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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

SOUTHWESTERN BELL TELEPHONE, §

L.P., et al., §

Plaintiffs, §

§

v. § CIVIL ACTION NO. 3: 04-CV-0669-B

§ ECF

ARTHUR COLLINS, INC., §

§

Defendant. §

MEMORANDUM ORDER

Before the Court is Arthur Collins, Inc.’s (“Collins”) Motion for Summary Judgment (Partial)

on the Issue of Inequitable Conduct (doc. 363), filed February 24, 2006. Because the issue of

inequitable conduct was untimely added to this suit, the Court does not reach its Rule 56 analysis

but GRANTS Collins’s motion to strike the improperly added portion of Southwestern Bell’s Reply

to Amended Counterclaim.

I. BACKGROUND

This declaratory judgement action concerns two patents Collins holds for a dynamically

reconfigurable time space time switch (“DRTST”): 4,701,907 (“the ‘907 patent”) and 4,797,589

(“the ‘589 patent”). According to Southwestern Bell, Collins has asserted that switching systems in

Southwestern Bell’s central offices infringe the patents-in-suit and has threatened suit for

infringement unless the company purchases a license from Collins. (Am. Compl. ¶¶ 10-11)

Southwestern Bell originally filed suit on March 31, 2004, seeking a declaratory judgment of noninfringement and invalidity of the patents-in-suit. (doc. 1) In its answer, Collins included a

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counterclaim of infringement against Southwestern Bell and requested compensatory damages, treble

damages, and an injunction. (Ans. & Countercl. ¶¶ 7-11) In November 2004, the Court entered

a scheduling order which set a June 27, 2005 deadline for the parties to move to amend their

pleadings. (doc. 30) Also in November, Fujitsu moved to intervene in this suit based upon

allegations of infringement made by Collins outside the context of the instant suit as well as potential

indemnity obligations to Southwestern Bell. (Mot. to Intervene at 3) The Court granted Fujitsu

leave to intervene in January 2005. (doc. 50)

At an earlier stage in this litigation, AT&T Corporation and Lucent Technologies, Inc. were

also parties to this suit; however, the companies entered into a settlement agreement with Collins

on February 4, 2005. (Southwestern Bell’s Unopposed Mot. to File an Am. Compl. ¶ 1)

Southwestern Bell was a third party beneficiary of this agreement. (Id. ¶ 2) Because Southwestern

Bell believed that Collins was not meeting the terms of the agreement, it moved the Court to allow

it to amend its complaint to include a claim for breach of the settlement agreement. (Id. ¶¶ 3-5)

The Court granted this motion on October 24, 2005, and Southwestern Bell filed the amended

complaint in December. (docs. 285, 325) On December 28, Collins amended its answer to address

the breach of settlement agreement claim and to exclude Lucent devices from its infringement

claims, but no other new claims or defenses were included. (Am. Answer & Countercl. ¶ 12)

Southwestern Bell then filed an answer to Collins’s amended counterclaim, adding inequitable

conduct as a new defense and also arguing litigation misconduct. (Reply to Am. Countercl. at 4-8)

On February 24, 2006, Collins moved for summary judgment on the issue of inequitable conduct.

The parties have briefed the issues, and the Court now turns to the merits of its decision.

 

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Although none of the parties discuss the claim of litigation misconduct in their summary judgment 1

briefing, the Court must strike that claim for the same reason it must strike the inequitable conduct defense:

it was untimely added in violation of the scheduling order.

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II. ANALYSIS

Collins initially argued inter alia that neither Southwestern Bell nor Fujitsu pled inequitable

conduct and that appearance in an expert report was not sufficient to bring the issue into this suit.

(Collins’s Mot. for Summ. J. at 2) Plaintiffs then explained that Southwestern Bell pled inequitable

conduct in its reply to Collins’s amended answer and counterclaim. (Pls.’ Resp. at 1) Collins

countered that Southwestern Bell introduced its inequitable conduct defense in violation of the

Court’s scheduling order and moved the Court to strike the new defense. (Collins’s Reply at 1-2)

Collins is correct, and Southwestern Bell’s inequitable conduct defense must be stricken.

Under Rule 16, a court has discretion to enter a scheduling order that sets a deadline for the

amendment of pleadings. FED. R. CIV. P. 16(b)(1). In the instant case, the Court set a deadline of

June 27, 2005 for the parties to move to amend the pleadings to include new claims and defenses.

(Scheduling Order at 1) Southwestern Bell violated this order by filing a reply that untimely added

a new defense of inequitable conduct and a new claim for litigation misconduct. The Court granted 1

Southwestern Bell leave to amend its complaint only for the purpose of adding a claim for breach of

the aforementioned settlement agreement. In turn, Collins properly amended its answer solely for

the purpose of refuting the new claim for breach of the settlement agreement. Southwestern Bell

exceeded the scope of the leave granted by the Court when it filed its amended reply and added the

defense of inequitable conduct and the claim of litigation misconduct. For this reason, the two issues

are not properly before the Court, and the Court GRANTS Collin’s motion to strike.

 

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A district court retains jurisdiction to decide Rule 11 issues even if the parties are no longer before 2

it. See Willy v. Coastal Corp., 503 U.S. 131, 137-38 (1992). Even though their Rule 11 claims will be stricken

from the reply, the Plaintiffs may renewthose litigation misconduct claims in a separate motion at a later time.

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III. CONCLUSION

Because Southwestern Bell’s addition of the sections entitled “Inequitable Conduct and

Fraudulent Procurement” and “Exceptional Case, Rule 11 and Litigation Misconduct” to its Reply 2

to Amended Counterclaim was untimely, the Court GRANTS Collins’s motion to strike. Both

sections shall be stricken from the reply.

SO ORDERED.

SIGNED September 27 , 2006 th

_________________________________

JANE J. BOYLE

UNITED STATES DISTRICT JUDGE

 

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