Rule 16 says that a schedule "may be modified only for good cause and with the judge’s consent." This rule comes up any time a party wants to do something after a deadline set in the scheduling order, which is one of the more common litigation issues.
Parties will often, for example, let the deadline to amend the pleadings pass by, only to later realize that they want to assert an inequitable conduct defense (defendants) or wrap in a related entity (plaintiffs).
Good cause requires diligence, and in practice parties often frame the diligence discussion as diligence from some triggering event. E.g., "we learned of inequitable conduct during the inventor's deposition, and since then, we have diligently pursued a motion to amend..."
In an opinion unsealed last week, however, Chief Magistrate Judge Thynge found a flaw in that approach. In considering a motion to amend an answer, counterclaims, and final contentions to add inequitable conduct, the Court held that diligence must be assessed from the start of the case:
In the scheduling order, Judge Andrews ordered patent-specific pretrial disclosures under Rules 26 and 33, namely that Defendant was to provide Plaintiff with its initial invalidity contentions by October 11, 2021 and its final invalidity contentions by July 18, 2022. . . . Now, 6 months after serving final invalidity contentions and in the middle of expert discovery, Defendant seeks to amend these contentions. Defendant essentially argues that this is a simple amendment to the case schedule and the pleadings. . . . However, in view of a more stringent standard for amending invalidity contentions under governing Federal Circuit case law, this judge will apply that standard. . . .
Therefore, the question before the court is whether “good cause” exists. As applied to the facts at hand, the question of “good cause” is whether Defendant exhibited diligence in pursuing the question of improper inventorship “from the outset of the litigation.”
ESCO Group LLC v. Deere & Company, C.A. No. 20-1679-MPT (D. Del. Feb. 2, 2023).
In the last paragraph, the Court quotes Judge Bryson's opinion in British Telecomms. PLC v. IAC/InterActiveCorp, C.A. No. 18-366-WCB, 2020 U.S. Dist. LEXIS 99888, at *9 (D. Del. June 8, 2020). Interestingly, Judge Bryson's original opinion rejected the argument that retaining new attorneys reset the clock for diligence—and wasn't dealing with the more general question of how to measure diligence:
Accordingly, the proper focus of the diligence inquiry is not principally on IAC’s diligence in locating and disclosing the Zhou and Welsh references after the new attorneys were added to IAC’s defense team, but on whether IAC exhibited diligence in discovering those references from the outset of the litigation.
British Telecomms. PLC v. IAC/InterActiveCorp, C.A. No. 18-366-WCB, 2020 U.S. Dist. LEXIS 99888, at *9 (D. Del. June 8, 2020).
The Court found that defendant was not diligent "from the outset of the litigation" because it had failed to pursue earlier disclosures from plaintiff on this issue:
Defendant maintains that its failure is excusable, because “it was not until Mr. Carpenter's December 5 deposition that Deere reasonably could have deduced that Mr. Emrich should have been named as an inventor and that ESCO's failure to do so amounted to inequitable conduct.” . . .
In discovery, Plaintiff disclosed that Mr. Emrich contributed “elliptical stabilized flats at the end of [the] Pit Viper nose [component.]” . . . ESCO deemed this feature “not novel” and did not claim it in the ’662 Patent. . . .
Defendant identifies no aspect of Mr. Carpenter’s deposition that elucidates Mr. Emrich’s alleged contribution to the claimed “wear member” beyond the information found in Plaintiff’s prior disclosures of the Pit Viper “nose” component. Absent such information, the court concludes that at any point during discovery, Defendant was fully capable of assessing the claims to the ’662 Patent and pursuing written discovery referencing ESCO-798 and ESCO-858 to investigate Mr. Emrich’s contribution. Defendant did not do so. Therefore, Defendant has not exhibited diligence in pursuing the question of improper inventorship “from the outset of the litigation” . . . and as a result has not demonstrated good cause to amend its invalidity contentions.
Ultimately, it seems to me that while the Court phrased this as measuring good cause "from the outset of the litigation," it could just as easily have framed it as a determination that the relevant trigger event for the good cause analysis was plaintiff's initial disclosure of Mr. Emrich's contribution, rather than the later deposition.
In other words, despite the "outset" framing, the opinion as a whole still looks broadly similar to a typical good cause analysis.
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