“[C]ourts typically require a showing of diligence by the party seeking amendment and only then consider whether there is prejudice to the non-moving party. . . . We hold that both diligence and prejudice are relevant considerations.”
How later courts described this case
- “[C]ourts typically require a showing of diligence by the party seeking amendment and only then consider whether there is prejudice to the non-moving party. . . . We hold that both diligence and prejudice are relevant considerations.”
Written by the judges who cited it.
The opinion
In the United States Court of Federal Claims
No. 11-130C
(Filed: February 24, 2021)
) Patent case; motion by defendant to
RETURN MAIL, INC., ) amend its invalidity contentions;
) diligence; prejudice; good cause; RCFC
Plaintiff, ) Appendix J (Patent Rules)
)
v. )
)
UNITED STATES, )
)
Defendant. )
)
Lee L. Kaplan, Smyser Kaplan & Veselka, L.L.P., Houston, Texas, for plaintiff. With
him on the briefs was Douglas H. Elliott, Elliott and Polasek, PLLC, Bellaire, Texas.
Shahar Harel, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, D.C., for defendant. With him on the briefs were
Jeffrey Bossert Clark, Acting Assistant Attorney General, and Gary L. Hausken, Director, United
States Department of Justice, Washington, D.C., as well as Rebecca Harker Duttry, Attorney,
and Stephan J. Boardman, Attorney, United States Postal Service, Washington, D.C.
OPINION AND ORDER
LETTOW, Senior Judge.
Pending before the court in this patent case is defendant’s motion to amend its invalidity
contentions. This motion adds to a procedural history that has generated opinions in related
proceedings from the Patent Trial and Appeal Board, the Federal Circuit, and the Supreme Court.
In this case, a stay of proceedings was entered in October 2014, as the related proceedings were
taking their course. At the conclusion of those proceedings, the stay was lifted in September
2019. See Order of September 5, 2019, ECF No. 108. At that point, discovery resumed, and
defendant supplemented its responses to interrogatories, including one directed to invalidity. See
Def.’s Mot. to Amend its Invalidity Contentions (“Def.’s Mot.”) at 4, ECF No. 135. The
government now seeks “leave to amend its invalidity contentions to include those contentions
identified in its supplemental interrogatory responses and corresponding claim charts.” Id. at 6
(footnote omitted).
In light of the amended discovery schedule regarding defenses, the parties’ supplemented
interrogatory responses, and the Patent Rules of the Court of Federal Claims, the court concludes
that the government has made a sufficient showing of diligence in seeking to amend its invalidity
contentions. In the circumstances, plaintiff has “not been genuinely surprised or harmed” by the
government’s supplementations. Hitkansut LLC v. United States, 127 Fed. Cl. 101, 109 (2016).
For good cause shown, the government’s motion to amend its invalidity contentions is
GRANTED.
BACKGROUND
Plaintiff Return Mail, Inc. (“Return Mail”) first filed suit in this court on February 28,
2011, alleging “the unlicensed use and infringement . . . of the invention claimed in United States
Patent Number 6,826,548” (“the ’548 Patent”) by the United States Postal Service. Compl. ¶ 1,
ECF No. 1. That patent relates to a system and method of processing returned mail. The stay
entered in this case on October 21, 2014, followed a petition by the Postal Service to the Patent
Trial and Appeal Board (“PTAB”) requesting institution of a covered business method review of
the ’548 Patent. See Order of October 21, 2014, ECF No. 83. The PTAB acted on the Postal
Service’s petition and concluded that all of the challenged claims were “more likely than not”
directed to ineligible subject matter. United States Postal Serv. v. Return Mail, Inc., No. CBM
2014-00116, 2014 WL 5339212, at *19 (P.T.A.B. Oct. 16, 2014). On appeal, the Federal Circuit
ruled that the Postal Service had standing under the America Invents Act (“AIA”), Pub. L. No.
112-29, 125 Stat. 284, to seek review notwithstanding that the Postal Service was a federal
government entity, and it affirmed the PTAB’s decision. Return Mail, Inc. v. United States
Postal Serv., 868 F.3d 1350 (Fed. Cir. 2013). Judge Newman dissented on the ground that the
government was not entitled to request review under the AIA. Id. at 1371. The case reached the
United States Supreme Court, which reversed and remanded, holding that “a federal agency is
not a ‘person’ who may petition [the PTAB under the AIA] for post-issuance review” of a patent.
Return Mail, Inc. v. United States Postal Serv., --- U.S. ---, 139 S. Ct. 1853, 1867 (2019). The
Federal Circuit then remanded the case to the PTAB “with instructions to dismiss in light of the
Supreme Court’s disposition.” Return Mail, Inc. v. United States Postal Serv., 774 Fed. Appx.
684 (Fed. Cir. 2019).
The case was reactivated when court lifted the stay on September 5, 2019. See Order of
September 5, 2019. Two months later, the parties filed a joint status report proposing a
bifurcated schedule, in which the court would decide the government’s “motion for summary
judgment regarding its [S]ection 101 invalidity defense” before hearing “any other invalidity
issues.” See ECF No. 111. The court did not adopt that proposal but instead set a schedule that
encompassed all available defenses. See Order of November 12, 2019, ECF No. 114 (setting
discovery schedule); Order of January 9, 2020, ECF No. 130 (granting in part and denying in
part defendant’s motion for reconsideration of the scheduling order). Return Mail filed its first
amended complaint on December 23, 2019. See First Am. Compl., ECF No. 128.
At an early stage of this case, on March 2, 2012, defendant had timely served its Initial
Disclosures of Prior Art, and it followed with its Invalidity Claim Chart on June 29, 2012, over a
year before the case was stayed in late 2014. Def.’s Mot. at 3. Defendant had challenged all
claims of the ’548 patent on the basis of ineligible subject matter under 35 U.S.C. § 101. Now,
however, defendant’s potential defenses include contentions under 35 U.S.C. §§ 102, 103, 112,
305, and 307. See Def.’s Mot. at 4.
2
Once discovery resumed, the government supplemented its interrogatory responses with,
inter alia, “a detailed response on July 8, 2020, answering each of the seven relevant subparts of
an interrogatory directed to invalidity.” Def.’s Mot. at 4. After an extension of time for
discovery due to the COVID-19 pandemic, see Order of August 5, 2020, ECF No. 134, the
government sought the agreement of Return Mail to amend its invalidity contentions, see Def.’s
Mot. at 5. Return Mail refused to consent to the motion. Id. The government now seeks leave
to amend its invalidity contentions to align those contentions with its supplemented interrogatory
responses. See id. at 6. After briefing, see Pl.’s Resp. to Def.’s Mot. (“Pl.’s Resp.”), ECF No.
136; Def.’s Reply to Pl.’s Resp. (“Def.’s Reply”), ECF No. 141; Pl.’s Sur-Reply, ECF No. 142-
1, the court held a hearing on January 21, 2021.
STANDARDS FOR DECISION
Rule 16 of the Rules of the Court of Federal Claims (“RCFC”) gives the court discretion
in issuing scheduling orders. Discovery scheduling orders serve “to protect the parties from a
continuing burden of producing evidence and to assure them adequate time to prepare
immediately before trial.” Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347 (9th Cir.
1984). “A schedule may be modified only for good cause and with the judge’s consent.” RCFC
16(b)(4). Rule 6 of the Patent Rules of the Court of Federal Claims (“PRCFC”) addresses
invalidity contentions specifically in requiring the defendant to “serve on all parties a
Preliminary Disclosure of Invalidity Contentions” containing, inter alia, “an explanation of how
each item of prior art, or combination thereof, anticipates each asserted claim and/or renders it
obvious; and . . . the identity and explanation of any other basis for invalidity, or unenforceability
of any of the asserted claims.” PRCFC 6(b)-(c). The defendant may amend its invalidity
contentions “only by court order upon a showing of good cause.” PRCFC 24. 1
“The good cause standard of RCFC 16(b)(4) mirrors many local district court patent rules
for amending [invalidity] contentions.” Cellcast Techs., LLC v. United States, 2019 WL
5959571, at *4 (Fed. Cl. Oct. 30, 2019) (citing Keranos, LLC v. Silicon Storage Tech., Inc., 797
F.3d 1025, 1035 (Fed. Cir. 2015); O2 Micro Int’l Ltd. v. Monolithic Power Sys., 467 F.3d 1355,
1363 (Fed. Cir. 2006)). Significantly, “[t]he law of the Federal Circuit controls for amending
invalidity contentions because this issue is ‘unique to patent cases’ and therefore has ‘a close
relationship to enforcement of substantive patent law.’” Id. (quoting O2 Micro, 467 F.3d at
1365). The good cause standard established by the Federal Circuit requires the party seeking to
amend its contentions to make “a showing of diligence.” O2 Micro, 467 F.3d at 1366. “The
burden is on the movant to establish diligence rather than on the opposing party to establish a
lack of diligence.” Id. (citing Genentech, Inc. v. Amgen, Inc., 289 F.3d 761, 774 (Fed. Cir.
2002)). “Considerations in determining a party’s diligence include additional or unexpected
results of discovery, along with the possibility of unanticipated construction of claim terms
1
The court’s Patent Rules were adopted on July 2, 2018 and were last amended on
August 3, 2020, while the parties were engaged in discovery. See Patent Rules, Appx. J, Rules
of the United States Court of Federal Claims; Order of January 9, 2020 (setting October 9, 2020
as the deadline for “Fact and Expert Discovery for All Defenses”).
3
according to the court's claim construction order.” Cellcast, 2019 WL 5959571, at *5 (citing
MorphoTrust USA, LLC v. United States, 132 Fed. Cl. 419, 421 (2017)).
Following the party’s showing of diligence, the court may consider the question of
prejudice to the non-moving party. See O2 Micro, 467 F.3d at 1368 (concluding that the court
did not need to consider the question of prejudice because the party seeking to amend failed to
establish diligence); MorphoTrust, 132 Fed. Cl. at 420 (“[C]ourts typically require a showing of
diligence by the party seeking amendment and only then consider whether there is prejudice to
the non-moving party. . . . We hold that both diligence and prejudice are relevant
considerations.”) (citation omitted). Factors to consider when determining whether prejudice
exists include whether the non-moving party has been “genuinely surprised or harmed,”
Hitkansut, 127 Fed. Cl. at 109, whether discovery would be reopened, see Kruse Tech. P’ship v.
Volkswagen AG, 544 Fed. Appx. 943, 953-54 (Fed. Cir. 2013), “the effect of amendments on the
construction of claim terms,” Cellcast, 2019 WL 5959571, at *5, and whether experts have
“staked out comprehensive positions with respect to claim construction,” MorphoTrust, 132 Fed.
Cl. at 421.
ANALYSIS
I. Defendant’s Showing of Diligence
Return Mail argues that the government has failed to meet its burden of establishing
diligence in seeking leave to amend its invalidity contentions, noting that the government “could
have sought leave to amend . . . the moment the stay was lifted in this action more than a year
ago.” Pl.’s Resp. at 11 (citing Radware, Ltd. v. F5 Networks, Inc., 147 F. Supp. 974, 982 (N.D.
Cal. 2015)). The government counters that it has “acted diligently in searching for, producing[,]
and charting these additional invalidity references, clearly establishing the first element of the
good cause analysis.” Def.’s Reply at 6. 2
Of note, the government filed its motion months after Return Mail filed its amended
complaint. Return Mail’s argument, however, overlooks the fact that the parties were engaged in
discovery through at least August 28, 2020. See Def.’s Reply at 6 (noting that it “provided an
invalidity chart for the ’231 Kuebert patent promptly with the rest of its invalidity charts on
2
The government avers that
once the stay in the case was lifted, [d]efendant diligently pursued a search for new
references to add the new evidence[,] including: (1) reasoning set forth in the PTAB’s
CBM decision for which the case was stayed, (2) [p]laintiff’s new allegations in the
amended complaint, and (3) this [c]ourt’s Markman decision (issued October 4, 2013).
Def.’s Reply at 3 (footnote omitted).
4
August 28, 2020”). 3 In addition, Return Mail had supplemented its interrogatory responses on
August 17, 2020, which then allowed the government “to assess [Return Mail’s] assertions
relating to conception and reduction to practice.” Def.’s Reply at 5. This extended period of
discovery was necessary following the court’s adoption of a discovery schedule focused on all
defenses. See Order of January 9, 2020. Given that the parties were engaged in discovery
through August 2020, and that the government’s motion is based in part on the “additional . . .
results of discovery,” Cellcast, 2019 WL 5959571, at *5 (citation omitted), the court concludes
that the government has made a sufficient showing of diligence in seeking leave to amend its
contentions.
II. Prejudice to Plaintiff
Return Mail further asserts that it would “be prejudiced by [the government’s] greatly
expanded invalidity arguments . . . and [its] assertion of new invalidity arguments.” Pl.’s Resp.
at 15-16. According to Return Mail, the government has not timely identified the evidentiary
bases for its arguments, and “instead has intentionally delayed to undermine [Return Mail’s]
ability to timely review, consider[,] and respond to” the invalidity contentions. Id. at 16. The
government counters that Return Mail “has known of [the government’s] amended invalidity
contentions since early July and received detailed claim charts in late August,” and that “[t]he
parties negotiated the current case schedule such that [Return Mail] and its expert would have
sufficient time to address the invalidity contentions.” Def.’s Mot. at 9.
Return Mail’s assertion that the government failed to timely identify the evidentiary bases
for its contentions is belied by the timing of the parties’ supplementation of interrogatory
responses. On July 8, 2020, the government “provid[ed] detailed invalidity positions regarding,
inter alia, 35 U.S.C. §§ 101-103, 112, 305[,] and 307.” Def.’s Mot. at 2. Return Mail was thus
put on notice of the government’s invalidity defenses in July, prior to the parties’ joint motion to
extend the discovery period. See Joint Mot. to Amend Schedule, ECF No. 133 (filed August 4,
2020). Return Mail has known of the government’s theories for months, and its expert has not
yet “staked out comprehensive positions” based on the government’s initial invalidity
contentions. MorphoTrust, 132 Fed. Cl. at 421. The lack of genuine surprise or harm to Return
Mail leads the court to conclude that plaintiff will not be prejudiced by the government’s
invalidity arguments. See Hitkansut, 127 Fed. Cl. at 109.
3
The Kuebert patent, No. 7,647,231, is a focus of defendant’s claim of anticipation under
35 U.S.C. § 102. Defendant explains that
[t]his patent was not previously considered because of its October 2001 filing date, which
is after the filing date of the ’548 patent’s provisional application. However, upon
considering the relevant priority date for the ’548 is the January 2002 filing date,
[d]efendant presented the ’281 Kuebert patent as prior art.
Def.’s Reply at 5.
5
CONCLUSION
For the reasons set forth above, the court finds that the government has established good
cause to amend its invalidity contentions. The government’s motion to amend its invalidity
contentions is GRANTED. The government shall file its amended invalidity contentions on or
before March 10, 2021.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Senior Judge
6