Case 1:20-cv-00393-LO-TCB Document 464 Filed 03/01/21 Page 1 of 10 PageID# 10202
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`RAI STRATEGIC HOLDINGS, INC. AND R.J.
`REYNOLDS VAPOR COMPANY
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`Plaintiffs and Counterclaim
`Defendants,
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`v.
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`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA, INC.; and PHILIP MORRIS
`PRODUCTS S.A.
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`Defendants and Counterclaim
`Plaintiffs.
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`Case No. 1:20-cv-00393-LO-TCB
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`PHILIP MORRIS PRODUCTS S.A.’S MEMORANDUM IN SUPPORT OF MOTION
`FOR LEAVE TO AMEND COUNTERCLAIMS TO ADD INJUNCTIVE RELIEF
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`Case 1:20-cv-00393-LO-TCB Document 464 Filed 03/01/21 Page 2 of 10 PageID# 10203
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`I.
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`II.
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`III.
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`IV.
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`V.
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ...............................................................................................................1
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`FACTUAL BACKGROUND ..............................................................................................1
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`LEGAL STANDARD ..........................................................................................................3
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`ARGUMENT .......................................................................................................................3
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`A.
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`B.
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`C.
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`PMP’s Motion For Leave To Amend Is Brought In Good Faith .............................3
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`Granting PMP’s Leave To Amend Will Not Prejudice Plaintiffs ............................3
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`PMP’s Proposed Amendment Is Not Futile .............................................................4
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`CONCLUSION ....................................................................................................................5
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`Case 1:20-cv-00393-LO-TCB Document 464 Filed 03/01/21 Page 3 of 10 PageID# 10204
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`TABLE OF AUTHORITIES
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`CASES
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`Page(s)
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`Atlantic Bulk Carrier Corp. v. Milan Express Co., Inc.,
`No. 3:10cv103, 2010 WL 2929612 (E.D. Va. July 23, 2010) ............................................. 1, 4, 5
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`Davis v. Piper Aircraft Corp.,
`615 F.2d 606 (4th Cir. 1980) ....................................................................................................... 5
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`eBay Inc. v. MercExchange, LLC,
`547 U.S. 388 (2006) .................................................................................................................... 5
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`Foman v. Davis,
`371 U.S. 178 (1962) .................................................................................................................... 3
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`Griaznov v. J-K Techs., LLC,
`No. ELH-16-2522, 2017 WL 915000 (D. Md. Mar. 8, 2017) ..................................................... 5
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`Johnson v. Orowheat Foods Co.,
`785 F.2d 503 (4th Cir. 1986) ....................................................................................................... 3
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`Laber v. Harvey,
`438 F.3d 404 (4th Cir. 2006) ............................................................................................... 1, 3, 4
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`MercExchange, L.L.C. v. eBay, Inc.,
`271 F. Supp. 2d 784 (E.D. Va. 2002) .......................................................................................... 4
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`Nelson-Ricks Cheese Co. v. Lakeview Cheese Co.,
`No. 4:16-cv-00427-DCN, 2017 U.S. Dist. LEXIS 150430 (D. Idaho Sept. 14, 2017) ........... 4, 5
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`Sciolino v. City of Newport News,
`480 F.3d 642 (4th Cir. 2007) ....................................................................................................... 3
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`STATUTES
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`35 U.S.C. § 283 ............................................................................................................................... 5
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`RULES
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`Fed. R. Civ. P. 15(a)(2) ................................................................................................................... 3
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`ii
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`I.
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`INTRODUCTION
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`Defendant Philip Morris Products S.A. (“PMP”) moves for leave to amend its
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`counterclaims to include the additional remedy of permanent injunctive relief for its patent
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`infringement claims (Dkt. 198).
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`The standard for amending the pleadings under Rule 15 is readily met here, where PMP
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`seeks, not to add new claims, but only to include an additional theory of recovery relating to the
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`claims already pled. PMP brings this motion in good faith shortly after the Court lifted the stay
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`on PMP’s asserted patents. The proposed amendment “is not prejudicial [inasmuch as] it merely
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`adds an additional theory of recovery to the facts already pled.” Atl. Bulk Carrier Corp. v. Milan
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`Express Co., Inc., No. 3:10cv103, 2010 WL 2929612, at *4 (E.D. Va. July 23, 2010), citing Laber
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`v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006). Nor will the amendment affect any case deadlines,
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`as discovery is ongoing, and a trial date has not been set. Lastly, the proposed amendment is not
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`futile, because the Court is able to grant the requested injunctive relief for infringement of PMP’s
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`asserted patents.
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`II.
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`FACTUAL BACKGROUND
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`On April 9, 2020, Plaintiffs filed their Complaint alleging infringement of six patents. Dkt.
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`1. The Court stayed proceedings as to three of the patents pursuant to 28 U.S.C. § 1659, because
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`Plaintiffs also asserted those patents in the ITC. Dkt. 27. Plaintiffs thereafter amended their
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`complaint to drop one remaining patent, leaving only two of Plaintiffs’ patents going forward in
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`this Court. Dkt. 52.
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`On June 29, 2020, Defendant PMP filed an answer and counterclaims that Plaintiffs
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`infringed three of PMP’s patents (“PMP’s asserted patents”). Dkt. 40. PMP’s prayer for relief
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`requested an award of damages under 35 U.S.C. § 284, attorneys’ fees under 35 U.S.C. § 285,
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`1
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`costs and expenses, and any additional relief as the Court deems just and reasonable. See Dkt 40
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`at 44-45. PMP’s prayer for relief did not expressly reference injunctive relief.
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`In October 2020, PMP, along with Altria Client Services LLC and Philip Morris USA, Inc.
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`(together, “Defendants”), filed a motion for leave to amend their counterclaims, to add an
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`inequitable conduct defense and counterclaim against one of Plaintiffs’ asserted patents, add
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`additional facts to support their defense of unclean hands against another of Plaintiffs’ asserted
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`patents, and add counterclaims that Plaintiffs willfully infringe three of the Counterclaim Patents.
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`Dkt. 115. The Court granted Defendants’ motion for leave to amend (Dkt. 179), and Defendants
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`thereafter filed their amended answer and counterclaims on October 19, 2020. Dkts. 193, 198.
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`In November 2020, Defendants moved to stay Plaintiffs’ claims on Plaintiffs’ two asserted
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`patents, pending PTAB review of those patents. Dkt. 370. On December 4, 2020, the Court
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`granted Defendants’ motion to stay the case on Plaintiffs’ remaining two asserted patents, and
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`further stayed the remainder of the case, including Defendants’ counterclaims, in view of the
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`ongoing COVID-19 pandemic and the potential impact of that pandemic on existing case schedules
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`in the District in the absence of a vaccination. Dkts. 426, 432; Dkt. 444 at 6:9-24, 7:14-23.
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`In February 2020, Defendants moved to lift the stay on Defendants’ counterclaims,
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`following the PTAB’s institution of post-grant review of one of Plaintiffs’ asserted patents and the
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`pending rehearing of a second asserted patent. Dkt. 447. On February 16, 2021, the Court granted
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`Defendant’s motion to lift the stay on Defendants’ counterclaims. Dkt. 456. On February 19, the
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`Court entered a modified scheduling order, setting deadlines for the remainder of the case,
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`including setting the close of discovery for April 12, 2021. Dkt. 461. A pretrial conference has
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`been set for April 16, 2021. Dkt. 445. No trial date has yet been set.
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`2
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`III. LEGAL STANDARD
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`Federal Rule of Civil Procedure 15(a)(2) provides that a party may amend a pleading with
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`leave of Court, and the Court “should freely give leave when justice so requires.” Leave to amend
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`a pleading should be denied only when the amendment would be prejudicial to the opposing party,
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`there has been bad faith on the part of the moving party, or the amendment would be futile. Laber,
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`438 F.3d at 426 (citing Johnson v. Orowheat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986) and
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`Foman v. Davis, 371 U.S. 178, 182 (1962)). That rule reflects the federal policy of “resolving
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`cases on their merits instead of disposing of them on technicalities.” Sciolino v. City of Newport
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`News, 480 F.3d 642, 651 (4th Cir. 2007) (citing Laber, 438 F.3d at 426).
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`IV. ARGUMENT
`A.
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`PMP’s Motion For Leave To Amend Is Brought In Good Faith
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`PMP brings this motion for leave to amend in good faith. PMP promptly filed its motion
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`to amend shortly after the Court lifted the stay on Defendants’ counterclaims. There is no deadline
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`in the scheduling order to amend the pleadings (see Dkts. 97, 99, 461), and PMP has not brought
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`this motion for purposes of delay. Rather, PMP’s motion is brought well in advance of the close
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`of fact and expert discovery and the mid-April pretrial conference, and is therefore timely.1
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`B.
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`Granting PMP’s Leave To Amend Will Not Prejudice Plaintiffs
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`Plaintiffs will not be prejudiced by PMP’s motion for leave to amend. PMP’s proposed
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`amendment does not add any new claims. PMP’s proposed amendment merely adds injunctive
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`relief as an additional theory of recovery to their existing claims of patent infringement of PMP’s
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`1 Although Defendants previously filed a motion for leave to amend in October 2020, Defendants’
`prior motion for leave was directed to adding inequitable conduct and unclean hands of Plaintiffs’
`asserted patents (which are currently stayed), and adding claims of willful infringement of three
`Counterclaim Patents based on facts obtained early in discovery. See Dkt. 113. PMP’s present
`motion for leave to add injunctive relief is unrelated to the claims sought to be included in
`Defendants’ previously filed motion.
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`3
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`asserted patents. “An amendment is not prejudicial . . . if it merely adds an additional theory of
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`recovery to the facts already pled.” Atl. Bulk Carrier, 2010 WL 2929612, at *4 (citing Laber, 438
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`F.3d at 427). Plaintiffs have long been on notice of PMP’s patent infringement claims since June
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`2020, when PMP first filed its counterclaims. The parties have undertaken discovery on PMP’s
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`patent infringement claims since then, and will continue to do so until the close of discovery.
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`Because Plaintiffs have had “notice of the events giving rise to the action at the outset, allowing
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`an amendment under the same theory of the case does not prejudice the preparation of the
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`[opposing party’s] case, and should be allowed.” Id.
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`Nor will granting PMP’s motion cause any delay. No trial date has been set, and thus
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`granting the motion will not affect the trial date. Because the motion seeks to add a request for
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`injunctive relief, and does not seek to add any additional claims, the amendment “will not affect
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`any deadlines or other aspects of case management.” Nelson-Ricks Cheese Co. v. Lakeview Cheese
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`Co., No. 4:16-cv-00427-DCN, 2017 U.S. Dist. LEXIS 150430, at *4 (D. Idaho Sept. 14, 2017)
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`(granting motion to amend complaint to add injunctive relief). Discovery in the case is ongoing,
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`and PMP’s proposed amendment will not necessitate the extension of any discovery, expert
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`discovery, or dispositive motion dates. See, e.g., MercExchange, L.L.C. v. eBay, Inc., 271 F. Supp.
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`2d 784, 788 (E.D. Va. 2002) (no prejudice where there was ample time left in discovery period).
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`Thus, because PMP’s proposed amendment does not present a new claim but merely states another
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`theory for recovery, it is not prejudicial to Plaintiffs. Laber, 438 F.3d at 428 (finding motion to
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`add alternative theory for recovery was non-prejudicial, and reversing denial of motion to amend).
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`C.
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`PMP’s Proposed Amendment Is Not Futile
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`Nor is PMP’s request for leave to amend futile. Leave to amend should be denied on the
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`ground of futility only when the proposed amendment is “clearly insufficient or frivolous on its
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`face.” Atl. Bulk Carrier, 2010 WL 2929612, at *4 (citing Davis v. Piper Aircraft Corp., 615 F.2d
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`606, 613 (4th Cir. 1980)).
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`PMP’s proposed amendment seeks to include the well-established remedy of injunctive
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`relief to its claims of patent infringement. It is undisputed that PMP’s counterclaims adequately
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`state claims for infringement of PMP’s asserted patents. Permanent injunction is a remedy for
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`patent infringement. 35 U.S.C. § 283; eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).
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`The Court is not required to assess the merits of PMP’s request for a permanent injunction to grant
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`a motion for leave to amend. See Davis, 615 F.2d at 613 (“Conjecture about the merits of the
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`litigation should not enter into the decision whether to allow the amendment.”). Because the Court
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`is able to grant the requested injunctive relief for patent infringement, PMP’s request is not futile.
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`Griaznov v. J-K Techs., LLC, No. ELH-16-2522, 2017 WL 915000, at *11 (D. Md. Mar. 8, 2017)
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`(granting motion to amend to include permanent injunctive relief because “there are claims in the
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`proposed Amended Complaint for which plaintiff may be able to obtain injunctive relief”) (citation
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`omitted); Nelson-Ricks, 2017 U.S. Dist. LEXIS 150430, at *6 (because there is a possibility of
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`future harm in this case, request for leave to amend “is not an exercise in futility”).
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`V.
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`CONCLUSION
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`PMP respectfully requests that the Court grant its motion for leave to amend its
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`counterclaims to include injunctive relief, and allow PMP to file its proposed Second Amended
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`Counterclaims (Exhibit A).
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`Dated: March 1, 2021
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`Respectfully submitted,
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`By: /s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`(max.grant@lw.com)
`Lawrence J. Gotts (VSB No. 25337)
`lawrence.gotts@lw.com
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`Case 1:20-cv-00393-LO-TCB Document 464 Filed 03/01/21 Page 9 of 10 PageID# 10210
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`Matthew J. Moore (pro hac vice)
`matthew.moore@lw.com
`Latham & Watkins LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
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`Clement J. Naples (pro hac vice)
`clement.naples@lw.com
`LATHAM & WATKINS LLP
`885 Third Avenue
`New York, NY 10022-4834
`Tel: (212) 906-1200; Fax: (212) 751-4864
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`Gregory J. Sobolski (pro hac vice)
`greg.sobolski@lw.com
`Latham & Watkins LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Telephone: (415) 391-0600
`Facsimile: (415) 395-8095
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`Brenda L. Danek (pro hac vice)
`brenda.danek@lw.com
`LATHAM & WATKINS LLP
`330 North Wabash Avenue, Suite 2800
`Chicago, IL 60611
`Tel: (312) 876-7700; Fax: (312) 993-9767
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`Counsel for Defendant-Counterclaim Plaintiff
`Philip Morris Products S.A.
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`Case 1:20-cv-00393-LO-TCB Document 464 Filed 03/01/21 Page 10 of 10 PageID# 10211
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 1st day of March, 2021, a true and correct copy of the foregoing
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`was served using the Court’s CM/ECF system, with electronic notification of such filing to all
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`counsel of record:
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`/s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`Email: max.grant@lw.com
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`Counsel for Defendant-Counterclaim
`Plaintiff Philip Morris Products S.A.
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