Copy of the Latest judges ruling, big MMRF win. Case 2:13-cv-00631-ODW-SH Document 41 Filed 12/23/13 Page 1 of 8. I converted the document to text for easy posting. The original copy is available for anyone via pacer.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MYMEDICALRECORDS, INC.,
Plaintiff,
v.
WALGREEN CO.,
Defendant.
Case No. 2:13-cv-00631-ODW(SHx)
ORDER GRANTING MOTION TO
STRIKE INVALIDITY
CONTENTIONS [28] AND
DENYING CROSS-MOTION FOR
LEAVE TO SUPPLEMENT
INVALIDITY CONTENTIONS [34]
I. INTRODUCTION
Two wrongs don’t make a right. Yet when Plaintiff MyMedicalRecords, Inc.
blew past several deadlines contained in the Court’s Scheduling and Case
Management Order, Defendant Walgreen Co. did the same. Without seeking a Court
order as required by the Patent Local Rules, Walgreens filed an untimely and
unauthorized supplement to its invalidity contentions. MyMedicalRecords (“MMR”)
then moved to strike those additional contentions. Since Walgreens did not timely
seek a court order and has not demonstrated good cause for the amendment, the Court
GRANTS MMR’s Motion to Strike and DENIES Walgreens’ Motion for Leave to
Amend.1
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1 After carefully considering the papers filed with respect to these Motions, the Court deems the
matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.
Case 2:13-cv-00631-ODW-SH Document 41 Filed 12/23/13 Page 2 of 8 Page ID #:809
II. FACTUAL BACKGROUND
On January 29, 2013, MMR filed suit against Walgreens, alleging that
Walgreens infringed MMR’s U.S. Patent No. 8,301,466, titled “Method and System
for Providing Online Records.” (ECF No. 1.) The Court subsequently issued its
Patent Standing Order, which adopted and incorporated the Patent Local Rules from
the United States District Court for the Northern District of California. (ECF No. 6.)
On July 2, 2013, the Court issued the Scheduling and Case Management Order
as required by Federal Rule of Civil Procedure 16(b). (ECF No. 19.) This Order
contains a complete schedule of pretrial and trial dates. Specifically, the Court
ordered MMR to disclose its asserted claims and infringement contentions by July 22,
2013, and Walgreens to serve its invalidity contentions and related documents by
September 2, 2013. The Court also ordered the parties to submit a joint claim-
construction and prehearing statement by October 28, 2013.
Walgreens served its invalidity contentions on September 27, 2013, in which it
identified eight prior-art references that it contends anticipate or render claim 8 of the
’466 Patent obvious. On October 28, 2013, the parties submitted their joint claim-
construction and prehearing statement. (ECF No. 26.)
Two days later—on October 30, 2013—Walgreens provided MMR with
“Supplemental Invalidity Contentions.” (Hatch Decl. ¶ 5, Ex. B.) The document
contains 46 new prior-art citations not present in the original invalidity contentions.
(Id. ¶ 6.) Walgreens also asserted seven new prior-art references: (1) Synchart, (2)
HeartRecord, (3) U.S. Patent Application No. 2004/0267572, (4) Personal MD,
(5) iHealthRecord.org, (6) U.S. Patent Application No. 2005/0209891, and (7) a
portion of the Walgreens.com website from 1999. Finally, Walgreens included new
invalidity arguments, including that the ’466 Patent is invalid under 35 U.S.C. § 101
for failure to meet the machine-or-transformation test and § 112 for lack of
enablement without undue experimentation.
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Walgreens never moved for a court order permitting it to amend its invalidity
contentions, nor did the parties file a stipulation to that effect. On November 18,
2013, MMR moved to strike these supplemental invalidity contentions. (ECF No.
28.) Walgreens timely opposed and ostensibly filed a cross-motion2 for leave to
amend its invalidity contentions. (ECF No. 34.) MMR’s Motion to Strike is now
before the Court for decision.
III. LEGAL STANDARD
The Patent Local Rules reflect a more conservative approach to amendment
than the liberal policy for amending pleadings under the Federal Rules of Civil
Procedure. Patent Local Rule 3-6 permits amendment of invalidity contentions “only
by order of the Court upon a timely showing of good cause.” Patent L.R. 3-6; but cf.
Fed. R. Civ. P. 15(a)(2) (permitting leave to amend “when justice so requires”).
To make a satisfactory showing of good cause, a party seeking to amend its
invalidity contentions must show that it “acted with diligence in promptly moving to
amend when new evidence is revealed.” See O2 Micro Int’l, Ltd. v. Monolithic Power
Sys., 467 F.3d 1355, 1363 (Fed. Cir. 2006) (affirming the district court’s denial of
leave to amend infringement contentions where the party seeking to amend had the
necessary discovery almost three months before moving for leave to amend). Even if
the moving party establishes its diligence, the Court then considers the potential
prejudice to the nonmoving party in determining whether to grant leave to amend. Id.
at 1368.
Patent L.R. 3-6 includes a non-exhaustive list of scenarios that could support a
finding of good cause:
(a) A claim construction by the Court different from that proposed by the
party seeking amendment;
2 Walgreens did not file its “motion” as a noticed motion in accordance with the Local Rules. But
since the Court finds that the putative motion lacks merit, the Court denies it in substance rather than
form.
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(b) Recent discovery of material, prior art despite earlier diligent search;
and
(c) Recent discovery of nonpublic information about the Accused
Instrumentality which was not discovered, despite diligent efforts,
before the service of the Infringement Contentions.
IV. DISCUSSION
MMR moves to strike Walgreens’ second set of invalidity contentions, arguing
that Walgreens failed to seek a court order permitting amendment as required by
Patent Local Rule 3-6. MMR also argues that Walgreens has not demonstrated good
cause permitting amendment, and any amendment would unduly prejudice MMR.
But Walgreens asserts that it timely served its invalidity contentions 45 days after
MMR tardily served its infringement contentions and supporting documents. The
Court considers these arguments in turn.
A. Motion to Strike Invalidity Contentions
It is undisputed that Walgreens never moved the Court for an order permitting it
to amend its invalidity contentions. Patent Local Rule 3-6 specifically provides that
amendment of invalidity contentions “may be made only by order of the Court upon a
timely showing of good cause.” That Patent Local Rules and this Court’s Scheduling
and Case Management Order do not provide for a two-step procedure for disclosing
invalidity contentions. Rather, the defendant must disclose its invalidity contentions
in one fell swoop. See Patent L.R. 3-3.
The Scheduling Order requires Walgreens to serve its invalidity contentions by
September 2, 2013. (ECF No. 19.) Walgreens served its first round of invalidity
contentions on September 27, 2013—some 25 days late. Walgreens then purported to
supplement its invalidity contentions with additional theories and prior-art references
on October 30, 2013—past the schedule set by the Court and without a Court order.
Walgreens contends that it provided both its original and supplemental
invalidity contentions within 45 days of receiving MMR’s infringement-contention
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document production required by Patent Local Rule 3-2. Walgreens thus argues that
its supplemental contentions were timely.
But the supplemental contentions were not timely. Patent Local Rule 3-3
provides that a party shall file its invalidity contentions “[n]ot later than 45 days after
service upon it of the ‘Disclosure of Asserted Claims and Infringement Contentions.’”
Walgreens misreads this Rule when it argues that it had 45 days from whenever MMR
served its infringement contentions and supporting documents. The 45-day deadline
begins to run from service of the infringement contentions under Patent Local Rule 31—
not the document production supporting this disclosure that is required by Patent
Local Rule 3-2. The 45-day limit is also the maximum time a party can wait to serve
invalidity contentions after receiving invalidity-contention disclosure. It does not
supplant the Court’s Scheduling and Case Management Order, which set a September
2, 2013 deadline for Walgreens to serve its invalidity contentions.
Walgreens also urges that the parties’ counsel stipulated that Walgreens would
not have to disclose its invalidity contentions until MMR completed its infringement
disclosures under Patent Local Rules 3-1 and 3-2. Walgreens contends that MMR’s
counsel orally responded that the proposal was “fair” and “reasonable.”
Walgreens’ stipulation argument fails for several reasons. First, the parties
never reduced the stipulation to written form or made it at a deposition or in open
court as required by Central District Local Rule 7-1. Second, no one ever filed a
stipulation to alter the deadlines with the Court. There was thus no Court order
accepting the stipulation. Local Rule 7-1 specifically provides that a stipulation “will
not be effective until approved by the judge.” Finally, if MMR failed to comply with
the Court’s Scheduling and Case Management Order, and if that failure impacted
Walgreens’ ability to comply as well, Walgreens should have moved to compel
MMR’s disclosures. The Court could have easily remedied the situation at that point.
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The Court finds that Walgreens’ supplemental invalidity contentions were both
untimely and improperly amended without a court order. The Court consequently
GRANTS MMR’s Motion to Strike.
B. Motion for Leave to Amend Invalidity Contentions
In its Opposition to MMR’s Motion to Strike, Walgreens moves for leave to file
its supplemental invalidity contentions. Walgreens argues that it has presented good
cause for the amendment for several reasons. Walgreens points out that despite the
fact that the Court ordered MMR to disclose its infringement contentions and related
documents by July 22, 2013, MMR did not start producing these documents until
September 16, 2013. Walgreens contends that it provided its original and
supplemental invalidity contentions within 45 days of that date. Defendant asserts
that MMR put it in an “untenable situation” of having to review MMR’s late
disclosures before disclosing its own invalidity contentions. Finally, Walgreens
argues that MMR will suffer no prejudice from the amendment. There is still ample
time to conduct discovery regarding these contentions, the ’466 Patent itself discloses
six of the seven new prior-art references, and MMR was already on notice of
Walgreens’ 46 prior-art citations from its original invalidity contentions.
The Court is not persuaded that Walgreens has demonstrated good cause for
amending its invalidity contentions. While the Court is mindful that MMR failed to
comport with the Court’s Scheduling and Case Management Order, MMR’s failure
did not excuse Walgreens from timely providing its own invalidity contentions or
from seeking a court order permitting amendment. Walgreens could have easily
moved to compel MMR’s disclosures so that Walgreens could have avoided its
“untenable situation.” Walgreens would then have had this Court’s full panoply of
sanctions to ensure that MMR complied with the Scheduling Order and that
Walgreens would be able to meet its own deadlines. While the Court does in fact
“expect[] the parties to resolve discovery issues by themselves in a courteous,
reasonable, and professional manner’” (Opp’n 1 (quoting Patent Standing Order 4)),
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the Court does not encourage wholesale abandonment of the Scheduling Order just
because one party breaches it.
As discussed above, Walgreens had to serve its invalidity contentions by
September 2, 2013—not simply 45 days after MMR’s infringement disclosures.
Walgreens’ argument to the contrary misapprehends Patent Local Rule 3-3’s clear
language.
It is also rather curious that Walgreens had to even supplement its invalidity
contentions in the first place. As MMR points out, six of the prior-art references are
cited in the very patent that is the heart of this litigation. And the seventh reference is
Walgreens’ own website. It is difficult to imagine that Walgreens “recently
discovered” its own former webpage and the patent that has been center stage in this
lawsuit for some 11 months.
While MMR may have been on notice of the prior-art references to which
Walgreens’ 46 new citations relate, Walgreens’ new citations do not comport with
Patent Local Rule 3-5. That Rule provides that when a party serves its invalidity
contentions, it must also serve a “chart identifying where specifically in each alleged
item of prior art each limitation of each asserted claim is found.” Patent L.R. 3-3(c)
(emphasis added). Although MMR had notice of the prior-art references, this notice is
not sufficient under Patent Local Rule 3-3(c) with respect to the 46 new citations.
Walgreens did not specifically identify where each alleged limitation of each asserted
claim is found in the prior-art citations.
Walgreens was also not diligent in coming up with its new invalidity arguments
under 35 U.S.C. §§ 101 and 112. As MMR points out, Walgreens included these
arguments in its Answer to MMR’s Complaint. (Answer 5 (“Third Affirmative
Defense”).) Since Walgreens was aware that it would raise these sections as invalidity
defenses in May 2013, it cannot claim it was diligent in asserting them in its second
round of invalidity contentions over five months later.
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The Court understands that Walgreens wanted to be thorough in preparing its
invalidity contentions. But if Walgreens needed more time due to MMR’s failure to
comport with the case schedule, Walgreens should have addressed that issue first
instead of compounding the problem.
V. CONCLUSION
For the reasons discussed above, the Court GRANTS Plaintiff
MyMedicalRecords, Inc.’s Motion to Strike Supplemental Invalidity Contentions
(ECF No. 28) and DENIES Defendant Walgreen Co.’s Motion for Leave to Amend
(ECF No. 34.)
IT IS SO ORDERED.
December 23, 2013
____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE
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