Opinion
1:00CV00463
December 12, 2002
ORDER
The matter before the Court is the untimely motion by defendant Pioneer Hi-Bred International, Inc. ("Pioneer") to amend its answer to the third amended complaint. In that pleading, Pioneer was to add new affirmative defenses.
A brief history of this case will help put the motion in perspective. The complaint was filed on May 5, 2000. The patents at issue are broadly described as the De Greve patents and were issued from October 1993 through August 2000. These patents purportedly describe methods for genetically engineering plant cells and plant with DNA fragments from the bacteria described as Bacillus thuringiensis ("Bt"). Cells and plants containing the Bt DNA are alleged to be toxic to some insects. Plaintiff Aventis Cropscience N.V. ("Aventis") claims that the De Greve patents cover all plant species, including monocotyledonous crops, such as corn and rice.
Aventis subsequently filed an amended complaint, but when the United States Patent and Trademark Office issued U.S. Patent No. 6,107,546 ("646 patent") on or about August 22, 2000, Aventis filed a second amended complaint to incorporate the new patent. After Pioneer responded to the second amended complaint, parallel litigation against Aventis was initiated by the Monsanto Corporation in the Eastern District of Missouri. Pioneer filed a motion to stay proceedings pending resolution of the Monsanto action, but this was denied in April 2001. A Rule 26(f) Report was entered on June 20, 2001. That order required all amendments to pleadings to be made by August 15, 2001. Within that time and on July 2, 2001, Aventis filed a third amended complaint adding an additional party. Pioneer did not file the instant motion until August 26, 2002, more than one year after the time allotted. Aventis filed a timely response on September 30, 2002, but Pioneer did not file its reply brief until October 23, 2002.
The progress of this case on the Court's docket has not been smooth. Originally, the Court had set a discovery cutoff for June 20, 2002. That permitted one year of discovery. The case was set on the Court's master calendar for January 6, 2003. Thereafter, some defendants attempted to amend the Rule 26(f) Report in March 2002. This was denied in light of the trial date. Discovery problems abound. In April 2002, Aventis filed a motion to compel discovery. The Court then held a hearing with respect to a request for a protective order and the discovery disputes which resulted in the parties beginning to work together to resolve some discovery matters. Pioneer then filed a motion to compel. The parties then moved again to extend the deadlines in the Rule 26(f) Report, which the Court again denied because it is important to this Court that cases be kept on the master calendar schedule. The master calendar has been the reason this Court has been able to reach its civil docket in a timely fashion and eliminate a backlog.
In May 2002, plaintiff filed a motion to compel documents. In July 2002, the Court rescheduled the trial for the July 2003 master calendar. Also in July, through written orders and a hearing, the Court resolved the motions to compel and a motion to strike. Following the hearing, the Court set a new discovery schedule which required fact discovery to close on December 20, 2002 and expert discovery to close on March 5, 2003. However, the Court set the deadline for filing dispositive motions before the end of expert discovery. By arranging discovery in this fashion, the Court allowed the parties the maximum discovery available prior to the master calendar trial date of July 7, 2003.
Thereafter, in July and August, Pioneer and defendant Dow Agrosciences LLC ("Dow") filed motions to compel discovery. The Court held a discovery conference on August 22, 2002, wherein discovery matters were resolved. Four days after that conference, Pioneer filed the instant motion to amend and add defenses.
Also presently pending before the Court is Pioneer's motion to compel discovery filed in September 2002. In the month of October, 2002, Aventis filed a motion for a protective order against allegedly harassing discovery. Defendant Dow has filed two motions to compel, and defendant Pioneer has filed a motion to compel. More motions are being filed as this order is being drafted. Thus, it can be seen that the parties and the Court have their hands full in attempting to take care of the claims and discovery which are presently before the Court. It is in this milieu that the Court views Pioneer's motion to amend its answer to add defenses.
Pioneer's motion to amend seeks to add defenses relating to license, equitable estoppel, collateral estoppel, laches, and to provide particulars concerning inequitable conduct allegations. Plaintiff has only objected to the addition of the affirmative defenses relating to license, equitable estoppel, and laches.
Motions to amend pursuant to Fed.R.Civ.P. 15(a) should be freely granted when possible. In denying a motion to amend, the Court should look to factors such as whether there has been an undue delay, bad faith, a dilatory motive, repeated failures to correct, futility of amendment, or prejudice to an opposing party. See Deasy v. Hill, 833 F.2d 38 (4th Cir. 1987), cert. denied, 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d 483 (1988). Delay alone is usually not a sufficient reason to deny a motion to amend unless the Court also finds some prejudice, bad faith, or futility. Johnson v. Oroweat Foods Co., 785 F.2d 503 (4th Cir. 1986). For example, even though a new cause of action or theory is advanced, if there will be no new evidence and the effect on the opposing party will be minor, the Court may grant an amendment. Medigan of Kentucky, Inc. v. Public Service Commission of West Virginia, 985 F.2d 164 (4th Cir. 1993). (That is not the case here.) When, however, a party seeks to amend a complaint or answer in violation of a Rule 16 scheduling order, the party must make an additional showing of good cause. Forstmann v. Culp, 114 F.R.D. 83 (M.D.N.C. 1987). Good cause is not shown when the amendment could have been timely made. Wildauer v. Frederick County, 993 F.2d 369 (4th Cir. 1993). Moreover, amendments attempted at the end of discovery or right before trial may be denied based on disruption to the docket and the parties. Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir.), cert. denied, 528 U.S. 891, 120 S.Ct. 215, 145 L.Ed.2d 181 (1999); Lone Star Steakhouse Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 940 (4th Cir. 1995) (counterclaim). That is the situation presently before the Court.
Also, the Court notes that not only is discovery coming to an end shortly, but this has been a case where the parties have had difficulty conducting discovery on issues already present in the case. The case has already been set back on the master calendar six months, which is an extraordinary event in this Court's history of the master calendar. Consequently, the Court will view Pioneer's motion to amend very strictly.
Laches
The Court will first review Pioneer's defense of laches. With this defense, Pioneer admits that it has only been selling corn hybrids since 1997 and, therefore, the laches period is extremely short. It further recognizes that a presumption of laches only arises after six years, citing 35 U.S.C. § 286. This is a defense that could have been raised immediately, but Pioneer did not. In defense of its tardiness, it can only say that the proposed amendments are based on documents in the sole possession of plaintiff showing Aventis knew about Pioneer's and Monsanto's collaboration on Cry1A(b) since 1993 and Pioneer's and Mycogen's research collaboration since 1995 and, therefore, Aventis "should have known that this involved insect resistant corn using a Cry1F gene." (Brf. at 15) However, as Aventis complains, Pioneer has not identified these documents and explained why these documents make the defense a newly arising one. Therefore, neither Aventis nor this Court can make any determination concerning Pioneer's claim of reliance on these heretofore unknown documents to make the claim at this late date.
As noted above, when a party seeks to amend the pleadings in violation of a scheduling order, it must show good cause. Here, Pioneer's only showing is wholly conclusory. Even after Aventis in its response complained about the conclusory showing, Pioneer in its reply did not identify these so-called "smoking gun" documents. Nor has Pioneer shown that it could not have raised the defense earlier without the documents. Even its justification involves conjecture as to what Aventis "should have known." Thus, the Court cannot find that Pioneer has met the steep burden in this case of showing good cause for not seeking to amend its answer and add these new defenses at an earlier time and within the scheduling order set by the Court.
In addition, Aventis states that the defense of laches would be futile. Amendments which cannot withstand a motion to dismiss are futile. At the same time, it is a better exercise of the Court's discretion, and a conservation of judicial resources, to leave decisions on the merits with respect to motions to amend until the matter has been fully briefed in a motion to dismiss. A court should only get into the merits when it is absolutely clear that the amendment is frivolous. Furthermore, the Court must wait for summary judgment briefing if there are any disputed facts which might have a bearing on the Court's decision. See generally 6 Charles Alan Wright, et al., Federal Practice and Procedure § 1487, at 635-643 (1990).
In the instant case, the Court will glance at Aventis' futility argument at this stage because Pioneer has not shown good cause for the amendment. Aventis' futility argument bolsters that prior finding.
Aventis argues that Pioneer relies on unidentified Aventis documents in order to show that Aventis knew that Pioneer and Monsanto collaborated on insect resistant corn using a Cry1A(b) protein some time in 1993. Aventis states that even if those documents show some knowledge, Monsanto did not reveal that the Cry1A(b) protein was truncated. This apparently was first revealed in 1999. Aventis further states that the first public information that Pioneer and Mycogen collaborated with respect to the Cry1F protein occurred in March 1999. In response, Pioneer only states that Aventis' argument must fail because Pioneer does not base its laches defense on the articles mentioned, but on other documents. However, Pioneer fails to point out these other documents. The Court does not think it unfair to require Pioneer to come forward with both factual assertions and some case law when it responds to a futility argument, at least in this case.
As noted earlier, the Court will often defer futility arguments until formal motions to dismiss or summary judgment are filed. However, in the instant case, Pioneer's motion comes late in the day, in a very hotly contested case, where the parties have discovery problems and have already caused a six-month delay in trial. Under these circumstances, the Court can expect and require more specific arguments than Pioneer has given. Consequently, the Court finds that Aventis has offered reasons to conclude that Pioneer's laches defense would be futile and Pioneer has not dispelled them. Therefore, for all the above reasons, the Court will deny Pioneer's motion to amend to the extent it seeks to add a defense of laches.
In other circumstances, and were this a unique and particularly deserving situation, the court might have considered allowing Pioneer to amend, but only on the condition that it set out the evidence it will use at trial. This would be done in order to eliminate the prejudice when a very deserving party has discovered new evidence at a very late date in the proceedings and the motion to amend is not tainted with undue delay or other problems. considering the number of the proposed amendments, the lateness of the filing, and the general nature of the case setting, the court concludes that this procedure would clearly not be appropriate for this case.
License
Pioneer wants to add a defense that it had a free, non-exclusive license to sell its insect resistant corn products. It claims that it obtained this license, which is contained in the Commercial License Agreement between it and Hoechst Schering AgrEvo Gmbh ("AgrEvo"). This license was allegedly signed on December 7, 1995. Pioneer argues that because AgrEvo is a predecessor to Aventis, Aventis has always known of the agreement. What Pioneer fails to state and explain is that this means Pioneer also was aware of the agreement. Pioneer fails to present good cause for it not raising this defense immediately based on the express terms of the agreement. Aventis further points out that this license agreement involves herbicide resistant, as opposed to insect resistant, products. For all these reasons, Pioneer fails to show good cause.
In addition to an express licensing theory, Pioneer also puts forward an implied licensing theory. The ground for this is based on the entire course of conduct by Aventis. Pioneer does not explain why it did not know about this conduct prior to the filing of this lawsuit. In fact, Pioneer does not refer to newly discovered "conduct" by Aventis. Instead, it now relies on alleged internal communications and letters setting out an alleged course of conduct whereby Aventis encouraged Pioneer to sell its insect resistant corn products in return for sales of LibertyLink sales, a herbicide treatment system.
Aventis first points out that, again, Pioneer has failed to identify these "smoking gun" communications. Second, Aventis argues that the information can only be relevant if Pioneer knew about it and, therefore, relied on this communication. Again, Pioneer appears to be arguing that an implied license can arise out of undisclosed thoughts of a party (Aventis), as opposed to the conduct of the party. It has failed to cite any case allowing such a theory. Consequently, the Court also finds that this defense should not be permitted.
Equitable Estoppel
Pioneer agrees that the elements for equitable estoppel are (1) unreasonable and inexcusable delay in filing suit; (2) prejudice to the infringer; (3) affirmative conduct by the patentee inducing belief that it had abandoned its claim against the alleged infringer (including silence); and (4) detrimental reliance by the infringer. (emphasis added) (Brf. at 12-13, citing A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1041-42 (Fed. Cir. 1992).)
Pioneer states that it has uncovered confidential communications, memoranda, and notes which have revealed a course of conduct designed to lull Pioneer into believing that Aventis would not assert patent rights against Pioneer's insect resistant corn products. Pioneer argues that representations were made to it and that it relied on these promises and committed to sell LibertyLink products in lieu of alternative technologies. In other words, Pioneer argues that Aventis encouraged it to sell offending products and now has brought suit against Pioneer for its conduct.
Again, Aventis points out that Pioneer fails to show why it did not plead this defense earlier if it, in fact, relied on representations (verbal or by conduct) made to it by Aventis. However, if representations were made, then Pioneer would have known of them. It would have been "induced." If Aventis stated or took actions, those all would have been observable. Now, Pioneer states that it can, after the fact, rely on internal communications as being part of Aventis' conduct, even though Pioneer would not have known of this "conduct" at the time. Again, the Court finds that this theory could have and should have been advanced earlier and, furthermore, the Court cannot disagree with Aventis that Pioneer's new theory is, in fact, futile. Pioneer has not pointed to the Court any case allowing a party to raise equitable estoppel defenses based on unknown internal memoranda which supposedly "induced" conduct at a prior time. Therefore, the Court further agrees that this defense also should not be permitted, both because Pioneer has failed to show good cause and because of futility.
IT IS THEREFORE ORDERED that defendant Pioneer Hi-Bred's motion to file an amended answer to the third amended complaint (docket no. 165) is granted in part and denied in part and that Pioneer may, within twenty days of the date of this order, file an amended answer and add affirmative defenses, but not may add the affirmative defenses of license, equitable estoppel. or laches. It may add the defenses of collateral estoppel, as well as setting out further particulars concerning inequitable conduct allegations.