Venetec Inter., Inc. v. Nexus Medical, LLC
| Decision Date | 28 March 2008 |
| Docket Number | No. 07-57-MPT.,07-57-MPT. |
| Citation | 541 F.Supp.2d 612 |
| Parties | VENETEC INTERNATIONAL, INC., Plaintiff, v. NEXUS MEDICAL, LLC, Defendant. |
| Court | U.S. District Court — District of Delaware |
Jack B. Blumenfeld, Maryellen Noreika, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, for Plaintiff.
Mary Matterer, Richard K. Herrmann, Morris James LLP, Wilmington, DE, for Defendant.
This patent matter was initiated on January 29, 2007 in which Venetec International, Inc. ("Venetec") alleges that Nexus Medical, LCC's ("Nexus") product, "The Bone," infringes U.S. Patent Nos. 6,213,979 (the "'979 patent") and 6,447,485 (the "485 patent").1 Venetec moved for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 12(c) to dismiss Nexus' counterclaim of inequitable conduct. In its opposition brief and through a separate motion, Nexus moved to amend its answer and counterclaim under Fed.R.Civ.P. 15(a) and 16(b). In its motion, Nexus moves to add false marking claims against Venetec, to further expand upon its inequitable conduct claim and to plead an additional basis for inequitable conduct due to Venetec's alleged fraudulent withholding notice of the existence of the present litigation from the United States Patent and Trademark Office ("PTO"). Because the motions are interrelated, this Memorandum Order addresses both motions.
The three patents asserted in this litigation are related in that the '150 patent is a continuation of U.S. Patent No. 6,929,625, which is a continuation of the '485 patent, which is a divisional of the '979 patent. According to the record, during the prosecution of the '150 patent, on October 20, 2005 and November 21, 2006, Venetec disclosed to the PTO certain prior art references which Nexus alleges invalidates all three patents-in-dispute.2
As noted herein, the present action was instituted on January 27, 2007 which just asserted infringement of the '979 and '485 patents since the '150 patent had not yet issued. Prosecution of the '150 patent continued during the pendency of the action. On February 7, 2007, Venetec had an interview with the Examiner of the '150 patent application, during which amendments to the claims were discussed. In March 2007, the PTO forwarded a Notice of Allowability which advised Venetec that the '150 patent application would be allowed over the prior art of record and that the patent would issue. Venetec paid the issue fee in March 2007.3 On April 27, 2007, the court entered a scheduling order which required that amendments to the pleadings be completed by September 7, 2007. On May 30, 2007, Nexus responded to Venetec's first written discovery requests, alleging that the '979 and '485 patents are invalid based upon the six prior art references noted herein.4 On June 20, 2007, Venetec disclosed to the PTO the invalidity contentions and claim charts of Nexus for the '979 and '485 patents that were part of the discovery responses. Since those materials were not submitted to the PTO until after the patent issue fee was paid, Nexus' contentions were not considered by the PTO during the prosecution of the '150 patent.5 All six prior art references, however, were cited to and before the PTO during the prosecution of the '150 patent.6 On June 25, 2007, Nexus filed an inter parties reexamination request of the '485 patent.
The '150 patent issued on July 24, 2007, and the following day Venetec moved for leave to file its first supplemental complaint which added claims of infringement under that patent against Nexus. Venetec's request was granted. Nexus filed its answer and counterclaims on August 8, 2007, which included allegations of inequitable conduct of the counterclaims on August 28, 2007. In its answer, Venetec did not assert the failure to state a claim for relief.
On September 5, 2007, Venetec filed a second supplemental complaint against Nexus which added the false marking claims.7 In the parties' joint status report to the court filed on September 6, 2007, Nexus asked for an extension in the discovery cut-off. There was no mention of the deadline for amending the pleadings. A status teleconference was held with the court on September 11, 2007.8 On September 19, 2007, Nexus filed an answer and counterclaim to the second amended complaint, alleging that because Venetec failed to withdraw its patent application for the invalidity contentions and its '485 patent reexamination proceeding, such conduct evidences bad faith with an intent to deceive the Patent Office.9 On September 27, 2007, Venetec filed an answer to Nexus' counterclaim alleging for the first time that Nexus failed to state a claim for relief with respect to the inequitable conduct claim.10 Venetec filed its motion for partial judgment on the pleadings on September 28, 2007. Nexus' motion for leave to amend followed on November 8, 2007, shortly after briefing on Venetec's motion was completed on October 25, 2007.
Generally, judgment on the pleadings under Fed.R.Civ.P. 12(c) is appropriate when there are no material issues of fact, which requires the moving party to show that it is entitled to judgment as a matter of law.11 The court does not consider matters outside the pleadings, and it must accept the non-moving party's allegations as true, drawing all reasonable factual inferences in the non-movant's favor.12 The purpose of judgment on the pleadings is to dispose of claims where the material facts are undisputed and judgment can be entered on the competing pleadings and exhibits thereto, and documents incorporated by reference.13
Rules 15(a) and 16(b)
Under Fed.R.Civ.P. 15(a), leave to amend pleadings is "freely given when justice so requires."14 In its analysis under Rule 15(a), it is within the discretion of the court to determine the appropriateness of the proposed amendment and to deny the amendment when considering the factors of undue delay, bad faith on the part of the party seeking the amendment, undue prejudice to the opposing party or futility of the amendment.15
Generally, "[d]elay alone is not sufficient to justify denial of leave to amend."16 The more dispositive factor in determining whether leave should be granted is prejudice to the non-movant.17 "Moreover, leave to amend is particularly warranted when pleadings lack the requisite factual specificity for a particular cause of action."18
Balanced with Rule 15(a) is Rule 16(b) which governs modifications to the court's scheduling order. Under Rule 16(b), a more stringent standard is applied which requires that a scheduling order only be modified for good cause and by the consent of the judge. This jurisdiction recognizes that motions to amend which, in effect, operate to change the scheduling order are controlled by 16(b).19 The good cause element requires the movant to demonstrate that, despite diligence, the proposed claims could not have been reasonably sought in a timely manner.20 Unlike Rule 15(a), the good cause standard under Rule 16(b) hinges on diligence of the movant and not on prejudice to the non-moving party.21
Because the patent application process is ex parte, patent applicants and their counsel, or those involved in the preparation and prosecution of patent applications, owe a duty of candor and good faith to the PTO. The breach of that duty may render a patent unenforceable for inequitable conduct.22 To prove unenforceability by inequitable conduct, "the alleged infringer must provide clear and convincing evidence of (1) affirmative misrepresentations of a material fact, the failure to disclose material information, or submission of false material information and (2) an intent to deceive."23 In analyzing whether inequitable conduct occurred, the court balances the levels of materiality and intent.
Because inequitable conduct is a claim sounding in fraud, Rule 9(b) applies which requires the elements of inequitable conduct to be pled with particularity.24
Inequitable conduct allegations, however, "remain subject to the liberal pleading standard of Rule 8, which requires only a `short and plain' statement of a claim or defense," the purpose of which is to place the opposition on notice of the misconduct charged.25 Therefore, "`pleadings that disclose the name of the [allegedly withheld] relevant prior art and disclose the acts of the alleged fraud fulfill the requirements of Rule 9(b).'"26
The parties cross-referenced their respective arguments in the briefing on the two motions. In fact, their positions noted in a brief in support of one motion considerably overlap and are very similar to their arguments contained in the other motion.27 As a result, the court views the two motions on similar, if not the same, subject matters, as one continuous discussion — two bites of the same apple. Therefore, the court will address the motions together as a whole.
Although Nexus' motion to amend its answer and counterclaims by augmenting its inequitable conduct defense and to add seven new false marking claims against certain lines of Venetec's products was filed after briefing on Venetec's motion for partial judgment on the pleadings on Nexus' original counterclaim of inequitable conduct of the '150 patent, the court will address these two issues first.28 The court analyzes the issues in light of the pertinent federal civil rules contained herein, specifically Rules 8, 9(b), 15(a) and 16(b).
Venetec argues that to meet the requirements of Rule 9(b), Nexus must plead with particularity how the withheld information is material to the prosecution of the patent...
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