By Memorandum Opinion and Order entered by The Honorable Leonard P. Stark, in Leader Technologies, Inc. v. Facebook, Inc., Civil Action No. 08-862-LPS (D.Del., June 24, 2010), the Court granted in part and denied in part defendant Facebook’s Motion for Leave to Amend Its Responsive Pleading to Add a Defense and Counterclaim of Inequitable Conduct and to Amend Its False Marking Counterclaim. Specifically, the Court’s Order allowed Facebook to add an affirmative defense of inequitable conduct and a declaratory judgment counterclaim, but did not permit Facebook to amend its existing false marking counterclaim. Id. at 10.

During its discussion of the applicable legal standards, the Court noted that, if a party moves for leave to amend the pleadings after a deadline imposed by a Scheduling Order, Rule 16 is implicated. Id. at 5. Pursuant to Rule 16(b), “a schedule may be modified only for good cause and with the judge’s consent.” Fed.R.Civ.P. 16(b)(4). In other words, “[a]fter a pleading deadline has passed, the Third Circuit requires a showing of good cause in order to amend.” Id. at 5. Moreover, “[i]n contrast to Rule 15(a), the good cause standard under Rule 16(b) hinges on diligence of the movant, and not on prejudice to the non-moving party.” Id. at 6.

In denying Facebook’s Motion to Amend with respect to its request to amend its existing false marking counterclaim, the Court concluded that Facebook had not demonstrated good cause to amend the counterclaim as required by Federal Rule of Civil Procedure 16(b). Id. at 6. Although in support of its motion Facebook contended that it could not have known that Leader was marking its other products with the ‘751 patent number until the February 17, 2010 deposition of Timothy Fathbruckner, Leader was able to direct the Court to numerous documents within Facebook’s own document production which occurred more than one year prior to Facebook’s motion that contained examples of how Leader marked the newly accused products. Id. Facebook did not dispute its possession of those documents and did not provide any explanation for why, in light of its possession of such documents, it could not have complied with the Scheduling Order. Id.

The general lesson in the Opinion is that a party needs to be diligent in reviewing discovery and, if a party moves for leave to amend a pleading after the deadline to amend in the Scheduling Order has passed, that party better be prepared to demonstrate “good cause” for the amendment, including no lack of diligence on its behalf. A complete copy of the Memorandum Opinion is attached.