IP Law Daily, PATENT—N.D. Cal.: Priority date issue allows Adobe to slip infringement suit, (Apr 15, 2016)

By Peter Reap, J.D., LL.M.

The date of invention for a patent disclosing a system and method of facilitating transactions, asserted by Collaborative Agreements, LLC (d/b/a Oui Agree, or “OA”), was November 1, 2011—the filing date of the application for the patent—and not April 2, 2002, as OA asserted, the federal district court in San Francisco has decided (Collaborative Agreements, LLC v. Adobe Systems Incorporated, April 14, 2016, Chen, E.). Because OA was not entitled to amend its infringement contentions was denied and OA’s own representations established that the ‘393 patent’s technology was in use prior to November 1, 2011, the ‘393 patent is invalid. Thus, defendant Adobe Systems Incorporated was entitled to summary judgment.

OA held U.S. Patent No. 8,271,393 (“the ’393 patent”), titled “System and Method for Facilitating Transactions Between Two or More Parties.” The patent’s claims related to a method for facilitating a transaction between two or more parties in which electronic documents or agreements are received by a server and are “locked against future changes” when received, “registration information” is likewise received, the transaction is assigned to an account that both parties may access, and, finally, when the documents posted to that account are accepted by the parties, an “identity validation” from each party is “attached” that indicates acceptance.

The ‘393 patent was filed November 1, 2011. On the first page of the patent, there was a section titled “Related U.S. Application Data,” indicating that the ‘393 patent claims priority to the filing dates of five earlier applications and provisional applications: application No. 12/254,540, filed on Oct. 20, 2008, now Pat. No. 8,078,544; application No. 10/406,151, filed on Apr. 2, 2003, now Pat. No. 7,562,053; provisional application No. 60/369,578, filed on Apr. 2, 2002; provisional application No. 60/402,929, filed on Aug. 14, 2002; and provisional application No. 60/427,172, filed on Nov. 18, 2002.

The date of invention for a patent is “presumed to be the filing date of the application until an earlier date is proved,” the court noted. Bausch & Lomb, Inc. v. Barnes-Hind/Hydrocurve, Inc., 796 F.2d 443, 449 (Fed. Cir. 1986). Here, the ‘393 patent had an application filing date of November 2, 2011. Adobe contended that the court should find that November 2, 2011, was the date of invention for the ‘393 patent.

OA argued for an earlier date of invention; it wanted to claim a date of invention based on a prior application. OA’s Rule 3-1(f) disclosure identified the priority date as follows: “no later than April 2, 2002.”

Adobe seized on the fact that OA used the phrase “no later” in the above statement. According to Adobe, because OA used that particular phrase, OA was (1) disavowing any priority date after April 2, 2002 and (2) committing itself to a priority claim based on ‘578 application, which was filed on April 2, 2002. In other words, Adobe contended that OA made the conscious decision not to implicate priority based on the four remaining patent applications identified on the face of the ‘393 patent.

Adobe then argued that, looking solely at the ‘578 provisional application, it was clear that not all of the elements of the invention claimed in the ‘393 patent are found in that application. Notably, OA did not really dispute that the ‘578 application did not disclose all of the elements of the invention claimed in the ‘393 patent. OA argued, however, that all of the elements could be found in three other applications (i.e., the ‘172, ‘151, and ‘540 applications) and that Adobe was fairly on notice of priority based on these applications as they were identified on the face of the ‘393 patent.

OA’s infringement contentions did not fairly put Adobe on notice of the ‘172, ‘151, and ‘540 applications, the court ruled. Even though Adobe knew from the face of the ‘393 patent that, in theory, OA could have claimed priority based on various applications, Adobe did not know with any certainty what position OA would ultimately take until it served its infringement contentions. In its infringement contentions, OA made clear that it did not claim priority based on the ‘172, ‘151, and ‘540 applications—even though it could have—and instead asserted a priority date of “no later than April 2, 2002.” Notably, OA did not provide any excuse as to why it did not identify the ‘172, ‘151, and ‘540 applications (not even in the alternative) in its infringement contentions, the court observed.

The issue thus now turned on whether OA should be permitted to amend its infringement contentions to include a priority claim based on the ‘172, ‘151, and ‘540 applications, according to the court. Good cause to amend infringement contentions under the local rules is subject to a two-part inquiry, which considers whether: (1) the moving party has shown diligence in amending its contentions; and (2) the non-moving party will not suffer undue prejudice. Here, this case was easily resolved based on the diligence factor, the court held. More specifically, OA entirely failed to show diligence because it had all the information at its disposal at the outset of this litigation but failed to include the information in its infringement contentions.

OA never offered any evidence (such as a declaration from the attorney who prepared the Rule 3-1(f) disclosure) that the omission of the ‘172, ‘151, and ‘540 applications, or the use of the phrase “no later,” was a mistake, the court noted. Indeed, OA failed to give any excuse for its failure to identify the ‘172, ‘151, and ‘540 applications (not even in the alternative) in its infringement contentions.

Furthermore, even if OA had claimed mistake, that position was untenable, the court explained. OA was clearly on notice that the issue of priority date was a significant one; thus, it was unlikely that OA would subsequently make a mistake in its Rule 3-1(f) disclosure. This was not a case where an amendment should be permitted because of an obvious mistake.

To the extent OA argued that it should be permitted to amend (i.e., even in the absence of any diligence) because there would be no prejudice to Adobe, the court was not required to consider prejudice where the diligence prong has not been satisfied, it noted. Finally, even if the court considered prejudice, it would also have to consider whether OA’s proposed amendment would be futile. According to Adobe, there was futility because “numerous claim elements now recited in the asserted claims [of the ‘393 patent] are not found anywhere in the priority documents and were added as new matter in 2011 [with the filing of the ‘393 patent application].” Adobe’s contentions had merit, therefore, it would be futile to allow OA to amend, the court decided.

The case is No. 3:15-cv-03853-EMC.

Attorneys: Derek T. Gilliland (Nix, Patterson & Roach, L.L.P.) for Collaborative Agreements, LLC d/b/a Oui Agree. David M. Hoffman (Fish & Richardson PC) for Adobe Systems Inc., Citrix Systems Inc. and Time Warner Cable Inc.

Companies: Collaborative Agreements, LLC d/b/a Oui Agree; Adobe Systems Inc.; Citrix Systems Inc.; Time Warner Cable Inc.

Cases: Patent CaliforniaNews