery requests about its validity theories. (D.I. 354 at 3-6). Therefore, Defendants raised the Lee/Amit combination at the first available opportunity-Dr. Prucnal's reply report, served on January 4, 2019. (D.I. 354 at 15; D.I. 355, Ex. O).

         Defendants rely on ChanBond's responses to Interrogatory No. 9, which states:

If you contend that any of the references cited in the exhibits in Defendants' Invalidity Contentions (and any supplements thereto) do not invalidate or render obvious the asserted claim of the Asserted Patent(s) for which it was cited, identify each claim limitation that You believe is missing from the reference and ...

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