United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
PAYNE UNITED STATES MAGISTRATE JUDGE.
the Court are Plaintiff Biscotti Inc.'s Motion to
Strike Previously Undisclosed Invalidity Theories (Dkt. No.
167) (“Biscotti's Motion to Strike”),
and Defendant Microsoft's Motion to Strike Portions
of the Expert Report of Dr. Stephen B Wicker (Dkt. No. 172)
(“Microsoft's Motion to Strike”). Both
motions are GRANTED-IN-PART and DENIED-IN-PART as follows.
November 26, 2013, Biscotti Inc. (“Biscotti”)
filed this action against Microsoft Corporation
(“Microsoft”), alleging that Microsoft's Xbox
One and related services and applications, including Beam and
Twitch video game broadcasting applications, are covered by
U.S. Patent No. 8, 144, 182 (“the '182
patent”), which generally relates to video calling
solutions. See Compl. ¶¶ 3, 5, Dkt. No. 1;
Dkt. No. 172 at 3-5; '182 patent at 2:10. After inter
partes review (IPR) proceedings, including three IPR trials,
the 53 claims of the '182 patent emerged intact. The case
has since returned to the Court, and trial is scheduled to
begin on June 5, 2017.
and Microsoft's motions raise the same general
question-whether a party should be allowed to rely on late
disclosures that allegedly violate the Local Patent Rules,
rules that “exist to further the goal of full, timely
discovery and provide all parties with adequate notice and
information with which to litigate their cases.”
Comput. Acceleration Corp. v. Microsoft Corp., 503
F.Supp.2d 819, 822 (E.D. Tex. 2007).
Biscotti's Motion to Strike
Patent Rule 3-3 requires a party opposing a claim for patent
infringement to serve Invalidity Contentions on all parties
to the action within 45 days after receiving Infringement
Contentions. Microsoft's original and supplemental
Invalidity Contentions include a number of disclosures,
including disclosures of Microsoft's defenses under 35
U.S.C. §§ 102, 103, and 112. But Microsoft's
Contentions do not include certain invalidity theories based
on § 112 ¶ 1's written description and
enablement requirements or § 101's subject matter
on the last day of fact-discovery (January 17, 2017)
Microsoft served a supplemental interrogatory response
asserting two new theories of invalidity under §§
112 and 101. First, Microsoft alleged for the first time that
“[t]he '182 patent claims are invalid for failure
to comply with the written description and enablement
requirements of pre-AIA 35 USC sec. 112(1) because the
‘instructions for . . .' elements are not disclosed
in the specification and there is no evidence that the named
inventors were in possession of these elements.” Dkt.
No. 167-2 at 18. Second, Microsoft alleged that “[t]he
'182 patent is also patent-ineligible under 35 USC sec
101.” Id. at 20. Microsoft's expert, Dr.
Michael Orchard, develops these two invalidity theories more
fully in his expert report. See Dkt. No. 167-1
(citing Orchard Rep. ¶¶ 208-10 (describing §
112 ¶ 1 defense) and Orchard Rep. ¶¶ 213-16
(describing invalidity under § 101)).
argues that Microsoft's new invalidity theories should be
struck from Dr. Orchard's report. The Court agrees as to
Microsoft's § 112 ¶ 1 defense but not as to
Microsoft's § 101 theory. With respect to
Microsoft's § 112 ¶ 1 defense, a party's
Invalidity Contentions must include, among other things,
“[a]ny grounds of invalidity based on indefiniteness
under 35 U.S.C. § 112(2) or enablement or written
description under 35 U.S.C. § 112(1).” Local
Patent R. 3-3(d). There is no dispute that Microsoft failed
to include the new § 112 ¶ 1 defense in its
Invalidity Contentions. Microsoft's supplemental
interrogatory response or Dr. Orchard's expert report
could, however, be considered a late amendment to
Microsoft's Invalidity Contentions. See Finisar Corp.
v. DirecTV Grp., Inc., 424 F.Supp.2d 896, 900 (E.D. Tex.
2006) (expert report “reasonably could be considered to
constitute, in effect, new ‘Final Infringement
assessed as a late amendment to a pleading or some other
discovery violation, the factors relevant to permitting the
amendment or excluding the evidence are substantively
identical. See Allergan, Inc. v. Teva Pharm. USA,
Inc., No. 2:15-CV-1455-WCB, 2017 WL 1512334, at *2 (E.D.
Tex. Apr. 27, 2017) (Bryson, J., sitting by designation)
(evaluating four factors relevant to late amendments to
contentions); Cf. Tyco Healthcare Grp. LP v. Applied Med.
Res. Corp., No. CIV.A. 9:06-CV-151, 2009 WL 5842062, at
*1-2 (E.D. Tex. Mar. 30, 2009) (evaluating five factors
relevant to exclusion of evidence). Namely, the Fifth Circuit
directs courts to consider (1) the offending party's
explanation for the untimeliness; (2) the importance of the
amendment or evidence that might be excluded; (3) the
potential prejudice to the movant; and (4) the availability
of a continuance to cure any prejudice. See United States
ex rel. Bias v. Tangipahoa Parish Sch. Bd., 816 F.3d
315, 328 (5th Cir. 2016) (quoting S&W Enters., L.L.C.
v. SouthTrust Bank of Ala., N.A., 315 F.3d 533,
536 (5th Cir. 2003)); Filgueira v. U.S. Bank Nat'l
Ass'n, 734 F.3d 420, 422 (5th Cir. 2013).
factors weigh in favor of striking the portions of Dr.
Orchard's report related to Microsoft's new §
112 ¶ 1 theories. Microsoft does not adequately explain
the untimeliness, and as Microsoft admits, the written
description and enablement requirements turn solely on the
'182 patent, not on any new fact revealed for the first
time during discovery. See Microsoft Br., Dkt. No.
187 at 2. Although Microsoft may consider the new § 112
¶ 1 theory important inasmuch as it could result in a
finding that one or more claims are invalid, that possibility
seems unlikely based on the Court's review of
Microsoft's theory. See Allergan, 2017 WL
1512334, at *5 (“In determining the importance of the
amendment, the Court must make a pragmatic judgment as to the
likelihood that the newly asserted defense will
succeed.”). The prejudice to Biscotti is
substantial-Biscotti has litigated this case for almost four
years without knowledge of Microsoft's § 112 ¶
1 defense, and Biscotti developed its claim construction
strategy without knowing that Microsoft would contend that
certain claims fail to meet the written description
requirement. Finally, any continuance would delay trial,
which is only two weeks away. See S&W
Enterprises, 315 F.3d at 537 (affirming district
court's refusal to grant continuance when it would
“unnecessarily delay the trial”). The Court
therefore finds it appropriate to strike portions of Dr.
Orchard's report related to Microsoft's new §
112 ¶ 1 defense, namely paragraphs 208-210.
respect to Microsoft's § 101 theory, unlike some
other districts' Patent Rules, this district's Patent
Rules do not require a party to disclose an invalidity ground
related to subject matter ineligibility under § 101.
Cf. Mortg. Grader, Inc. v. First Choice Loan Servs.
Inc., 811 F.3d 1314, 1319 (Fed. Cir. 2016) (addressing
good cause to amend contentions to include § 101 defense
where Local Rules required such disclosure). And because Dr.
Orchard's report does not identify any new factual basis
for Microsoft's § 101 theory, no discovery violation
has occurred. The lack of any new factual basis for
Microsoft's § 101 theory distinguishes cases cited
by Biscotti such as Bayer Healthcare Pharmaceuticals,
Inc. v. River's Edge Pharmaceuticals, LLC, in which
a court excluded a new theory asserting lack of utility under
§ 101 that was based on a previously undisclosed
product. See No. 1:11-CV-1634-HLM, 2015 WL 11142427,
at *7 (N.D.Ga. May 21, 2015), report and recommendation
adopted, No. 1:11-CV-1634-LMM, 2015 WL 11142424 (N.D.Ga.
June 16, 2015). The Court therefore finds no basis in the
Local or Federal Rules for striking Microsoft's §
101 theory from Dr. Orchard's report.
said that, it is not clear why Biscotti has moved to
“strike” a portion of an expert report related to
§ 101 when both sides agree that invalidity under §
101 is not a jury issue. See Microsoft Br., Dkt. No.
187 at 3 (“the § 101 issue is not an issue for the
jury”). The primary purpose of an expert report is to
provide notice to the opposing side of the scope of an
expert's potential trial testimony. Smith &
Nephew, Inc. v. Arthrex, Inc., No. 2:07-CV-335-TJW-CE,
2010 WL 457142, at *8 (E.D. Tex. Feb. 5, 2010). Microsoft
agrees that Dr. Orchard will not testify ...