Local patent rules “are considered part of the Court’s scheduling order,” thus Patent Rule 3-7 permits amendment of preliminary invalidity contentions “only by order of the presiding judge upon a showing of good cause.”  In relevant part, Patent Rule 3-7 provides that “[g]ood cause for the purposes of this paragraph may include … newly discovered prior art references.  A party seeking amendment of the preliminary or final … invalidity contentions must include in its motion to amend a statement that the … newly discovered prior art references were not known to that party prior to the motion despite diligence in seeking out same.”  Accordingly, after noting that Defendant X10 Wireless had timely filed its Preliminary Infringement Contentions, the Court set out to determine whether X10 had shown good cause to amend the Scheduling Order.  “Good cause,” in turn, requires an evaluation both of the moving party’s diligence and potential prejudice to the non-moving party.

The parties disputed whether X10 had demonstrated the required diligence.  According to Judge Boyle:

The local rules do not require perfection in the search for prior art references; they do, however, require diligence and an absence of gamesmanship.  It is expected that through the course of discovery and evaluation by experts that additional sources may be found which support timely disclosed theories of invalidity.  P.R. 3-7 allows that good cause may include “newly discovered prior art references” so long as the moving party carries its burden of showing its search was diligent and that the reference was timely disclosed.  A party may not, however, delay in diligently searching for references or strategically withhold their prompt production as its opponent commits to a path.  A party seeking to amend its invalidity contentions must include P.R. 3-7’s required statement that the “newly discovered prior art references were not known to that party prior to the motion despite diligence in seeking out same,” and if its diligence is meaningfully challenged, it must respond with evidence.

Here, Judge Boyle concluded that X10 proved the required diligence by virtue of its continuous and broad prior art search, its timely disclosure of the newly found prior art references, and its prompt filing of a motion to amend upon receiving the plaintiff’s objection to the new references.  The Court also emphasized the thorough nature of X10’s preliminary and amended invalidity contentions.

The parties also disputed whether X10 had demonstrated the absence of unfair prejudice to Guardian.  Judge Boyle determined that Guardian did not present any particular evidence of prejudice:

X10′s proposed amendment does not drastically reframe the suit by inserting previously undisclosed theories of invalidity, and instead timely discloses newly discovered references to support its arguments.  More importantly, X10′s proposed amendment is made well in advance of the deadlines for expert reports and the close of discovery.  The schedule set in this case does not preclude a full and fair analysis of the additional proposed references.  While Guardian points to a potential impact on claim construction, it does not point to any claim language that would be affected by the addition and the Court does not find any potential need to revisit claim construction to be readily apparent.

The Court thus found that the potential for unfair prejudice did not provide sufficient basis to deny X10’s motion to amend.

Based on X10’s showing of diligence and an absence of unfair prejudice to Guardian, Judge Boyle granted X10’s Motion to Amend its Preliminary Invalidity Contentions.  The Court expressly reserved any decision regarding Guardian’s argument that the newly included references do not qualify as prior art.

FULL DISCLOSURE: Attorneys at Klemchuk Kubasta LLP represent X10 Wireless Technology, Inc., one of the Defendants in this patent infringement litigation.

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