Barnes & Noble Inc. v. LSI Corporation et al.

Filing 156

ORDER regarding 145 the parties' joint discovery letter dated December 14, 2012. Signed by Magistrate Judge Laurel Beeler on 1/9/2013. (lblc2, COURT STAFF) (Filed on 1/9/2013)

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UNITED STATES DISTRICT COURT

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Northern District of California

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San Francisco Division
BARNES AND NOBLE, INC., et al.,

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For the Northern District of California

UNITED STATES DISTRICT COURT

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No. C 11-02709 EMC (LB)

Plaintiffs,

ORDER REGARDING THE PARTIES’
JOINT DISCOVERY LETTER DATED
DECEMBER 14, 2012

v.
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LSI CORPORATION, et al.,
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[Re: ECF No. 145]
Defendants.
_____________________________________/

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INTRODUCTION

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On December 14, 2012, the parties filed a tenth joint discovery dispute letter. See Joint Letter,

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ECF No. 145.1 The court held a hearing on January 9, 2013 and rules as follows.

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STATEMENT

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Plaintiffs Barnes & Noble, Inc. and barnesandnoble.com LLC (collectively, “B&N”) filed this

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lawsuit seeking a declaratory judgment of non-infringement and patent invalidity against defendants

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LSI Corporation and Agere Systems, Inc. (collectively, “Defendants”). Original Complaint, ECF

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No. 1. LSI brought counterclaims against B&N for patent infringement. Answer and

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Counterclaims, ECF No. 62. The lawsuit involves whether the Nook’s 3G, WiFi, and audio

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technology infringes on LSI’s patents.

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Citations are to the Electronic Case File (“ECF”) with pin cites to the electronic page
number at the top of the document, not the pages at the bottom.
C 11-02709 EMC (LB)
ORDER RE: 12/14/2012 JOINT LETTER

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The current discovery dispute is because LSI wants information about downloads of digital

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content to devices other than the Nook, and it wants information about B&N’s partnership with

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Microsoft called Nook Media LLC. Joint Letter, ECF No. 145 at 1-2.

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ANALYSIS
I. DOWNLOADS TO DEVICES OTHER THAN THE NOOK

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LSI seeks discovery of B&N’s sales of digital content to third-party eReader devices, saying that

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it is relevant to Georgia-Pacific factors 6 (effect of selling the patented speciality on promoting sales

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of non-accused devices) and 13 (the portion of profit that should be credited to the patented elements

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as opposed to the non-patented elements). B&N argues that discovery ought to be limited to the

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The main case that the parties cite is Elan Microelectronics v. Apple, No. C 09-01531 RS (PSG),

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For the Northern District of California

UNITED STATES DISTRICT COURT

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accused devices and that sales to non-accused devices are not relevant. Id. at 4.

ECF No. 423 (N.D. Cal. Sept. 09, 2011). There, the court ordered Apple to produce information

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about its smartphone apps that did not use the accused “multi-touch” functionality because that

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information would illuminate what effect the multi-touch functionality had on sales. Id. at 3.

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B&N’s argument is that this case is different than Elan because the third-party devices have the

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same Wi-Fi and/or 3G functionality as the accused Nook devices. Joint Letter, ECF No. 145 at 4.

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Thus, the argument is that discovery here does not provide the same illumination into damages.

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All devices (accused and non-accused) rely on WiFi, 3G, or USB connectivity for downloads.

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LSI says that the mix of digital content sales for use on accused and non-accused devices will help

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illuminate what particular combination of features in the devices drives sales. Id. at 2. For example,

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maybe devices with WiFi drive more sales of digital content than those with 3G connectivity. Id.

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In the end, the court cannot say on this record that the information is not relevant. While the

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non-accused apps in Elan did not incorporate the multi-touch function and thus provided different

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insight into the effect that the multi-touch function had on sales, LSI still has articulated a theory of

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relevance as to damages. As Judge Grewal said in Elan, in the end, the damages theory may be

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unsound (or it may not), but the appropriate vehicle to challenge that is a Daubert challenge. Elan,

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ECF No. 423 at 3. Also, B&N did not articulate any burden, and the court presumes that the sales

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data is fairly readily producible.
C 11-02709 EMC (LB)
ORDER RE: 12/14/2012 JOINT LETTER

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The other cases that B&N cites do not change this outcome. B&N cites Samsung SDI Co. Ltd. v.

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Matsushita Elec. Indus. Co. Ltd., 2007 WL 4328482, at *1 (C.D. Cal. 2007), for the proposition that

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discovery should be limited to the accused devices, but that case involved the parties’ prior

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understanding that they would limit discovery to the accused products only. And here, in allowing

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discovery previously regarding draft licenses, the court articulated an approach to discovery related

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to reasonable royalties and damages calculations that favored disclosure absent burden or interests

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that could not be protected adequately by a protective order. See 12/23/12 Order, ECF No. 153. On

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the record provided by the parties in their joint letter brief, the court sees no reason here to deviate

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from that practice.

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II. NOOK MEDIA LLC
As to LSI’s argument that it wants information about Nook Media LLC, B&N resists disclosure

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For the Northern District of California

UNITED STATES DISTRICT COURT

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of post-suit valuations of its e-Book business (which is what it says LSI is looking for). Joint Letter

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Brief at 5. Also, Microsoft had alleged infringement relating to the Nook browser, user interface,

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and reader software (not the 3G, WiFi, and audio technologies at issue here). Id. B&N says that

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those disputes, the eventual settlement, and the Nook Media partnership have nothing to do with

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LSI’s damages position here. Id.

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The 2012 Microsoft-B&N transactions occurred three years after the hypothetical negotiations

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would have taken place in this case and after the lawsuit was filed. The court cannot see how they

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are relevant to a reasonable royalty. Cf. Interactive Pictures Corp. v. Infinite Pictures, Inc., 274

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F.3d 1371, 1384 (Fed. Cir. 2001) (the business plans at issue were from around the time the

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infringement began, not years later).

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LSI cites cases that do not change this outcome. In Lantiq Deutschland GMBH v. Ralink Tech.

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Corp., 2012 WL 1439087, *1-*2 (N.D. Cal. April 25, 2012), Judge Grewal and Lantiq were

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concerned about Ralink’s merger with another company and becoming a shell without any assets.

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Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1333 (Fed. Cir. 2009), authorized discovery

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after the date of the hypothetical negotiations, but that was discovery about the usage of the accused

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products (information that B&N has disclosed already). In 3Com v. D-Link Sys., Inc., 2007 WL

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94596, *4 (N.D. Cal. Mar. 7, 2007), the court ordered production of sales and profit information for
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ORDER RE: 12/14/2012 JOINT LETTER

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all versions of the accused products, which again is information that B&N disclosed already.

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III. BURDEN ISSUES

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The court previously ordered discovery of draft licenses. See, e.g., 12/23/12 Order, ECF No.

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153. The court ordered the parties to talk about burden and said they ought to be able to work it out.

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Id. at 6. LSI submitted a separate letter discussing burden, and the parties discussed solutions at the

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hearing. The court now orders that LSI need only review documents in the possession of LSI

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attorneys involved in negotiating potentially relevant licenses. For the reasons stated on the record,

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LSI need not create a privilege log now, except for the one licensing package as discussed.

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CONCLUSION

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The court grants LSI’s motion for discovery about B&N’s sales of digital content to third-party
eReader devices and denies it for discovery about Nook Media.

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For the Northern District of California

UNITED STATES DISTRICT COURT

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This disposes of ECF No. 145.

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IT IS SO ORDERED.

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Dated: January 9, 2013
_______________________________
LAUREL BEELER
United States Magistrate Judge

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C 11-02709 EMC (LB)
ORDER RE: 12/14/2012 JOINT LETTER

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