Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-04483/USCOURTS-cand-3_02-cv-04483-19/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 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

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

POSTX CORPORATION,

Plaintiff,

 v.

SECURE DATA MOTION, INC. d/b/a/ SIGABA,

Defendant.

 /

AND RELATED COUNTERCLAIMS.

 /

No. C 02-04483 SI

ORDER DENYING SIGABA’S MOTION

FOR LEAVE TO AMEND

COUNTERCLAIMS

Now before the Court is defendant/counterclaimant Sigaba’s motion for leave to amend its Lanham

Act and unfair competition counterclaims to allege those counterclaims against the Mayfield defendants. The

Mayfield defendants oppose the motion. Pursuant to the Court’s September 1, 2005 order, the motion was

submitted without oralargument. After carefully considering the parties’ papers, the Court DENIES Sigaba’s

motion for the reasons explained below.

LEGAL STANDARD

FederalRule ofCivilProcedure 15(a) provides for amendment ofpleadings by leave of court and notes

that such leave “shall be freely given when justice so requires.” However, the grant or denial of such a motion

is committed to the discretion of the district court, and denial is proper where there is “undue delay, bad faith

or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously

allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the

amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962); see also Lockman Found. v. Evangelical

Alliance Mission, 930 F.2d 764, 772 (9th Cir. 1991). 

Case 3:02-cv-04483-SI Document 989 Filed 11/08/05 Page 1 of 4
United States District Court

For the Northern District of California

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DISCUSSION

Sigaba’s motionis based onitscontentionthatdocuments produced by PostX in August 2005 “provide

proof for the first time that Mayfield representatives – including non-PostX director Allen Morgan – were

directly involved in the misappropriation of confidential Sigaba information (including the names of prospects

and Sigaba’s internalfinancialcondition) by PostX CEO ThampyThomas fromSigaba’s former founder Gary

Friedman in late June 2002, which misappropriation led to the circulation of PostX’s ‘counter offensive’

strategy only two days later.” Sigaba also contends that these documents “provide proof for the first time

that Mayfield representatives – including Mr. Morgan – knew that PostX ‘cannot lose BofA,’ another factor

that led to the creation of PostX’s ‘counter offensive’ strategy.” Motion to Amend at 1-2 (emphasis in

original). 

The documents at issue are (1) an email string concerning a June 2002 lunchthat PostX CEO Thampy

Thomas had with Gary Friedman (the former CEO of Sigaba); and (2) two emails from September 2002

regarding the possibility ofPostX filing a patent infringementsuit against Sigaba. Sigaba contends that because

two individuals associated with Mayfield were copied on these emails, these two sets ofdocuments show that

Mayfield and PostX were “joint tortfeasors” in misappropriating confidential Sigaba information and in

disseminating information about the false patent infringement claims against Sigaba in violation of the Lanham

Act.

Sigaba contends that it did not unduly delay seeking to amend its counterclaims because the evidence

of Mayfield’s “direct involvement” was only just discovered when the documents were produced in August

2005. Sigaba also argues that Mayfield will not be prejudiced because neither Mayfield nor the Lanham Act

and unfair competition act counterclaims are new, and full and complete discovery has been had on these

claims by counsel who represents both PostX and Mayfield.

The Court is not persuaded by Sigaba’s arguments. As an initial matter, the “critical documents” that

Sigaba pointsto for evidence ofMayfield’s “directinvolvement” only show that two individuals associated with

Mayfield, Yogen Dalal and Allen Morgan, were copied on the emails described above. The June 2002 email

string consists of an email fromMr. Thomas to the entire PostX Board of Directors, including Yogen Dalaland

Allen Morgan of the Mayfield Funds, reporting the details of a lunch meeting he had with Mr. Friedman.

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United States District Court

For the Northern District of California

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Although some other board members responded to Mr. Thomas’ email, neither Dalalnor Morgan emailed any

response. The receipt of the June 2002 emails is not “proof” that Mayfield representatives were directly

involved in misappropriation of confidential Sigaba information.

Similarly, neither Dalal nor Morgan responded to the September 2002 emails regarding the possible

filing of a patent infringementsuit against Sigaba. The first September 2002 email is from Mr. Thomas to the

entire PostX Board of Directors, including Dalaland Morgan, and states that PostX intended to send a “cease

and desist” letter to Sigaba complaining of patent infringement. The second email is a response from a nonMayfield directorreferring to the “black cloud” that a patent infringement actionwould place “over [Sigaba’s]

head in the market, press and financialcommunity,” and also stating that “my opinion is thatwe should go a few

extra steps and see really how confident we are in our patent prevailing. If we feel really good, we should sue

them. If not, we should be very thoughtful about next steps.” PXT 0220884. Sigaba contends that because

the Mayfield individuals did notsend an email disagreeing with these emails,such non-action constitutes “proof”

that Mayfield representatives directed PostX to publicize the false infringement accusations against Sigaba to

potential customers. The Court disagrees.

Indeed, most ofthe “evidence” described in Sigaba’s papers ofMayfield’s purported involvement was

produced and/or discovered in depositions between 2003 and October of 2004, and Sigaba cited such

evidence in its summary judgment oppositions. See generally Docket No. 564 (Opposition to Motion for

Summary Adjudication ofAntitrust ConspiracyClaims);DocketNo. 722 (Opposition to Motion for Summary

Adjudication ofAntitrust Immunity and False Advertising Claims). Sigaba has known of this evidence for quite

some time, and there is no reason why Sigaba could not have sought to amend its counterclaims earlier. 

The Court concludes that Sigaba has not provided a convincing explanation for its delay in seeking to

amend the counterclaims. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 985 (9th

Cir. 1999) (holding that unexplained delay is relevant factor in determining whether amendment should be

denied). The only explanation Sigaba has provided for seeking to amend at this advanced stage of the litigation

is that the recently produced documents constitute proof “for the first time” of Mayfield’s wrongdoing.

However, as discussed supra, this argument is not persuasive giventhatmost of the evidence Sigaba relies on

was produced long ago, and because the recently produced documents simply show that Dalal and Morgan

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were recipients of several emails discussing Thomas’ meeting with Friedman and PostX’s decision to send a

“cease and desist” letter to Sigaba. These emails are not “proof for the first time” that Mayfield participated

in misappropriating confidential Sigaba information, or that Mayfield committed a Lanham Act violation. See

Chodos v. West Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002) (affirming district court’s denial motion to

amend where plaintiff “contended that he had learned new facts that supported that claim shortly before the

close of discovery” but in reality those “new facts” were long known to plaintiff).

The Court also concludes that allowing amendment at this late date in the litigationwould unduly delay

this litigation. Discovery has closed, and the deadline for filing dispositive motions has passed. The trial date,

which has been rescheduled several times for various reasons, is currently set for February 2006. Allowing

Sigaba’s amendment would require the reopening of discovery, and based upon statements in Mayfield’s

opposition, it appears that if the amendment were allowed, Mayfield would seek the opportunity to file a

dispositive motion; both of these actions could result in a further delay of the trial date. Simply put, allowing

the amendment at this late stage in the litigation would result in undue delay, and Sigaba has provided no

persuasive reason to allow amendment. See Zivkovic v. Southern Cal. Edison Co., 302 F.3d 1080, 1087

(9th Cir. 2002) (“The district court may deny a motion for leave to amend if permitting an amendment would,

among other things, cause an undue delay in the litigation or prejudice the opposing party.”). 

CONCLUSION

For the foregoing reasons, the Court hereby DENIES Sigaba’s motion for leave to amend its 

counterclaims. [Docket No. 859].

IT IS SO ORDERED.

Dated: November 8, 2005

 

SUSAN ILLSTON

United States District Judge

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