DSS Technology Management, Inc. v. Apple, Inc.

Background

DSS alleged that Apple’s computers and other devices using Bluetooth connections infringed claims of U.S. Patent No. 6,128,290. DSS had previously withdrawn its infringement allegations concerning U.S. Patent No. 5,699,357, leaving only the ’290 patent at issue. The court had transferred the case to the Northern District of California, stayed it during inter partes review proceedings, later lifted the stay, construed disputed patent terms, and set discovery deadlines.

DSS served amended preliminary infringement contentions in 2014. Those contentions identified Apple products using Bluetooth versions between 2.1 and 4.0 and repeatedly referred to Bluetooth Sniff Subrating Mode. The opinion explains that Sniff Subrating Mode became optional beginning with Bluetooth version 2.1, while earlier versions used Bluetooth Sniff Mode. Some portions of the opinion are redacted, including the name or description of the additional mode DSS sought to add.

Motion to Amend

Under Patent Local Rule 3-6, a party may amend infringement contentions only with the court’s permission and a timely showing of good cause. The court considers the moving party’s diligence and any prejudice to the opposing party. The party seeking amendment bears the burden of showing diligence in discovering the basis for the amendment and in seeking amendment after discovering it.

DSS sought to add the redacted mode to its infringement contentions. DSS said it discovered the basis for the amendment during a May 15, 2019 deposition. The court found that DSS had not shown sufficient diligence in discovering the information earlier. Apple had made source code available in 2014, and the court found that documents and source-code information gave DSS indications relevant to the proposed theory. The court also found that DSS had opportunities to investigate after the stay was lifted in 2018 and before discovery closed.

The court rejected DSS’s explanation that Apple’s production and other events caused the delay. It found that DSS had not substantively reviewed the available source code early enough, had not timely raised the relevant discovery dispute, and waited until late in the case to pursue the theory. Because DSS failed to show diligence, the court did not need to consider prejudice, but it found that amendment at that stage would prejudice Apple because claim construction and fact and expert discovery had already occurred.

The court therefore denied DSS’s motion to amend infringement contentions to add the redacted mode.

Motion to Strike the Expert Report

Apple sought to strike the joint infringement expert report of Scott A. Denning and Randal H. Direen. Apple argued that the report relied on two new infringement theories: the redacted mode and products operating in Bluetooth Sniff Mode.

The court found that the report impermissibly relied on the redacted theory because DSS had not shown diligence in obtaining permission to add it. The court separately considered whether Sniff Mode was a new theory. It concluded that DSS’s amended contentions did not clearly notify Apple that products operating in Sniff Mode, as distinct from products operating in Sniff Subrating Mode, were alleged to infringe.

The court acknowledged that a device operating in Sniff Subrating Mode necessarily enters Sniff Mode first. But it held that this fact alone did not clearly identify Sniff Mode as an independently infringing mode. The amended contentions lacked specific limitations referring to Sniff Mode and consistently focused on Sniff Subrating Mode functionality. The court also noted that DSS failed to show good cause to amend its contentions to add Sniff Mode.

Because the expert report relied entirely on two new infringement theories, the court granted Apple’s cross-motion to strike DSS’s infringement expert report.

Motions to Seal and Further Proceedings

The court applied the lower “good cause” standard because the sealing requests concerned filings related to nondispositive motions. It found good cause to seal some portions containing confidential business, proprietary, source-code, or third-party-component information. It also found that some proposed redactions and sealed exhibits were not narrowly tailored or lacked sufficient support.

The court therefore granted in part and denied in part Docket Nos. 213, 219, 231, 233, and 246. It allowed the parties fourteen days from the order’s date to file unredacted materials or renewed sealing motions. The court also set a further case-management conference for January 21, 2020, and directed the parties to discuss the consequences of the order and next steps.

Judge Haywood S. Gilliam, Jr. entered the order on January 14, 2020.