Yesterday, in Intercept Pharmaceuticals v. Apotex Inc., C.A. No. 20-1105-MN (D. Del. Sept. 1, 2022), Judge Hall granted a motion to amend to add inequitable conduct allegations almost a year after the deadline for amendment in the scheduling order.
Most D. Del. scheduling orders include a deadline for motions to amend or to join additional parties. Normally, the standard for motions to amend in the Third Circuit is relatively easy to meet. But when there is a scheduling order deadline for amendment, the Courts has held that parties must show "good cause" under Rule 16 if they move to amend after the deadline (although there is some nuance to that in some opinions).
This comes up pretty often in litigation, because new claims or defenses that must be pled often become apparent as the case develops.
There is some art to deciding where the place the deadline to join parties or amend pleadings in the initial scheduling order, as both parties may have conflicting motivations. Both parties may want a later deadline (for defendants to add inequitable conduct, for example, or for plaintiffs to add new patents or parties) or an earlier deadline (to prevent the other side from amending).
In practice, if a party truly discovers a reason to amend after the deadline that they could not have seen before, the Court often finds good cause for amendment—as long as the motion is early enough to prevent undue prejudice.
That's what happened here, in Intercept. The defendant discovered new inequitable conduct facts after the deadline for amendment, and Judge Hall permitted amendment. She pointed out that the high bar for pleading inequitable conduct helps justify waiting to amend:
Inequitable conduct must be pleaded with particularity in accordance with Rule 9(b), and “the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.”
. . .
It is not possible or feasible for the Court to determine at this juncture, based on the new allegations in Defendants’ proposed pleadings, to make a definitive determination as to whether the evidence Defendants had back in March 2022 would have been enough for Defendants to raise an inequitable conduct claim that could have survived a motion to dismiss. But the Court is persuaded that Defendants cannot be faulted for waiting until they had obtained additional evidence in this case before pleading a defense with such strict requirements for pleading and proof. . . . Connecting how each batch was made with the data of its purity and particle size is an important part of Defendants’ theory. Defendants have persuaded the Court that they did not have a sufficiently complete picture of the evidence until after June 13, 2022, when Plaintiffs’ interrogatory answer linked manufacturing documents written in Italian to the purity and particle size data. The Court further finds that Defendants acted diligently after June 13, 2022, and proposed an amendment in less than two months.
Given that adding inequitable conduct claims is a common reason to amend, and one of the reasons frequently considered at the scheduling order stage, I expect that this will be a handy cite going forward.
If you enjoyed this post, consider subscribing to receive free e-mail updates about new posts.
