Summary
granting defendant's motion to amend its defense of invalidity to include the "closely related" defense of inequitable conduct in suit alleging patent infringement
Summary of this case from Ty, Inc. v. Publications International, Ltd.Opinion
No. 00 C 7340.
May 4, 2004
On November 20, 2000, Plaintiff Douglas Press Inc. ("Douglas Press") filed a Complaint against Defendant Gamco International, Inc. ("Gamco") alleging infringement of United States Patent No. 5,046,737 ("the 737 patent"). The patent relates to a "pull-tab" game, constructed of paper and used primarily for charitable gaming. In its Answer, Gamco denied infringement and asserted that the '737 patent was invalid.
Gamco now moves to amend its Answer, pursuant of Federal Rule of Civil Procedure 15(a), to include the affirmative defense of inequitable conduct. The grant or denial of such a motion is within my sound discretion. Jones v. Hamelman, 869 F.2d 1023, 1026 (7th Cir. 1989). Fed.R.Civ.P. 15(a) states that leave to file an amended complaint "shall be freely given when justice so requires." The Supreme Court has interpreted this to mean that "in the absence of any apparent or declared reason — such as undue delay . . . or undue prejudice to the opposing party by virtue of allowance of the amendment . . . the leave sought should, as the rules require, be `freely given.'" Foman v. Davis, 371 U.S. 178, 182 (1962).
First, Douglas Press opposes the amendment on the grounds that inequitable conduct is not, as Gamco suggests, an affirmative defense but is instead a compulsory counterclaim and not subject to amendment under Rule 15(a). I find this argument unpersuasive. Inequitable conduct is well accepted in the Federal Circuit as an affirmative defense. See Int'l Rectifier Corp. v. IXYS Corp., 361 F.3d 1363 (Fed. Cir. 2004); Abbott Labs. v. TorPharm, Inc., 300 F.3d 1367 (Fed. Cir. 2002); Ferguson Beauregard v. Mega Sys., 350 F.3d 1327 (Fed. Cir. 2003).
Second, Douglas Press opposes the amendment on the grounds that it would cause them substantial prejudice. I disagree. Gamco bases its inequitable conduct claims on Douglas Press's allegedly improper withholding of prior art during its application for the '737 patent. This inequitable conduct defense is closely related to Gamco's previously pled defense of invalidity. In its original Answer, Gamco denied that the alleged invention of the '737 patent was patentable over prior work. Gamco's amendment would add only the proposition that Douglas Press knew of this prior work. Because the inequitable conduct claim is substantially related to the previously pled invalidity defense, I find that it will not prejudice Douglas Press. See Bower v. Joines, 978 F.2d 1004, 1010 (7th Cir. 1992). Additionally, I find the time needed to investigate this new defense will not materially delay these proceedings. Should this prove to be wrong, I will reconsider this order.
Finally, Douglas Press opposes the amendment on the grounds that Gamco has unduly delayed in seeking leave to amend its Answer. Douglas Press claims that Gamco had knowledge of facts that would support an inequitable conduct defense as early as 1998 and, therefore, should have included it in its Answer. Gamco claims that it did not include the inequitable conduct defense because it thought the evidence available, The testimony of Mr. Sonen, was insufficient to support such a claim. Gamco claims that, during discovery, a deponent, Mark Sells, corroborated Mr. Sonen's story. Claims of inequitable conduct are akin to fraud and must be pled with the particularity required by Fed.R.Civ.P. 9(b). Ferguson Beauregard, 350 F.3d 1327; Videojet Sys. Int'l, Inc., v. Inkjet, Inc., No. 95 C 7016, 1997 U.S. Dist. LEXIS 3110 (N.D. Ill. Mar. 13, 1997). Because of the seriousness of this fraud like allegation, some district courts have allowed litigants to amend their pleadings to assert an inequitable conduct defense where new or corroborating evidence is discovered. Enzo Life Sciences, Inc. v. Digene Corp., 270 F. Supp.2d 484, 489 (D. Del. 2003) (granting leave to amend to add inequitable conduct defense where party had obtained corroborating evidence through depositions noting that the party had been "prudent and possibly required to confirm the factual allegations through discovery.); O. Med. Indus. Pty. Ltd. v. C.R. Bard, Inc., 32 Fed.R. Serv.3d 18 (Callaghan) (N.D. Ga. July 6, 1995), aff'd 101 F.ed 715 (Fed. Cir. 1996) (granting accused infringer leave to amend its answer to add an inequitable conduct defense, although information regarding the conduct was first discovered nearly 10 months prior, as the court held that it will not penalize defendant for obtaining additional, confirming information . . . to support his claims.) Given the serious nature of claims alleging inequitable conduct, I find that Gamco's hesitation to take it was not improper.
Therefore, Gamco's Motion to Amend its Answer is GRANTED.