United States District Court, D. Rhode Island
ALIFAX HOLDING SPA; and SIRE ANALYTICAL SYSTEMS SRL, Plaintiffs,
ALCOR SCIENTIFIC INC.; and FRANCESCO A. FRAPPA, Defendants.
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Alifax Holding SpA (“Alifax”) initiated this
patent infringement case against a former employee, Defendant
Francesco Frappa, and the former employee's new employer,
Defendant Alcor Scientific Inc. (“Alcor”), in
October 2014. (Compl. ¶ 1, ECF No. 1.) Alifax alleges
that Defendant Alcor developed a diagnostic erythrocyte
sedimentation rate (“ESR”) analyzer using
patented intellectual property to which Defendant Frappa had
access while working for Alifax and then shared with Alcor.
(Id. ¶ 5.)
filed an Amended Complaint in March 2015 with assent from
Defendants, adding Alifax's subsidiary, Sire Analytical
Systems Srl (“Sire”), as a Plaintiff. (Mem. in
Supp. of Pl.'s Assented to Mot. to Am. Compl., ECF No.
19; 3/17/15 Text Order.) The Amended Complaint lists three
counts: patent infringement against Alcor, misappropriation
of trade secrets against Alcor and Frappa, and breach of a
confidential relationship against Alcor and Frappa. The Court
denied Defendants' Motion to Dismiss two counts of the
Amended Complaint in September 2015. Defendants then answered
the Amended Complaint and asserted two counterclaims,
alleging that both patents at issue are invalid. (Defs.'
Answer and Countercl. 13, ECF No. 28.) Thereafter, the
parties engaged in fact discovery and claim construction
October 2016, Alifax filed a motion to amend and supplement
the Amended Complaint. (ECF No. 55.) On February 22, 2017,
the Court held a claim construction hearing and also heard
oral argument regarding Alifax's request to file a Second
Amended and Supplemental Complaint. This Memorandum and Order
will address Alifax's motion to amend its pleading; a
separate Memorandum and Order regarding the parties'
request for the Court to construe seven claim terms in the
patents at issue is forthcoming.
proposed Second Amended and Supplemental Complaint reflects
four main changes to the Amended Complaint: it (1) removes
Sire as a named plaintiff because Sire has completely merged
into Alifax and no longer exists as a discrete business
entity; (2) adds detail to the patent infringement claim
against Alcor regarding its alleged infringement and
introduces allegations about induced infringement; (3) adds a
supplemental claim for copyright infringement; and (4) amends
some of the factual allegations pertinent to the
misappropriation of trade secrets claim to clarify that this
claim is not based on ultrasound technology but is based
instead in part on computer source code. (Pls.' Mem. in
Supp. 3, ECF No. 55; Ex. 2, ECF No. 55-2.)
asserts that the proposed changes to the Amended Complaint
are intended to clarify facts learned during discovery and to
reflect an evolution of its theories of Defendants'
liabilities for their alleged misconduct. (Pls.' Mem. in
Supp. 4.) Alifax argues that Defendants will not suffer any
unfair prejudice from these changes because discovery is in
the early stages; depositions have not been either scheduled
or taken, the parties have not finished exchanging documents,
and the scope of discovery will not be materially affected by
the changes. (Id. at 5, 6; Pls.' Reply Mem. 7,
ECF No. 60.) Alifax also argues that it could not have
brought this claim as part of its initial or amended pleading
because the factual basis for the copyright infringement
claim was not discovered until it reviewed Alcor's source
code as part of the discovery process during Spring 2016.
(Pls.' Reply Mem. 9.)
vigorously opposes Alifax's motion to amend and
supplement on the basis that the addition of the copyright
infringement claim reflects an abuse of the protective order
in place governing confidential material and is futile
because it will not survive a motion to dismiss. (Defs.'
Mem. in Supp. of Obj. 1-2, 12-13, ECF No. 56.) Defendants
also argue that they will be unfairly prejudiced by the new
claim because it has already translated many of the documents
that Alifax produced from Italian to English, but would need
to re-review all of the documents produced by Alifax thus far
to determine whether any are relevant to the new claim.
(Id. at 10.)
15(a)(2) of the Federal Rules of Civil Procedure provides
that the court should “freely give leave [to amend]
when justice so requires.” A motion for leave to amend
may be denied “[i]n appropriate circumstances - undue
delay, bad faith, futility, and the absence of due diligence
on the movant's part . . . .” Palmer v.
Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006) (citing
Foman v. Davis, 371 U.S. 178, 182 (1962)).
“[A] request to amend . . . requires the court to
examine the totality of the circumstances and to exercise its
informed discretion in constructing a balance of pertinent
considerations.” Id. at 30-31 (citing
Quaker State Oil Ref. Corp. v. Garrity Oil Co., 884
F.2d 1510, 1517 (1st Cir. 1989)).
do not oppose removing Sire as a named plaintiff. (Defs.'
Mem. in Supp. of Obj. 9 n.3.) Other than questioning
Alifax's purpose for adding factual allegations and
clarifying the basis for the misappropriation of trade
secrets claim, Defendants have not provided a compelling
argument that these proposed changes to the Amended Complaint
are either unduly delayed, made in bad faith, futile, or a
reflection of the absence of due diligence on Alifax's
part. See Palmer, 465 F.3d at 30. Instead,
Defendants focus their objections to the proposed amendments
primarily on the addition of the new claim for copyright
infringement. Therefore, to the extent that Alifax seeks to
amend its pleading, its proposed amendments will be allowed
because this litigation is still in a relatively early stage.
The fact discovery period has not been closed and neither
party has yet scheduled depositions. In fact, the parties
have filed a joint motion to extend the discovery schedule to
allow fact discovery to continue until four months from the
date of this Order. (ECF No. 63.) Allowing Alifax to amend
its pleading at this stage will not result in unfair
prejudice to Defendants.
to Alifax's proposed supplemental claim for copyright
infringement, Rule 15(d) provides that “the court may,
on just terms, permit a party to serve a supplemental
pleading setting out any transaction, occurrence, or event
that happened after the date of the pleading to be
supplemented.” According to Alifax, it reviewed
Alcor's source code in compliance with the terms of the
protective order, secured copyright protection for its own
source code, and now seeks to supplement its pleading in this
litigation with a copyright infringement claim. (Pls.'
Reply Mem. 9.) According to Defendants, the request to add
this claim is futile because it will not survive a motion to
dismiss. (Defs.' Mem. in Supp. of Obj. 2.)
Court has previously considered whether a proposed supplement
to a pleading pursuant to Rule 15(d) is futile by using the
same standard as that applied when it considers whether a
proposed amendment to a pleading pursuant to Rule 15(a) is
futile. Pelletier v. Rhode Island, CA No. 07-186S,
2008 WL 4900951, at *1 (D.R.I. Nov. 14, 2008). While futility
can be a reason to deny a motion to amend or supplement a
pleading, “[i]f leave to amend is sought before
discovery is complete and neither party has moved for summary
judgment, the accuracy of the ‘futility' label is
gauged by reference to the liberal criteria” of Rule
12(b)(6) of the Federal Rules of Civil Procedure. Hatch
v. Dep't for Children, Youth & Their Families,
274 F.3d 12, 19 (1st Cir. 2001) (citing Glassman v.
Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)).
“In this situation, amendment is not deemed futile as
long as the proposed amended complaint sets forth a general
scenario which, if proven, would entitle the plaintiff to
relief against the defendant on some cognizable
for copyright infringement requires a plaintiff to
demonstrate that it has registered its copyright, that it
owns a valid copyright, and that a defendant has copied
original elements of the copyrighted work. Airframe Sys.,
Inc. v. L-3 Commc'ns Corp., 658 F.3d 100, 105 (1st
Cir. 2011). A review of the proposed Second Amended and
Supplemental Complaint reveals that Alifax has sufficiently
pleaded to each of these elements. (Second Am. and Suppl.
Compl. ¶¶ 78-82, ECF No. 55-2.) For this reason,
and the reasons articulated above regarding Alifax's