02 Micro v. Monolithic Power (Fed. Cir. 2006).

02 Micro holds a patent covering an DC/AC conversion circuit to allow a laptop batter to control a fluorescent lamp. 02 Micro sued Monolithic for infringement.

Following the local patent rules of the Northern District of California, 02 Micro filed its final infringement contentions within 30 days of the district court’s claim construction hearing. At that time, discovery was still ongoing, and during a late deposition, 02 Micro discovered another (much better) theory of infringement based on the defendant’s design.  After an extended period of negotiation, the defendant refused to stipulate to an amended infringement contention. Then finally, three months after the deposition, 02 Micro submitted a motion to amend.

The case is on appeal because the magistrate judge denied 02 Micro’s motion to amend.  The N.D.Cal. rules allow amendments for “good cause.” However, the magistrate found that the three-month delay showed no diligence, that the negotiation time did not justify a delay because no settlement was reached, and that allowing the amended infringement contentions would prejudice the defendant and reopen discovery. The new theory of infringement was the only viable theory, and without that theory, summary judgment quickly followed.

Applying typical formalism, but no real analysis of the language of the rule, the CAFC affirmed summary judgment — finding that the required “good cause” requires diligence:

If the parties were not required to amend their contentions promptly after discovering new information, the contentions requirement would be virtually meaningless as a mechanism for shaping the conduct of discovery and trial preparation.

The two stated purposes of discovery are to (1) allow the parties to “develop facts and support” their theories and defenses; and (2) allow the parties to pin down the other side’s theories and defenses.  In this case, 02 Micro proposed amending contacted the defendant within three weeks of learning the new information about the defendant’s products.  All the parties knew of the new theory, there was just bickering over procedure.