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Optolum Inc. v. Cree Inc.

United States District Court, M.D. North Carolina

July 11, 2019

OPTOLUM, INC., Plaintiff,
CREE, INC., Defendant.



         Presently before this court is Defendant Cree, Inc.'s (“Cree”) Motion to Strike Plaintiff OptoLum, Inc.'s (“OptoLum”) Second Amended Infringement Contentions (“SAICs”). (Doc. 172.) Cree has filed a brief in support of its motion, (Doc. 173), OptoLum has responded, (Doc. 174), and Cree has replied, (Doc. 175). On July 8, 2019, this court heard argument from counsel. (See Minute Entry 07/08/19.) For the reasons set forth herein and discussed at argument, Cree's motion will be denied.

         I. BACKGROUND

         On August 22, 2018, this court entered its Claim Construction Memorandum Opinion and Order (“Claim Construction Order”). (See Doc. 152.) On the same day, this court approved the parties' Joint Rule 26(f) Report. (See Doc. 151.) The Joint Rule 26(f) Report was submitted with both parties' consent and set forth various deadlines, including, for the first time in a scheduling order in this case, a deadline for final contention responses. (See Doc. 149.)

         On September 21, 2018, OptoLum served its First Amended Infringement Contentions (“FAICs”) pursuant to Local Rule for Patent Cases (“Patent Rules”) 103.6(a). (See Declaration of Lynne A. Borchers (“Borchers Decl.”) ¶ 1 (Doc. 173-1); Tab 1 to Borchers Decl. (FAICs) (Doc. 173-2) at 2, 9.)[1] On October 11, 2018, Cree served its Non-Infringement and Invalidity Contentions pursuant to Patent Rule 103.6(c)(1). (Mem. in Supp. of Def.'s Mot. to Strike (“Def.'s Mem.”) (Doc. 173) at 2.) On March 5, 2019, this court amended the scheduling order, providing the currently operative deadlines: final contention responses were due on March 29, 2019; fact discovery closed on April 5, 2019; opening expert reports were due on May 6, 2019; responsive expert reports were due on June 3, 2019; rebuttal expert reports were due on June 19, 2019; expert discovery closes on July 22, 2019; and dispositive motions are due by August 21, 2019. (See Doc. 171 at 1-2.) Trial is set for December 10, 2019. (Id. at 2.)

         On March 29, 2019, OptoLum served its SAICs without seeking leave to amend from this court. (See Def.'s Mem. (Doc. 173) at 2.) In the interim between OptoLum's FAICs and SAICs, Cree made several document productions. (See OptoLum's Opp'n to Cree's Mot. to Strike (“Pl.'s Opp'n”) (Doc. 174) at 2 n.2.) Some of those productions were in response to OptoLum's requests for files containing the requisite metadata to enable OptoLum to efficiently utilize them. (See id.) OptoLum learned that these files existed during its deposition of Cree's employee, Dr. Curt Progl. (See Pl.'s Opp'n, Ex. A, Declaration of Leah R. McCoy (“McCoy Decl.”) (Doc. 174-1) ¶ 10.) OptoLum asserts that Cree did not produce many of the files with the correct metadata until October 5, 2018, others until March 25, 2019, and that some production deficiencies continued through the end of April 2019. (See Id. ¶¶ 5, 10, 12-16.)

         On April 11, 2019, Cree filed its Motion to Strike, arguing that OptoLum's SAICs do not comply with Patent Rules 103.6 and 103.7. (See Doc. 172.)


         The interpretation of local patent rules is governed by Federal Circuit law, which dictates that local patent rules must be consistent with the Federal Rules of Civil Procedure. See O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1364-65 (Fed. Cir. 2006) (citing 28 U.S.C. § 2071(a) (2000); Fed.R.Civ.P. 83(a)(1)). Local patent rules seek to balance “the right to develop new information in discovery with the need for certainty as to the legal theories” of infringement, non-infringement, and invalidity. O2 Micro, 467 F.3d at 1366 (citation and footnote omitted).

         There is little caselaw interpreting this district's Patent Rules or the Eastern District of North Carolina's Local Patent Rules, which are substantively similar. And the Federal Circuit has not addressed the Patent Rules relevant here. Much of the caselaw interpreting local patent rules involves the Northern District of California's Patent Local Rules. See, e.g., O2 Micro, 467 F.3d at 1355; Volumetrics Med. Imaging, L.L.C. v. Toshiba Am. Med. Sys., Inc., No. 1:05CV955, 2011 WL 2359061, at *1 (M.D. N.C. June 9, 2011). The Northern District of California's Patent Local Rules, however, provide that a party may amend its infringement contentions only by order of the court upon a timely showing of good cause. See Patent L.R. 1-3, 3-6.[2] The cases are therefore instructive but not particularly persuasive, as only amendment under the final sentence of Patent Rule 103.7 explicitly requires a showing of good cause. See Simo Holdings Inc. v. H.K. uCloudlink Network Tech. Ltd., 354 F.Supp.3d 508, 510 (S.D.N.Y. 2019) (“[P]laintiff's citations to various decisions from other courts imposing a ‘good cause' standard for supplementing invalidity contentions are inapposite. Those cases rely on local rules which, unlike this Court's, expressly impose such a requirement.”).

         When interpreting a Patent Rule, the court begins with the plain language of the rule's text. See Veolia Water Sols. & Techs. Support v. Siemens Indus., Inc., 63 F.Supp.3d 558, 563 (E.D. N.C. 2014) (citing Dodd v. United States, 545 U.S. 353, 359 (2005)). As the court told counsel during oral argument, the court finds the plain language of Patent Rules 103.6 and 103.7 confusing and difficult to apply. The parties' interpretations of the rules are reasonable, but the court interprets portions of them differently.

         The plain language of Patent Rule 103.6 does not require a party amending its contentions to show good cause or obtain a court order. Rather, a party has the authority to amend when specific circumstances exist. Patent Rule 103.6(a) permits a party claiming patent infringement to amend its infringement contentions within thirty days of a claim construction ruling and with respect to the information required by Patent Rules 103.1(c)-(d), but only if required by the claim construction ruling or by documents produced pursuant to Patent Rule 103.4. See LR 103.6(a). Patent Rule 103.6(b) allows a party to amend its infringement or non-infringement contentions when “[d]iscovery has revealed information requiring modification of the contentions.” LR 103.6(b). This court finds that Patent Rule 103.6(b) permits amendment when the information “requiring modification” relates to the information required to be disclosed pursuant to Patent Rules 103.1 or 103.3, which set forth the information a party must include in its preliminary contentions. There is no time frame associated with amendment under Patent Rule 103.6(b). This rule can operate unfairly and to the disadvantage of a party where, as here, the other party amends its contentions on the eve of the close of fact discovery. Patent Rule 103.7 allows a party to amend its infringement or non-infringement contentions in three circumstances: (i) “as expressly permitted by [Patent] Rule 103.6”; (ii) “within thirty (30) days of the discovery of new information relevant to the issues of infringement, noninfringement, or invalidity”; or (iii) by order of the court based upon good cause. LR 103.7.

         Notwithstanding Patent Rules 103.6 and 103.7, this court has broad discretion in managing the patent cases before it. See LR 101.2(c) (“The Court may . . . modify the obligations or deadlines set forth in the[] Local Patent Rules based on the circumstances of any particular case . . . .”); see also Doe v. Montgomery Cty. Bd. of Educ., No. 1:15CV940, 2016 WL 5415760, at *3 (M.D. N.C. Sept. 28, 2016) (internal quotation marks omitted) (quoting Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001)) (noting the court's discretion “to overlook a party's failure to comply with local court rules”). Relatedly, as this court noted at oral argument, there is a “strong policy” in the Fourth Circuit to decide cases on the merits. See, e.g., United States v. Shaffer Equip. Co., 11 F.3d 450, 462 (4th Cir. 1993).

         III. ...

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