Marlowe Patent Holdings LLC v. Dice Electronics, LLC

293 F.R.D. 688, 2013 WL 775764, 2013 U.S. Dist. LEXIS 26533
District Court, D. New Jersey·Decided February 27, 2013·No. Civil Action No. 10-1199 (PGS)·Published·Cited by 30 cases

Opinion

MEMORANDUM OPINION AND ORDER

ARPERT, United States Magistrate Judge.

I. INTRODUCTION

This matter comes before the Court on a Motion by Defendant LTI Enterprises, Inc. d/b/a USA SPEC (“LTI”) for leave to file an Amended Counterclaim pursuant to Fed. R. Civ. P. 15 [dkt. entry no. 171], Plaintiff Marlowe Patent Holdings LLC (“Plaintiff’) has opposed this Motion. See dkt. entry no. 175.

This matter also comes before the Court on a Motion by Plaintiff for leave to conduct additional discovery, file Amended Claim Construction Briefs and for entry of an Amended Scheduling Order [dkt. entry no. 172], Defendants LTI and Precision Interface Electronics, Inc. (“PIE”) (collectively, “Defendants”) have opposed this Motion. See dkt. entry nos. 174 & 179.

For the reasons stated below, LTI’s Motion is GRANTED and Plaintiffs Motion is DENIED.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On March 5, 2010, Plaintiff filed a Complaint against Defendants alleging infringement of U.S. Patent No. 7,489,786 (“'786 patent”), a patent issued to Mr. Ira Marlowe for an invention entitled, “Audio Device Integration System” which Mr. Marlowe subsequently assigned to Plaintiff. See Pl.’s Comp., dkt. entry no. 1 at 1-5; see also Pl.’s Amended Compl., dkt. entry no. 142 at 1-5. Plaintiff claims that the '786 patent pertains to a device that enables after-market audio products such as a CD player to be connected to and controlled by an existing audio system in an automobile. Id. at 2-3. Plaintiff alleges that Defendants sell devices that infringe the claims of the '786 patent. Id. at 3-4.

On April 21, 2010, LTI filed an Answer denying Plaintiffs allegations and a Counter[692]*692claim seeking a declaratory judgment of non-infringement and invalidity. See LTI’s Answer, dkt. entry no. 8 at 1-7. Likewise, on June 23, 2010, PIE filed an Answer and Counterclaim. See PIE’s Answer, dkt. entry no. 45 at 1-10.

III. LTI’s Motion

A. LTI’s Arguments in Support of its Motion to Amend

LTI seeks leave to file an Amended Counterclaim to add a claim for inequitable conduct based on its recent discovery of certain prior art, evidence of which was allegedly deleted from an internet archive site at the direction of Plaintiffs owner, Mr. Marlowe. See Def.’s Br., dkt. entry no. 171-1 at 1. LTI contends that because “[t]he instant action originally included an affirmative defense that inequitable conduct in the procurement of the [patent-in-suit] rendered the [patent] unenforceable”, Plaintiff “has been aware of this issue since LTI filed its Answer”. Id.

LTI notes that Plaintiff “is wholly owned and controlled by [Mr.] Marlowe ... [,] the sole inventor listed on [the '786 patent]”, that Mr. Marlowe “assigned the rights [to] the '786 patent to his company Blitzsafe of America, Inc. (“Blitzsafe”) on December 13, 2002”, that “Blitzsafe assigned those rights back to [Mr.] Marlowe” on August 29, 2005, and that Mr. Marlowe “assigned [his] right[s] [to] the '786 patent to Plaintiff on March 4, 2010, the day before this lawsuit was filed”. Id. at 1. As a result, LTI claims, Mr. Marlowe “was intimately familiar with the design of Blitzsafe products sold and offered for sale in the United States more than one year before the filing date of the '786 patent”. Id. Claiming that it was not able to locate or “review any Blitzsafe products from ... the time the '786 patent was filed” until April 2012, LTI states that it “acquired ... a Blitzsafe audio interface bearing product number CUY/ALPDMXV.1A” from a third party on April 4, 2012. Id. at 2. Thereafter, during his deposition on April 9, 2012, Mr. Marlowe “opened the Blitzsafe CHY/ ALPDMXV.1A audio interface and found that the circuit board inside was dated 2001”. Id. After Mr. Marlowe’s deposition, LTI tested the Blitzsafe product and ascertained that the Blitzsafe product produced a “device presence signal” and, therefore, “anticipated all of the limitations of at least one claim of the '786 patent”. Id.

In addition, LTI maintains that during his deposition, Mr. Marlowe “confirmed that ... Blitzsafe askedarchive.org to take down old Blitzsafe webpages” after the start of this litigation despite previously claiming that “Blitzsafe had no paper records before 2005 due to a flood and no computer records due to a file server problem”. Id. LTI “first learned that there [was] a backup toarchive.org” on April 24, 2012 and, thereafter, “was able to locate an old Blitzsafe web page showing that a Blitzsafe CHY/ALPDMXV.1A audio interface was on sale in the U.S. more than one year before the filing date of ... [the '786 patent]”. Id. Based on this information, on April 26, 2012, LTI informed Plaintiffs counsel, then Jeffrey Kaplan, Esq. (“Kaplan”), that it intended to move to amend its Counterclaim to add a claim for inequitable conduct.

1. Good cause exists to modify the Scheduling Order to permit the amendment.

LTI notes that Fed. R. Crv. P. 16(b)(4) “provides that a scheduling order may be modified only for good cause and with the judge’s consent” and contends that, in this instance, good cause exists. Id. LTI further notes that it “should not be prejudiced because [Mr.] Marlowe deleted evidence of Blitzsafe’s own prior art products and it took until after the Scheduling Order to locate the evidence from third parties”. Id. Citing E. Minerals & Chems. Co. v. Mahan, 225 F.3d 330, 340 (3d Cir.2000) and Dimensional Communications, Inc. v. OZ Optics, Ltd., 148 Fed.Appx. 82, 85 (3d Cir.2005), LTI notes that “the Third Circuit requires a showing of good cause in order to amend” after a pleading deadline has passed and maintains that “ ‘good cause’ exists when the ordered schedule cannot reasonably be met despite the diligence of the party seeking the extension”. Id. at 4-5. Finally, citing Enzo Life Sci., Inc. v. Digene Corp., 270 F.Supp.2d 484, 487-89 (D.Del.2003) and Roquette Freres v. SPI Pharma, Inc., 2009 WL 1444835, at *5 [693]*693(D.Del.2009), Plaintiff notes that Fed. R. Civ. P. 9(b) “requires that claims of inequitable conduct in patent cases be plead with particularity” and that “the pleading party is possibly required to confirm the factual allegations through discovery”. Id. at 5. “LTI’s proposed amendment is based on a new set of facts that could not be adequately confirmed prior to the Scheduling Order’s deadline for amended pleadings”. Id.

LTI argues that it “acted diligently in pursuing the inequitable conduct claim and in discovering facts necessary to plead it with particularity”. Id. “LTI first acquired a Blitzsafe CHY/ALPDMXV.1A audio interface from a third party on or around April 4, 2012” because “[p]rior to that time, despite diligent efforts, LTI had not been able to review any Blitzsafe products from prior to the December 11, 2002 filing date of the '786 patent”. Id.

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Marlowe Patent Holdings LLC v. Dice Electronics, LLC, 293 F.R.D. 688, 2013 WL 775764, 2013 U.S. Dist. LEXIS 26533 (D.N.J. 2013).

293 F.R.D. 688 (Marlowe Patent Holdings LLC v. Dice Electronics, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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