Case 1:04-cv-01436-LPS Document 305 Filed 06/10/09 Page 1 of 6 PageID #: 5982
`Case l:O4—cv—O1436—LPS Document 305 Filed 06/10/09 Page 1 of 6 Page|D #: 5982
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF DELAWARE
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`ST. CLAIR INTELLECTUAL PROPERTY :
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`CONSULTANTS, INC.,
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`'
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`Plaintiff,
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`V.
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`Civil Action No. 04-1436-JJF-LPS
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`MATSUSHITA ELECTRONIC
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`INDUSTRIAL CO., LTD., et al.,
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`Defendants.
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`Ronald J. Schutz, Esquire; Becky R. Thorson, Esquire; Carrie M. Lambert, Esquire; Annie
`Huang, Esquire and Seth A. Northrop, Esquire of ROBINS, KAPLAN, MILLER & CIRESI
`L.L.P., Minneapolis, Minnesota.
`George H. Seitz, III, Esquire and Patricia P. McGonigle, Esquire of SEITZ, VAN OGTROP &
`GREEN, Wilmington, Delaware.
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`Attorneys for Plaintiff, St. Clair Intellectual Property Consultants, Inc.
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`Robert F. Perry, Esquire; Allison H. Altersoh, Esquire and Susan A. Kim, Esquire of KING &
`SPALDING LLP, New York, New York.
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`Jack B. Blumenfeld, Esquire and Julia Heaney, Esquire of MORRIS, NICHOLS, ARSHT &
`TUNNELL LLP, Wilmington, Delaware.
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`Attorneys for Defendants Nokia Corporation and Nokia Inc.
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`MEMORANDUM OPINION REGARDING
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`MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT
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`June 10, 2009
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`Wilmington, Delaware.
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`QAP,
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`Star ,
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`agistrate Judge.
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`Pending before me is a Motion For Leave To File A Second Amended Complaint (D.I.
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`243) filed by Plaintiff, St. Clair Intellectual Property Consultants Inc. (“St. Clair”). The Motion
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`is opposed only by Defendants Nokia Inc. and Nokia Corporation (collectively, “Nokia”). For
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`the reasons discussed, I will grant St. Clair’s Motion For Leave To File A Second Amended
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`Complaint.
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`1.
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`THE PARTIES’ CONTENTIONS
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`By its Motion, St. Clair requests leave to file a Second Amended Complaint which, most
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`significantly, adds allegations of willful infringement against Nokia. St. Clair contends that its
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`Motion has been timely filed before the Court’s April 6, 2009 deadline to amend and supplement
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`the pleadings. St. Clair further contends that its Motion is made in good faith based upon
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`Nokia’s post-filing conduct, which is information that St. Clair did not have available to it when
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`it first filed this action against Nokia. St. Clair further contends that Nokia will not suffer undue
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`prejudice as a result of the amendment to the Complaint, given that the Scheduling Order
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`expressly contemplates an amendment based on willful infringement.
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`In response, Nokia contends that St. Clair cannot, as a matter of law, satisfy the standard
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`for willful infringement, and, therefore, St. Clair’s Motion To Amend should be denied.
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`According to Nokia, St. Clair cannot establish that Nokia acted despite an objectively high
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`likelihood that its actions constituted infringement as required by the Federal Circuit’s opinion in
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`In re Seagate, 497 F. 3d 1360 (Fed. Cir. 2007), because the patents in this case have been
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`subject to (1) a significant ownership dispute, and (2) a reexamination proceeding that resulted in
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`dueling claim constructions by the Court and the United States Patent and Trademark Office
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`(“PTO”). Nokia also contends that it did not have the requisite knowledge of its infringement,
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`because St. Clair did not identify the accused Nokia products until October 2008 and did not
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`serve its infringement contentions on Nokia until January 2009. Thus, Nokia contends that St.
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`Clair’s proposed amendment to add willfulness allegations against Nokia is futile.
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`Alternatively, Nokia contends that St. Clair has acted in bad faith and with undue delay
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`that unduly prejudices Nokia by waiting four and a half years since the inception of this litigation
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`and six months after the stay was lifted to amend its Complaint. Nokia contends that St. Clair’s
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`decision to add a willful infringement allegation is a “calculated ploy to incentivize settlement.”
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`(D.I. 263 at 2) Nokia contends that if the Court grants St. Clair’s Motion, then it will be forced
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`to litigate the same issues raised here in the context of a motion for summary judgment, which
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`Nokia contends will be more costly for the parties.
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`II.
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`LEGAL STANDARDS
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`In pertinent part, Rule 15(a) of the Federal Rules of Civil Procedure provides that after a
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`responsive pleading has been filed a party may amend its pleading “only by leave of court or by
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`written consent of the adverse party; and leave shall be freely given when justice so requires.”
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`The decision to grant or deny leave to amend lies within the discretion of the Court. Factors the
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`Court should consider in exercising its discretion include “undue delay, bad faith, dilatory
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`motive, prejudice, and futility.” In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1434
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`(3d Cir. 1997) (citations omitted). An amendment is futile if it is frivolous, fails to state a claim
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`upon which relief can be granted, or “advances a claim or defense that is legally insufficient on
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`its face.” Koken v. GPC Int'l, Inc., 443 F. Supp. 2d 631, 634 (D. Del. 2006). Delay alone is an
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`insufficient reason to deny leave to amend, but there is grounds to deny amendment if the delay
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`is coupled with either an unwarranted burden on the Court or undue prejudice to the non-moving
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`party (as a result ofthe amendment). See Cureton v. Nat ’l Collegiate Athletic Ass ’n, 252 F.3d
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`267, 273 (3d Cir. 2001). A party may suffer undue prejudice if the proposed amendment causes
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`surprise, results in additional discovery, or adds costs to the litigation in defending against the
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`new facts or theories alleged. See id. “Thus, while bearing in mind the liberal pleading
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`philosophy of the federal rules, the question of undue delay requires that we focus on the
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`movant’s reasons for not amending sooner. .
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`.
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`.
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`[Moreover,] [t]he issue of prejudice requires that
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`we focus on the hardship to the [non-movant] if the amendment were permitted.” Id. at 273
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`(internal citations omitted).
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`III.
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`ANALYSIS
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`Applying these principles to the circumstances in this case, I conclude that St. Clair has
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`satisfied the liberal requirements of Rule l5(a) for amending the pleadings. As St. Clair points
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`out, the Scheduling Order I entered contemplates the possibility of amendment to the pleadings
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`to add claims of willful infringement. St. Clair’s proposed amendment comes within the time
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`frame I set for amending the pleadings. Therefore, I do not find that St. Clair’s Motion is
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`untimely.
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`Nokia’s futility argument is primarily grounded in the proposition that the granting of
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`reexamination by the PTO defeats a claim of willful infringement as a matter of law. Nokia finds
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`support for such a per se rule in Lucent Technologies v. Gateway, Inc., No. 07-CV—2000-H
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`(CAB), 2007 U.S. Dist. LEXIS 95934 (S.D. Cal. Oct. 30, 2007), a case which is notably absent
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`from St. Clair’s Reply Brief. Despite this absence, however, I am not persuaded that this case
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`should govern my analysis of whether leave to amend should be granted. First, the Lucent
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`decision was rendered in the context of summary judgment. Second, the court was careful @ to
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`craft a per Se rule, stating instead only that “it does appear that a reexamination order may be
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`taken as dispositive with respect to post—filing conduct.” Id. at * 19 (emphasis added). The
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`Lucent court emphasized that reexamination was one factor, among a totality of the
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`circumstances, to consider in examining whether a party can meet the requirements of Seagate.
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`Id. at * 18 (“The Court does not assume that a reexamination order will always prevent a plaintiff
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`from meeting their burden on summary judgment, but it does consider this as one factor among
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`the totality of the circumstances”).
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`In this regard, it is important to note that in the instant case the reexamination proceeding
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`resulted in the issuance of reexamination certificates for each of the patents-in-suit without
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`amendment to any of the claims. See generally Ultratech Int 7, Inc. v. Aqua—Leisure Indus., Inc.
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`v. Swimways C0rp., No. 3:05-cv-134-J-25MCR (M.D. Fla. Mar. 3, 2009) (allowing amendment
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`after PTO issued reexamination certificates and holding that “[d]efendant’s continued use of the
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`.
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`.
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`. [p]atent could be reasonably considered ‘objectively reckless’”). Although the PTO arguably
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`rendered a different claim construction during reexamination than that which was rendered by the
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`Court during the course of related litigation involving these same patents, St. Clair has not
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`waived its infringement arguments under the PTO’s claim construction, and the Court is not
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`bound by that construction. See SRAM Corp. v. AD—II Eng "g, Inc., 465 F.3d 1351, 1359 (Fed.
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`Cir. 2006).‘ Moreover, Nokia has not explained the significance of any differences between the
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`PTO’s claim construction and this Court’s claim construction. Given the circumstances of this
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`‘I do not mean by this Memorandum Opinion to in any way prejudge any of the claim
`construction issues the parties have put before me.
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`4
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`case, which include the PTO’s ultimate granting of reexamination certificates without
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`amendment, previous jury verdicts in favor of St. Clair, and the licenses of the patents-in—suit
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`taken by numerous parties, I cannot conclude at this juncture that the addition of a willful
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`infringement claim against Nokia is futile or that it has been asserted in bad faith without a
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`sufficient evidentiary basis.2
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`I place little weight on Nokia’s suggestion that St. Clair’s failure to seek preliminary
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`injunctive relief should lead to denial of the motion to amend. (D.I. 263 at 8) There is no per se
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`rule that failure to seek a preliminary injunction precludes a claim for willful infringement. See,
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`e.g., Krippelz v. Ford Motor Co., No. 98 C 2361, 2009 WL 7994952, at *4 (ND. Ill. Mar. 25,
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`2009); Novartis Pharms. Corp. v. Teva Pharms USA, Inc., No. 05-CV-1887 (DMC), 2009 WL
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`483865, at *3 (D.N.J. Feb. 25, 2009). Likewise, I am not persuaded that Nokia would suffer
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`undue prejudice as a result of the amendment, even if my ruling leads Nokia to conclude it must
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`file a motion for summary judgment on futility grounds.
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`IV.
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`CONCLUSION
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`For the reasons discussed, I will grant St. Clair’s Motion For Leave To File A Second
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`Amended Complaint. The Clerk will be instructed to assign a separate docket entry to the
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`proposed Second Amended Complaint For Patent Infringement attached as Exhibit 1 to the
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`Declaration of Patricia McGonigle (D.I. 245).
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`An appropriate Order will be entered.
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`2To this extent, I also conclude that St. Clair’s claim for willful infringement has been
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`properly pled.