Order Granting Leave to Amend Answer, Fujifilm Corporation v. Motorola Mobility LLC, Case No. C 12-03587 (Judge William Orrick)

Fighting over the factual bases for patent-related affirmative defenses?  Here are some take-home points from Judge Orrick, who allowed defendant Motorola Mobility to add allegations that plaintiff Fujifilm's patent infringement claims are barred by inequitable conduct, and by a license arising from Fujifilm's membership in the Bluetooth Special Interest Group (SIG):

Plausibility is the ultimate gatekeeper;

  • When a defense sounds in fraud, be sure to plead with particularity;
  • Otherwise, notice pleading is enough;
  • Either way, there are limits to what is required at the pleading stage, versus what is left for discovery; and
  • Delay, even unexplained, may not bar amendment if there is no prejudice.

Judge Orrick identified five factors relevant to whether to grant leave to amend: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment, and (5) previous amendments.  Prejudice carried the greatest weight.  Without prejudice or a "strong" showing on a remaining factor, he found, there was a "presumption" in favor of granting leave to amend.

On inequitable conduct, Motorola alleged that Fujifilm had embarked on a joint collaboration with Nokia to develop the patented technology, yet the named inventor deceptively declared himself the sole inventor.  Fujifilm opposed solely based on the futility factor, arguing that Motorola had not pleaded materiality, intent, and the specific identity of the alleged co-inventor.  In evaluating the argument, Judge Orrick began by noting that the standard for futility is the standard for a motion to dismiss, i.e., plausibility under Iqbal.  Inequitable conduct, which requires an affirmative misrepresentation of material fact with intent to deceive, sounded in fraud, so it had to be pled with particularity under Rule 9(b).  Turning to Fujifilm's first point, Judge Orrick found that inventorship would be material to the PTO.  Fujifilm tried to frame Motorola's allegation as being that Nokia merely contributed an idea, which was irrelevant to inventorship, but Judge Orrick found the allegations plausible, and held that the extent of Nokia's contribution was not an issue for the pleading stage.  On intent, Judge Orrick held that Motorola's generic allegations lumping together multiple individuals were insufficient.  However, Motorola's allegations concerning the named inventor were sufficient, as they identified a specific individual who allegedly knew and withheld material information with deceptive intent.  Finally, Judge Orrick rejected Fujifilm's argument that Motorola had to identify the particular co-inventor that should have been disclosed to the PTO, given that such information was uniquely known to Fujifilm or Nokia, and Motorola was conducting discovery to uncover the co-inventor's name.

On licensing, Motorola alleged that it had an actual or implied license arising from Fujifilm's membership in the Bluetooth SIG.  Fujifilm again argued that such amendment was futile because Motorola failed to plead details such as who received the license and what type of license it was.  Judge Orrick, however, found that a licensing defense was subject only to Rule 8's notice pleading standard, and Motorola's allegations were sufficient to give Fujifilm fair notice.  Fujifilm also argued that Motorola had been dilatory in seeking leave to amend, having long known of the underlying facts.  But Judge Orrick noted that Fujifilm had not identified any prejudice resulting from the delay.  Thus, even though Motorola did not state when or how it discovered the facts or explain why it waited to file the motion, delay by itself was insufficient reason to deny leave to amend.

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