Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 1 of 24
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`YAR R. CHAIKOVSKY (SB# 175421)
`yarchaikovsky@paulhastings.com
`PHILIP OU (SB# 259896)
`philipou@paulhastings.com
`JOSEPH J. RUMPLER, II (SB# 296941)
`josephrumpler@paulhastings.com
`DAVID OKANO (SB# 278485)
`davidokano@paulhastings.com
`ANDY LEGOLVAN (SB# 292520)
`andylegolvan@paulhastings.com
`BORIS LUBARSKY (SB# 324896)
`borislubarsky@paulhastings.com
`PAUL HASTINGS LLP
`1117 S. California Avenue
`Palo Alto, California 94304-1106
`Telephone: 1(650) 320-1800
`Facsimile: 1(650) 320-1900
`
`MATTHIAS KAMBER (SB#232147)
`matthiaskamber@paulhastings.com
`PAUL HASTINGS LLP
`101 California Street, 48th Floor
`San Francisco, California 94111
`Telephone: 1(415) 856-7000
`Facsimile: 1(415) 856-7100
`
`Attorneys for Plaintiff
`APPLIED MATERIALS, INC.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`APPLIED MATERIALS, INC.,
`Plaintiff,
`
`vs.
`DEMARAY LLC,
`Defendant.
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`CASE NO. 5:20-cv-09341-EJD
`PLAINTIFF APPLIED MATERIALS,
`INC.’S OPPOSITION TO DEMARAY
`LLC’S MOTION TO AMEND ITS
`ANSWER
`
`Hearing Date: September 29, 2022
`Hearing Time: 9:00 a.m.
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`UNREDACTED VERSION OF
`DOCUMENT SOUGHT TO BE
`SEALED
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`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 2 of 24
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`TABLE OF CONTENTS
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`Page
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`B.
`C.
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`B.
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`C.
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`INTRODUCTION.........................................................................................................1
`A.
`Demaray’s Rejected Subject Matter Jurisdiction Challenge Delayed Case
`From Proceeding For Nearly a Year....................................................................3
`Demaray’s Continued Efforts to Delay this Case From Proceeding ......................4
`Demaray’s Knowledge Regarding the Details of Applied’s Cirrus Chamber
`and Inconsistent Positions Before this Court and Texas .......................................8
`LEGAL ARGUMENT ..................................................................................................9
`A.
`Demaray Unduly Delayed Bringing its Motion – Demaray’s Fourteen-
`Month Delay was Made with a Dilatory Motive ..................................................9
`Demaray’s Belated Attempt to Add Infringement Claims and New Issues
`to this Case Severely Prejudices Applied .......................................................... 11
`Demaray’s Inexplicable Delay and Misrepresentations of the Evidence
`Support Bad Faith ............................................................................................ 15
`1.
`Demaray’s Mischaracterizations of Applied’s Documents and
`Statements Are Rebutted By the Actual Evidence .................................. 16
`Recent Discovery from Comet and Inspection of the Source Match
`Do Not Justify Demaray’s Delay Tactics or Belated Amendment ........... 18
`CONCLUSION........................................................................................................... 21
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`I.
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`II.
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`III.
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`APPLIED’S OPPOSITION TO DEMARAY’S
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 3 of 24
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`
`
`Cases
`
`TABLE OF AUTHORITIES
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`Page(s)
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`Alzheimer’s Inst. of Am. v. Elan Corp. PLC,
`274 F.R.D. 272 (N.D. Cal. 2011) .................................................................................. 10, 11
`
`AmerisourceBergen Corp. v. Dialysist W., Inc.,
`465 F.3d 946 (9th Cir. 2006) .............................................................................................. 10
`
`In re Apple iPhone Antitrust Litig.,
`No. 11-CV-6714-YGR, 2021 WL 5181862 (N.D. Cal. Nov. 8, 2021) .................................. 11
`
`Flores v. City of Concord,
`No. 15-cv-05244-TEH, 2017 WL 2472977 (N.D. Cal. June 8, 2017) ..................................... 9
`
`FullView, Inc. v. Polycom, Inc.,
`No. 18-cv-00510-EMC, 2021 U.S. Dist. LEXIS 81652 (N.D. Cal. Apr. 28,
`2021) ................................................................................................................................ 15
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`Harris v. Vector Mktg. Corp.,
`No. C-08-5198 EMC, 2009 WL 3710696 (N.D. Cal. Nov. 4, 2009) ..................................... 11
`
`Hernandez v. DMSI Staffing, LLC,
`79 F. Supp. 3d 1054 (N.D. Cal. 2015)................................................................................. 21
`
`Johnson v. Serenity Transp., Inc.,
`No. 15-cv-02004-JSC, 2015 U.S. Dist. LEXIS 108227 (N.D. Cal. Aug. 17,
`2015)................................................................................................................................... 9
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`Juarez v. Jani-King of California, Inc.,
`No. 09-CV-03495-YGR, 2019 WL 2548691 (N.D. Cal. June 20, 2019) ............................... 12
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`Leadsinger, Inc. v. BMG Music Pub.,
`512 F.3d 522 (9th Cir. 2008) ................................................................................................ 9
`
`Texaco, Inc. v. Ponsoldt,
`939 F.2d 794 (9th Cir. 1991) .............................................................................................. 10
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`Zivkovic v. S. Cal. Edison Co.,
`302 F.3d 1080 (9th Cir. 2002) ............................................................................................ 11
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`*Unless otherwise noted, internal citations and subsequent history are omitted, and emphasis is
`added.
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`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 4 of 24
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`I.
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`INTRODUCTION
`Demaray LLC’s (“Demaray”) motion to bring infringement claims against Applied
`Materials, Inc.’s (“Applied”) Cirrus chambers twenty months after Demaray first accused
`Applied’s customers of infringing the same patents in Texas based on their use of the same Cirrus
`chambers is the latest maneuver in a series of dilatory tactics to delay this case from proceeding in
`favor of the customer suits. Demaray cannot justify its undue delay, mask the bad faith behind its
`tactics, or mitigate the clear prejudice to Applied.
`In an attempt to do so, Demaray falsely accuses Applied of withholding discovery and
`making misrepresentations to the Texas Court regarding the DC filter in its Cirrus chamber.
`Demaray has twice told this Court that the purported lack of information prevented Demaray from
`formulating a Rule 11 basis to accuse the Cirrus chamber of infringement in this case. Yet at the
`same time, Demaray continued to press forward with its infringement claims in Texas against the
`same Cirrus chamber, including based on (1) a Cirrus chamber manual and (2) a technical
`specification for the component in Cirrus that Demaray alleges contains the claimed “narrow band-
`rejection filter”—two documents it has had since January 2021, fourteen months ago. Demaray’s
`motion ignores its reliance on these documents through five rounds of supplemental infringement
`contentions to accuse the Cirrus chambers in Texas, the first which occurred thirteen months ago.
`Despite Demaray’s repeated reliance on these Cirrus documents
`to prosecute its
`infringement claims in Texas, Demaray now incredibly claims that only after recent third party
`discovery from a component supplier (Comet) and an inspection, it formed a “good faith reasonable
`basis for bringing infringement claims here.” Mot. at 3:26. In other words, Demaray claims that
`up until the Comet inspection, it lacked a good faith basis to bring infringement claims in this Court
`against the same Cirrus chamber it has been accusing of infringement since July 2020 in Texas.
`Whether an about-face between two tribunals or an apparent double-standard for its Rule 11
`obligations in California versus Texas, Demaray’s explanation is simply not credible and cannot
`excuse its undue delay in bringing infringement claims.
`What is worse, the recent discovery from Comet, including testing and inspection of the
`component, did not reveal any new evidence supporting a claim of infringement. Rather, both the
`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 5 of 24
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`documents and Demaray’s inspection corroborated what Demaray already knew from Applied’s
`Cirrus manual and component specification produced in January 2021—that the Cirrus chamber
`does not infringe. That was reinforced by Applied’s corporate testimony provided in February
`2021 and measurements of the component provided by Comet and produced in September 2021.
`Furthermore, the alleged “new” evidence relied upon by Demaray to support its motion to amend
`is irrelevant to infringement because it either relates to protecting the RF (and not DC) power supply
`in the Cirrus chamber or is duplicative of the information Demaray has had since last January. The
`recent discovery and inspection are nothing more than a smokescreen for Demaray’s latest attempt
`to delay the parties and this Court from moving forward with claim construction.1
` Demaray’s proposed Amended Answer raises even greater concerns regarding its claim
`that it only now has a “good faith reasonable basis for bringing infringement claims.” As explained,
`infra, the Amended Answer accuses the Cirrus chambers of infringing both the ’276 and ’657
`patent, specifically identifying the deposition of titanium nitride (TiN) for the ’657 patent, which
`requires reactive sputtering. But five days before its motion, Demaray supplemented its contentions
`in Texas to withdraw its claims against the Cirrus chamber for the ’657 patent in the Intel case.
`Ex. J. On the same day of Demaray’s motion, it did the same in the Samsung case, another
`inexplicable contradiction between its Texas and California positions. How can Demaray now have
`a Rule 11 basis to accuse Cirrus of infringing the ’657 patent in this Court, but no longer have one
`in Texas? There is no credible explanation.
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`1 Demaray has not shied away from its motive behind seeking to add infringement claims twenty
`months after originally accusing the same Cirrus chamber in Texas. Three days after the instant
`motion, Demaray submitted a letter brief requesting to either (1) “hold in abeyance the Patent Local
`Rule deadlines” or (2) enter a schedule assuming Demaray is permitted to add infringement claims
`such that Markman is further delayed by several months. Dkt. No. 135. Just hours ago, Demaray
`doubled down on its delay efforts, seeking to indefinitely enlarge its time to file its responsive claim
`construction brief due on April 1, 2022 under the Patent Local Rules. Dkt. No. 140.
`APPLIED’S OPPOSITION TO DEMARAY’S
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 6 of 24
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`The Court should put an end to this “gamesmanship”, Dkt. No. 101 at 2:27, so that Applied’s
`manufacturer suit can finally move forward and “the potential impact the resolution of this case
`could have on Demaray’s lawsuits against Applied’s customers” can be realized. Dkt. No. 63 at
`14:11-13. Accordingly, Demaray’s motion to amend should be denied.
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`A.
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`Demaray’s Rejected Subject Matter Jurisdiction Challenge Delayed Case
`From Proceeding For Nearly a Year
`On December 24, 2020, Applied filed this action seeking declaratory relief that its products,
`including those used by its customers that are accused of infringement in Demaray’s customers
`suits in Texas (e.g., the Cirrus chamber now accused in Demaray’s proposed Amended Answer),
`do not infringe Demaray’s patents. Dkt. No. 1.
`The parties filed a Joint CMC Statement on January 14, 2021 where Demaray embarked on
`a narrative that it would carry forward up until the instant motion: that despite accusing Intel and
`Samsung of infringment based on their use of Applied PVD chambers in Texas, it lacked sufficient
`information to determine whether to assert infringement against Applied for those same chambers
`before this Court. Dkt. No. 27 at 4:15-8:7 (Section 5: Amendment of Pleadings).
`Demaray thereafter moved to dismiss, arguing the Court lacked subject matter jurisdiction.
`Dkt. No. 30. Over the next several months, Applied produced hundreds of documents to Demaray
`in response to its subpoenas and a corporate representative to testify regarding the configurations
`and relevant components of its PVD chambers accused in Texas (including the Cirrus chamber).
`Demaray in-turn supplemented its infringement contentions three times on February 5, April 15
`and August 17, each time continuing to accuse Applied’s customers of infringement based on their
`use of Applied’s Cirrus chamber. See, e.g., Exs. A-C (Exemplary Excerpts from Infringement
`Contentions to Samsung for ’276 Patent)2.
`On September 16, 2021, the Court denied Demaray’s challenge, noting the affirmative acts
`Demaray had taken against Applied, including “creating preliminary infringement contentions
`which included references to Applied’s reactors, refusing to grant Applied a covenant not to sue,
`
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`2 All references to “Ex. __” herein shall be to the exhibits to the Lubarsky Declaration, attached
`hereto.
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`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 7 of 24
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`requesting discovery from Applied to determine if Applied allegedly infringes the Asserted Patents,
`and making representations about the need for discovery from Applied to determine which of Intel’s
`and Samsung’s reactors allegedly infringe.” Dkt. No. 63 at 12:5-9. In finding an actual
`controversy, the Court reasoned that “Demaray ‘could just as easily have asserted a claim for
`direct infringement against [Applied], based on the same underlying circumstances in the
`customer suit.’” Id. at 13:20-22. Those circumstances included both complaints and preliminary
`infringement contentions to Intel and Samsung that specifically accused Applied’s Cirrus chamber
`of infringement. Dkt. No. 1, Ex. A (July 14, 2020 Complaint to Intel) at 8 (identifying “Cirrus
`ionized PVD chamber” for depositing TiN layers as accused reactor); Dkt. No. 1, Ex. C (October
`9, 2020 Infringement Contentions) at 12 (“As a further example, Intel configures and uses, among
`other reactors, Intel Accused Products in the Endura product line from Applied Materials, Inc. for
`deposition of such layers….For example, the Endura product line includes reactors that can be
`configured for deposition of… TiN layers (e.g., Cirrus ionized PVD chamber”) (emphasis added).
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`B.
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`Demaray’s Continued Efforts to Delay this Case From Proceeding
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`No longer able to stop Applied’s declaratory judgment claims from proceeding with its
`jurisdictional challenge, Demaray turned to other tactics to prevent those claims from impacting
`Demaray’s lawsuits against Applied’s customers. Whether through self-help, ignoring Patent and
`local rule deadlines, or relying on its claimed lack of Rule 11 basis to bring infringement claims,
`Demaray has continued to seek delay at every turn. Thus far, the Court has rejected those efforts:
`• October 1, 2021: Demaray files a motion to stay pending IPR, while refusing to similarly
`stay its lawsuits in Texas against Applied’s customers. Dkt. No. 67.
`• October 4, 2021: Demaray opposes Applied’s administrative motion to deny as moot its
`prior motion to lift the discovery stay in view of the Court’s finding subject matter
`jurisdiction. Dkt. No. 65. Despite the Court finding jurisdiction, Demaray refused to
`respond to discovery by contending that the discovery stay that the Court entered at the
`January 21, 2021 case management conference while Demaray’s motion to dismiss was
`pending remained in effect.
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`APPLIED’S OPPOSITION TO DEMARAY’S
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 8 of 24
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`• October 6, 2021: In the parties Updated Joint CMC Statement, Demaray declines to propose
`a case schedule. Dkt. No. 69 at 3:16-18 (“In addition, if the case proceeds, Demaray
`currently lacks details regarding Applied’s products and processes sufficient to make a
`determination regarding whether it will assert affirmative infringement counterclaims
`against Applied…)
`• October 15, 2021: The Court addresses Demaray’s arguments that the case remains stayed
`by making clear that “the case will move forward” and orders the parties to “meet and confer
`and submit an updated Case Management Statement with a proposed case schedule.” Dkt.
`No. 80.
`• November 4, 2021: Parties file an Updated Joint CMC Statement, where Demaray relies on
`its purported lack of discovery to bring infringement claims as a basis to delay the case
`schedule and justify its failure to comply with Patent Local Rule deadlines. Dkt. No. 82.
`• November 19, 2021: Despite the Court’s instructions that “the case will move forward”,
`Applied is forced to file a motion to compel Demaray to comply with Patent Local Rules
`after Demaray refuses to exchange 4-1 and 4-2 claim construction disclosures. Dkt. No. 83.
`• December 15, 2021: Court denied Demaray’s motion to stay, finding gamesmanship when
`considering the timing of Demaray’s motion and unwillingness to stay its customer suits in
`Texas. Dkt. No. 101 at 2:25-27 ( The Court further found, “Demaray’s stay request would
`allow its customer suits in Texas to proceed. The timing of Demaray’s stay motion []
`reveals gamesmanship.”; id. at 2:19-20 (“[A] stay would unduly prejudice and present an
`overwhelming tactical disadvantage to Applied.”).
`• December 15, 2021: The Court also ordered Demaray to comply with the Patent Local
`Rules, finding that “Demaray essentially has granted itself a further stay of the case even
`after Judge Davila ordered an end to the discovery stay.” Dkt. No. 101 at 3:7-21. During
`oral argument that same day, Demaray stated: “…we have this problem with the filter that
`is present… And so we’re being very cognizant of our Rule 11 obligations here. And they
`have raised issues in the Texas cases where they said, hey we question your Rule 11…
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`[w]e’re being cognizant, respectful of it, and once we get filter details, we can make an
`affirmative determination, are there going to be affirmative infringement claims against
`Applied, standing alone, its reactors that it’s supplying or not.”. Dkt. No. 130-2 Hr’g Tr. at
`7:12-8:2
`• December 22, 2021: Parties file another Update Joint CMC Statement, wherein Demaray
`continues to rely on its purported lack of discovery to bring infringement claims, as a basis
`to delay the case schedule. Dkt. No. 106.
`• January 12, 2022: At the next hearing before Magistrate Judge Cousins in discussing the
`case schedule, Demaray again relies on its Rule 11 concerns as justification for seeking to
`delay: “And so we’re trying to be really really cognizant of Rule 11 and respect the
`obligations here, and that’s all we’re doing. If the Plaintiffs [sic] want to admit that our
`contentions in Texas are sufficient to cover a Rule 11 basis for them, we will submit those
`to your Court - - to your Honor tomorrow….”. Dkt. No. 130-3, Hr’g Tr. at 18:21-19:1.
`• January 14, 2022: Pursuant to Magistrate Judge Cousins’ instructions, the parties file a
`proposed order with competing case schedules. Demaray continues to rely on the possibility
`that it may bring infringement claims to propose “reset[ing]” deadlines if such claims are
`allowed. Dkt. No. 116.
`• February 7, 2022: Demaray improperly files letter brief (instead of a noticed motion under
`Local Rule 7-1(a)), seeking leave to amend to add infringement claims, allegedly based on
`the Comet inspection and documents. Dkt. No. 127.3
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`3 Curiously, Demaray provided a draft of its letter brief on February 1, 2022, three days before the
`inspection. Ex. I at 2 (“Based on its … inspection of Comet’s DC filter (conducted February 4),
`Demaray has a good faith, reasonable basis to add affirmative infringement claims regarding
`Applied’s stand-alone reactors.”). Demaray’s predetermined “reliance” on the results of the
`inspection, before it even occurred, undermine its claim that the inspection gave Demaray a
`“reasonable good faith basis” when it previously had none.
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`• March 12, 2022: Demaray files letter brief to Magistrate Judge Cousins requesting that the
`“Court either (a) hold in abeyance the Patent Local Rule deadlines pending a ruling on the
`Motion to Amend from Judge Davila4, or (b) in the alternative, adopt a schedule based upon
`Demaray’s proposed schedule setting forth deadlines
`that account for affirmative
`infringement claims.” Dkt. No. 135.
`• March 23, 2022: Just hours before Applied’s response to the instant motion, Demaray
`reframed its letter brief seeking to stay or delay the Patent Local Rules deadlines as an
`indefinite motion to enlarge its time to file its responsive claim construction brief. Dkt. No.
`140. Under Patent L.R. 4-5(b) (fourteen days after Applied’s opening brief) and Demaray’s
`own proposed schedule, Dkt. No. 116, its brief is due April 1, 2022.
`
`Despite the Court rejecting Demaray’s repeated attempts to stall this case, Demaray has
`already achieved significant delay and continues to do so through the instant motion. Indeed, in
`Demaray’s recent letter brief seeking to stay or delay claim construction deadlines (potentially by
`several months), Demaray points to the fact that “[n]o case schedule has been entered in this
`case”—a result of Demaray’s repeated efforts to delay, including by advocating that no schedule
`be entered until it decides whether to add infringement claims. Dkt. No. 135. Applied objected
`and opposed, explaining how Demaray’s letter brief was yet another attempt to stop this case (e.g.,
`through upcoming claim construction proceedings) from impacting Demaray’s Texas suits against
`Applied’s customers. Dkt. No. 139. Applied has filed its opening claim construction brief, Dkt.
`No. 138, and expects that Demaray will comply with the Patent Local Rules and timely file its
`response. Refusal to do so, absent Court order, would be in contempt of this Court’s prior order
`instructing Demaray to comply with the Patent Local Rules. Dkt. No. 101 at 2:7-18.
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`4 Demaray’s motion is currently set for hearing six months from now in September 29, 2022.
`APPLIED’S OPPOSITION TO DEMARAY’S
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`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 11 of 24
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`C.
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`Demaray’s Knowledge Regarding the Details of Applied’s Cirrus Chamber
`and Inconsistent Positions Before this Court and Texas
`
`To justify its undue twenty month delay in bringing infringement claims, Demaray claims
`that Applied refused to disclose the details of the DC Filter in the Source Match of the Cirrus
`chamber, and that only recently did it obtain the necessary information to form a basis to allege
`infringement. This is not credible when considering that Demaray has accused the same Cirrus
`chambers of infringement in Texas, including through five supplementations of its infringement
`contentions. Telling, those infringement contentions rely on disclosures regarding the Cirrus
`chambers that Applied provided over a year ago. Specifically:
`• On January 15, 2021, Applied produced a technical specification regarding the Comet
`component used in the Cirrus chamber having a “DC Filter” that Demaray alleges contains
`the claim required “narrow band rejection filter”, see Ex. D (herein as “Source Match
`Specification”);
`• On January 21, 2021, Applied produced the Cirrus PVD Chamber Manual which included
`detailed information regarding the DC Filter, see Ex. E;
`• On February 9, 2021, Demaray deposed Keith Miller, a Director of Engineering at Applied
`and corporate representative in response to Demaray’s subpoena, regarding Applied’s
`Cirrus chambers, including the two aforementioned documents;
`• On May 18, 2021, Mr. Miller submitted a declaration that explained the electrical
`schematics for Applied’s Cirrus chamber; see Ex. F at ¶¶4–7.
`Despite the Court’s finding that “Demaray ‘could just as easily have asserted a claim for
`direct infringement against [Applied], based on the same underlying circumstances in the
`customer suit,’” Dkt. No. 63 at 13:20-22, and having ample discovery regarding the Cirrus
`chambers which Demaray undeniably relied on in multiple rounds of infringement contentions in
`Texas, on September 30, 2021 (over a year into the customer suits), Demaray filed its Answer
`strategically electing not to assert compulsory claims of infringement. Dkt. No. 66. Demaray
`continued its narrative before this Court that it lacked the technical details required to assert
`infringement while boldly claiming in the Texas Court that, for example, “[t]he record in this case
`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 12 of 24
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`indicates that Intel has used, and continues to use, the claimed reactor
`overwhelmingly
`configurations without Demaray’s permission to churn out semiconductor products from which
`Intel has obtained billions of dollars in revenue.” Ex. H.
`
`II.
`
`LEGAL ARGUMENT
`In the Ninth Circuit, district courts may deny leave to amend due to “undue delay, bad faith
`or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
`previously allowed, undue prejudice to the opposing party by virtue of allowance of the
`amendment, and futility of amendment.” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532
`(9th Cir. 2008) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). As revealed by the detailed
`history of Demaray’s tactical delay in bringing infringement claims and contradicting positions
`before this Court and in the customer suits, leave should not be granted.
`
`A.
`
`Demaray Unduly Delayed Bringing its Motion – Demaray’s Fourteen-Month
`Delay was Made with a Dilatory Motive
`
`“The passage of time is not, in and of itself, undue delay; rather, the inquiry focuses on
`
`whether the plaintiff knew of the facts or legal bases for the amendments at the time the operative
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`pleading was filed and nevertheless failed to act promptly to add them to the pleadings. [] In other
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`words, undue delay is ‘dilatory motive.’” Johnson v. Serenity Transp., Inc., No. 15-cv-02004-JSC,
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`2015 U.S. Dist. LEXIS 108227, at *13 (N.D. Cal. Aug. 17, 2015) (internal citation omitted). “‘Bad
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`faith may be shown when a party seeks to amend late in the litigation process with claims which
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`were, or should have been, apparent early.’ [] Generally courts require more than unexcused delay:
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`there must be evidence in the record that a party acted with a dilatory motive, intention to cause
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`undue delay, or the goal of otherwise obstructing the litigation process.” Flores v. City of
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`Concord, No. 15-cv-05244-TEH, 2017 WL 2472977, at *3 (N.D. Cal. June 8, 2017) (citation
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`omitted). “However, ‘late amendments to assert new theories are not reviewed favorably when the
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`facts and the theory have been known to the party seeking amendment since the inception of the
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`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 13 of 24
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`cause of action.’” Alzheimer's Inst. of Am. v. Elan Corp. PLC, 274 F.R.D. 272, 276 (N.D. Cal.
`
`2011) (citation omitted).
`
`First, Demaray unduly delayed bringing its motion for leave to add infringement claims.
`
`The record is clear – Demaray had ample information through discovery provided as early as
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`January 2021 to bring compulsory counterclaims of infringement when it filed its Answer eight
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`months later in September 2021. See Section I.C. Notably, this Court already found before
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`Demaray filed its Answer and in finding subject matter jurisdiction over this case that “Demaray
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`‘could just as easily have asserted a claim for direct infringement against [Applied], based on the
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`same underlying circumstances in the customer suit.’” Dkt. No. 63 at 13:20-22. In making that
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`determination,
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`the Court considered Demaray’s October 9, 2020 preliminary
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`infringement
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`contentions in the Texas cases which already accused Applied’s Cirrus chamber of infringement.
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`The Ninth Circuit has held that an eight month delay between the time of obtaining a relevant fact
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`and seeking leave to amend is unreasonable. See Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 799 (9th
`
`Cir. 1991) (citing Jackson v. Bank of Haw., 902 F.2d 1385, 1388 (9th Cir. 1990)). The Ninth Circuit
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`similarly found that a 15-month delay between discovering a fact and requesting leave to amend
`
`was unreasonable. AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 954 (9th Cir.
`
`2006) (“We will not speculate whether AmerisourceBergen’s sudden change in tactics was
`
`gamesmanship or the result of an oversight by counsel, but we do conclude that the district court
`
`did not abuse its discretion in denying AmerisourceBergen's motion for leave to amend.”).
`
`Accordingly, Demaray’s 14 month delay is unexcusable.
`
` Second, Demaray’s delay was with a dilatory motive. As explained in supra Sections I.A-
`
`B, Demaray’s decision not to assert compulsory counterclaims with its Answer was not due to lack
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`of discovery (as recognized by this Court), but rather a continuation of its aggressive campaign to
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`delay this case from moving forward using any procedural means. Demaray had been in possession
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`APPLIED’S OPPOSITION TO DEMARAY’S
`MOTION TO AMEND ITS ANSWER
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`Case 5:20-cv-09341-EJD Document 141-3 Filed 03/23/22 Page 14 of 24
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`of the relevant information for at least eight months when it filed its Answer in September 2021
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`and chose not to include compulsory counterclaims of infringement. Six more months have passed,
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`Applied has already filed its opening claim construction brief, and Demaray once again seeks to
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`delay this case from moving forward through its requested amendment and related requests to halt
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`claim construction deadlines until its motion is decided. Indeed, as explained infra at n. 1, three
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`days after filing its motion, Demaray again sought to derail this case from moving forward by
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`requesting that Magistrate Judge Cousins either hold in abeyance the Patent Local Rule deadlines
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`or further delay them assuming the instant motion is granted. Demaray’s pattern of dilatory tactics
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`seeking a tactical advantage of allowing its customer suits in Texas to proceed while repeatedly
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`attempting to delay this manufacturer suit from going forward should be put to an end. Magistrate
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`Judge Cousins has already h