United States District Court, Northern District of Illinois, Eastern Division
AVNET, INC. and BSP SOFTWARE, LLC, Plaintiffs,
MOTIO, INC. Defendant.
OPINION AND ORDER
JOAN H. LEFKOW JUDGE
Defendant Motio, Inc. (“Motio”) asks the court for leave to file an amended answer alleging an affirmative defense and additional counterclaims. (Dkt. 263.) For the reasons stated below, Motio’s motion is granted.
On March 22, 2012, Plaintiff BSP Software, LLC (“BSP”) filed suit against Motio alleging infringement of Patent Nos. 7, 945, 589 (the ’589 patent) and 8, 073, 863 (the ’863 patent). (Dkt. 1.) Motio filed an answer denying BSP’s allegations and seeking a declaratory judgment that the patents are invalid or, in the alternative, were not infringed. (Dkt. 12.) Avnet, Inc. (“Avnet”) acquired BSP later that year and obtained all rights to BSP’s intellectual property, including the ’589 and the ’863 patents. (See dkt. 153 at 1.) BSP filed a motion to substitute Avnet as plaintiff in July 2013. (Dkt. 144.)
In January 2014, the court stayed the case in light of the parties’ interest in settlement. (Dkt. 239.) The parties engaged in settlement talks until September 2014, when the magistrate judge concluded that, based on the parties’ report, further settlement discussions would not be fruitful. (See dkt. 257.)
Once settlement talks ceased, Motio moved for a new case management schedule. (Dkt. 258.) The court granted Motio’s motion and a new scheduling order was entered on August 25, 2014. (Dkts. 260, 262.) A week later, Motio filed the instant motion for leave to amend. (Dkt. 263.) Motio’s motion seeks to file three additional counterclaims, all of which allege violations of the Sherman Act, and the affirmative defense of inequitable conduct. The additional counterclaims and affirmative defense pertain only to the ’589 patent. (Id.)
At the core of Motio’s counterclaims is the allegation that BSP procured the ’589 patent through intentional fraud on the U.S. Patent and Trademark Office (“USPTO”). Motio claims that by filing a suit to enforce the fraudulently obtained patent, BSP attempted to form a monopoly in violation § 2 of the Sherman Act. Motio also claims that by acquiring BSP, Avnet and BSP entered into a conspiracy to restrain trade in violation of § 1 of the Sherman Act. BSP and Avnet (together “Plaintiffs”) dispute these claims.
Once a pleading can no longer be amended as a matter of course, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave.” Fed.R.Civ.P. 15(a)(2). Federal Rule of Civil Procedure 15(a)(2) directs courts to “freely give leave when justice so requires.” Id. This generous standard reflects the Rule’s “liberal attitude towards the amendment of pleadings.” Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) (quoting Campania Mgmt. Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 848–49 (7th Cir. 2002)) (internal quotation marks omitted).
Courts may refuse to grant leave if, however, there is undue prejudice to the non-movant. Hukic v. Aurora Loan Servs., 588 F.3d 420, 432 (7th Cir. 2009). Courts may also refuse to grant leave if “the moving party unjustifiably delayed in presenting its motion to the court, repeatedly failed to cure deficiencies, or if the amendment would be futile.” Gandhi v. Sitara Capital Mgmt., LLC, 721 F.3d 865, 868–69 (7th Cir. 2013) (citing Hukic, 588 F.3d at 432). An amendment is futile when “the new pleading would not survive a motion to dismiss.” Id. at 869 (citing Brunt v. SEIU, 284 F.3d 715, 720–21 (7th Cir. 2002)).
Plaintiffs argue for a different standard, claiming Motio must show good cause in order to amend its pleading. (Dkt. 273 at 9–10.) Although a motion for leave to amend a complaint is generally evaluated under Rule 15(a)(2), that Rule is in tension with Rule 16, which governs scheduling orders. Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011). Rule 16 directs district courts to issue scheduling orders as soon as practicable, and to include in those orders a deadline for filing amended pleadings. Fed.R.Civ.P. 16(b)(2), (b)(3)(A). Once the schedule is set, it can be modified “only for good cause and with the judge’s consent.” Fed.R.Civ.P. 16(b)(4). Plaintiffs argue that because the deadline for amending pleadings has passed, Motio must show good cause in order to assert additional counterclaims. (Dkt. 273 at 9–10). The Seventh Circuit has held that when the deadline for amending pleadings has passed, a district court is “entitled to apply the heightened good-cause standard of Rule 16(b)(4) before considering whether the requirements of Rule 15(a)(2) were satisfied.” Alioto, 651 F.3d at 719.
I. Good Cause
The primary consideration in determining whether a litigant has established good cause is the diligence of the party seeking amendment. Id. at 720 (citing Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am., 424 F.3d 542, 553 (7th Cir. 2005)). Plaintiffs claim that Motio “waited nearly two years since being provided with the very documents that form the basis for its new claims and defenses” to file its motion to amend. (Dkt. 273 at 13 (emphasis removed).) Motio, however, maintains that BSP did not produce all relevant documents. (Dkt. 263 at 3–4.) According to Motio, BSP only produced some of what Motio claims are “critically important” IM chat logs. (Id.) Motio had to subpoena the remaining chat logs from third party Team Tech Systems, Inc. (“Team Tech”)—a third party that, despite its connections to BSP (and specifically with the ’589 patent), Motio claims BSP never identified in its initial disclosures or its responses to Motio’s interrogatories. (Id. at 4.)
Plaintiffs argue that even if Motio is correct, and BSP did not produce all relevant documents, Motio had “every opportunity to timely seek leave” since the production of documents that Motio alleges give rise to its proposed claims. (Dkt. 273 at 13.) Plaintiffs claim this production was in October 2012. (Id.) Motio, however, insists that it only became aware of the facts supporting its Sherman Act claims when it forensically analyzed the documents produced by Team Tech. (Dkt. 283 at 1.) Motio states that it did not receive the native version of these documents—the version needed to perform forensic analysis—until September 2013, over a year later. (Id.) Although Motio did not file its motion to amend until October 2014, Motio explains that due to the Markman hearing and the settlement process that followed, “the forensic analysis was not completed until the parties signed a settlement term sheet and the case was stayed pending settlement.” (Id.)
Motio further alleges that BSP attempted to keep relevant documents from Motio by failing to name potential custodians. (Dkt. 263 at 3–5.) Motio also claims that BSP used alias email accounts to cover up its fraudulent conduct and hinder Motio’s attempts at discovery. (Id. at 7–9.) Although Plaintiffs dispute these claims, Motio’s allegations sufficiently explain its delay in ...