Case 1:15-cv-00842-RGA Document 389 Filed 05/14/19 Page 1 of 6 PageID #: 17971
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`IN THE UNITED STATES DISTRJCT COURT
`FOR THE DISTRJCT OF DELAWARE
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`IN RE CHANBOND, LLC
`PATENT LITIGATION
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`No. 15-cv-842-RGA
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`CONSOLIDATED
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`MEMORANDUM ORDER
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`Presently before the Court is Defendants' motion regarding their invalidity combinations.
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`(D.I. 353). 1 I have reviewed the parties' briefing and related letters. (D.I. 348, 349, 354, 382,
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`385). Defendants' motion builds on the issues discussed at the February 26, 2019 discovery
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`conference. (D.I. 351).
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`I. BACKGROUND
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`In September 2015, Plaintiff ChanBond, LLC ("ChanBond") filed thirteen suits against
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`numerous defendants (collectively, "Defendants"). (E.g., D.I. 1 (complaint against Atlantic
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`Broadband Group, LLC)). On February 23, 2018, the Patent Trial and Appeal Board ("PTAB")
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`issued a Final Written Decision invalidating certain asserted claims. (D.I. 244, Ex. A).2 The
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`PTAB decision is currently on appeal before the Federal Circuit. Fact discovery closed on July
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`6, 2018, and expert discovery closed on February 22, 2019. Opening summary judgment and
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`Daubert briefs have been filed. (D.I. 358,361,364,367,370). No trial date has been set in view
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`of the pending appeal. (D.I. 347).
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`The present dispute stems from a September 2017 agreement between the parties, which
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`the Court adopted as a scheduling order. (D.I. 142). The parties stipulated to certain discovery
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`1 Unless otherwise noted, all docket citations are to C.A. No. 15-842. The consolidated member cases are
`C.A. Nos. 15-843, 15-844, 15-845, 15-846, 15-847, 15-848, 15-849, 15-850, 15-851, 15-852, 15-853, and 15-854.
`2 Specifically, claims of U.S. Patent No. 7,941,822 (''the '822 patent). The '822 patent is not at issue in the
`present motion.
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`Case 1:15-cv-00842-RGA Document 389 Filed 05/14/19 Page 2 of 6 PageID #: 17972
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`deadlines, three of which are relevant here. First, by November 3, 2017, the parties agreed to
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`"[s]ubstantially comply with outstanding written discovery and document production." Second,
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`by November 10, 2017, ChanBond agreed to reduce its number of asserted claims to eighteen.
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`Third, by December 4, 2017, Defendants agreed to reduce their number of prior art references to
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`eighteen and their number of invalidity combinations to four per claim. (Id at 2). The parties
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`made their respective reductions.
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`On January 4, 2019, Defendants introduced a new invalidity combination relating to U.S.
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`Patent No. 8,341,679 ("the '679 patent") via the reply report of their invalidity expert, Dr.
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`Prucnal. (D.I. 355, Ex. 0). Dr. Prucnal combines two references-U.S. Patent Nos. 7,017,176
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`("Lee") and 7,274,679 ("Amit")-that he independently addressed in his opening report. (Id,
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`Ex. M §§ IX.A-B, X.A.2, X.C.2). Defendants argue that the Lee/Amit combination is in
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`response to ChanBond's new validity argument presented by its expert, Dr. Aki, in his
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`opposition report. (D.I. 354 at 6). Dr. Aki opined, "Lee's purported innovation only relates to
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`the upstream transmission from the cable modem to the head end" (D.I. 355, Ex. N ,r 154), and
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`similarly, "Amit's purported innovation only relates to the downstream transmission from the
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`[head end] to the cable modem" (id, ,r 176). In response, Dr. Prucnal testified that a person of
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`ordinary skill in the art would have been motivated to combine Lee and Amit to produce a
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`"bidirectional" device, having both "upstream" and "downstream" transmission, as required by
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`the '679 patent claims. (Id, Ex. 0 ,r 495).
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`ChanBond moved to strike Dr. Prucnal's reply testimony regarding the Lee/Amit
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`combination as a violation of the September 2017 ·scheduling order. (D.I. 348). I heard
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`argument at the February 26, 2019 discovery conference. (D.I. 351). I declined to decide the
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`issue at the time but gave the parties the option of further briefing. (Id at 27:25-28:21).
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`2
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`Case 1:15-cv-00842-RGA Document 389 Filed 05/14/19 Page 3 of 6 PageID #: 17973
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`Defendants then filed the present motion requesting an order allowing Defendants to rely on the
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`Lee/Amit combination. (D.I. 353,354).
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`II. ANALYSIS
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`The parties disagree on the legal standard that should apply. ChanBond argues that, since
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`Defendants seek to add a new invalidity theory in violation of the September 2017 scheduling
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`order, they must show good cause under Federal Rule of Civil Procedure 16. (D.I. 382 at 6-7).
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`Defendants argue that this Court generally applies the Pennypack factors, under Federal Rule of
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`Civil Procedure 37, to assess whether exclusion is an appropriate sanction. (D.I. 354 at 7-10).
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`This Court addressed a similar situation in St. Clair Intellectual Property Consultants,
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`Inc. v. Matsushita Electric Industrial Co., 2012 WL 1015993 (D. Del. Mar. 26, 2012), ajf'd, 522
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`F. App'x 915 (Fed. Cir. 2013). In St. Clair, the plaintiff sought to add additional infringement
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`theories past the Court's scheduling order deadline for serving infringement contentions. Id. at
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`* 5. The Court applied both Rule 16 and P ennypack, first finding no good cause under Rule 16
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`and then finding exclusion appropriate under the Pennypack factors. Id. at *5-9. Although I
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`come out differently on good cause, I will still consider both standards. See Rowe v. E.1 du Pont
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`de Nemours & Co., 2010 WL 703210, at *4-5 (D.N.J. Feb. 24, 2010) (finding an extension of
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`time to serve expert reports and disclosures supported by good cause, as well as "further
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`supported" by the Pennypack factors).
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`A. Defendants Show Good Cause under Rule 16
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`Rule 16(b)(4) provides, "A schedule may be modified only for good cause and with the
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`judge's consent." Fed. R. Civ. P. 16(b)(4). "Good cause is present when the schedule cannot be
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`met despite the moving party's diligence." Meda Pharm. Inc. v. Teva Pharm. USA, Inc., 2016
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`WL 6693113, at *1 (D. Del. Nov. 14, 2016).
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`3
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`Defendants argue that they have been diligent because the new Lee/ Amit combination is
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`responsive to ChanBond's new validity theory that was first disclosed in Dr. Akl's opposition
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`report, served on November 30, 2018. (D.I. 354 at 3-6, 13-15; D.I. 355, Ex. N). Defendants
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`assert that prior to then, ChanBond had only provided boilerplate answers to discovery requests
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`about its validity theories. (D.I. 354 at 3-6). Therefore, Defendants raised the Lee/Amit
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`combination at the first available opportunity-Dr. Prucnal's reply report, served on January 4,
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`2019. (D.1. 354 at 15; D.I. 355, Ex. 0).
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`Defendants rely on ChanBond's responses to Interrogatory No. 9, which states:
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`If you contend that any of the references cited in the exhibits in Defendants'
`Invalidity Contentions (and any supplements thereto) do not invalidate or
`render obvious the asserted claim of the Asserted Patent(s) for which it was
`cited, identify each claim limitation that You believe is missing from the
`reference and provide each and every basis for Your contention that the
`limitation is missing.
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`(D.I. 355, Ex. D at 13). Defendants' invalidity contentions, served on October 12, 2017 and
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`December 22, 2017, indicate that Lee and Amit teach bi-directional communication as claimed
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`in the '679 patent. (Id., Ex. B (Ex. B-15 at 49), Ex. C (Ex. B-18 at 1)). Defendants thus argue
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`that ChanBond was required to disclose, in response to Interrogatory No. 9, its contrary theory
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`that Lee and Amit do not teach bi-directional communication.
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`ChanBond argues that it did disclose its theory in its second supplemental response to
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`Interrogatory No. 9, served on July 6, 2018. (D.I. 382 at 8; D.I. 355, Ex. F).3 I disagree.
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`ChanBond merely listed the claim limitations that each reference allegedly failed to disclose,
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`without any explanation. (D.I. 355, Ex.Fat 128-31, 173-77). Therefore, I find ChanBond first
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`3 ChanBond's original response, served on August 24, 2016, does not address either Lee or Amit with
`respect to the '679 patent. (D.I. 355, Ex. D at 35-52). ChanBond's first supplemental response, served on
`November 27, 2017, only addressed Lee. (Id., Ex.Eat 128-31).
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`4
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`Case 1:15-cv-00842-RGA Document 389 Filed 05/14/19 Page 5 of 6 PageID #: 17975
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`disclosed its theory that Lee and Amit do not teach bi-directional communication in Dr. Al<l's
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`opposition report.
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`Defendants appear to have been diligent since receiving Dr. Al<l's report. Thus, I find
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`Defendants have shown good cause under Rule 16.
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`B. The Pennypack Factors Do Not Support Exclusion
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`Federal Rule of Civil Procedure 37(c)(l) provides, "If a party fails to provid~ information
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`... as required by Rule 26( a) or ( e ), the party is not allowed to use that information ... to supply
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`evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is
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`harmless." To determine whether a failure to disclose was harmless, courts in the Third Circuit
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`consider the Pennypack factors: (1) the prejudice or surprise to the party against whom the
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`evidence is offered; (2) the possibility of curing the prejudice; (3) the potential disruption of an
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`orderly and efficient trial; (4) the presence of bad faith or willfulness in failing to disclose the
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`evidence; and (5) the importance of the information withheld. Konstantopoulos v. Westvaco
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`Corp., 112 F.3d 710, 719 (3d Cir. 1997) (citing Meyers v. Pennypack Woods Home Ownership
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`Ass 'n, 559 F.2d 894, 904-05 (3d Cir. 1977)). "[T]he exclusion of critical evidence is an
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`'extreme' sanction, not normally to be imposed absent a showing of willful deception or
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`'flagrant disregard' of a court order by the proponent of the evidence." Id. The determination of
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`whether to exclude evidence is within the discretion of the district court. Id
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`The first two Pennypack factors weigh against exclusion. ChanBond argued at the
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`discovery·conference that it might have asserted different claims had it known Defendants would
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`rely on the Lee/Amit combination. (D.1. 351 at 8:6-15). In the briefing, however, the only
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`prejudice ChanBond identifies is the "fundamental[] unfair[ ness ]" of Defendant violating the
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`5
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`Case 1:15-cv-00842-RGA Document 389 Filed 05/14/19 Page 6 of 6 PageID #: 17976
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`parties' agreement. (See D.I. 382 at 18).4 Thus, it seems any prejudice to ChanBond may be
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`cured by a sur-reply report, which Dr. Akl indicated he "would be happy to do." (D.I. 355, Ex. P
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`at 132:9-19).
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`The third Pennypack factor weighs against exclusion as no trial date has been set.
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`The fourth Pennypack factor is neutral.
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`The fifth Pennypack factor weighs against exclusion. Defendants have indicated that the
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`Lee/Amit combination is critical to their case. (D.I. 3.85 at 8-9).
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`Therefore, on balance, the Pennypack factors do not support exclusion of Defendants'
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`Lee/Amit invalidity theory.
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`III. CONCLUSION
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`For the foregoing reasons, Defendants' motion (D.1. 353) is GRANTED WITH THE
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`FOLLOWING CONSTRAINTS. First, Defendants are limited to two invalidity combinations
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`for the '679 patent, one of which is the new Lee/Amit combination. Second, if desired, Dr. Akl
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`may file a sur-reply report responding to Dr. Prucnal's testimony on the Lee/Amit combination,
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`and the parties may take additional depositions as necessary.
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`IT IS SO ORDERED this .1!t__ day of May 2019.
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`4 In fact, at the discovery conference, counsel for ChanBond indicated that he did not think the new
`invalidity combination was "that devastating." (D.I. 351 at 12:17-13:5).
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`6
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