Ely Holdings Limited v. O'Keeffe's, Inc.

Background

Plaintiffs Ely Holdings Limited and Greenlite Glass Systems Inc. sued O’Keeffe’s, Inc., doing business as SaftiFirst, on patent-infringement claims involving U.S. Patent No. 7,694,475. They sought permission to file another amended complaint adding claims for alleged misrepresentations under the Lanham Act, California Business and Professions Code section 17500, intentional interference with business relations, and negligent interference with business relations.

The proposed claims concerned four categories of alleged statements: that Safti’s product met certain project specifications when it did not; that Safti concealed that its product allegedly infringed the patent; that Greenlite’s product did not meet Buy American Act standards; and that Greenlite was not environmentally friendly. The scheduling order set May 7, 2019, as the deadline to seek leave to amend, but plaintiffs filed their motion on December 20, 2019.

Claim Construction

Claim construction is the court’s interpretation of patent-claim language. The remaining dispute concerned claim 24’s description of a first glass layer that is “structural glass” and a second glass layer that is “fire rated glass.” The court had already resolved other aspects of those terms and requested additional evidence on whether fire-rated glass could include layers other than alternating glass and intumescent material.

Safti argued that fire-rated glass had to contain transparent intumescent material between all of its glass layers and had to satisfy additional requirements. Plaintiffs proposed a broader construction. The court found no evidence that intumescent material had to separate every glass layer and found evidence that products with other configurations had been marketed as fire-resistant glass. The court therefore adopted plaintiffs’ proposed construction.

The court construed the disputed language as requiring: (1) a laminated glass sheet made of at least two glass layers capable of bearing weight; and (2) a multilayered glass sheet made of at least two glass layers, with transparent intumescent material between at least two layers, glass as the outer layers, and a designated fire-resistance rating certified by a testing authority.

Motion to Amend

Because the scheduling-order deadline had passed, the court applied Federal Rule of Civil Procedure 16(b)(4), which requires good cause and focuses mainly on the diligence of the party seeking to change the schedule. The court concluded that plaintiffs had shown sufficient diligence. Although a 2007 email raised a closer question, it related to only one of the four theories, and most of the documents supporting the proposed amendment were produced in August and September 2019. The court did not find that plaintiffs’ actions after receiving those documents showed a lack of diligence.

The court also found that the additional discovery burden identified by Safti provided little reason to deny the amendment because similar discovery would be required if plaintiffs filed the new claims separately. The court declined to decide at this stage whether some allegations failed the heightened pleading standard under Rule 9(b), stating that those issues were better addressed through a later motion to dismiss and that deficiencies might warrant another amendment.

Disposition

The court granted plaintiffs’ motion for leave to amend. It allowed plaintiffs to file a third amended complaint no later than February 14, 2020, asserting at most the claims included in the proposed second amended complaint, with additional factual allegations addressing Safti’s arguments. The court also resolved the remaining claim-construction dispute in plaintiffs’ favor.

The conclusion calls the amendment motion “Safti’s motion,” although the body repeatedly identifies it as plaintiffs’ motion and states that plaintiffs may file the third amended complaint.