Defendants in patent cases should be wary of the possibility that a plaintiff will attempt to add new defendants after a stay for inter partes review is lifted. In a pending case involving patents directed to “space partitions,” Judge Ho (S.D.N.Y.) permitted Plaintiff Molo Design, Ltd. to do just that. Judge Ho reasoned that Defendant Chanel, Inc. would not be unduly prejudiced if two French companies identified during the stay as having worked with Chanel were added as defendants. See Molo Design, Ltd. v. Chanel, Inc., 2024 WL 2982924, at *5 (S.D.N.Y. June 12, 2024).

Molo sued Chanel for patent infringement in February 2021, alleging that Chanel used window installations that violated Molo’s patents. Id. at *1. The parties exchanged some written discovery, and about a year after the complaint was filed, Chanel filed a motion to stay the case pending inter partes review of Molo’s patent claims, which Chanel had requested. Id. at *1–2. The Court granted the stay, which lasted until October 2023. Id. at *1.

During the stay, a Canadian lawsuit brought by Molo against Chanel Canada ULC, Chanel SAS (“SAS”), and Procedes Chenel International (“Procedes”) uncovered evidence leading Molo to believe that Procedes had supplied Chanel’s allegedly infringing window installations and that SAS had encouraged the alleged infringement. Id. at *2. SAS and Procedes are French companies, and SAS is Chanel’s parent company. Id. at *1.

When Judge Ho lifted the stay in the S.D.N.Y. case in October 2023, Molo promptly provided notice to the Court that it might seek to amend its pleadings. Id. at *2. It sought leave to do so the following month. Id.

In granting Molo’s motion to amend, the Court concluded that Molo was diligent in discovering the new facts about SAS and Procedes and had good cause to amend the complaint. Id. at *3–5. The Court explained that Molo had not been aware of the relevant facts about SAS and Procedes when it filed its initial complaint, and discovery had not revealed those facts. Id. at *4. The Court also emphasized that once Molo became aware of the facts, it acted quickly, requesting leave to amend within two months. Id. Molo’s delay in seeking leave to amend after the May 2021 deadline for amendments, the Court added, was “largely” caused by Chanel’s requested stay. Id.

The Court then concluded that adding SAS and Procedes as defendants would not unduly prejudice Chanel for three main reasons. Id. at *5. First, the parties had not completed discovery, and the Court had not entered a post-stay scheduling order. Id. Second, all three defendants’ positions were aligned in the Canadian case, and Chanel had not suggested any reason to believe that its interests would diverge from SAS’s and Procedes’ interests in the S.D.N.Y. case. Id. Finally, Molo’s patent infringement claims against the proposed defendants arose from the same factual allegations against Chanel. Id.

Molo illustrates how circumstances can change during a stay, especially if the parties have other litigation proceeding elsewhere. Defendants seeking a stay pending inter partes review should be aware of that possibility.