Well Master Corp. v. Flowco Prod. Sols.

1

WELL MASTER CORPORATION, Plaintiff, v. FLOWCO PRODUCTION SOLUTIONS, LLC, Defendant.

Civil Action No. 21-cv-02145-CMA-KLM

United States District Court, D. Colorado

March 26, 2024

ORDER ON PATENT CONTENTIONS AND MOTION TO DISMISS COUNTERCLAIMS

CHRISTINE M. ARGUELLO, SENIOR UNITED STATES DISTRICT JUDGE.

This matter is before the Court on five pending motions:^[1]

1. Defendant Flowco Production Solutions, LLC's Renewed Motion to Compel Supplemental Infringement Contentions (Doc # 131) is DENIED;

2. Plaintiff Well Master's Motion to Exclude Defendant's Initial and Supplemental Invalidity Contentions (Doc. # 127) is GRANTED IN PART AND DENIED IN PART;

3. Plaintiff Well Master's Motion to Exclude Defendant's Second Supplemental Invalidity Contentions (Doc. # 195) is GRANTED;

4. Plaintiff Well Master's Motion to Dismiss Defendant's Counterclaims for Declaratory Judgment of Invalidity and Inequitable Conduct (Doc. # 146) is

GRANTED IN PART AND DENIED IN PART; and

5. The parties' Unopposed Motion for Hearing (Doc. # 225) is DENIED.

I. BACKGROUND

A. FACTS

Well Master owns three patents for plunger lift systems:^[2]United States Patent Numbers 7,395,865 (“the ‘865 patent”); 7,793,728 (“the ‘728 patent”);^[3] and 8,627,892 (“the ‘892 patent”). Well Master alleges that Flowco designed its devices “specifically to compete with Well Master's patented plunger designs” by copying those designs' patented functions and features. (Doc. # 20 at ¶ 29.) Well Master commenced this infringement action on August 9, 2021. (Doc. # 1.)

B. MOTIONS AT ISSUE

The District of Colorado's Local Patent Rules set forth a system that runs parallel to the Federal Rules of Civil Procedure's discovery protocols. Relevant here, the Local Patent Rules require that the parties notify each other of their respective theories on infringement and invalidity through the service of patent contentions. Said patent contentions form the crux of three of these four pending motions.

The parties' deadlines to serve their initial patent contentions were February 7, 2022, for Well Master's infringement contentions and April 22, 2022, for Flowco's invalidity contentions. (Doc. # 32 at 1-2); see (Docs. ## 36, 43 (extending deadlines)); accord D.C.COLO.LPtR 4, 5, 8. Both parties served their contentions on time. (Doc. # 127 at 2.) Neither party, however, was satisfied based on their respective readings of the Local Patent Rules. Flowco filed a motion to compel supplemental infringement contentions in April 2022, insisting that Well Master be ordered to add more detail to its theories of infringement. (Doc. # 44 at 3.) Similarly, Well Master filed a Motion to Strike Defendant's Initial Invalidity Contentions, insisting that they were impermissibly vague.^[4](Doc. # 73.)

As the parties fought over the patent contentions, Flowco was simultaneously preparing petitions for Inter Partes review before the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office (“USPTO”). (Doc. # 83.) Flowco eventually filed those applications and consequently, on September 12, 2022, the Court entered a stay in this case and denied without prejudice the parties' pending patent contention motions (Docs. ## 98, 114.). The stay was to remain in effect until the PTAB decided whether to institute Inter Partes review. (Doc. # 98.)

Ten days later-an event key to one of Well Master's pending motions to exclude-Flowco attempted to amend its patent contentions by serving supplemental invalidity contentions. (Doc. # 127-7.)^[5]However, Flowco did not formally move for leave to amend. Well Master rejected the supplemental invalidity contentions on the basis that the amendment was motivated by bad faith^[6] rather than good cause.

Nine months later, however, the PTAB declined to initiate Inter Partes review and, on June 7, 2023, the stay in this case was lifted. See generally (Doc. # 124.) Consequently, Flowco refiled its Partial Motion to Dismiss (Doc. # 125), which the Court denied on December 14, 2023. (Doc. # 192.) Flowco also filed an answer to Well Master's complaint, asserting counterclaims of non-infringement, invalidity, and inequitable conduct. (Doc. # 126.)

Both parties also refiled their patent contention motions. On June 7, 2023, Well Master filed its first Motion to Exclude both Flowco's initial invalidity contentions and Flowco's September 2022 attempt at supplementation. (Doc. # 127.) That same day, Flowco renewed its Motion to Compel Supplemental Infringement Contentions. (Doc. # 131.) Further, in response to Flowco's new counterclaims, on August 10, 2023, Well Master filed a Motion to Dismiss several of those counterclaims. (Doc. # 146.) When Flowco attempted again to supplement its initial invalidity contentions on October 13, 2023, Well Master filed a second Motion to Exclude. (Doc. # 195 at 12.)^[7] Finally, on March 19, 2024, the parties filed an Unopposed Request for Oral Argument on Plaintiff's Motions to Exclude (Doc. # 225).

II. MOTIONS TO EXCLUDE

A. APPLICABLE LAW

The District of Colorado, like many other jurisdictions, has adopted Local Patent Rules that require parties to disclose certain aspects of their infringement and invalidity theories early in the case. See generally XY, LLC v. Trans Ova Genetics, LC, No. 17-cv-00944, 2018 WL 6791102, at *4 (D. Colo. Oct. 2, 2018) (likening patent contentions to initial disclosures in discovery); Fox Factory, Inc. v. SRAM, Ltd. Liab. Co., No. 18-cv-00127, 2018 WL 6603960, at *3 (D. Colo. Oct. 16, 2018) (explaining the normative aims of Colorado's Local Patent Rules). “[I]nfringement and invalidity contentions . . . force each side to show its cards: the patent holder shows in detail how the accused device meets each claim limitation[,] and the accused infringer shows in detail how the claim is invalid.” Lear Corp. v. NHK Seating of Am. Inc., No. 2:13-cv-12937, 2020 WL 1815876, at *2 (E.D. Mich. April 10, 2020). Both types of patent contention disclosures involve the same “matching game.” Id. That “game” requires producing claims charts that trace figurative lines between either the Accused Instrumentality (for infringement contentions) or prior art (for invalidity contentions) and the limitations of the patents-in-suit's asserted claims. Id.

Although the Local Patent Rules governing patent contentions operate somewhat like initial disclosures under Rule 26 of the Federal Rules of Civil Procedure, the two sets of rules serve distinct purposes. Both Rule 26 initial disclosures and the Local Patent Rules' patent contention disclosures seek to equip a litigant with the information it needs to develop and support its claim(s). However, the Local Patent Rules also force the parties to “pin down” their litigation theories, thereby “confining discovery and trial preparation to information that is pertinent to th[ose] theories of the case.” O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1365 (Fed. Cir. 2006) (emphasis added). Contentions are meant to “crystalize” the parties' theories of the case early in litigation so as to prevent the “shifting sands approach” to the case. Fox Factory, 2018 WL 6603960, at *3 (citation omitted). For that reason, the Local Patent Rules serve a secondary purpose of aiding the Court in limiting and managing discovery. Id. (citing Jama v. City & Cnty. of Denver, 304 F.R.D. 289, 295 (D. Colo. 2014).

Local Patent Rules are not, however, “a straitjacket into which litigants are locked from the moment their contentions are served.” Comcast Cable Commc'ns. Corp. v. Finisar Corp., No. C 06 -04206, 2007 WL 716131, at *2 (N.D. Cal. Mar. 2, 2007). If discovery yields new and relevant information, a party can move to amend its patent contentions-but it must “proceed with diligence.” O2 Micro, 467 F.3d at 1365-66. Although Colorado's Local Patent Rules do not directly address supplementing non-final patent contentions, they do require good cause to amend final patent contentions. Moreover, courts in this district require a showing of good cause to amend initial patent contentions. See, e.g., Crocs, Inc. v. Effervescent, Inc., No. 6-cv-00605, 2017 WL 5171332, at *8 (D. Colo. Nov. 8, 2017). Good cause in this context requires showing (1) that the movant was diligent in amending its contentions and (2) that the non-movant would suffer no prejudice from amendment. E.g., id. at *3; but see Trans Ova, 2018 WL 6791102, at *6 (the touchstone of good cause is diligence). A party may move to exclude supplemented patent contentions where good cause has not been shown and does not exist. Crocs, 2015 WL 5171332, at *2; accord D.C.COLO.LPtR 16(b)(2) (prohibiting the presentation of invalidity theories that are not properly disclosed).

B. ANALYSIS

1. Flowco's Renewed Motion to Compel Supplemental Infringement Contentions (Doc. # 131)

a. Context

Well Master's infringement contentions, as supplemented,^[8] assert theories of direct and indirect infringement. First, the infringement contentions allege that Flowco directly infringed the asserted claims because it sells thirty-three plungers that fall into two categories “Flowco Device 1” and “Flowco Device 2.” (Doc. # 46 at 2-3.) Well Master's contentions include product “stock numbers” for each “Flowco Device” group that correspond to Flowco's plunger inventory, but the infringement contentions do not explain what characteristics these plungers share that warrant two representative groups. Id. (providing eleven stock numbers for the Device 1 category and twenty-two stock numbers for the Device 2 category). The infringement contentions also accuse Flowco of indirect infringement because Flowco customers buy and use the thirty-three plungers identified by stock number. Id. at 4. Finally, the infringement contentions assert that “each...