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Cellular Communications Equipment LLC v. AT & T Inc.

United States District Court, E.D. Texas, Marshall Division

May 24, 2017

CELLULAR COMMUNICATIONS EQUIPMENT LLC, Plaintiff
v.
AT & T INC., Defendants.

         LEAD CONSOLIDATED CASE

          MEMORANDUM AND ORDER

          ROY S. PAYNE UNITED STATES MAGISTRATE JUDGE

         In this patent case, Apple moves the Court for leave to amend its answer to CCE's Third Amended Complaint [Doc. # 215]. Relative to its live pleadings, [Doc. # 231-234], Apple's proposed First Amended Answer [Doc. # 298] adds a counterclaim for breach of contract based on CCE's alleged failure to disclose certain patent applications to the European Telecommunications Standards Institute (ETSI), a working group that developed the LTE standard relevant to the asserted patents. Apple asserts this failure entitles it to monetary damages as a third-party beneficiary to the obligation.

         After reviewing the briefing submitted by both parties, the Court GRANTS Apple's motion.

         I. BACKGROUND

         On August 15, 2016, CCE filed its Third Amended Complaint [Doc. # 215]. Apple answered on August 29, 2016, [Doc. # 231-234], which was the deadline to amend responsive pleadings. In November 2016, Apple filed its Motion for Leave to Amend [Doc. # 297] and proffered its First Amended Answer [Doc. # 298].

         Apple's new counterclaim concerns a purported contractual obligation by Nokia Siemens, which was CCE's predecessor-in-interest to the asserted patents. According to Apple, Nokia Siemens failed to disclose certain patent applications to ETSI. [Doc. # 298] ¶¶ 7, 11-47. The patent applications were provisional and PCT applications related to the asserted patents in this litigation.

         Apple claims CCE was bound by that contractual obligation as a successor-in-interest to Nokia Siemens. By failing to disclose the patent rights CCE says are essential to LTE standards, and by now asserting those patent rights against Apple, CCE violated its contractual obligation. This caused significant harm to Apple as a third-party beneficiary to the obligation. Id. ¶¶ 96-99. Notably, Apple's new factual allegations are similar to allegations in its earlier Answers. See, e.g., [Doc. # 231] ¶¶ 130-133.

         The parties have already conducted some discovery on this issue. In December 2016, the Court ordered letters rogatory directed in part to communications with standard setting organizations. Among many other issues, the letters were directed to discovery about obligations to disclose the asserted patents and related applications to ETSI. [Doc. # 340-343]; [Doc. 318-1] at 14 (¶ 13); id. at 15 (¶ 23).

         The pretrial conference is set for July 11, 2017, with jury selection beginning on July 31, 2017. [Doc. # 435].

         II. DISCUSSION

         A. Rule 16(b) Analysis

         Once a deadline has been set for filing amended pleadings, Fed.R.Civ.P. 16(b) governs the decision about whether to permit a post-deadline amendment. Under Rule 16(b)(4), a motion to modify the scheduling order by permitting the filing of an amended pleading after a deadline may be granted “only for good cause and with the judge's consent.”

         Rule 16 gives trial courts “broad discretion to preserve the integrity and purpose of the pretrial order.” Geiserman v. MacDonald, 893 F.2d 787, 790 (5th Cir. 1990). District courts, however, should consider (1) the explanation for the party's failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice. United States ex rel. Bias v. Tangipahoa Parish Sch. ...


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