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Pipeline Technologies, Inc. v. Telog Instruments, Inc.

United States District Court, D. Arizona

June 3, 2014

Pipeline Technologies, Inc., Plaintiff,
v.
Telog Instruments, Inc., et al., Defendants.

ORDER

PAUL G. ROSENBLATT, District Judge.

Before the Court is Defendants' Motion to Amend Their Pleadings. (Doc. 52.) Plaintiff opposes. (Doc. 58.) The motion will be granted for the reasons set forth below.

DISCUSSION

Plaintiff filed this action on October 16, 2013, alleging infringement of U.S. Patent No. 7, 219, 553 and U.S. Patent No. 7, 357, 034.[1] (Doc. 1.) On November 8, 2013, Defendant Telog Instruments, Inc., filed its Answer and Counterclaims (Doc. 12) and Defendant Applied Products Group, LLC, filed its Answer (Doc. 13).

On March 10, 2014, the Court issued a scheduling order. (Doc. 45.) The order adopted the parties' proposed deadline of April 25, 2014, for requests to amend pleadings and for the parties to exchange proposed terms and claim elements to be construed. The pending motion to amend was filed on April 25, 2014.

Defendants' amended pleadings assert new affirmative defenses of invalidity of the asserted claims of the patents-in-suit and add a defense of lack of standing to recover certain damages sought by Plaintiff. (Doc. 52.)

1. Applicable Law

Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that courts "should freely give leave [to amend] when justice so requires." Courts have emphasized that "[t]his policy is to be applied with extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir.2003) (quotation marks omitted).

Factors commonly used to determine the propriety of a motion for leave to amend include bad faith, undue delay, failure to cure deficiencies by previous amendments, prejudice to the opposing party, and futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); see Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). The factors are not necessarily equal, and "it is the consideration of prejudice to the opposing party that carries the greatest weight." Eminence Capital, 316 F.3d at 1052. Moreover, while a district court may consider the factor of undue delay, "[u]ndue delay by itself... is insufficient to justify denying a motion to amend." Bowles v. Reade, 198 F.3d 752, 757-58 (9th Cir. 1999); see Eminence Capital, 316 F.3d at 1052 ("Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption... in favor of granting leave to amend.").

The party opposing the amendment carries the burden of showing why leave to amend should not be granted. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). The decision to grant or deny a request for leave to amend rests in the discretion of the trial court. California v. Neville Chem. Co., 358 F.3d 661, 673 (9th Cir. 2004).

2. Analysis

Plaintiff first contends that Defendants exhibited undue delay in filing the motion to amend. Motions to amend may be found untimely even if, as in this case, they are brought within the time allowed by a scheduling order. AmeerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 2006). In determining timeliness, courts "do not merely ask whether a motion was filed within the period of time allotted by the district court in a Rule 16 scheduling order. Rather, in evaluating undue delay, we also inquire whether the moving party knew or should have known the facts and theories raised by the amendment in the original pleading." Id .; see Acri v. International Ass'n of Machinists, 781 F.2d 1393, 1398 (9th Cir. 1986) ("Late amendments to assert new theories are not reviewed favorably when the facts and the theory have been known to the party seeking amendment since the inception of the cause of action."). Courts also consider whether allowing an amendment would cause delay in the operative trial schedule. See Loehr v. Ventura County Community College District, 743 F.2d 1310, 1320 (9th Cir. 1984) (permitting an amendment "would have substantially complicated and delayed the case for new discovery, responsive pleadings, and considerations of state law").

Plaintiff asserts that the motion to amend, which was filed on the last day of the deadline set forth in the scheduling order, is untimely because Defendants knew or should have known of the facts on which their affirmative defenses are based at the time they filed their answers in November 2013. (Doc. 58 at 7-10.)

Defendants reply that they became aware of the factual and legal bases for their new defenses and counterclaims when they deposed the previous patent owners, the Worthingtons, on April 16 and 17, 2014. (Doc. 61 at 4.) It was then they learned there had been no written license agreement between Plaintiff and the previous owners prior to the September 4, 2013, assignment of the patent to Plaintiff. ( Id. at 3.) This information was the basis for their defense that Plaintiff is barred from seeking lost profits or other damages prior to the assignment date. Defendants also assert that some of the grounds of their invalidity defenses were revealed ...


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