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KEKER & VAN NEST, LLP 
JOHN W. KEKER - #49092 
HENRY C. BUNSOW - #60707 
MICHAEL H. PAGE - #154913 
710 Sansome Street 
San Francisco, CA 941 1 1-1704 
Telephone: (415)391-5400 
Facsimile: (415)397-7188 

INTERTRUST TECHNOLOGffiS CORPORATION 

DOUGLAS K. DERWIN - #1 1 1407 

MARK SCADINA - #173103 

JEFF MCDOW- #184727 

4800 Patrick Henry Drive 

Santa Clara, CA 95054 

Telephone: (408)855-0100 

Facsimile: (408) 855-0144 

Attorneys for Plaintiff and Counter-Defendant 
INTERTRUST TECHNOLOGIES CORPORATION 


UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 


INTERTRUST TECHNOLOGIES 
CORPORATION, a Delaware corporation. 

Plaintiff, 


MICROSOFT CORPORATION, a 
Washington corporation. 

Defendant. 


AND COUNTER ACTION. 


Case No. C 01-1640 SBA (MEJ) 

Consolidated with C 02-0647 SBA 

NOTICE OF APPLICATION AND 
APPLICATION FOR LEAVE TO AMEND 
COMPLAINT AND LOCAL RULE 3-1 
DISCLOSURES; REQUEST FOR 
FURTHER CASE MANAGEMENT 
CONFERENCE 

Judge: The Honorable Saundra B. Armstrong 
Date: October 22, 2002 
Time: 1:00 p.m. 


NOTICE OF APPLICATION 

PLEASE TAKE NOTICE that plaintiff and counter-defendant InterTrust Technologies 

Corporation ("InterTrust") hereby applies, pursuant to Federal Rule of Civil Procedure 15(a), for 
leave to amend it Complaint in this action. InterTrust further applies, pursuant to Patent Local 

Rule 3-7, for leave to serve an amended Patent Local Rule 3-1 Disclosure of Asserted Claims 

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APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA 


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and Preliminary Infringement Contentions. InterTrust also requests that the Court schedule a 
further Case Management Conference at its earliest convenience. This application is set for 
hearing on October 22, 2002, at 1 :00 p.m. This applicatibn is based upon the following 
Memorandum of Points and Authorities, and upon the accompanying declarations of Michael H. 
Page and David P. Maher. 

MEMORANDUM OF POINTS AND AUTHORITIES 
I. INTRODUCTION 

InterTrust hereby applies for leave to amend its complaint, in the form attached hereto as 
Exhibit A, and to serve amended Patent Local Rule 3-1 disclosures, in order to include in this 
case significant additional infiingements of its patents by Defendant Microsoft Corporation 
("Microsoft"). Those additional infringements include Microsoft products and services 
introduced to the marketplace since the filing of InterTrust' s initial complaint in this action, as 
well as infiingements revealed as a result of discovery produced by Microsoft in the course of 
this litigation. If granted, leave to amend will add an additional four InterTrust patents (Nos. 
5,915,019 ("the '019 patent"), 5,949,876 ("the '876 patent"), 6,112,181 ("the '181 patent") and 
6,389,402 Bl ("the '402 patent")) to the seven patents already in suit. 

Leave to amend should be granted, as a matter of course, for nimierous reasons: 

• Although the proposed amendment adds additional patents, the patents are closely 
related to those already in suit; all but one is a continuation or continuation-in-part 
from the same parent application as the current patents-in-suit, sharing 
substantially the same specification. 

• The additional patents do not add any inventors to the suit, and Microsoft has not 
yet deposed any of the inventors. 

• All documents related to the invention and reduction to practice of the four 
additional patents have already been produced in response to previous Microsoft 
discovery requests, and thus no additional discovery from InterTrust will be 
required. 

• In advance of this motion and conteniporaneous with claim charts for the existing 
patents-in-suit, InterTrust provided Microsoft with complete draft claim charts for 
the four additional patents (claim charts that under the Patent Local Rules would 
not have been due for months after filing), thus obviating any delay caused by 
amendment. 

• In the absence of leave to amend, InterTrust would be required (and entitled) to 
file the new allegations of infiingement as a separate case, which in due course 

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APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA 


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either (a) would be related to and consolidated with the existing suit anyway, after 
unnecessary delay, and motion practice, or (b) would proceed separately, requiring 
two Markman hearings construing multiple identical terms and two trials, both 
raising the distinct possibility of conflicting rulings. 

Basic principles of judicial economy and established rules of procedure dictate that leave 
to amend be granted in such circumstances. InterTrust, in advance of filing this application, 
served upon Microsoft amended claim charts for the existing patents-in-suit and complete claim 
charts for the four additional patents, and asked that Microsoft stipulate to leave to amend. See 
Declaration of Michael H. Page ("Page Decl."), HH 5-9 & Exhs.C,D. Microsoft declined to 
stipulate, necessitating this application.' Id., T| 6-9 & Exhs. E, G. 

II. STATEMENT OF FACTS 

This action has been pending for some fifteen months. As one would expect in any 
litigation concerning "cutting edge" technology, the world has not stood still while this case has 
been pending. Microsoft has continued to release new versions of its software, and has imveiled 
numerous new products, services, and initiatives. Chief among those initiatives has been 
Microsoft's ".NET" initiative, Microsoft's next generation technology platform. Since this 
lawsuit was filed, Microsoft has rolled out myriad aspects of .NET, and has begun publishing 
sufficient information about its .NET architecture to enable InterTrust to identify numerous 
additional infiingements of its patents. As set forth in the accompanying Declaration of David P. 
Maher, InterTrust's Chief Technical Officer (hereafter, '"Maher Decl."), significant technical 
source material used to identify those infringements was not available until late 2001 or 2002. 
Maher Dec!., 1[5. 

In addition, since this lawsuit was filed, Microsoft has shipped new versions of its 
jperating system (Windows XP), has unveiled the Xbox gaming system, has introduced or 
ipdated technologies such as Windows CE for Automotive, Microsoft's driver signing 


In addition to adding four new patents, InterTrust's proposed amended complaint includes U.S. 
latent No. 6,157,721, which is currently asserted in a separate but related and consolidated 
iction. No. C 02 0647 SBA. The amended complaint makes no changes in the allegations 
elated to that patent, and incorporates it only in order to fully consolidate the pending actions 
mder a single case number. Upon filing of the Fourth Amended Complaint, the consolidated 
;ase could tiien be dismissed as moot. 


APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA 


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technology, and its Media Player application, and has implemented numerous new technologies 
to allow secure computing across multiple distributed machines. Maher Decl. 6, 7. In each 
instance, and others, Microsoft has only later published technical disclosures and other 
information concerning these infringing technologies. Only as technical disclosures and 
publications concerning these new products and services have become available, InterTrust has 
Dcen able to identify additional infringements of its patents. An extensive list of these sources, 
published or released in late 2001 and 2002, is contained in the Declaration of David P. Maher. 

Similarly, time has not stood still at InterTrust. Pending patent applications have resulted 
n additional patents being issued to InterTrust, including the *402 patent, issued in May of this 
^ear. In its proposed amended complaint, InterTrust alleges infringement of this new patent. 
Moreover, analysis of material produced by Microsoft in discovery has revealed additional 
nfiinged claims from the patents-in-suit.^ 

As a result, it is again necessary for InterTrust to amend both its complaint and its Local 
lule 3-1 disclosures, in order to assert all currently known claims in a single action. Those 
claims include four additional patents. Three of the four additional patents (the '019, 876, and 
402 patents) are continuations or divisional of the same original patent application from which 
ive of the seven patents-in-suit arose. As a result, they share the same inventorship, and 
ubstantially the same specification, as the patents already in suit. Thus, there is little or no 
idditional discovery that needs be taken concerning the inventorship of these additional patents: 
11 documents concerning that invention and reduction to practice have ahready been produced, as 
^^ell as file histories and draft claim charts. And as Microsoft has not yet deposed any of the 
tiventors or any of the prosecuting attorneys, adding these patents will not result in duplicative 
iiscovery. Indeed, Microsoft has to date taken only one deposition of a third party, which will 
iOt need to be reconvened as a result of the proposed amendments. The fourth additional patent 


Just as with the additional patents, InterTrust on April 30 and again on June 21 served amended 
laim charts detailing additional claims from the patents-in-suit. Page DecL T| 6 & Exh C. 
Microsoft has taken the position that InterTrust must seek leave of Court to serve those amended 
laim charts. Id,, Exhs.E, G. Accordingly, InterTrust asks that the Court, in granting leave to 
mend and setting a revised schedule, also grant leave to serve those supplemental claim charts.. 
ee Part II (B), infra . 


APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SB A (ME J), CONSOLIDATED WITH C 02-0647 SB A 


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(the '181 patent), although it is not a continuation of other patents-in-suit, springs from the same 
research efforts at InterTrust, and shares inventorship with the existing patents-in-suit. And 
again, all documents related to that patent have already been produced, as have file histories and 
draft claim charts. 

Similarly, adding the four additional patents will have only limited impact on the conduct 
of this case under the Local Patent Rules. InterTrust has already produced claim charts for all 
eleven patents, and Microsoft has not yet served its Patent Local Rule 3-2 invalidity contentions. 
Although Microsoft will of course be required to present invalidity contentions for eleven patents 
rather than seven, and the parties and the Court will have to conduct claim construction hearings 
on eleven patents, the significant overlap of both subject matter and specifications (and thus the 
significant overlap of terms to be construed) means that Markman proceedings for all eleven 
patents will be at most only incrementally more complex than proceedings on the existing seven 
patents: with few if any exceptions, the terms to be construed extend across the entire body of 
patents. Indeed, given the close relationship between the various InterTrust patents, it would be 
wildly inefficient to litigate the newer infiringements in a separate case, requiring two separate 
Markman hearings in two separate matters, with near-complete overlap of the terms to be 
construed. 

III. ARGUMENT 
A. LEAVE TO AMEND THE COMPLAINT SHOULD BE GRANTED 

Federal Rule of Civil Procedure 15(a) provides that leave to amend a complaint "shall be 
freely given when justice so requires." See also Bowles v. Reade. 198 F.3d 752, 757 (9* Cir. 
1 999) (noting that the federal rules evidence a "strong policy permitting amendment"). "Rule 
15's policy of favoring amendments to pleadings should be applied with extreme liberality." 
PCD Programs. Ltd. v. Leighton. 833 F.2d 183, 186 (9* Cir. 1987). The Ninth Circuit has noted 
that, when determining whether to grant leave to amend, a court must evaluate five factors: (1) 
bad faith by die moving party; (2) undue prejudice to the opposing party; (3) undue delay by the 
moving party; (4) futility of the amendment; and (5) whether the moving party has previously 
Ul 

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APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA 


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amended its complaint. Id at 1 86 & n.3. The party opposing amendment bears the burden of 
showing prejudice. Id. at 187. 

Each of these factors militates for leave to amend. There can be no question that 
InterTrust has acted in good faith: InterTrust could not have included in its initial complaint 
infringement allegations concerning products and services that had not yet been released (or for 
which Microsoft had not yet released technical information), or based on patents that had not yet 
issued. Moreover, InterTrust advised Microsoft many months ago that it expected to add 
additional infringement allegations based on new information. That issue was discussed at 
length in the course of preparing the April 1, 2002 Case Management Conference Statement, 
which expressly sets forth both InterTrust' s intention to add additional claims at the agreed-upon 
time of serving additional Patent Local Rule 3-1 disclosures and the parties* respective positions 
concerning what effect those additional claims would have on the proposed litigation schedule. 
Page DecL, If 2-5 & Exhs. A & B at 1 1 

Similarly, leave to amend will not cause any undue prejudice to Microsoft, As noted 
ibove, Microsoft has not conducted any depositions of inventors or prosecuting attomeys, so no 
liscovery will need to be repeated. Neither are there any significant rulings that need be 
•evisited, as no claim construction, infiingement, or validity issues have yet been decided. Other 
ban document discovery (which, as noted above, has on the InterTrust side covered the proposed 
idditional patents as well as those in suit), this case is despite its age in the early stages of 
itigation. Admittedly, the allegations of infringement against additional Microsoft products and 
iervices expands the scope of the case — and the scope of discovery that must be provided by 
Microsoft — ^beyond that of the existing claims. But that is a fimction of Microsoft's vastly 
sxpanded infringement of InterTrust's patents, not of the proposed amendment, and those claims 
vill be brought against Microsoft regardless whether leave is granted to amend this complaint. If 


Due in large part to Microsoft's decision to file its ill-fated summary judgment motion, which it 
ater withdrew, that Case Management Conference was first rescheduled to coincide with the 
learing of that motion, and then cancelled along with the withdrawn motion. As a result, the 
larties have been proceeding on a proposed litigation schedule that has never been approved by 
he Court. InterTrust respectfiilly urges that a Case Management Conference be held at the 
[Court's earliest convenience. 


APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SB A (MEJ), CONSOLIDATED WITH C 02-0647 SB A 


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anything, bringing those additional claims into this case will streamline the overall course of 
litigation between these parties. 

Nor can there be a claim that InterTrust has unduly delayed bringing these additional 
claims. InterTrust has diligently researched new Microsoft products and services as they have 
been released, and as technical details of their operation have become available. InterTrust has 
at all times advised Microsoft timely of additional claims, and has even taken the step of 
providing Microsoft with Local Rule 3-1 claim charts in advance of filing its amended 
complaint — claim charts that would not actually be due for many months. InterTrust has also 
diligently brought additional claims into the existing complaint in this action, rather than hold 
claims back/ 

And finally, there can be no question of futility here: this is not a case where leave to 
amend is sought in response to a prior dismissal, and thus where the Court can assess whether 
any proposed amendment could cure a previously-adjudicated defect. Rather, these are new 
claims, occasioned by additional infringing acts by Microsoft. 

Conversely, refusal of leave to amend would unduly prejudice InterTrust. Absent leave 
to amend, InterTrust will be forced to file a separate action, which will begin an entirely new 
one- to two-year process leading to a largely redundant Markman proceeding. As a result, 
Microsoft will be able to avoid trial of its current technology almost indefinitely: as that second 
filing wends its way to trial, Microsoft will undoubtedly continue to release new versions of its 
software, and continue to resist amendment to encompass its current products. Microsoft will 
undoubtedly argue that there must be some point at which the pleadings must be fixed, and they 
u-e correct in principle. But that time is not now, while discovery is still open, no substantive 
iepositions have been conducted by Microsoft, no substantive rulings have been made, and no 
nvalidity or claims construction positions have been taken. At this early stage, InterTrust 
;ubmits that the proper and judicially efficient course is to amend the current complaint to 
// 


As a result, this is InterTrust's Fourth Amended Complaint, but that should not weigh against 
nterTrust's amendment here: rather, it is evidence of InterTrust's diligent attempts to avoid 


APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA 


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encompass all known claims, so that validity and claims construction proceedings can be 
conducted once rather than multiple times. 

B. LEAVE TO SERVE AMENDED PATENT LOCAL RULE 3-1 DISCLOSURES 
SHOULD BE GRANTED 

The Court should also grant leave for InterTrust to serve its amended Patent Local Rule 
3-1 disclosures — amended disclosures that have already been served upon Microsoft on June 21, 
2002. Patent Local Rule 3-7 provides that preliminary or final infiingement contentions may be 
amended or modified upon a showing of good cause. There can be no dispute that good cause 
exists for InterTrust to amend its claim charts in this case. The proposed amendments do not 
change previous infiingement positions in order to avoid the effect of prior rulings, as was the 
case in Atmel Corp. v. Information Storage Devices. 1998 U.S. Dist. LEXIS 17564 (1998) 
(rejecting attempt to amend claim charts after Markman ruling and with summary judgment 
motions pending). Rather, they add additional claims of infiingement based upon new Microsoft 
products and services, and based upon documents produced by Microsoft since service of 
InterTrust's preliminary claims charts. As set forth above and in the Declaration of David P. 
Maher, the proposed amendments are based in large part on information that was not made 
available by Microsoft imtil late last year and this year. 

Neither can there be any possible prejudice to Microsoft as a result of the amended 
claims charts. Although InterTrust's prior claim charts were served in November, 2001, nothing 
of substantive effect has occurred since. Microsoft has not taken any positions in reliance on the 
prior claim charts: in fact, Microsoft has not yet even served its Patent Local Rule 3-3 
Preliminary Invalidity Contentions. Under the Patent Local Rules, those disclosures are the next 
step after Rule 3-1 claim charts, and are supposed to be served 45 days after Rule 3-1 
disclosures. Microsoft can hardly claim to be prejudiced by amendment of InterTrust's claim 
:harts when it has not even proceeded to the next step in the process. Neither have there been 
my substantive decisions by the Court in the interim. 
7/ 


delay and prejudice. 


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APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ). CONSOLIDATED WITH C 02-0647 SBA 


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Conversely, denial of leave to serve amended claim charts would severely prejudice 
InterTrust. Denial of leave would mean that Microsoft could avoid liability for significant 
portions of its ongoing patent infringement simply by releasing new products and services after 
service of InterTrust's initial disclosures. Unless leave is granted to bring new and newly- 
discovered infringements into this case, InterTrust would be required to file a separate lawsuit, 
asserting the same patents against the same defendant, every time Microsoft shipped another 
infringing product. And, assuming such seriatim complaints were required, Microsoft would 
upon resolution of the first case surely argue that subsequent cases, filed during the pendency of 
the first suit, were barred either by res judicata or as impermissibly split causes of action. And of 
course — as noted above — such seriatim cases would almost certainly be related and consolidated 
with this case in any event. Where — as here — ^no prejudice flows fi-om amending the existing 
claim charts at this early stage, the more logical course is to simply allow the new claims to be 
amended into the pending litigation. Any other course would be a waste of judicial resources. 

IV. CONCLUSION 

For the foregoing reasons, InterTrust respectfully requests that the Court (1) grant leave 
to file InterTrust's Fourth Amended Complaint, (2) grant InterTrust leave to serve amended 
Patent Local Rule 3-1 disclosures, (3) order the consolidated case No. C 02 0647 SBA dismissed 
as moot, and (4) set a further Case Management Conference at the Court's earliest convenience 
for the purpose of setting a revised Case Management schedule. 

Respectfully submittedl 
Dated: July 3^, 2002 KEKER & VAN NEST, LLP / 



Attorneys for Plaintiff and Counter- 
Defendant 

INTERTRUST TECHNOLOGIES 
CORPORATION 



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APPLICATION FOR LEAVE TO AMEND COMPLAINT; 
REQUEST FOR FURTHER CASE MANAGEMENT CONFERENCE 
CASE NO. C 01-1640 SBA (MEJ), CONSOLIDATED WITH C 02-0647 SBA