Applied Materials, Inc. v. Demaray LLC

• Court: District Court, N.D. California
• Decided: August 5, 2022
• Docket: 5:20-cv-09341
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 APPLIED MATERIALS, INC., Case No. 5:20-cv-09341-EJD

9 Plaintiff, ORDER GRANTING LEAVE TO FILE AMENDED ANSWER; DENYING 10 v. MOTION FOR RELIEF

11 DEMARAY LLC, Re: Dkt. Nos. 133, 161 Defendant. 12

13 On December 24, 2020, Plaintiff filed this case against Defendant, seeking a declaratory 14 judgment that its stand-alone reactors did not infringe Defendant’s Patents. See Complaint for 15 Declaratory Judgment (“Compl.”), Dkt. No. 1. On September 30, 2021, Defendant Demaray LLC 16 filed an answer. See Dkt. No. 66. Defendant now moves to amend its Answer to add affirmative 17 counterclaims for infringement of the '276 and '657 Patents. See Demaray LLC’s Notice of 18 Motion and Motion to Amend its Answer to Add Affirmative Counterclaims for Infringement 19 (“Mot.”), Dkt. No. 133. On March 23, 2022, Plaintiff Applied Materials, Inc., filed an opposition 20 to this motion, to which Defendant filed a reply. See Plaintiff Applied Materials, Inc.’s 21 Opposition to Demaray LLC’s Motion to Amend its Answer (“Opp.”), Dkt. No. 142; Demaray 22 LLC’s Reply Memorandum in Support of Motion to Amend its Answer to Add Affirmative 23 Counterclaims for Infringement (“Reply”), Dkt. No. 144. Having considered the Parties’ papers, 24 the Court GRANTS Defendant’s motion to amend.1 25

26 1 Pursuant to Civil Local Rule 7-1(b), the Court finds this motion appropriate for decision without 27 oral argument. Case No.: 5:20-cv-09341-EJD 1 I. LEGAL STANDARD 2 Federal Rule of Civil Procedure 15 provides that a party may amend its pleading by leave 3 of court and that “[t]he court should freely give leave when justice so requires.”2 Fed. R. Civ. P. 4 15(a)(2). The Ninth Circuit applies this rule “with extreme liberality.” Eminence Cap. LLC v. 5 Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003); see also DCD Programs Ltd. v. Leighton, 833 6 F.2d 183, 186 (9th Cir. 1987) (“[R]ule 15’s policy of favoring amendments to pleadings should be 7 applied with ‘extreme liberality’”). 8 Under this liberal standard for granting leave to amend, the Ninth Circuit instructs courts to 9 grant leave unless the amendment: “(1) would cause prejudice to the opposing party, (2) is sought 10 in bad faith, (3) creates undue delay, and (4) or is futile.” Doe I v. Cisco Sys., Inc., 2013 WL 11 527293, at *1 (N.D. Cal. Sept. 18, 2013) (citing Chudacoff v. Univ. Med. Ctr. of S. Nev., 649 F.3d 12 1143, 1153 (9th Cir. 2011); see also Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 13 1999) (noting that “this determination should be performed with all inferences in favor of granting 14 the motion”). 15 These factors are not weighed evenly. “Absent prejudice, or a strong showing of any of 16 the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting 17 leave to amend.” Eminence, 316 F.3d at 1052. Of the four factors, “it is the consideration of 18 prejudice to the opposing party that carries the greatest weight.” Id. The non-movant bears the 19 burden of showing prejudice. DCD Programs, 833 F.2d at 187. 20 II. DISCUSSION 21 Defendant seeks to add affirmative counterclaims for infringement based upon Plaintiff’s 22 “third-party supplier’s recent disclosures and [Defendant’s] subsequent inspection and testing of 23 the claimed narrow band rejection filter at [Plaintiff’s] own supplier’s facility.” Mot. at 5. 24 Defendant argues that leave is required because the case is in its early stages and thus any 25

26 2 Because a court-issued deadline for amending pleadings has not been entered, Federal Rule of 27 Civil Procedure 16’s “good cause” standard does not apply. Case No.: 5:20-cv-09341-EJD 1 prejudice is minimal. The Court agrees. 2 A. Prejudice and Futility 3 Prejudice is the “most important factor.” Jackson v. Band of Haw., 902 F.2d 1385, 1387 4 (9th Cir. 1990). Here, the Court finds that any prejudice would be minimal. The Court has yet to 5 conduct a case management conference or enter a case schedule, see infra. Discovery is ongoing, 6 and briefing on claim construction has not started, and will not begin for seven months. See 7 Oracle Am., Inc. v. Hewlett Packard Enter. Co., 2017 WL 3149297, at *3 (N.D. Cal. July 25, 8 2017) (noting that the “proposed amendments, while expanding the scope of discovery and of the 9 case, hardly present new theories of liability that take [the defendant] by surprise”); cf. Illumina 10 Inc. v. BGI Genomics Co., Ltd., 2021 WL 428632, at *3 (N.D. Cal. Feb. 8, 2021) (finding no 11 significant prejudice to the plaintiff by allowing the defendant to amend its answer when it 12 requested to do so on the last possible day permitted under Rule 15). Further, the counterclaims 13 that Defendant seeks to add are the mirror-image of Plaintiff’s claims for declaratory judgment. 14 Indeed, Plaintiff has known of Defendant’s intent to add the counterclaims, should discovery 15 support it, since the first Joint Case Management Statement. See Dkt. No. 27 at 6–7. Thus, the 16 addition of the counterclaims can hardly be said to be a surprise. 17 Amendment does not appear to be futile. See Hynix Semiconductor Inc., 2006 WL 18 3093812, at *2 (N.D. Cal. Oct. 31, 2006) (“Courts rarely deny a motion for leave to amend for 19 reason of futility. Indeed, before discovery is complete, as here, a proposed amendment is futile 20 only if no set of facts can be proved under the amendment which would constitute a valid claim or 21 defense.”). In view of Rule 15(a)’s permissive standard, courts typically defer consideration of 22 challenges to the merits of a proposed amended pleading until after leave to amend is granted and 23 the amended pleading is filed. Id. The Court finds that Defendant has met its burden of 24 demonstrating that amendment is not futile. 25 26 27 Case No.: 5:20-cv-09341-EJD 1 B. Undue Delay and Bad Faith 2 Plaintiff spends most of its opposition arguing that Defendant has delayed seeking 3 amendment in bad faith. Much of the dispute between the Parties focuses on recently received 4 || discovery, which Defendant claims it sought diligently for months. Problematically, much of 5 || Plaintiffs opposition focuses on the merits of Defendant’s amendments. That is, whether the 6 || “recently received discovery” actually supports Defendant’s counterclaims. This is properly 7 viewed as a futility argument. However, because resolving this would require the Court to make 8 factual determinations about the evidence—something better done at the motion to dismiss or 9 summary judgment phase—the Court does not find that this is a proper basis to deny leave to 10 amend. See Netbula, LLC vy. Distinct Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003). Likewise, 11 qualitative assessments like whether the prior Texas disclosures are sufficient is not something the 12 || Court can resolve at this early pleading stage. Further, the Court does not find that Defendant 5 13 acted in bad faith or unduly delayed in seeking leave to amend. The basis for amendment came to 14 || fruition, and then Defendant sought leave to amend. 3 15 Wl. CONCLUSION 16 Based on the foregoing, the Court GRANTS Defendant leave to amend its Answer. 3 17 Defendant must file the amended answer, attached as Exhibit | to its motion, within ten days of 18 || this Order. The Court also ADOPTS the schedule proposed by Judge Cousins, see Dkt. No. 156. 19 || While the Court appreciates Plaintiff's objection to the schedule, the Court will allow Defendant 20 || enough time to amend its answer and pursue its counterclaims. The Court thus DENIES 21 Plaintiff's motion for relief, Dkt. No. 161. 22 IT IS SO ORDERED. 23 Dated: August 5, 2022 24

EDWARD J. DAVIL 26 United States District Judge Case No.: 5:20-cv-09341-EJD 28 PRON GRANTING LEAVE TO FILE AMENDED ANSWER; DENYING MOTION FOR