Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-02177/USCOURTS-cand-3_03-cv-02177-21/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

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

3COM CORP,

Plaintiff,

v

D-LINK SYSTEMS, INC,

Defendant,

_________________________

REALTEK SEMICONDUCTOR CORP,

Intervenor. /

No C 03-2177 VRW

ORDER

Plaintiff 3Com Corporation (3Com) brought this suit

alleging that two products of defendant D-Link Systems, Inc (DLink) infringe three of 3Com’s patents. Doc #1, ¶10. Realtek

Semiconductor Corporation (Realtek) later intervened. Doc #108. 

3Com also alleges that Realtek infringes seven 3Com patents. Doc

#120. In the first two years of this case, the undersigned judge

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and Magistrate Judge Zimmerman dealt with myriad disputes related

to 3Com’s seriously troubling conduct. The current dispute relates

to Realtek’s motion to strike 3Com’s amended preliminary

infringement contentions (PICs), which reference products not

accused in 3Com’s original PICs. Magistrate Judge Zimmerman denied

Realtek’s motion. Doc #286. Realtek subsequently filed a motion

in this court objecting to Magistrate Judge Zimmerman’s ruling. 

Doc #295. The court vacated Magistrate Judge Zimmerman’s ruling

and ordered 3Com to show cause “why Realtek products not named in

3Com’s original preliminary infringement contentions should not be

stricken in light of (1) Pat L R 3-7, (2) 3Com’s representations to

the court during the further case management conference held on

June 21, 2005, and (3) the understandings of the parties and their

counsel when drafting the stipulated proposed discovery order, Doc

#269.” Doc #306. 3Com has now responded to the order to show

cause and opposes Realtek’s motion to strike. Doc #316. For the

reasons that follow, the court DENIES Realtek’s motion to strike.

I

On January 17, 2003, 3Com filed its infringement

complaint against D-Link in the United States District Court for

the District of Delaware. Doc #1. That court transferred the

action to this court pursuant to 28 USC § 1404(a) on April 24,

2003, and the case was assigned to the undersigned. On November

17, 2003, pursuant to Pat L R 3-1, 3Com served its PICs on D-Link. 

Doc #157 (Morr Decl) Ex A. The PICs accused two specific D-Link

products, DFE-530TX (530TX) and DFE-550TX (550TX), both a type of

network interface card (NIC), of infringing three 3Com patents,

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namely United States patent Nos 5,434,872 (‘872), 5,732,094 (‘094)

and 5,307,459 (‘459). Id. Pursuant to Pat L R 3-1(c), 3Com

attached a “[two-column] chart identifying specifically where each

element of each asserted claim is found within each accused product

of D-Link * * *.” Id at 2, Appendix A. The first column listed

the specific elements of the asserted claims of 3Com’s three

patents, and the second column stated that “testing demonstrated

that the processor included in the D-Link DFE-530TX and DFE-550TX

is operable to * * *,” followed by language that is virtually

identical to the language of the claim itself. In due course, DLink moved to strike 3Com’s PICs, and 3Com opposed. Docs ##156,

205. In addition, 3Com moved to amend its PICs, and D-Link

opposed. Docs ##175, 204. 

Realtek intervened in the case on June 23, 2004. Doc

#108. In 3Com’s answer to Realtek’s complaint requesting

declaratory judgment, 3Com accused Realtek of infringing seven of

3Com’s patents, including the patents asserted against D-Link (the 

‘459, ‘872 and '094 patents) as well as United States patent Nos

6,115,776 (‘776), 6,327,625 ('625), 6,526,446 ('446) and 6,570,884

(‘884). Docs ##108, 120. 3Com served Realtek with PICs on January

14, 2005 (the “original PICs”). The PICs served on Realtek were

similar to the PICs served on D-Link, but the PICs against Realtek

did not include the assertion that “testing” was conducted. Doc

#296 (Rader Decl) Ex B. Realtek wrote the court to complain that

the original PICs were insufficient. Id, Ex C. 

On May 5, 2005, the court issued an order (the “May 5

order”). Doc #251. The May 5 order granted D-Link’s motion to

strike 3Com’s PICs. Id at 14. The court also granted 3Com’s

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motion to amend its PICs in part. Id at 18. 3Com was permitted to

amend its PICs to accuse the 530TX+ product (which happened to

contain a Realtek chipset) and no others. Id. Finally, the court

sanctioned 3Com pursuant to 28 USC § 1927. Id at 20. Realtek,

however, was not substantively involved in the motions related to

the May 5 order. See Docs ##156, 175, 204 and 205. To be sure,

the PICs at issue in the May 5 order were the PICs 3Com served on

D-Link before Realtek intervened. The court summarizes the May 5

order because its analysis is relevant to the discussion below. 

3Com’s PICs against D-Link asserted that 3Com had tested

the 530TX and 550TX when it had not. 3Com’s claim that “testing

demonstrated * * *” led D-Link to seek discovery on the alleged

testing. Doc #251 at 3. 3Com attempted to hide its lack of

testing in two ways. First, in one maneuver, 3Com heavily resisted

discovery of the testing information. Id at 3. Pursuant to

Magistrate Judge Zimmerman’s order, 3Com eventually produced three

documents that were represented to be the only documents relied

upon in preparing the PICs against D-Link. Id at 5. But the

documents did not relate to either the 530TX or the 550TX. Id at

5-6. Instead, 3Com had tested a D-Link product, the 530TX+ that

contained a Realtek RTL8139 chipset. Id. Second, when faced with

the correct finding that 3Com had not tested either the 530TX or

550TX (in fact, 3Com admitted this to Magistrate Judge Zimmerman),

3Com tried to downplay the differences between the 530TX and the

530TX+. Id at 7. Magistrate Judge Zimmerman rejected the argument

that the 530TX “family of products” was broad enough to capture the

530TX+. Id at 6. 

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In short, the court struck 3Com’s PICs because the only

products accused in the PICs were the 530TX and the 550TX. 3Com,

by accusing these two products, did not accuse the 530TX+. Since

no testing had been conducted on the accused products (i e, the

530TX and 550TX), all references to “testing demonstrated” were

struck. Id at 11. The court struck the remainder of the PICs

served on D-Link because 3Com did not otherwise conduct a

“reasonable prefiling inquiry.” Id at 14. 

Only when 3Com’s improper actions failed did 3Com admit

its mistake and move to amend it PICs to accuse the correct

product. Id at 17. Accordingly, the court next examined 3Com’s

motion for leave to amend. The court rejected 3Com’s “scrivener’s

error” argument because, as a factual matter, that argument

necessitated the conclusion that either 3Com lied in its Rule

30(b)(6) deposition or 3Com’s counsel lied in representing what

documents he relied upon in preparing the PICs. Id at 16. Left

with “nothing but 3Com’s misrepresentations and shifting

positions,” the court weighed this “heavily against a finding of

good cause” to amend. Id at 18. On the other hand, because D-Link

and Realtek were fully aware, as of June 2003, that 3Com had tested

the D-Link 530TX+ (and hence the Realtek RTL8139), neither party

could claim surprise. Id. The court also relied on the fact that

the suit was “in its early stages and no Markman hearing date has

been set.” Id. The court concluded that a compromise was

appropriate: 3Com could amend its PICs to accuse the 530TX+ only,

and the damage period would be truncated. Id. Following the May 5

order, 3Com retained new counsel. From this point, the current

dispute takes shape. 

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In mid-June 2005, the parties (including 3Com’s new

counsel) conferred, tentatively agreed on a joint schedule and

filed a joint discovery schedule and proposed order. Doc #269. An

email chain was generated from the parties’ efforts to reach a

joint agreement. See Doc #317 (Gutman Decl), Exs N-S. A case

management conference was held on June 21, 2005. Doc #271. Then,

on September 16, 2005, 3Com served Realtek with its amended PICs in

accordance with the joint schedule. These amended PICs accused

products not identified in the original PICs. Subsequently,

Realtek and 3Com exchanged several letters regarding the substance

of the amended PICs and the addition of new products to the amended

PICs. Realtek alleged non-compliance with Pat L R 3-1(c) and 3-

2(b), and the court referred the dispute to Magistrate Judge

Zimmerman. Docs ##275, 277. Through no fault of his own,

Magistrate Judge Zimmerman addressed whether the newly accused

products should be stricken, which was outside the scope of the

matters referred. Docs ##286, 306. Accordingly, the court vacated

Magistrate Judge Zimmerman’s order denying Realtek’s motion to

strike. Doc #306. Additionally, the court ordered 3Com to show

cause why the newly accused Realtek products should not be

stricken. Id. 

The issue here is whether 3Com’s amended PICs against

Realtek, which accuse Realtek products not identified in the

original PICs, should be stricken.

II

Whether 3Com’s amended PICs accusing new products should

be stricken depends on two questions: (1) As required by Pat L R

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3-7, did 3Com have leave to amend its original PICs against

Realtek? (2) If yes, what was the scope of 3Com’s leave to amend

given the understanding of the parties and their counsel when

drafting the stipulated proposed discovery order (Doc #269), and

given 3Com’s representations to the court at the June 21 case

management conference? 

A

The first question can be disposed of easily. Under the

patent local rules, there are only two ways to amend PICs. One is

not applicable here. Pat L R 3-6 (allowing certain amendments

after a claim construction ruling or after documents are produced

under Pat L R 3-4). The other is by leave of court. Pat L R 3-7. 

It is clear that both Realtek and D-Link agreed to permit 3Com to

amend its PICs. The court approved this at the June 21 case

management conference. Accordingly, 3Com was permitted by the

court, as well as by Realtek and D-Link, to amend its PICs.

B

This brings the court to the second question concerning

the scope of the amendments permitted. Resolving this question

requires examining three issues: (1) the effect of the May 5 order

on 3Com’s ability to amend PICs as to Realtek; (2) whether there

was any agreement, beyond the May 5 order, that limited 3Com’s

ability to add products not accused in the original PICs against

Realtek; and (3) whether the court would have found good cause to

grant leave, had 3Com explicitly moved for leave to amend in the

summer of 2005. 

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1

For the following reasons, the court finds that the May 5

order did not limit 3Com’s ability to amend its PICs against

Realtek. First, the May 5 order addressed PICs served on D-Link in

November 2003, before Realtek intervened in this case. Doc #251. 

The May 5 order did not address 3Com’s PICs served on Realtek in

January 2005. Id. Once Realtek intervened, it did not participate

in the motions that concluded with the May 5 order. Also, some of

D-Link’s arguments supporting its motion to strike 3Com’s PICs were

predicated on the ability to pursue Realtek, the party whose

product had been tested. Further, none of the D-Link products

excluded by the May 5 order contained a Realtek chipset. The one

D-Link product that 3Com was allowed to add in its amended PICs did

contain a Realtek chipset. Finally, while some of the claims and

patents asserted against D-Link and Realtek overlap, the two sets

of patents are substantially different. All of these reasons lead

the court to conclude that the May 5 order, on its face, did not

limit 3Com amending vis-a-vis Realtek. 

Second, 3Com’s original PICs against Realtek did not

contain the incorrect statement “testing demonstrated.” It was

these words, included in 3Com’s PICs against D-Link, that were the

subject of so much controversy. The May 5 order was a result of

3Com’s troubling conduct around both the testing assertion and its

attempts to conceal the fact that no accused products had been

tested. This course of conduct started before Realtek intervened

in the case and was largely related to the false and misleading

testing assertion. 

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Realtek states that the PICs served on Realtek were

nearly identical to those served on D-Link with the exception of

the “testing demonstrated” language, and therefore should be

stricken for the same reason. Doc #295 at 7. Realtek understates

the significance of the distinction. The testing assertion, and

disputes related to it, were the “factors weigh[ing] heavily

against a finding of good cause in allowing 3Com to amend” and the

basis for striking 3Com’s PICs. Doc #251 at 18. This false

assertion was not made against Realtek. The court finds that the

testing assertion in the PICs against D-Link, and lack thereof in

the PICs against Realtek, make the two sets of PICs significantly

different. Accordingly, the court rejects Realtek’s argument that

the PICs, as to D-Link and Realtek, were subject to being stricken

for the same reasons.

Third, rather than admit its mistake and seek leave to

amend its PICs at the appropriate time, 3Com prolonged its

deception and made blatant misrepresentations to the court

regarding the testing assertion. Id at 17. 3Com was punished for

its behavior. This “pattern of deceptive and inconsistent

positions” led the court to strike 3Com’s PICs, allow only limited

amendments to the PICs and impose a significant monetary sanction. 

Id at 18. In doling out 3Com’s punishment, the court did not

address any matter as between 3Com and Realtek. With respect to

Realtek, 3Com has attempted to fix the mistakes within a reasonable

time after serving its original PICs on Realtek. 3Com’s

deficiencies in its original PICs against Realtek are much less

severe because 3Com did not falsely claim testing had been

conducted and did not embark on a course of deception regarding

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non-existent testing. For these additional reasons, the issues

addressed in the May 5 order differ from the current issues between

3Com and Realtek. 

In sum, the May 5 order did not limit 3Com’s ability to

amend its PICs against Realtek to accuse new products. 

2

Next the court must determine whether there was an

agreement or understanding between the parties regarding

limitations on 3Com’s leave to amend its PICs. Realtek argues that

there was an understanding that 3Com would amend its PICs only to

the extent required to bring the PICs into compliance with the

patent local rules and not to accuse additional Realtek products. 

Clearly, 3Com is limited as to D-Link by both the May 5 order and

an explicit agreement. 3Com admits this. Docs ##251, 269, 316 and

317 Ex R. But 3Com denies any such limitation exists as to

Realtek. Doc #316 at 5. There are two possible sources for

finding such an agreement between 3Com and Realtek: (1) the June

10-13 email chain related to the proposed discovery schedule (Doc

#269); and (2) the June 21 case management conference. Not

surprisingly, the parties characterize these two sources

differently. 

The court takes the email chain up first. Following a

conference on the subject, counsel for 3Com, D-Link and Realtek

finalized the parties’ proposed joint discovery schedule by email

between June 10 and June 13. Realtek argues that the emails show

an agreement that 3Com was permitted to amend its PICs only to the

extent required to conform the PICs to Pat L R 3-1, and not to

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accuse additional products. Doc #295 at 4-5, 7 and 9. The court

disagrees and declines to find an “agreement” from these emails for

the following reasons. 

The first email was sent by 3Com to D-Link and Realtek on

Friday, June 10, in the afternoon. Doc #317 (Gutman Decl) Ex N. 

Realtek quickly responded that it “looks very close” and mentioned

only minor changes regarding dates. Id, Ex O. Shortly thereafter,

3Com amended the dates to conform to Realtek’s request. Id, Ex P. 

Then, Realtek approved the changes and stated that all that was

needed was confirmation from D-Link. Id, Ex Q. D-Link chimed in

later that evening to clarify that 3Com was not permitted to make

any amendments to the PICs that were inconsistent with the May 5

order. Id, Ex R. D-Link made several proposed revisions to the

joint discovery schedule and proposed order. Id. “This is fine

with Realtek,” Realtek responded. Doc #318 (Gutman Decl) Ex S. 

3Com’s counsel did not agree with the language of the revision on

Friday evening, but on Monday D-Link and 3Com agreed to the phrase,

“[a]ll amendments are subject to the requirements of the Patent

Local Rules and the orders of the Court.” Id. Realtek accepted

this change as well. Id. 

Realtek effectively approved the joint discovery schedule

and proposed order before D-Link raised any questions about the

scope of the allowed amendments. It is clear that D-Link was

clarifying and emphasizing that D-Link was not acquiescing to any

amendment by 3Com that was inconsistent with the May 5 order. The

extent of Realtek’s involvement in these clarifications was “That

is fine with Realtek” and “Great.” The court finds it difficult to

see an “agreement” as between 3Com and Realtek when Realtek agreed

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to the language before the question of scope was raised by D-Link,

and when Realtek’s contribution to the discussion was so limited. 

The email chain, specifically D-Link’s proposed redlines (Doc #317

(Gutman Decl) Ex R), does raise the question whether 3Com should

have been extraordinarily cautious and specifically requested leave

to amend to accuse additional products under Pat L R 3-7. The

email chain does not, however, rise to the level of an agreement

between 3Com and Realtek. 

The second source of disagreement between 3Com and

Realtek involves the June 21 case management conference. Realtek

states that 3Com “expressly” and “in open court” agreed that it

would only amend its PICs to comply with the patent local rules. 

Doc #295 at 5. 3Com disputes this “open court” agreement. 

Interestingly, Realtek did not submit the transcript as an exhibit

to show this purported express, open court agreement. Doc #296

(Rader Decl) at 3. The court has reviewed the transcript. Doc

#317 (Gutman Decl) Ex B. Again, the statements made at the case

management conference hardly support an agreement between 3Com and

Realtek. At best the transcript indicates a wash. Mr Gutman,

3Com’s counsel, stated that 3Com would not only amend the PICs

against D-Link in accordance with the May 5 order, but 3Com would

be amending its PICs against Realtek. Id at 4. 

It would not have been possible, however, at the time of

the case management conference for 3Com to know that it would

accuse new products in its amended PICs because 3Com’s new counsel

had not yet conducted due diligence. 3Com admits this. Doc #316

at 4. This again raises the question of whether 3Com should have

been extraordinarily cautious and should have formally requested

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leave to amend when it discovered that new products were

potentially infringing. Even so, 3Com’s representations at the

case management conference are not enough to show some kind of

“express” agreement between 3Com and Realtek that 3Com would not

accuse new products. 

Also, the court notes that its conclusion that the email

chain and the case management conference did not evidence some type

of agreement is bolstered by Realtek’s letters to 3Com sent after

Realtek was served with the amended PICs, Realtek’s November 15

letter to the court and Realtek’s arguments to Magistrate Judge

Zimmerman. Realtek’s letter of October 5 does not object to the

addition of new accused products, rather it complains that the

substance of the PICs does not satisfy Pat L R 3-1. Doc #317

(Gutman Decl) Ex I. Further, the letter states nothing about the

May 5 order or any agreement. Id. Realtek’s letter of October 20

is similar in that there is no objection to additional accused

products, no mention of the effect of the May 5 order as to Realtek

and no allegation of any breached agreement. Id, Ex J. The first

objection to the addition of new accused products came in Realtek’s

October 31 letter to 3Com. Id, Ex K. The objection was based on

the May 5 order. Id. But still, no reference was made to any

agreement. The same is true of Realtek’s November 15 letter to the

court. Id, Ex L. 

The court does not hold that Realtek waived its

objections to the addition of new products by failing to object or

make arguments related to the May 5 order and any “agreement.” The

court, however, notes that the lack of objection and argument

reinforces the court’s conclusion that there was no such agreement

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and Realtek did not understand the May 5 order as binding on 3Com

at the time of the emails and case management conference. 

3

While, as discussed above, the May 5 order did not limit

3Com’s ability to amend its PICs against Realtek and the court does

not find any “agreement” that 3Com would not accuse additional

Realtek products, the court does not agree fully with 3Com either. 

That is, it is not readily apparent that Realtek opened itself up

unconditionally to amendments. 3Com states that, at the June 21

case management conference, “counsel for 3Com did not know which

Realtek products would be accused in the Amended PICS.” Doc #316

at 4. Accordingly, it is not certain that Realtek agreed to grant

leave with no conditions attached. Further, as noted above, there

is a question whether 3Com should have been extraordinarily

cautious regarding the scope of its leave to amend – especially

given the conduct of prior counsel. For completeness, the court

examines whether 3Com has “good cause” to amend as required by Pat

L R 3-7. For the reasons that follow, the court finds that 3Com

has good cause. 

First, the timing of the amendments supports finding good

cause. It is worth noting that Pat L R 3-1 is titled “Disclosure

of Asserted Claims and Preliminary Infringement Contentions.” 

“While the Court recognizes that the Patent Local Rules are

intended to force patent owners to finalize their contentions

early, preliminary infringement contentions are still preliminary.” 

General Atomics v Axis-Shield ASA, 2006 WL 2329464, 2 (ND Cal

2006). Good cause is clearly a flexible standard. In the context

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of the patent local rules, setting too high a bar for good cause

would have the consequence of eliminating the distinction between

preliminary contentions and final contentions. Here, the

amendments came before any motions were made regarding the PICs,

before a Markman hearing and before the close of discovery. It is

to be expected that a patent holder may find other product

designations that infringe as discovery progresses. 

Second, the additional accused products appear to be

substantially similar to the original accused products. As the

briefing on this subject is limited, the court reaches this

conclusion assuming, but without determining whether, the new

products accused in the amended PICs are merely more detailed

listings of the originally accused products with substantially

similar functionality. 3Com has not added any patents or any

claims to its amended PICs. This is consistent with discovering

new product number designations of products with substantially

similar functionality. 

Further, 3Com explicitly stated that the products listed

in the original PICs were those “currently known” and would later

amend to include additional “chip designations.” Doc #317 (Gutman

Decl) Ex F. While “a party cannot unilaterally amend the Patent

Local Rules” by inserting boilerplate language in its PICs, it is

consistent with the rules to allow amended PICs to accuse products

which represent a more detailed listing of products initially

known. Berger v Rossignol Ski Co, Inc, 2006 WL 1095914, 4 (ND Cal

2006). This is especially true when the PICs in question are

directed at an intervening party and when the intervention occurs

in the midst of a lengthy dispute. Although the lengthy dispute

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between 3Com and D-Link was caused by 3Com’s improper conduct, the

court does not believe 3Com is benefitting from its wrongful

conduct, as alleged by Realtek. 

Third, there is no undue prejudice to Realtek. Absence

of a product’s name or number is not a covenant not to sue for

infringement. This is especially true if a defendant is put on

notice by the naming of several products within a line of products

possessing similar functionality. Realtek has not presented any

evidence that it changed manufacture, sales or distribution with

respect to the products originally accused, so there is no reason

to infer that Realtek relied on 3Com’s original PICs for business

decisions in the nine month period between January and September of

2005. The fact that certain, more detailed product numbers were

not included in the original PICs would not constitute a defense in

a separate infringement action. 

The court also notes that judicial economy supports

allowing the amendment at this stage of the litigation. Finally,

Realtek is getting a second shot at its preliminary invalidity

contentions. Realtek has taken this opportunity to add invalidity

arguments and prior art references. 

Accordingly, the court finds that 3Com had and – due to

the parties’ misunderstanding, now has – good cause to amend its

PICs.

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III

For the reasons discussed above, the court DENIES

Realtek’s motion to strike.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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