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Realtime Data, LLC v. Rackspace US, Inc.

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

June 19, 2017

REALTIME DATA, LLC, Plaintiff,
v.
RACKSPACE US, INC., NETAPP, INC., and SOLIDFIRE, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN D LOVE UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Plaintiff Realtime Data LLC's Sealed Motion for Leave to Supplement Infringement Contentions as to Defendant Rackspace US, Inc. (Doc. No. 158.) Rackspace has filed a Response (Doc. No. 161), Realtime has filed a Reply (Doc. No. 171), and Rackspace has filed a Sur-Reply (Doc. No. 181).[1] After consideration of the parties' arguments and for the reasons stated herein, the Court GRANTS Realtime's Motion for Leave to Supplement its Infringement Contentions, with further requirements as explained below. (Doc. No. 158.)

         I. BACKGROUND

         On June 26, 2016, Realtime filed the above-captioned case against Rackspace and one other Defendant. (Doc. No. 1.) Realtime filed an Amended Complaint on October 11, 2016. (Doc. No. 33.) In its October 2016 Complaint, Realtime alleges that Rackspace infringes seven Realtime patents with the Rackspace Cloud Backup, ONTAP, and AltaVault products. (Id.)

         On April 25, 2017, Realtime took the deposition of Rackspace's Chief Technology Officer, John Engates. (Doc. No. 158-1 (“Chung Decl.”), ¶4.) Mr. Engates testified that the Rackspace Managed Backup product also performs deduplication and compression via CommVault software. (Id.) Rackspace had first produced documents relating to CommVault on April 18, 2017. (Id. at ¶5.) On May 1, 2017, Realtime served supplemental infringement contentions on Rackspace that included claim charts for Rackspace Managed Backup. (Id. at ¶6.) After meeting and conferring with Rackspace on the issue, Realtime filed the current Motion to Supplement Infringement Contentions on May 15, 2017. (Doc. No. 158.)

         The fact discovery deadline is currently set for July 10, 2017, the expert discovery deadline is set for August 18, 2017, and the dispositive motion deadline is set for August 25, 2017. (Doc. No. 167.) Trial is set for January 22, 2018. (Id.)

         II. LEGAL STANDARD

         Patent Local Rule 3-6 sets forth when a party may amend its infringement or invalidity contentions. If a party “believes in good faith that the Court's Claim Construction Ruling so requires, not later than 30 days after service by the Court of its Claim Construction Ruling, that party may serve Amended Infringement Contentions without leave of court.” E.D. Tex. L.R. P. R. 3-6(a). Otherwise, a party seeking to supplement its infringement contentions must obtain leave of Court upon a showing of good cause. E.D. Tex. L.R. P. R. 3-6(b).

         Courts in this district rely on four factors to determine whether a party has shown good cause to supplement infringement contentions: “(1) the reason for the delay and whether the party has been diligent; (2) the importance of what the court is excluding and the availability of lesser sanctions; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.” Motion Game, LLC v. Nintendo Co., Case No. 6:12-cv-878-RWS-JDL, 2015 WL 1774448, at *2 (E.D. Tex. Apr. 16, 2015).

         III. DISCUSSION

         A. Potential Prejudice in Allowing Amendment

         Realtime argues that Rackspace is not prejudiced because Realtime is not seeking to add any new patents or claims, but simply seeking to “add one new accused product that was recently identified in deposition.” (Doc. No. 158, at 5.) Realtime argues that fact discovery is still open. (Id. at 5-6.) Realtime also argues that Rackspace made a “conscious decision” not to include Rackspace Managed Backup in its answer to interrogatory responses served January 17, 2017, and thus any prejudice is “self-inflicted”. (Id. at 6.)

         Rackspace argues that it will be prejudiced because Realtime is attempting to add an entirely new product that operates differently from the currently accused products. (Doc. No. 161, at 4-5.) Rackspace argues that the Rackspace Managed Backup product compresses data without an “analysis step” or “selection step, ” as required by the claims. (Id.) Thus, Rackspace argues, Rackspace will need to perform new and “extensive” prior art searching to supplement its invalidity case. (Id. at 5-6.) Rackspace also argues at length that because Rackspace Management Backup does not perform an “analysis step” or “selection step, ” amendment is futile and must be denied. (Id. at 6-10.)

         On reply, Realtime argues that Rackspace's futility argument “amounts to a summary judgment motion for non-infringement, ” not a basis to deny supplemental infringement contentions. (Doc. No. 171, at 1-2.) On the merits, however, Realtime argues that certain patent claims do not even mention analyzing, selecting, or identifying. (Id. at 2 (citing U.S. Patent No. 9, 116, 908, Claim 1; U.S. Patent No. 7, 415, 530, Claim 1).) Realtime argues that its theories against Rackspace ...


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