Opinion
CV-01-1158-ST
June 13, 2002
OPINION AND ORDER ALLOWING AMENDMENT
INTRODUCTION
On July 27, 2001, plaintiff Michaels of Oregon Co. ("Michaels"), filed this action against defendant Clean Gun LLC ("Clean Gun"), alleging infringement on two of its patents for gun barrel cleaning devices (the '589 patent and the '125 patent) in violation of 35 U.S.C. § 1, et seq. This court has jurisdiction under 28 U.S.C. § 1331, 1338(a), and 35 U.S.C. § 1, et seq.
On April 22, 2002, Michaels filed a Motion to Amend Complaint (docket #25), requesting to add five new defendants: Good Sportsman Marketing, LLC, aka GSM, LLC ("GSM"); TKS, LLC; KJW Enterprises, LLC; the trustees of The Schnell Trust; and Timothy David Schnell ("Schnell"). For the reasons set forth below, that motion is granted.
LEGAL STANDARD
Generally, leave to amend should be "freely given when justice so requires." FRCP 15(a). However, such leave may be denied if it causes undue delay and prejudice to the non-moving party. Foman v. Davis, 371 U.S. 178, 181-82 (1962); Roth v. Garcia Marquez, 942 F.2d 617, 628 (9th Cir. 1991). Delay, by itself, may justify the denial of a motion for leave to amend. Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1292-93 (9th Cir. 1983) (affirming rejection of motion to amend as untimely). Preservation of judicial economy is further cause to deny a motion to amend. Perrian v. O'Grady, 958 F.2d 192, 194-95 (7th Cir. 1992).
Due process requires that newly added parties be given an adequate opportunity to respond to the claims against them. Nelson v. Adams USA, Inc., 529 U.S. 460, 471-72 (2000). "As a matter of due process, each new defendant in a patent suit is entitled to make its own defense." Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1571 (Fed Cir. 1993) (permitting each new defendant to challenge validity of patent); see also Nelson, 529 U.S. at 470-71 (reversing judgment against party added to patent case by amendment who was denied opportunity to contest personal liability).
ANALYSIS
Clean Gun argues that this motion should be denied as untimely because it has been filed nine months after Michaels filed its original Complaint, six months after the period for adding parties has expired, and after discovery regarding claim construction has closed. It also argues that adding parties will unduly delay the proceedings and waste this court's time and resources by requiring redundant proceedings.
This court disagrees and finds no undue delay or bad faith. Although the deadline for adding parties was October 24, 2001, Michaels first discovered these new defendants on April 4, 2002, at the deposition of Schnell, the Vice President of Clean Gun. Schnell testified that Clean Gun's product is made in Taiwan and comes to the United States through a Taiwanese agent, Active Trading, Co., Ltd. ("ATCL"). ATCL sells the product to TKS, LLC, who then resells it to Clean Gun and Clean Gun in turn resells it to GSM which resells it to retailers and distributors. According to the purchase orders, TKS, LLC, has ATCL ship the product directly to GSM. Schnell further testified that Clean Gun has no physical address, employees or telephone number and is owned by KJW Enterprises, LLC, and the trustees of The Schnell Trust. Schnell's fiancee, Kimberly J. Wuesta, is the President of Clean Gun and who also formed KJW Enterprises, LLC. Schnell's father is a common officer and/or member of both Clean Gun, LLC, and TKS, LLC. TKS, LLC also has no office, employees, or telephone number. Schnell's acquaintance from his former employment, Debbie Black, is the general manager of GSM and the secretary/treasurer of Clean Gun.
Thus, each defendant sought to be added is closely intertwined with Clean Gun. The four new defendant companies have common directors and managers and all buy and sell the allegedly infringing product. The new individual defendant is Schnell, who appears to either control or be closely involved with all of the companies. Addition of the new defendants will ensure that Michaels, if it prevails, is able to enjoin all infringing activity and to collect any money judgment.
Clean Gun argues that adding these new defendants will be prejudicial since the court may lack personal jurisdiction over the new defendants. However, a new defendant may make a motion to dismiss for lack of personal jurisdiction as soon as it is served with the First Amended Complaint. Although the claim construction hearing has already taken place, the presentation by Clean Gun was thorough and it is inconceivable that the newly added defendants will have any additional evidence or argument to offer on those issues. Furthermore, discovery is not yet concluded. In fact, Clean Gun has not yet taken any depositions. And, if necessary, trial can be delayed to ensure that any new defendants over whom this court has jurisdiction are given a full opportunity to respond to the claims against them.
ORDER
For the reasons set forth above, Michaels' Motion to Amend Complaint (docket #25) is GRANTED and the First Amended Complaint shall be filed with the court within 10 days.