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Hologram USA, Inc. v. Pulse Evolution Corp.

United States District Court, District of Nevada

January 23, 2015

Hologram USA, Inc.; Musion Das Hologram Limited; and Uwe Maass, Plaintiffs,
v.
Pulse Evolution Corporation; Pulse Entertainment Corporation; John C. Textor; Dick Clark Productions, Inc.; John Branca and John McClain, executors of the estate of Michael J. Jackson; MJJ Productions, Inc.; Musion Events Ltd.; Musion 3D Ltd.; William James Rock; and Ian Christopher O’Connell Defendants.

ORDER

Gloria M. Navarro, Chief Judge United States District Court

Pending before the Court is the Motion for Leave to File a Second Amended Complaint, (ECF No. 157), filed by Plaintiffs Hologram USA, Inc.; Uwe Maass; and Musion Das Hologram Limited (“Plaintiffs”). Defendants John Branca and John McClain, as executors of the estate of Michael J. Jackson; MJJ Productions, Inc.; and Dick Clark Productions, Inc. (“Jackson Defendants”) filed a Response in opposition, (ECF No. 160), as did Defendants Pulse Evolution Corporation; Pulse Entertainment Corporation; and John C. Textor, (ECF No. 163). Plaintiffs subsequently filed a Reply, (ECF No. 171).

I. BACKGROUND

This case centers upon allegations that a performance by a holographic projection of Michael Jackson at the Billboard Music Awards on May 18, 2014, infringed upon several of Plaintiffs’ patents. In the First Amended Complaint (“FAC”), Plaintiffs claim that they obtained the exclusive rights to patented technology that creates three-dimensional images which are virtually indistinguishable from real performers (“hologram technology”) in February 2014. (FAC 2:2-11, 7:7-13, ECF No. 34). Plaintiffs allege that Defendants approached them in April and May of 2014 seeking to acquire the rights to the hologram technology to create a holographic Michael Jackson performance at the 2014 Billboard Music Awards. (Id. at 2:8-13). Despite Plaintiffs’ refusal to license the hologram technology, the award show prominently featured a performance in which a holographic image of Michael Jackson danced, twirled, and moonwalked around the stage to the rhythm of a previously unreleased song. (Id. at 8:15-21). Plaintiffs allege that this performance infringed upon their patents to the hologram technology, and also that Defendants John C. Textor, Pulse Evolution Corporation, Pulse Entertainment Corporation, Musion Events Ltd., and Musion 3D Ltd. (“Pulse Defendants”) have since made false statements to numerous media outlets and potential customers that they own the technology used to generate the Michael Jackson hologram. (Id. at 10:11-13:18).

Based on these allegations, the FAC states that Defendants infringed upon two separate patents, U.S. Patent Nos. 5, 865, 519 (“the ’519 patent”) and 7, 883, 212 (“the ’212 patent”). (Id. at 13:19-15:13). The FAC also sets forth claims for willful infringement, active inducement, and contributory infringement. (Id. at 15:14-20:25).

In the instant Motion, Plaintiffs seek leave from the Court to file a Second Amended Complaint (“SAC”). (Mot. to Am., ECF No. 157). Plaintiffs claim that, during the course of discovery, they learned that they held the rights to a third patent, U.S. Patent No. 8, 328, 361 (“the ‘361 patent”), whose ownership had previously been fraudulently concealed by Defendants William James Rock and Ian O’Connell. (Id. at 6:20-7:17). Specifically, Plaintiffs allege that the ‘361 patent is a continuation of the ‘212 patent, and was assigned in the same series of transactions by which Plaintiffs obtained the rights to the other patents at issue. (Id. at 7:18-8:19). Based on these allegations, the Proposed SAC contains additional claims for infringement of the ‘361 patent. The Proposed SAC also includes additional allegations and claims based on acts which occurred after the filing of the FAC, involving the Pulse Defendants’ continued public representations of ownership over the technology used to create the Michael Jackson hologram. (Id. at 9:3-10:5). The instant Motion was filed on December 5, 2014, prior to the parties’ stipulated deadline for requests to amend the pleadings in this case. (Sched. Ord. 4:4-6, ECF No. 116).

II. LEGAL STANDARD

A. Leave to Amend Complaint

Federal Rule of Civil Procedure 15(a) provides that leave to amend “shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a). “Four factors are commonly used to determine the propriety of a motion for leave to amend. These are: bad faith, undue delay, prejudice to the opposing party, and futility of amendment. These factors, however, are not of equal weight in that delay, by itself, is insufficient to justify denial of leave to amend.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citation omitted). “[I]t is the consideration of prejudice to the opposing party that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “The party opposing amendment bears the burden of showing prejudice.” DCD Programs, 833 F.2d at 187.

In addition to the Rule 15(a) requirements, the Local Rules of Federal Practice in the District of Nevada require that a plaintiff submit a proposed, amended complaint along with a motion to amend. D. Nev. R. 15-1(a).

B. Leave to Supplement Complaint

Federal Rule of Civil Procedure 15(d) provides, “On motion and reasonable notice, 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. The court may permit supplementation even though the original pleading is defective in stating a claim or defense.” For an amendment to be permitted pursuant to Rule 15(d), the allegations in the supplemental complaint need not relate to precisely the same transaction or occurrence as the original complaint; it is only required that “some relationship . . . exist[s] between the newly alleged matters and the subject of the original action.” Keith v. Volpe, 858 F.2d 467, 474 (9th Cir. 1988).

III. DISCUSSION

Defendants assert that the instant Motion should be denied, arguing that: (1) Plaintiffs’ proposed claims regarding the ‘361 patent are futile; (2) the proposed willful infringement claims are asserted in bad faith; (3) the delay in asserting these additional claims will prejudice Defendants; and (4) the proposed supplemental tort claims are improperly pled and ...


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