Zoetis, Inc. v. Boehringer Ingelheim Vetmedica, GmbH

Background

Zoetis brought this action concerning a license agreement with BIV for patents covering certain animal vaccines. Zoetis alleged that BIV made improper deductions from royalty payments owed under the agreement.

The case’s scheduling order set a deadline for asserting additional causes of action or defenses, except for amendments allowed as a matter of course under Federal Rule of Civil Procedure 15. The pleadings closed on June 2, 2022. On September 20, BIV moved to amend its answer to add a counterclaim for breach of the license agreement. BIV alleged that Zoetis had failed to pay royalties since June 2020.

Standards Applied

Because BIV sought to amend after the scheduling-order deadline, the court applied Federal Rule of Civil Procedure 16(b)(4), which permits changing a scheduling order only for “good cause” and with the judge’s consent. The court explained that good cause depends on the moving party’s diligence.

The court also considered the more permissive standard under Rule 15. Under that rule, courts generally allow amendments when justice requires, but may deny leave because of undue delay, an inadequate explanation for the delay, or prejudice to the opposing party.

Reasons for Denial

The court found that BIV had not shown the diligence required for good cause. BIV said it learned on June 30, 2022, of facts suggesting that Zoetis had breached the agreement, but it did not explain what those facts were or how it discovered them. The court also found it implausible that BIV would have discovered only in June 2022 that royalty payments had stopped two years earlier. Zoetis submitted emails showing that BIV had raised the issue in January 2021 and that Zoetis had responded in February 2021.

The court concluded that the motion would also fail under Rule 15. BIV waited more than six months after filing its answer to seek the amendment and sought to add a counterclaim of which it should have been aware almost two years earlier. The court found that BIV’s explanation did not justify the delay.

The court further found that amendment would prejudice Zoetis. Document discovery was already substantially underway, and the parties were briefing a summary-judgment motion concerning interpretation of the license agreement. Adding BIV’s counterclaim would require additional discovery about BIV’s damages and its own contract performance, as well as greater detail concerning Zoetis’s alleged royalty failures on a country-by-country and product-by-product basis. The court determined that litigating the new contract claim would significantly delay the action.

Disposition

The court denied BIV’s September 20, 2022 motion to amend.