Entangled Media, LLC v. Dropbox, Inc.

Background

Entangled Media sued Dropbox for allegedly infringing U.S. Patent Nos. 8,296,338 and 8,484,260. The patents identify Erik Caso and Mike Abraham as the named inventors. Dropbox sought permission to add defenses and counterclaims based on improper inventorship under 35 U.S.C. § 102(f) and inequitable conduct, including an alleged intentional failure to name Matt Drew as an inventor.

The deadline to amend pleadings was March 29, 2024. Dropbox filed its motion after that deadline. The court therefore required Dropbox to show good cause under Federal Rule of Civil Procedure 16(b) to modify the scheduling order and to satisfy the amendment standards under Rule 15(a).

Rule 16(b) Good Cause

The court found that Dropbox acted diligently in discovering the basis for its proposed additions. Dropbox had requested documents relevant to inventorship as early as June 26, 2023. It later took depositions of the named inventors, patent prosecutor Bey, and Drew in July and August 2024. The court concluded that Dropbox was entitled to investigate the issues through discovery before pleading them and that it did not have the facts needed to plead the proposed claims until July or August 2024.

The court also found that Dropbox acted diligently after discovering the relevant facts. Within one week after Drew’s August 19, 2024 deposition, Dropbox told Entangled Media’s counsel that it would seek leave to amend. Dropbox filed the motion on September 24, 2024, six days after Entangled Media confirmed that it opposed the request. The court held that good cause existed to modify the scheduling order.

Rule 15(a) Amendment Factors

The court found that the Rule 15(a) factors favored allowing the amendment. Entangled Media had not identified substantial prejudice. Although Entangled Media said it might need limited additional discovery, updated privilege logs, and additional expert discovery, the court found those to be ordinary litigation burdens. Trial was not scheduled to begin until the second half of 2025, and Entangled Media did not claim that major deadlines would need to change.

The court also found no bad faith or undue delay. Dropbox separately moved to add defenses and counterclaims unrelated to Entangled Media’s amended complaint, rather than adding them to its timely answer responding to that complaint. The court accepted Dropbox’s explanation for filing a separate motion and applied the same diligence reasoning to reject Entangled Media’s undue-delay argument.

Futility

The court held that the proposed additions were not futile, meaning they were not clearly subject to immediate dismissal.

For the improper-inventorship claim and defense, Dropbox alleged that Drew contributed sufficiently to the patented invention to qualify as a joint inventor. The court stated that Dropbox had plausibly alleged the required elements and provided sufficient notice.

For inequitable conduct, Dropbox alleged that someone involved in filing or prosecuting the patent applications made a material misrepresentation, failed to disclose material information, or submitted false information with the specific intent to deceive the Patent and Trademark Office. The court held that Dropbox pleaded these matters with the required specificity, including the relevant who, what, when, where, and how. The court noted that the parties agreed that arguments about specific intent were better addressed through a fully briefed motion to dismiss.

Other Ruling and Disposition

The court stated that it had denied from the bench an administrative motion concerning whether another party’s materials should be sealed. The parties were ordered to file the unsealed materials by January 31, 2025.

The order granted Dropbox’s motion to modify the scheduling order and motion for leave to file its amended answer, affirmative defenses, and counterclaims. The order did not decide whether Dropbox will ultimately prove improper inventorship or inequitable conduct, or whether Entangled Media’s patents are invalid.