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Fox Factory, Inc. v. Sram, LLC

United States District Court, D. Colorado

April 2, 2019

FOX FACTORY, INC., Plaintiff,
v.
SRAM, LLC, a Delaware limited liability company, and SANDLEFORD, LIMITED TAIWAN BRANCH IRELAND, a Taiwanese limited liability company Defendants.

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          NINA Y. WANG, UNITED STATES MAGISTRATE JUDGE

         This matter comes before this court for recommendation on Plaintiff FOX Factory, Inc.'s Motion for Order Permitting Fox Factory to Amend Its Final Infringement Contentions and/or Assert Infringement at Trial by SRAM's Brain Product (“Motion to Amend Final Infringement Contentions”), see [#187, filed December 7, 2018], which was referred to this Magistrate Judge pursuant to 28 U.S.C. § 636(b), Fed.R.Civ.P. 72, and the Memorandum dated December 12, 2018 [#192]. The court has discussed the issue with the Parties [#183]; reviewed the Parties' briefing, including Defendants' Response [#200] and Plaintiff's Reply [#207]; and has determined that further oral argument would not materially assist in resolving this instant Motion. Having been advised of the premises, this court respectfully RECOMMENDS that Plaintiff's Motions to Amend Final Infringement Contentions be DENIED.

         BACKGROUND

         On July 1, 2016, Plaintiff FOX Factory, Inc. (“Plaintiff” or “FOX Factory”) initiated two separate actions in the United States District Court for the Northern District of California. The Parties thereafter stipulated to consolidation. See [#1, #107]. In the operative First Amended Complaint for this action, FOX Factory alleges Defendants infringe U.S. Patent No. 6, 135, 434 (“the '434 patent” or “the air shock patent”). [#79]. Pursuant to the NDCA Patent Local Rules, FOX Factory served its Infringement Contentions and subsequently amended them in both cases with the court's approval. See NDCA Patent L.R. 3-1, 3-4. Specifically, Plaintiff contends that Defendants willfully infringe Claims 2 and 9 of the '434 patent with the Monarch R, Monarch RL, Monarch RT, Monarch RT3, Monarch XX, Monarch Plus R, Monarch Plus RC3, Vivid Air RC2, Deluxe RT3, Deluxe RT, Deluxe RL, Deluxe RL Remote, Deluxe R, Super Deluxe RC3, Super Deluxe R, Super Deluxe RT, Super Deluxe RCT, Super Deluxe RC World Cup, and Debon Air Upgrade Kit. [#88-3 at 2].

         The court in the Northern District of California issued its claim construction order on October 30, 2017. See [#105]. On January 3, 2018, FOX Factory sought to further amend its Infringement Contentions. [#121-4]. FOX Factory sought to supplement its Second Amended Infringement Contentions with arguments arising from the court's claim construction of the terms “bypass channel” and “whereby the second gas chamber portion acts as an air negative spring to automatically balance the force on the damping unit . . . so the shock absorber is in an equilibrium condition, ” in response to non-infringement arguments identified by Defendants (“First Motion to Amend”).[1] [#121-4 at 8]. As justification for the proposed amendments to the '434 patent, FOX Factory argued that it was diligent in soliciting any new non-infringement arguments by Defendants, that Defendants did not articulate those non-infringement arguments until six weeks after the court's claim construction order, and that it was diligent in seeking amendment after receiving those new non-infringement arguments. [#121 at 5-6]. Five days later, the Northern District of California transferred both actions to this District. [#122].

         This court granted the First Motion to Amend on March 15, 2018, and construed Plaintiff's Third Amended Infringement Contentions as its Final Infringement Contentions under this District's Local Patent Rules. [#147]. This court further instructed the Parties to comply with this District's Local Patent Rules moving forward. [Id.]. Defendants then filed Final Invalidity Contentions on April 5, 2018. [#156]. The Parties continued discovery, raising a number of discovery disputes with the court. See, e.g., [#159; #163; #164; #165]. On July 6, 2018, the Parties requested a Status Conference with the court [#167], which was held on July 11, 2018. [#171]. During the Status Conference, the Parties indicated that they were contemplating a global resolution and sought an extension of time to complete discovery. [#170; #171]. The court granted an extension of time, reset pretrial deadlines, and reset the Final Pretrial Conference for May 3, 2019. [#173]. The Parties were unable to resolve their disputes, and appeared before the court again on September 7, 2019, and the deadlines for expert discovery were subsequently extended upon joint motion. [#174; #177].

         The Parties continued to have discovery issues that required court intervention. E.g., [#184]. One such issue raised during the November 14, 2018 discovery dispute conference was whether FOX Factory would be permitted to present evidence of infringement by Defendants' custom products. [Id.]. Plaintiff argued that it should be permitted to present evidence that the custom “BRAIN” product infringed the '434 Patent because SRAM had delayed in providing it information regarding the BRAIN product. Defendants disagreed, arguing that Plaintiff was well aware of the BRAIN product before the deadline for amendment, and they had no obligation to craft Plaintiff's infringement argument for it. Because the record contained insufficient evidence as to what was disclosed in discovery and more importantly, when it was disclosed, the court ordered formal briefing, and this instant Motion to Amend followed.

         LEGAL STANDARDS

         I. Standard for Amendment to Final Infringement Contentions

         While the court has previously discussed the “good cause” standard applicable to the amendment of infringement and invalidity contentions between their Initial and Final versions under this District's Local Patent Rule 16(a)(3), (b)(3), see, e.g., [#147; Civil Action No. 18-cv-0127-WJM-NYW [ECF No. 169]], the Local Patent Rules do not expressly address amendments to Final Infringement Contentions. At least one court in this District has applied Local Patent Rule 16(b)(3)'s standard of good cause. Brandt v. Von Honnecke, No. 1:15-CV-02785-RM-NYW, 2018 WL 4385284, at *1 (D. Colo. Sept. 14, 2018). Another has applied Rule 26(e) of the Federal Rules of Civil Procedure, which requires a party to supplement or correct its disclosure or response “in a timely manner” if the party learns that in some material respect the disclosure or response is incomplete or incorrect. See, e.g., Teashot LLC v. Green Mountain Coffee Roasters, Inc., No. 12-CV-0189-WJM-KMT, 2014 WL 485876, at *6 (D. Colo. Feb. 6, 2014), aff'd, 595 Fed.Appx. 983 (Fed. Cir. 2015) (affirming, inter alia, the district court's exclusion of Teashot's doctrine of equivalents theory as a discovery sanction).

         Regardless of the articulation as “good cause” or “in a timely manner, ” it is clear to this court that it should first consider FOX Factory's diligence in seeking amendment to its Final Infringement Contentions. Indeed, this concept is consistent with “good cause” as construed by the United States Court of Appeals for the Tenth Circuit (“Tenth Circuit”). When interpreting “good cause” in the context of amendment to pleadings, the Tenth Circuit has explained that the movant is required to show that “scheduling deadlines cannot be met despite the movant's diligent efforts.” Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014). In that way, “good cause” does not focus on the bad faith of the movant or prejudice to the opposing party in the first instance. See Colorado Visionary Academy v. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000). It is also consistent with our sister courts within the Tenth Circuit that expressly incorporate “good cause, ” and in some cases, “timely showing of good cause, ” into their respective Patent Local Rules as the standard for amendment to Final Infringement Contentions, see, e.g., Corel Software, LLC v. Microsoft Corp., No. 2015-CV-00528-JNP-PMW, 2018 WL 5792323, at *2 (D. Utah Nov. 5, 2018); Digital Ally, Inc. v. Taser Int'l, Inc., No. 16-CV-2032-CM-TJJ, 2018 WL 1138283, at *2 (D. Kan. Mar. 2, 2018), as well as courts outside of this Circuit that require good cause for any amendment to infringement contentions, including the United States District Court for the Northern District of California, where this action originated. See, e.g., [#147 at 5 (citing NDCA Patent L.R. 3-6)].

         II. Discovery Sanctions for Failure to Disclose

         At the heart of Plaintiff's argument is its assertion that Defendants failed to satisfy its discovery obligations as set forth in the Federal Rules of Civil Procedure. It appears undisputed that Defendants failed to identify the BRAIN product expressly in their response to Interrogatory No. 9. Compare [#187 at 6-7] with [#200]. Instead, Defendants contend that information regarding the BRAIN shock was publicly known as of July 2017; within FOX Factory's own competitive analysis from September 2017; or through Defendants' document production as of May 2018. [Id. at 2-3]. Therefore, Defendants argue that they were not required to supplement their response to Interrogatory No. 9.

         Rule 26(e) of the Federal Rules of Civil Procedure imposes a self-executing duty on a party who has responded to an interrogatory to supplement or correct its response in a timely manner if the party learns that in some material respect the response is incomplete, and if the additional information has not otherwise been made known to the other parties during the discovery process or in writing. Fed.R.Civ.P. 26(e)(1)(A); Poitra v. Sch. Dist. No. 1 in the Cty. of Denver, 311 F.R.D. 659, 664 (D. Colo. 2015). Courts in this District and elsewhere have interpreted “otherwise been made known” to require meaningful disclosure. See Poitra, 311 F.R.D. at 666-67. “To satisfy the ‘made known' requirement, a party's collateral disclosure of the information that would normally be contained in a supplemental discovery response must in such a form and of such specificity as to be the functional equivalent of a supplemental discovery response; merely pointing to places in the discovery ...


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