Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-05669/USCOURTS-cand-5_03-cv-05669-8/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

The Regents of the University of

California, 

Plaintiff,

 v.

Micro Therapeutics Inc. et al.,

Defendant(s),

Third Party Plaintiff(s)

v.

Boston Scientific Corp. et al.,

Third Party Defendant(s)

 /

NO. C 03-05669 JW 

ORDER DENYING THIRD PARTY

DEFENDANTS’ MOTION FOR LEAVE

TO AMEND

I. INTRODUCTION

The Regents of the University of California (“Plaintiff”) initiated this patent infringement

suit against Micro Therapeutics, Inc., and Dendron GmbH (“Third Party Plaintiffs”) under 35 U.S.C.

§ 271. Micro Therapeutics and Dendron counterclaimed against Plaintiff, and filed a third party

complaint against Boston Scientific Corp. and Target Therapeutics, Inc. (“Third Party Defendants”)

alleging an Antitrust violation under the Sherman Act, 15 U.S.C. §§ 1 and 2. Presently before this

court is Boston Scientific and Target’s motion for leave to amend their answer by adding the

affirmative defense of unclean hands and third party counterclaims of trade secret misappropriation

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and unfair trade practices. For the reasons stated below, this court DENIES the motion. 

II. BACKGROUND

Plaintiff, the Regents of The University of California filed suit against Third Party Plaintiffs

Micro Therapeutics, a California corporation, and Dendron, a German corporation, alleging patent

infringement. Micro Therapeutics and Dendron, in turn, brought counterclaims against Plaintiff and

third party claims against Third Party Defendants Boston Scientific, a Massachusetts corporation,

and Target, a California corporation, alleging an antitrust violation. In their answer, Third Party

Defendants denied and admitted the various allegations and also asserted various defenses. They

now seek to amend their answer on the basis of newly discovered evidence. More specifically,

Third Party Defendants allege they discovered that “highly confidential ... company files” full of

“key strategic plans” were in possession of Third Party Plaintiffs. (BSC Mot. for Leave to Am., at

3.) Third Party Defendants assert that this “trade secret information” was taken “knowingly” by a

former employee who gave the information to the “highest levels of management” of Third Party

Plaintiffs. (BSC Mot. for Leave to Am., at 5.) Therefore, they wish to amend their answer to add

the counterclaims of trade secret misappropriation and unfair trade practices, along with the

affirmative defense of unclean hands based on the same factual circumstances. (BSC Mot. for

Leave to Am., at 3.) 

The parties are in the midst of discovery and claim construction has been partially

completed. (BSC Mot. for Leave to Am., at 4.) However, Third Party Defendants argue that adding

“new unrelated trade secret claims” to an already “complex patent case” would be prejudicial. (MTI

Opp. to BSC Mot. for Leave to Am., at 1.) They also contend that the proposed amendments are

futile because the defense of unclean hands is legally unsustainable and the counterclaims of trade

secret misappropriation and unfair trade practices fail to meet the requirements of supplemental

jurisdiction. Id. 

III. STANDARDS

Leave to amend a pleading "shall be freely given when justice so requires." FED. R. CIV. P.

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15(a). Generally, leave to amend is "to be applied with extreme liberality." Owens v. Kaiser Found.

Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001) (quoting Morongo Band of Mission Indians v.

Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)). Factors weighed in determining whether leave should

be granted include undue delay, bad faith, futility, and prejudice to the opposing party. Griggs v.

Pace Am. Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999).

IV. DISCUSSION

A. Unclean Hands

Third Party Plaintiffs argue that amending the answer to include the affirmative defense of

unclean hands would be futile. The court agrees. The defense of unclean hands bars a party’s

claims if they acted unscrupulously, because a court of equity cannot be an “abettor of inquity.” 

Keystone Driller Co. V. Gen. Excavator Co., 290 U.S. 240, 245 (1933). Hence, a party bringing a

claim must have acted fairly without fraud or deceit. Fuddruckers, Inc. v. Doc’s B.R. Others, Inc.,

826 F.2d 837, 847 (9th Cir. 1987). However, the scope of this requirement is limited. In bringing a

claim, the party’s actions must be devoid of misconduct with respect to that particular claim. “What

is material is not that the plaintiff’s hands are dirty, but that he dirtied them in acquiring the right he

now asserts,” because a careless motorist should not be “able to defend” a lawsuit, by asserting that

“the victim beat his wife at home.” Republic Molding Corp. v. B.W. Photo Utils., 319 F.2d, 347,

349-350 (9th Cir. 1963). 

Applying this test, the court finds that Third Party Defendants’ allegation of trade secret

misappropriation, upon which the defense of unclean hands is based, lacks the requisite relationship

to Third Party Plaintiffs’ claim for antitrust violations. Third Party Plaintiffs assert a Walker

antitrust claim alleging the “knowing enforcement of invalid or unenforceable patents.” (MTI Opp.

to BSC Mot. for Leave to Am., at 2.) They allege that Third Party Defendants acted inequitably in

procuring the patents now being asserted against Micro Therapeutics and Dendron. In contrast,

Third Party Defendants’ desired defense of unclean hands stems from the purported trade secret

misappropriation. The court finds an insufficient relationship between Third Party Defendants’

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1

The court recognizes the direction of the Second and Seventh Circuits in deciding the

appropriateness of extending supplemental jurisdiction over permissive counterclaims. See Jones v.

Ford Motor Credit Co., 368 F.3d 205. 212-213 (2d. Cir. 2004); Ammerman v. Sween, 54 F.3d 423,

424 (7th Cir. 1995). However, the Ninth Circuit has remained silent on this issue and this court

declines to deviate from established common law until instructed otherwise.

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unclean hands defense and the antitrust claim asserted against them. Accordingly, the court denies

leave to add the affirmative defense of unclean hands.

B. Supplemental Jurisdiction

Third Party Plaintiffs also argue that amending the answer to include the counterclaims of

trade secret misappropriation and unfair trade practices would be futile for lack of supplemental

jurisdiction. The court agrees. Title 28 U.S.C. § 1367 grants federal jurisdiction over claims that

are “so related to claims in the action within such original jurisdiction that they form part of the

same case or controversy under Article III of the United States Constitution.” Federal Rule of Civil

Procedure 13 defines two types of counterclaims: compulsory and permissive. The former arise out

of a “transaction or occurrence that is the subject matter of the opposing party’s claim.” Fed. R. Civ.

P. 13(a). The latter is defined as those claims not arising out of the same transaction or occurrence

that is the subject matter of the opposing party’s claim. Fed. R. Civ. P. 13(b) (emphasis added). 

Compulsory counterclaims are automatically within the purview of section 1367 because claims that

arise out of the same transaction are sufficiently “so related.” Permissive counterclaims, however,

have been held to require independent grounds of federal jurisdiction. Wright et al., Federal Practice

and Procedure: Federal Rules of Civil Procedure § 1422; Consolidated Freightways Corp. v. Coast

Freightways, Inc., 628 F. Supp. 894, 897 (C.D. Cal. 1986); Premier Commercial Corp. v. FMC

Corp., 139 F.R.D. 670, 671 (N.D. Cal. 1991); State Farm and Casualty Co., v. Geary, 699 F. Supp.

756, 762 (N.D. Cal. 1987).1

Third Party Defendants’ assert claims of trade secret misappropriation and unfair trade

practice because they allegedly discovered that Third Party Plaintiffs possessed “numerous internal

Boston Scientific files.” (BSC Mot. for Leave to Am., at 4.) Allegedly, these files were taken

“knowingly” by a former employee. (BSC Mot. for Leave to Am., at 5.) However, the original

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claim upon which this court found jurisdiction is antitrust, in which Third Party Plaintiffs assert that

Third Party Defendants acted inequitably with the United States Patent Office (“USPTO”). The

alleged inequitable transactions with the USPTO are not the same transactions that give rise to the

claims of trade secret misappropriation and unfair trade practices. Hence, the desired counterclaims

are not compulsory. Instead they are permissive and require a finding of independent grounds of

federal jurisdiction. See Wright et al., supra § 1422. Third Party Defendants have not demonstrated

sufficient independent grounds. Their proposed counterclaims of trade secret misappropriation and

unfair trade practices do not arise under a federal question. Third Party Defendants also lack

complete diversity with Third Party Plaintiffs. Therefore, the Court denies leave to add the

counterclaims of trade secret misappropriation and unfair trade practices.

Third Party Plaintiffs have also asserted that the proposed amendments would be prejudicial. 

However, the Court declines to discuss this issue because leave to amend has already been denied.

V. CONCLUSION

For the reasons stated above, the Court DENIES the Motion for Leave to Amend.

Dated: February 22, 2006

03cv5669amend

/s/James Ware 

JAMES WARE

United States District Judge

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For the Northern District of California

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Amanda Marie Kessel akessel@goodwinprocter.com

Charles G. Curtis ccurtis@hewm.com

Chien-Ju Alice Chen achen@Fenwick.Com

Christopher T. Holding cholding@goodwinprocter.com

Colin G. Sandercock csandercock@hewm.com

David J. Harth dharth@hewm.com

Gabrielle E. Bina gbina@hewm.com

J. Anthony Downs jdowns@goodwinprocter.com

John S. Skilton jskilton@hewm.com

John S. Skilton jskilton@hewm.com

Julie Lynn Fieber jfieber@flk.com

Lynn H. Pasahow lpasahow@fenwick.com

Michael Francis Kelleher mkelleher@flk.com

Michael J. Shuster mshuster@fenwick.com

Michael K. Plimack mplimack@hewm.com

Michelle M. Umberger mumberger@hewm.com

Patrick E. Premo ppremo@fenwick.com

Roland Schwillinski rschwillinski@goodwinprocter.com

Sarah C. Walkenhorst swalkenhorst@hewm.com

Wendy Lynn Bjerknes Wbjerknes@fenwick.com

Dated: February 22, 2006 Richard W. Wieking, Clerk

By:__/s/JW Chambers________

Melissa Peralta

Courtroom Deputy

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