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Judge Andrews Denies Motion to Add Inequitable Conduct Defense

Judge Andrews recently denied a motion to amend filed by a Defendant seeking to add a defense of inequitable conduct to its answer. “As an initial matter, [Judge Andrews] reject[ed] Defendants’ assertions that the current motion is not subject to the more stringent ‘good cause’ standard of Rule 16(b),” which is applicable after the scheduling order’s deadline for amendment of pleadings has passed. “Defendants argue that because they ‘openly disclosed their legally sufficient theories of inequitable conduct’ prior to the deadline, the current proposed amendment should not be subject to the ‘good cause’ standard. This is incorrect. Disclosing a legal theory is not the equivalent of substantively amending a pleading.” Sonos, Inc. v. D&M Holdings Inc., et al., C.A. No. 14-1330-RGA, Memo. Op. at 3 (D. Del. Feb. 3, 2017). The Defendant had filed two separate motions to amend with different accompanying proposed amended answers and elected to rely on the later of the two, which was filed after this deadline. Accordingly, the good cause standard applied.

Judge Andrews also found that the Defendant had not met the good cause standard because it had not shown that the prior deadline could not be met, despite its diligence. “The only argument Defendants make in support of diligence, the only factor important in the Rule 16 analysis, is that they ‘have diligently pursued their request for leave since August 1, 2016.’ This is the wrong time frame for the diligence analysis, however. To show good cause, Defendants must show diligence in pursuing their inequitable conduct defense prior to the deadline for amendments; whether Defendants acted diligently, after the deadline, in addressing the deficiencies Plaintiff identified in their First Amended Answer is simply irrelevant. Furthermore, Defendants have not argued that their defense is based on newly disclosed evidence that could not have been obtained prior to the deadline. Nor could they. The inequitable conduct allegations in the proposed Second Amended Answer rest entirely on information that was publicly available months or even years before the deadline for amendments.” Id. at 3-4.

Finally, Judge Andrews explained that “[e]ven if were to find some hint of good cause for this amendment, I am dubious about whether Defendants’ pleading is sufficient . . . [because] Defendants’ identification of the required “who” is murky at best, with most allegations centering on Sonos’s current in-house counsel, an attorney who was not even employed by Sonos until March 2014, years after the occurrence of much of the alleged misconduct. In addition, Defendants’ allegations of intent revolve around Sonos’ s attorneys’ knowledge of the existence of prior art references cited during prosecution of some patents, but not others. This alone is insufficient.” Id. at 4 n.2.

Sonos, Inc. v. D&M Holdings Inc., et al., C.A. No. 14-1330-RGA (D. Del. Feb. 3, 2017).

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