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`PHILIPS NORTH AMERICA LLC,
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`Case No. CV 19-06301-AB (KSx)
`
`
`ORDER DENYING DEFENDANTS’
`MOTION TO AMEND (DKT. NO. 82)
`
`Plaintiff,
`
`
`v.
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`GARMIN INTERNATIONAL, INC.
`AND GARMIN LTD.,
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`Defendants.
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`I. INTRODUCTION
`Before the Court is Defendants’ Garmin International, Inc. and Garmin Ltd.
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`(collectively, “Defendants” or “Garmin”) Motion to Amend. (“Motion,” Dkt. No 82.)
`Plaintiff Philips North America LLC (“Plaintiff” or “Philips”) filed an Opposition to
`Defendants’ Motion to Amend or in the alternative, Motion to Dismiss (“Opp’n,” Dkt.
`No. 87); Defendants filed a Reply; (“Reply,” Dkt. No. 88); and Plaintiff, per
`stipulation (Dkt. No. 78), filed a Reply in Support of Its Motion to Dismiss (“Sur-
`Reply,” Dkt. No. 91). For the following reasons, the Court DENIES Defendants’
`Motion and DENIES AS MOOT Plaintiff’s Motion to Dismiss in the Alternative.
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`1.
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`

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`II. BACKGROUND
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`Plaintiff asserts six patents in this action. (First Amended Complaint, Dkt. No.
`45.) By this Motion, Defendants request leave to amend their pleadings to assert an
`affirmative defense and counterclaim for inequitable conduct with respect to U.S.
`Patent No. 9,314,192 (“the ’192 Patent”). Defendants attach to their Motion a set of
`Proposed First Amended Answers, which contain allegations related to inequitable
`conduct. (Dkt. No. 83-1 at ¶¶ 78–133; Dkt. No. 83-2 at ¶¶ 78–133.1) The allegations
`are as follows.
`A. Philips IP&S
`Plaintiff’s parent company, Koninklijke Philips Electronics N.V. (“KPNV”) has
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`a department titled Intellectual Property & Standards (“IP&S”), which “handles all IP
`matters related to Philips businesses.” (Dkt. No. 83-1 at ¶¶ 78–79.) IP&S contains “a
`team of over 300 intellectual property experts in 18 offices in 11 different countries.”
`(Id. at ¶ 80.) “[O]n information and belief, Philips IP&S coordinates its
`communications and patent strategies in patent offices throughout the world.” (Id. at
`¶ 82.)
`
`B. EP Application
`On December 15, 2005, IP&S filed Application No. 05112250.5 (“the EP
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`Application”) with the European Patent Office (“EPO”). (Id. at ¶ 87.) IP&S received
`an International Search Report from the EPO, following which IP&S amended the
`claims in the EP Application. (Id. at ¶¶ 88–91.) On March 9, 2010, the EPO notified
`IP&S that the claims in the EP Application were not novel in view of the art cited in
`the International Search Report. (Id. at ¶ 92.) IP&S amended the claims. (Id. at ¶ 93.)
`On June 26, 2012, IP&S identified a new internal representative for the EP
`Application, Petronella Verweij. (Id. at ¶ 94.)
`
`
` Because the allegations presented in Dkt. Nos. 83-1 and 83-2 are identical, the Court
`hereinafter refers to Dkt. No. 83-1, and its analysis applies equally to Dkt. No. 83-2.
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`2.
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`On June 30, 2014, the EPO issued a summons for IP&S to attend oral
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`proceedings and attached two additional references, collectively referred to as
`“Yamamoto.” (Id. at ¶ 95.) The EPO’s explanation stated it “is not at present apparent
`which part of the application could serve as a basis for a new, allowable claim.” (Id. at
`¶ 96.) IP&S did not attend the oral proceeding, and the EPO closed the proceedings.
`(Id. at ¶¶ 99–101.) On April 7, 2015, IP&S withdrew the EP Application and
`requested a refund. (Id. at ¶ 102.)
`C. Japanese Application
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`On June 12, 2008, IP&S filed Japanese Patent Application No. 2008-545163
`(“Japanese Application”). (Id. at ¶ 103.) The Japanese Patent Office cited prior art JP
`2003-102692A, following which IP&S amended the claims and overcame the
`rejection. (Id. at ¶¶ 104–06.)
`D. US Application
`On June 12, 2008, IP&S (specifically, Yan Glickberg and Jeanne Rusciano)
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`filed U.S. Patent Application No. 12/097,121 (“US Application”) with the United
`States Patent and Trademark Office (“PTO”). (Id. at ¶¶ 107, 110.) IP&S submitted an
`Information Disclosure Statement identifying the references previously identified by
`the EPO in the International Search Report. (Id. at ¶ 112.) During prosecution, IP&S
`employees Yan Glickberg, Patricia Heim, Edward W. Goodman, and Kathleen Asher
`made submissions to the PTO. (Id. at ¶¶ 110–19.) During the timeframe from 2009 to
`2015, IP&S submitted the references from the International Search Report, and two
`references cited against the Japanese Application. (Id.) IP&S did not submit the
`Yamamoto reference that was cited in 2014. (Id. at ¶ 120.)
`E. IP&S Docket Numbers
`At the time of filing, the IP&S “attorney docket number” for the US
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`Application was PH003603 US1, and the attorney docket number for the EP
`Application was PH003603 EP2. (Id. at ¶ 108.) In 2015, IP&S changed the US
`Application docket number to 2005PO2656WOUS and the EP Application docket
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`3.
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`number to 2005PO2656WE. (Id. at ¶ 109.)
`F. Allegations Relating to IP&S Knowledge
`The IP&S team prosecuting the US Application knew of the Yamamoto
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`reference because the team operates in a coordinated fashion. (Id. at ¶¶ 123, 124.) The
`same docketing number was assigned to the US Application and EP Application,
`which “evidences that the legal teams prosecuting both patents had access to the same
`information.” (Id. at ¶¶ 108, 125.) IP&S selectively disclosed references cited against
`foreign counterparts, but not the Yamamoto reference. (Id. at ¶ 126.)
`III.
` LEGAL STANDARD
`A. Leave to Amend
`To determine whether a proposed amendment to pleading should be allowed
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`after the scheduling order deadline for amending pleadings has expired, there are
`typically two steps: (1) the party seeking amendment must show good cause to allow
`modification of the scheduling order under Rule 16, and (2) the court must determine
`whether amendment is proper under Rule 15. See Johnson v. Mammoth Recreations,
`Inc., 975 F.2d 604, 607–08 (9th Cir. 1992); Eckert Cold Storage, Inc. v. Behl, 943 F.
`Supp. 1230, 1232–33 (E.D. Cal. 1996).
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` “Only after the moving party has demonstrated diligence under Rule 16 does
`the court apply the standard under Rule 15 to determine whether the amendment was
`proper.” Id. (citations omitted). Rule 15(a)(2) instructs the court to “freely give leave
`when justice so requires.” Fed. R. Civ. P. 15(a)(2); see Foman v. Davis, 371 U.S. 178,
`182 (1962).
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`“This policy is to be applied with extreme liberality.” Desertrain v. City of Los
`Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014) (citation omitted); see also DCD
`Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citation omitted)
`(“Amendment is to be liberally granted where from the underlying facts or
`circumstances, the [claimant] may be able to state a claim.”) Even so, “[l]eave to
`amend is not automatic[,]” Kaneka Corp. v. SKC Kolon PI, Inc., No. CV 11-03397
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`4.
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`JGB (RZx), 2013 WL 11237203, at *2 (C.D. Cal. May 6, 2013). In the Ninth Circuit,
`courts consider five factors in deciding whether to grant leave to amend: “bad faith,
`undue delay, prejudice to the opposing party, futility of amendment, and whether the
`plaintiff has previously amended the complaint.” Id. (citing Nunes v. Ashcroft, 375
`F.3d 805, 808 (9th Cir. 2004)); see also Forman v. Davis, 371 U.S. 178, 182 (1962).
`“Futility alone can justify the denial of a motion for leave to amend.” Nunes, 375 F.3d
`at 808.
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`The party opposing amendment bears the burden of showing prejudice, which is
`the “touchstone of the inquiry under [R]ule 15(a).” Eminence Capital, LLC v. Aspen,
`Inc., 316 F.3d 1048, 1052 (internal quotation marks omitted) (citation omitted); see
`also Johnson, 975 F.2d at 609 (“Rule 15(a)’s liberal amendment policy . . . focuses on
`the bad faith of the party seeking to interpose an amendment and the prejudice to the
`opposing party”). Ultimately, leave to amend lies “within the sound discretion of the
`trial court.” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981); see also Rich v.
`Shrader, 23 F.3d 1205, 1208 (9th Cir. 2016).
`B. Inequitable Conduct
`“Inequitable conduct is an equitable defense to patent infringement that, if
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`proved, bars enforcement of a patent.” Therasense Inc. v. Becton Dickinson and Co.,
`649 F.3d 1276, 1285 (Fed. Cir. 2011). The doctrine enforces a patent applicant’s duty
`of candor to the Patent Office. See 37 C.F.R. § 1.56 (“Each individual associated with
`the filing and prosecution of a patent application has a duty of candor,” including “a
`duty to disclose to the Office all information known to that individual to be material to
`patentability.”). Inequitable conduct is sometimes characterized as consisting of three
`elements: (1) “the patent applicant made misrepresentations or omissions material to
`patentability,” (2) the applicant “did so with the specific intent to mislead or deceive
`the [Patent Office],” and (3) “that deceptive intent was the single most reasonable
`inference to be drawn from the evidence.” Ohio Willow Wood Co. v. Alps S., LLC, 813
`F.3d 1350, 1357 (Fed. Cir. 2016).
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`5.
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`“[I]nequitable conduct, while a broader concept than fraud, must be pled with
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`particularity” under Rule 9(b). Ferguson Beauregard/Logic Controls, Div. of Dover
`Res., Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003). Thus, a pleading
`must identify the “‘who, what, when, where and how’ of the alleged material
`misrepresentation, and offer ‘sufficient underlying facts from which a court may
`reasonably infer that a party acted with the requisite state of mind.’” Parallax Grp.
`Int’l LLC v. Incstores LLC, No. SA CV 16-00929 AG (DFMx), 2017 WL 3453299, at
`*3 (C.D. Cal. June 30, 2017) (quoting Exergen Corp. v. Wal-Mart Stores, Inc., 575
`F.3d 1312, 1327 (Fed. Cir. 2009)). Under the clear and convincing evidence standard,
`the party alleging inequitable conduct must show that the specific intent to deceive is
`“the single most reasonable inference able to be drawn from the evidence.”
`Therasense, 649 F.3d at 1291. Therefore, “when there are multiple reasonable
`inferences that may be drawn, intent to deceive cannot be found.” Id. at 1290–91.
`IV. DISCUSSION
`Defendants seek to amend their pleadings to assert an affirmative defense and
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`counterclaim of inequitable conduct with respect to the ’192 Patent. The parties
`dispute only whether Defendants’ amended pleading is futile. (See Stipulation, Dkt.
`No. 81.)
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`Inequitable conduct requires establishing by clear and convincing evidence that
`an applicant made material omissions “with the specific intent to mislead or deceive
`the [Patent Office].” Ohio Willow Wood Co., 813 F.3d at 1357. Although intent can be
`shown by circumstantial evidence, Defendants must demonstrate “that deceptive
`intent was the single most reasonable inference to be drawn from the evidence.” Id.
`Therefore, “when there are multiple reasonable inferences that may be drawn, intent to
`deceive cannot be found.” Therasense, 649 F.3d at 1290–91.
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`Defendants’ proposed allegations regarding specific intent consist of the
`following. The IP&S team prosecuting the US Application knew of the Yamamoto
`reference cited during prosecution of the EP Application because the IP&S team
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`operates in a coordinated fashion, and the internal docket numbers indicate the teams
`“had access to the same information.” (Dkt. No. 83-1 at ¶¶ 123, 108.) Defendants’
`allegations, while showing it is possible the US Application team could access the EP
`Application information, does not show it is plausible that the team did so, learned of
`the Yamamoto reference, and decided to deliberately withhold it. Defendants allege
`the IP&S team has over 300 intellectual property experts, in 18 offices, in 11 different
`countries. (Id. at ¶ 80.) Defendants further allege the prosecution of the US
`Application spanned from 2008 through 2015, during which the IP&S member
`responsible for submissions to the PTO changed numerous times, and during which
`the members cited other references to the PTO. (Id. at ¶¶ 107–19.) Given the breadth
`of the department and prosecution activity detailed by Defendants’ allegations, the
`possibility remains that Yamamoto (cited in 2014) was overlooked during prosecution
`of the US Application from 2008 to 2015. Thus, taking Defendants’ allegations as
`true, multiple reasonable inferences exist as to whether or not the US Application
`team knew of the Yamamoto reference. See Therasense, 649 F.3d at 1291.
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`Even if Defendants demonstrated that the single most reasonable inference was
`that the US Application team knew of Yamamoto, Defendants’ proposed allegations
`remain deficient because they do not result in the single most reasonable inference
`being that the team “decided to deliberately withhold [Yamamoto] from the relevant
`examiner.” Exergen, 575 F.3d at 1331. Defendants make no allegations that
`Yamamoto was not cumulative where IP&S submitted multiple references to the PTO
`during seven years of prosecution. Exergen, 575 F.3d at 1329. Additionally, Courts
`have consistently held that allegations that an applicant disclosed a reference during
`prosecution of one application, and not another, do not meet the threshold level of
`deceptive intent. E.g., Therasense, 649 F.3d at 1288–89 (“Proving that the applicant
`knew of a reference, should have known of its materiality, and decided not to submit it
`to the PTO does not prove specific intent to deceive.”); see also Abaxis, Inc. v.
`Cepheid, No. 10-CV-02840-LHK, 2011 WL 1044396, at *7 (N.D. Cal. Mar. 22,
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`2011).
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`For these reasons, Defendants’ proposed pleading does not result in the single
`most reasonable inference being that IP&S knew of Yamamoto and decided to
`deliberately withhold it from the PTO. Thus Defendants’ Motion is denied on futility
`grounds at this time.2 Because Defendants’ Motion is denied, Plaintiff’s Motion to
`Dismiss in the Alternative is denied as moot.
`V. CONCLUSION
`For the foregoing reasons, the Court DENIES Defendants’ Motion (Dkt. No.
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`82) and DENIES AS MOOT Plaintiff’s Motion to Dismiss in the Alternative. The
`August 28, 2020 hearing is vacated.
`
`
`Dated: August 26, 2020
`
`_______________________________________
`HONORABLE ANDRÉ BIROTTE JR.
`UNITED STATES DISTRICT COURT JUDGE
`
`
` Plaintiff stated that “it was already in the midst of preparing a production of non-
`privileged documents pertaining to the patent prosecution.” (Opp’n at 14 n.2.)
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