Judge Williams unsealed a detailed Pennypack decision Friday, where he struck an expert's infringement argument after the party failed to disclose it in their contentions.
The motion and brief provide some helpful context here. The defendant moved to strike material in the expert's opening report that apparently responded for the first time to arguments made in the defendant's non-infringement contentions. Cirba Inc. v. VMWare, Inc., C.A. No. 19-742-GBW, D.I. 1460 at 1 (D. Del. Nov. 28, 2022); Id., D.I. 1461 at 2-3.
The Court rejected an attempt to argue that the argument was "responsive" to a filing that came after the infringement contentions:
[Defendant] VMware seeks to exclude as untimely Dr. Madisetti’s infringement opinions concerning U.S. Patent No. 8,209,687(“the ’687 patent”)that(1) VMware’s DRS 2.0 vCLS virtual machines (“VMs”) are not “virtual guests,” and (2) VMware’s DRS feature evaluates the vCLS VMs against hosts (collectively,“Dr. Madisetti’s vCLS VMs Theories”). . . . [Plaintiff] Cirba responds that Dr. Madisetti’s vCLS VMs Theories are proper because, although they were not explicitly addressed in Cirba’s infringement contentions, they were offered in response to VMware’s noninfringement contentions, which were served after Cirba’s infringement contentions. . . . In other words, Dr. Madisetti’s vCLS VMs Theories are proper because Cirba’s “infringement contentions were not required to anticipate VMware’s every potential responsive non-infiingement position.” D.I. 1494 at 2.
Cirba, however, did not include Dr. Madisetti’s vCLS VMs Theories in its infringement contentions, which were due before VMware’s non-infringement contentions. . . . Cirba even concedes as much. See . . . id. at 3 (“Nothing would have been different had [Cirba] anticipated VMware’s non-infringement positions and specifically addressed them in its contentions.”). Cirba cannot point to VMware’s later filing to justify the absence of Dr. Madisetti’s vCLS VMs Theories in its own infringement contentions. Indeed, it is Cirba’s burden to prove infringement, including infringement of each claim element, not VMware’s burden. . . . Cirba had the obligation to disclose all of its infringement contentions on or before May 6, 2022. D.I. 1278 K 7(e). Allowing Cirba to blame VMware’s later-served noninfringement contentions for not timely disclosing Dr. Madisetti’s vCLS VMs Theories would eviscerate Cirba’s obligation to provide adequate notice of its theories of infringement. . . . Thus, the Court concludes that Dr. Madisetti’s vCLS VMs Theories were not timely disclosed in Cirba’s infringement contentions.
After finding that the disclosures were late, the Court addressed the Pennypack factors and found that they favored exclusion. The Court's analysis of the factors was detailed and mostly follows well-tread ground—although there are a few points worth noting. For example, the Court followed precedent finding that parties in sophisticated and complex litigation, with competent counsel, get less leeway in the Pennypack analysis:
At the outset, in “sophisticated, complex litigation involving parties represented by competent counsel,” courts have “been less indulgent” in applying the Pennypack factors and “more willing to exclude evidence without a strict showing that each of the Pennypack factors has been satisfied.” Bridgestone Sports Co. v. Acushnet Co., C.A. No. 05-132, 2007 WL 521894, at *4 (D. Del. Feb. 15, 2007). There can be little doubt that this sprawling litigation, which has lasted nearly four years and has already proceeded once to trial, is “sophisticated [and] complex” or that these parties are represented by “competent counsel.
That's a helpful cite for the party moving to strike in any patent case.
The Court also found that the moving party's efforts to cure the prejudice don't warrant a finding that the second factor, "the ability of [the moving party] to cure the prejudice" favored exclusion:
While true that VMware may have availed itself to the general procedures for remedying prejudice suffered due to untimely disclosures, “it would be unjust to penalize [VMware] for doing its best under difficult circumstances." [citation omitted]
On the question of willfulness or bad faith, the Court found that Plaintiff's failure to set forth its arguments in its contentions was "willful" based on the how long it had known the underlying facts—not based on how long it had known the non-infringement position:
Here, based on the present record, the Court cannot conclude that Cirba acted in “bad faith” when it failed to include Dr. Madisetti’s vCLS VMs Theories in its infringement contentions. Cirba did know that it had an obligation to disclose its infringement theories earlier. . . . Cirba was also on notice of VMware’s vCLS VMs for at least two years prior to serving its infringement contentions and had access to VMware’s source code since May 2021. . . . In that sense, the omission of Dr. Madisetti’s vCLS VMs Theories was a “willful” decision and was not a responsible approach to its discovery obligations. . . . However, on the other hand,there is no direct evidence of bad faith or a willful intent to sandbag VMware, although the Court notes the previous instances in which Cirba’s conduct was questioned.
The Court rejected Plaintiff's excuse that it essentially doesn't have to disclose counter-arguments:
Moreover, the Court is not satisfied with Cirba’s wanting explanation that it was “not required to anticipate VMware’s every potential responsive non-infringement position” to justify its failure to adequately disclose Dr. Madisetti’s vCLS VMs Theories.
The last Pennypack factor is typically the best one for the late-disclosing party: the importance of the material. Here, the Court found that the material was a key infringement argument, but excluded it nonetheless:
Finally, as to the fifth Pennypack factor, Cirba argues that excluding Dr. Madisetti’s vCLS VMs Theories would effectively preclude Cirba “from addressing [VMware’s] non-inffingement argument as to a new alleged feature [VMware]introduced after trial to avoid infringement.” D.I. 1494 at 3 (excluding Dr. Madisetti’s vCLS VMs Theories “would unfairly muzzle [Cirba] on a key position”). In other words, although Dr. Madisetti’s vCLS VMs Theories were untimely, the issue of whether VMware’s accused products practice this element of the asserted claims of the ’687 patent is key to Cirba’s infiingement case. While the Court recognizes the importance of Dr. Madisetti’s vCLS VMs Theories, the fact remains that Cirba violated the Scheduling Order when it admittedly failed to raise all of its infringement contentions at the appropriate time. This is not merely an instance where Cirba recently learned of VMware’s alleged product changes and moved to amend or supplement its infringement contentions. Rather, the record shows that Cirba was aware of the new features VMware introduced after the first trial to avoid infringement for more than two years. . . . Therefore, on balance, this factor slightly favors exclusion.
Here, it looks like the Court balanced the importance of the material against the length of time that they failed to disclose it, finding that even though it was important, the "importance" factor favored exclusion.
Thoughts on "the Importance of the Excluded Evidence" as a Factor
It bugs me that the Pennypack analysis considers the importance of the excluded evidence and, even worse, that "importance" factor is generally the most significant factor.
The way this is supposed to work is that, if the evidence is important, then Pennypack directs the Court to be more hesitant to exclude it. In my opinion, there are a couple of problems with this.
First, isn't that backwards? If the evidence is important, shouldn't it be more critical that it be timely disclosed, not less? If the purpose of disclosure is to allow the parties to develop their arguments and avoid trial-by-surprise, shouldn't we care most about a failure to disclose the important things?
Second, everything that a party moves to exclude is likely important to some extent. If it weren't, the parties probably would not be spending the money and time to fight over it.
The other Pennypack factors make sense: prejudice, ability to cure, disruption of trial, and bad faith/willfulness. But "importance" is different, because it cuts both ways. The more important the evidence is, the more prejudicial it is to withhold it. So, in my ideal hypothetical version of the Pennypack test, "importance" would be a non-factor.
Of course, that's not the reality, and I don't think the Pennypack test is changing any time soon. So it's probably a good idea to keep cases like this one in mind when you need to argue that the Court should exclude "important" evidence.
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