Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. et al

Filing 137

MOTION for Modification of 124 Order for Inspection and Sanctions filed by Louis Vuitton Malletier, S.A.. Motion Hearing set for 5/26/2009 10:00 AM in Courtroom 2, 5th Floor, San Jose. (Attachments: # 1 [Proposed] Order Granting Motion for Modification of Order for Inspection and Sanctions)(Coombs, J.) (Filed on 4/14/2009) Modified on 4/15/2009,(counsel failed to properly link to which document it relates to.) (cv, COURT STAFF).

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J. Andrew Coombs (SBN 123881) [e-mail] Annie S. Wang (SBN 243027) [e-mail] J. Andrew Coombs, A Prof. Corp. 517 E. Wilson Ave., Suite 202 Glendale, California 91206 Telephone: [phone] Facsimile: [phone] Attorneys for Plaintiff Louis Vuitton Malletier, S.A.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA (SAN JOSE) Louis Vuitton Malletier, S.A., Plaintiff, v. Akanoc Solutions, Inc., et al. Defendants. ) ) ) ) ) ) ) ) ) ) ) Case No. C 07 3952 JW (HRLx) NOTICE AND MOTION FOR MODIFICATION OF ORDER FOR INSPECTION AND SANCTIONS Date: May 26, 2009 Time: 10:00 a.m. Court: Mag. Judge Howard R. Lloyd

TO THE COURT AND TO THE DEFENDANTS: PLEASE TAKE NOTICE that on May 26, 2009 at 10:00 a.m., or as soon thereafter as the matter may be heard in the Courtroom of the Hon. Howard R. Lloyd, Magistrate Judge for the United States District Court located at the United States District Courthouse, 280 South 1st Street, 5th Floor, San Jose, California 95113, Plaintiff Louis Vuitton Malletier, S.A. ("Plaintiff" or "Louis Vuitton") will and hereby does move the Court for an order modifying the Order for Inspection entered March 10, 2009 ("Inspection Protocol") and for sanctions pursuant to Fed. R. Civ. P. 37. This motion is based on this Notice of Motion and accompanying Memorandum of Points and Authorities, the Declarations and exhibits filed concurrently herewith, the pleadings, records

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and papers on file herein and such other matters and evidence as may be presented at or before the hearing. Dated: April 14, 2009 J. Andrew Coombs, A Professional Corp. ____/s/ J. Andrew Coombs___________________ By: J. Andrew Coombs Annie S. Wang Attorneys for Plaintiff Louis Vuitton Malletier, S.A.

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INTRODUCTION A. Summary of Dispute.

Plaintiff Louis Vuitton Malletier, S.A. ("Louis Vuitton") brings this Action against Defendants Akanoc Solutions, Inc., Managed Solutions Group, Inc. and their principal Steven Chen (collectively "Defendants") for contributory and vicarious liability for copyright and trademark infringement. Louis Vuitton alleges Defendants aided counterfeiting of Louis Vuitton copyrights and trademarks through the provision of Internet website hosting services and the routing of Internet traffic to third party websites hosted on servers owned, controlled and maintained by Defendants and despite notice to Defendants of the infringing activity occurring on those Websites. Defendants have produced no documents evidencing their systematic, willful and ongoing hosting services for websites offering counterfeit Louis Vuitton merchandise despite the recent confirmation that they have always had the ability to do so. This is now Louis Vuitton's third motion to the Court on Defendants' (a) initial failure to produce any relevant documents and (b) refusal to cooperate in the inspection of its own servers on which such infringing activity occurs. Louis Vuitton requests monetary sanctions in the form of its attorneys' fees incurred in connection with these efforts and the expert fees incurred in connection with the inspection made necessary by Defendants' obstructionist discovery strategy. B. Statement of Relevant Facts.

On or about January 3, 2008, Louis Vuitton propounded separate sets of document production requests to each defendant. Not one printout, traffic log, page of information or bit of data from any of the servers operated by Defendants was produced in response to Louis Vuitton's demands. Although such data may still exist (or be recoverable) Defendants have made no discernable effort to produce such data. For these reasons, Louis Vuitton filed its motion on March 25, 2008, seeking an order to compel production or, in the alternative, to permit forensic inspection of a sampling of the servers. Declaration of J. Andrew Coombs ("Coombs Decl.") at ¶¶ 2-3. In Opposition to the Motion, Defendants asserted (i) that they have no control over the servers once "leased" to an account; (ii) even where they may have such control where a re-seller
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ceases to use a particular server, they have no obligation to preserve such data despite this litigation or to produce it, and (iii) production of the requested material would violate federal privacy legislation. After oral argument, the Court entered its ruling on July 15, 2008, which read in part: "Based on the foregoing, IT IS ORDERED THAT plaintiff's motion to compel is GRANTED as follows: No later than July 31, 2008, defendants shall either (1) produce all responsive publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying counterfeit activity, or (2) permit inspection of their servers to allow plaintiff an opportunity to ascertain the same. The discovery shall be limited to the 67 allegedly infringing websites identified by plaintiff. In the event an inspection is held, it shall be conducted pursuant to an appropriate protocol. The court trusts that the parties should be able to agree upon a suitable protocol between themselves. However, if they are not, each side shall submit its proposed protocol for this court's consideration and the court shall decide upon the protocol to be followed." Defendants produced no documents by the July 31, 2008, deadline specified in the Court's Order. At no time have the Defendants identified what, if any steps were taken before that deadline to comply with that part of the Court's order. Defendants did file objections to the Court's order on July 25, 2008. By order dated August 7, 2008, Judge Ware overruled the Defendants' objections. In so doing, the Judge Ware stated, among other things: "The Court OVERRULES Defendants' objection to the Order to Compel. As directed by Judge Lloyd, the parties shall meet and confer to determine an appropriate protocol for obtaining the discovery at issue." Between August 4, 2008 and October 24, 2008, through discussions with Defendants' counsel and technical experts, Louis Vuitton attempted to structure a protocol to accomplish the inspection ordered by the Court. On or about October 14, 2008, as a result of those efforts, Louis Vuitton transmitted a working draft proposed protocol, a copy of which is attached hereto as Exhibit D. Thereafter, on October 24, 2008, Defendants objected to the proposed protocol, proposed no changes, and despite requests, submitted no "counter" protocol. Coombs Decl. at ¶¶ 5-6.
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On November 10, 2008, Louis Vuitton filed its administrative motion asking the Court to order a protocol for inspection of the Defendants' servers. On March 10, 2009, the Court entered its Order re Discovery Protocol ("Protocol") which provides, among other things that an Inspection shall proceed on the following basis: · Plaintiff will initially isolate 5 servers for inspection and will stagger additional inspections pursuant to the orders of the court. · The parties can agree that documents produced will be covered under the protective order and each party will have 20 days to designate materials as confidential. · Plaintiff's forensic expert shall make best efforts by whatever means necessary to extract the discovery authorized by this court ­ namely, publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying counterfeit activity pertaining the 67 websites identified by plaintiff. Prior to the inspection, Louis Vuitton provided Defendants with a list of problem IP Addresses to isolate the five servers to be inspected. Coombs Decl. at ¶ 7. To Louis Vuitton's surprise, additional IP Addresses were needed because multiple IP Addresses provided initially, appeared to be contained on the same servers. Id. Apparently multiple problem IP Addresses belonged to the same "customer." Furthermore, on March 25, 2009, while isolating the five servers on site, it appeared that Defendants' personnel was able to search and identify the IP Addresses at issue very quickly and it was observed that the same individuals identified in connection with prior complaints, including those identified in connection with the 67 websites under the Court's Order to Compel, were the customers to which at least four of the servers belonged. Id. at ¶ 8. The updated and user friendly information easily accessed by Defendants' personnel and observed during the inspection, particularly regarding the histories of the servers, frustratingly, was never produced by Defendants despite a demonstrated ability to do so. Id.; Declaration of Joseph T. Murin ("Murin Decl.") at ¶ 5, Ex. A.

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The inspection was completed on the morning of March 26, 2009, and copies of data contained on those servers is currently in possession of forensic experts retained on behalf of Louis Vuitton. Murin Decl. at ¶¶ 2, 5. It appears from information gathered at the time of the inspection, in addition to other things, that the servers may contain data pertaining to publicly accessible website offers of counterfeit Louis Vuitton merchandise located on many more websites than the 67 identified by Louis Vuitton when it filed the underlying motion to compel in March, 2008. Id. at ¶ 7; Coombs Decl. at ¶ 8. This is due, in part, to ongoing hosting activities engaged in by Defendants to the same individuals responsible for the infringing conduct after the underlying motion was filed, and, due to incomplete information available to Louis Vuitton based on Defendants' systematic and ongoing discovery defaults. Coombs Decl. at ¶¶ 7-8; Murin Decl. at ¶ 4, Ex. A. Additional websites have been brought to Defendants' attention since March 2008, and it is likely the problems have continued because the "customers" who were the subject of prior demands have since started to use additional domain names 1 . Coombs Decl. at ¶ 9. Thus, the underlying scope of the order was inadvertently limited and is properly expanded to include all traffic logs and publicly available documents concerning all counterfeiting websites engaged in the infringement of Louis Vuitton's copyrights and trademarks. Louis Vuitton is informed that the most efficient way to extract the material ordered by the Court is to conduct a search for Louis Vuitton trademarks and other commonly used words on counterfeit sites such as "monogram". Murin Decl. at ¶ 7. However, Defendants object to production regarding websites beyond those identified by Louis Vuitton when it filed the underlying motion to compel in March of 2008, over twelve long months ago, thus necessitating this motion. C. Argument. a. The Underlying Order to Compel was Inadvertently Limited Due to Information Louis Vuitton Was Previously Unaware; Its Modification is Proper In Light of New Facts. See Exhibit A filed under seal, and particularly entries dated July 30, 2008, and February 2, 2009, within Exhibit A. The information appeared to relate to the same server and the entries corresponded to the dates of cease and desist letters from Louis Vuitton. Coombs Decl. at ¶ 9.
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Louis Vuitton should not be constrained by the limits to discovery identified during oral argument on its motion to compel one year ago. All traffic logs and publicly accessible data evidencing offers of counterfeit Louis Vuitton merchandise are relevant, discoverable and appropriately inspected as part of this case. The underlying order to compel was inadvertently limited. Louis Vuitton could not have known at the time of the filing of the underlying motion, or during the oral argument on the motion, that this discovery issue would still exist today, or that the same kinds of problems would persist with the same "customers" of Defendants. Because Defendants have continued their claims of feigned impossibility and have done so inappropriately for the past year, Louis Vuitton seeks modification of the Court's order as well as monetary sanctions. During oral argument on April 29, 2008, the Court asked counsel for Louis Vuitton about the scope of the dispute before it ­ including whether the production sought was limited to the websites identified in the discovery propounded. In the interest of facilitating resolution of the dispute, because this was the scope of the infringing activity then known to Louis Vuitton and, most significantly, because the proceeding was for a motion to compel production of documents by Defendants, Louis Vuitton agreed to limit the relief sought to those websites previously identified. Coombs Decl. at ¶ 3. As noted above, however, Defendants produced no documents notwithstanding the Court's order compelling production by not later than July 31. Significantly, Defendants have made no pretense of their utter failure to even attempt to make such a production, persisting in their misguided and repeatedly rejected assertion of inapplicable statutory protections under the Stored Communications Act. There did not appear to be any barrier to the production of information on Defendants' servers, or, of Defendants' own records regarding the complained of material, even if only in the form of Defendants' internal database entries reflecting counterfeiting activity on the servers and IP Addresses at issue. Coombs Decl. at ¶¶ 7-8; Murin Decl. at ¶¶ 3-4. Louis Vuitton has, since the hearing on its motion, identified additional sites hosted by Defendants which have been the subject of demands to Defendants. There is, accordingly, no surprise ­ to Louis Vuitton nor to Defendants ­ that the servers employed for past illegal infringing
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activity continued to be used for such activity after the hearing, order, subsequent notifications and, apparently, even at the time of the long-postponed inspection on March 25, 2009. Coombs Decl. at ¶¶ 7-8. Moreover, evidence generated at the time to insure the inspection proceeded in a manner consistent with the Protocol provided further evidence of infringement. Murin Decl. at Ex. A (see photograph indicating Defendants' own personnel input data apparently acknowledging the server continued to host more than forty sites after follow up notices to Defendants and more than a year after this action was filed.). Even though Rule 37 also provides for the ultimate sanction of an entry of default judgment for willful disregard of court orders or discovery failures, the less harsh modification order requested by Louis Vuitton is fully supported by the facts of this case, the Court's inherent sanctioning power, and case law. Chambers v. Nasco, Inc., 501 U.S. 32, 43-44 (1991) (going further stating "...it is firmly established that "the power to punish for contempts is inherent in all courts." citing Ex Parte Robinson, 86 U.S. 505, 510 (1873)); NHL Hockey League, et al. v. Metropolitan Hockey Club, Inc., et al., 427 U.S. 639, 640-43 (1976) (affirming dismissal of case under Rule 37 when discovery responses not timely filed despite opportunity, and when finally filed, "grossly inadequate"); U.S. v. Sumitomo Marine & Fire Insurance Company, 617 F.2d 1365, 1370 (9th Cir. 1980) (preclusion order even appropriate if "understaffing" was cause of nonproduction due to prejudice to other side). An order modifying the Court's inspection protocol to allow for the discovery of all traffic logs and publicly available information pertaining to websites counterfeiting Louis Vuitton's intellectual properties is proper in light of Defendants' deliberate bad faith dealings in the discovery process and purely imagined obstacles that have delayed not only their production of this highly relevant information, but also the discontinuation of infringing sales of counterfeit Louis Vuitton product. Defendants understandably seek to prevent discovery of this incriminating evidence that will show that not only is the material still existing on their servers, but that even one year later, they are continuing to do business with known infringers. They understand that, in the absence of any defenses and in view of their ongoing willful conduct aiding and abetting the infringement of Louis Vuitton's rights, they have no alternative but to continue to obstruct Louis Vuitton's efforts
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to obtain that evidence which ought, properly, to have been produced by them over one year ago in response to Louis Vuitton's proper discovery requests. Thus, the Court should grant Louis Vuitton's request for a modification of the underlying order. b. Defendants' Conduct is Sanctionable.

Based upon the ease by which Louis Vuitton's retained forensics examiner was able to copy the information and the observed convenience at which other relevant, previously undisclosed information was accessed by Defendants' personnel, Louis Vuitton seeks monetary sanctions for Defendants willful withholding of evidence and fabricated obstacles despite Court orders. Additionally, Defendants' responses through counsel contradicted what appeared to be more truthful statements in Defendants' internal database entries regarding continuing infringements. Compare February 10, 2009, letter in Ex. F with Ex. A. For these reasons, Defendants are properly sanctioned for the added fees and costs which Louis Vuitton has been obliged to incur unnecessarily. Fed. R. Civ. P. 37(b) lists appropriate sanctions for a party in noncompliance with a court order compelling discovery. Defendants have delayed and obstructed the development of relevant evidence as provided for by a series of orders by this Court, and the requested relief is proper given that even when a failure to provide discovery is seemingly "innocent...it is fundamental that a party that does not provide discovery cannot profit from its own failure." Dellums v. Powell, 566 F.2d 231, 235 (D.C. Cir. 1977); see also Sumitomo Marine & Fire Insurance Company, 617 F.2d at 1369 (quoting Dellums). Given the shocking simplicity of the access and review of relevant data that was observed at Defendants' data center just identifying the servers for inspection, there is no doubt that Defendants' willfully withheld pertinent information to this litigation in contempt of the Court's orders and their discovery obligations. The Court's inherent power to sanction also supports an award of fees and costs as this power is "vested in courts to manage their own affairs as to achieve the orderly and expeditious disposition of cases." Chambers, 501 U.S. at 43 citing Link v. Wabash R. Co., 370 U.S. 626, 630631 (1962). Even though "inherent powers must be exercised with restraint and discretion," a court is entirely within reason to assess fees when a party has "acted in bad faith, vexatiously,
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wantonly or for oppressive reasons." Chambers, 501 U.S. at 44-46. Furthermore, the Supreme Court has recognized that if a court finds "that fraud has been practiced upon it, or that the very temple of justice has been defiled," it may assess attorneys' fees against the responsible party." Id. at 45-46. Defendants' litigation conduct is the exact kind of bad faith delaying, disruption, and hampering of enforcement of court orders that the court's inherent power was contemplated to address. By sanctioning Defendants, the court would serve the dual purpose of "vindicating judicial authority without resort to the more drastic sanctions available for contempt of court and making the prevailing party whole for expenses caused by his opponent's obstinacy." Id. at 46. Defendants' deplorable conduct can not go unpunished and Louis Vuitton would be left without redress for not only the additional costs manufactured by Defendants' misrepresentations and false claims of an inability to produce, but the prejudice that Louis Vuitton has experienced because of Defendants' intentional disregard of their responsibilities not only to the Court but also to their opponent and this judicial process. Louis Vuitton accordingly requests that this Court award monetary sanctions pursuant to Fed.R.Civ.P. 37(b) in the amount of not less than Fifty-Seven Thousand Seven Hundred Seventy Dollars ($57,770.00), made necessary by Defendants' obstructionist strategies. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that the Court grant its motion for a modification of the March 10, 2009, protocol permitting it to search for all publicly accessible references to the Louis Vuitton Trademarks and other words commonly associated with counterfeiting sites not limited to the 67 websites specified in the underlying order, and for monetary sanctions in the amount of not less than Fifty-Seven Thousand Seven Hundred Seventy Dollars ($57,770.00). Dated: April 14, 2009 J. Andrew Coombs, A Professional Corp. ___/s/ J. Andrew Coombs_____________________ By: J. Andrew Coombs Annie Wang Attorneys for Plaintiff Louis Vuitton Malletier, S.A.
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DECLARATION OF J. ANDREW COOMBS I, J. Andrew Coombs, declare as follows: 1. I am an attorney at law, duly admitted to practice before the Courts of the State of

California and the United States District Court for the Northern District of California. I am counsel of record for Plaintiff, Louis Vuitton Malletier, S.A. ("Louis Vuitton") in an action styled Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., et al., and, except as otherwise expressly noted to the contrary, I have personal knowledge of the following facts. 2. On or about January 3, 2008, Louis Vuitton propounded separate sets of document

production requests to each defendant. Not one printout, traffic log, page of information or bit of data from any of the servers operated by Defendants was produced in response to Louis Vuitton's demands. Although such data may still exist (or be recoverable) Defendants have made no discernable effort to produce such data. 3. On March 25, 2008 I caused to be filed Louis Vuitton's motion to compel

production and, in the alternative, to permit inspection of servers operated by Defendants in this matter. On April 29, 2008 I attended the hearing before Magistrate Judge Lloyd on Louis Vuitton's motion. In the interest of facilitating resolution of the dispute, because this was the scope of the infringing activity then known to Louis Vuitton and, most significantly, because the proceeding was for a motion to compel production of documents by Defendants, Louis Vuitton agreed to limit the relief sought to those websites previously identified. On July 15, 2008, the Court entered its Order compelling production and, in the alternative, ordering inspection of the Defendants' servers. A copy of that Order is attached hereto as Exhibit B. 4. Defendants produced no documents on or before July 31, 2008. Defendants did file

objections to the Exhibit B order. Those objections were overruled by Judge Ware on August 7, 2008. A copy of the Court's order overruling Defendants' objections is attached hereto as Exhibit C. 5. On August 4, 2008, having received no documents pursuant to the Exhibit B Order

and no order staying its effect, I wrote to Defendants' counsel of record confirming that no documents were produced and proposing that we move forward in establishing the protocol
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ordered by the Court. After further correspondence, I met telephonically with Defendants' counsel and we agreed to involve our respective experts in the process of seeking to establish a protocol in accordance with the Courts order. An initial conference call was held on August 27, 2008. 6. Between August 27, 2008 and September 29, 2008, the Parties continued to

exchange information in an effort to establish the protocol ordered by the Court. On October 14, 2008, I caused to be transmitted a working draft proposed protocol based on the discussion which had occurred. By letter dated October 24, 2008, Defendants rejected the proposed protocol, asserted that any proposed inspection was unworkable (apparently on the same grounds rejected by the Court) and submitted no alternative proposal. By letter dated November 3, 2008, I caused to be transmitted a follow up, expressly requesting Defendants' proposed protocol but was met with more claims of impossibility. 7. On or about March 10, 2009, the court issued its order on the protocol attached

hereto as Exhibit D, after Plaintiff's request for intervention. Prior to the inspection, my office provided Defendants' counsel with a list of IP Addresses to isolate the five servers to be inspected pursuant to the Court's orders. My office was required to supplement that initial list because multiple IP Addresses initially identified were in fact hosted on the same servers. Attached hereto as Exhibit E are true and correct copies of the correspondence between counsel regarding the servers to be inspected. 8. I am informed and believe that, on March 25, 2009, while isolating the five servers

on site, Defendants' personnel was able to search and identify the IP Addresses at issue quickly and the same individuals identified in connection with prior complaints, including those identified in connection with the 67 websites under the Court's Order to Compel, were the customers to which at least four of the five servers belonged. This updated hosting data has not been produced by Defendants despite an apparent ability to do. 9. Numerous additional infringing websites outside of the 67 listed in the attachment to

Louis Vuitton's initial request have been the subject of subsequent cease and desist requests to counsel. Among those include but are not limited to correspondence dated March 31, 2008, April 7, 2008, June 2, 2008, June 20, 2008, June 24, 2008, July 25, 2008, September 19, 2008, January
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30, 2009, and February 4, 2009. Attached collectively as Exhibit F is a sample consisting of Plaintiff's letter of January 30, 2009, February 4, 2009 and Defendants' response of February 10, 2009, which contained flat contradictions to what appears to be stated in Defendants' internal database, attached hereto as Exhibit A. 10. My hourly rate is $395 per hour and that of my associate Annie S. Wang was $225

per hour until approximately June 2008, and since then is $265 per hour. For the Court's benefit should it wish to order sanctions against Defendants, I estimate that the fees for my associate and I, along with costs associated with Defendants' bad faith tactics is not less than Fifty-Seven Thousand Seven Hundred Seventy Dollars ($57,770.00). This includes Twenty Thousand Seven Hundred Seventy Dollars ($20,770.00) worth of fees and costs (1) of bringing the initial motion to compel and appearing at oral argument on that motion; (2) for preparing and filing a response to Defendants' objections to this Courts order to compel; (3) for counsel's ongoing and fruitless attempts to agree upon a protocol consistent with the Court's underlying order to compel; (4) for preparing the administrative motion requesting the Court set a protocol for inspection; (5) for Defendants' refusal to stipulate to the requested relief and thus preparing this supplemental motion to modify the Protocol and (6) $37,000 for the expert costs associated with engaging in an inspection made necessary by Defendants' obstructionist strategies. Should the Court award sanctions, I am prepared to submit a detailed accounting supporting this estimate. I declare under penalty of perjury that the foregoing is true and correct and this declaration was executed the 14th day of April, 2009 at Glendale, California.

_______/s/ J. Andrew Coombs________ J. ANDREW COOMBS

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EXHIBIT A FILED UNDER SEAL IN ACCORDANCE WITH LOCAL RULE 79-5

EXHIBIT A

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J. Andrew Coombs (SBN 123881) Annie S. Wang (SBN 243027) J. Andrew Coombs, A Prof. Corp. 517 E. Wilson Ave., Suite 202 Glendale, California 91206 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Attorneys for Plaintiff Louis Vuitton Malletier, S.A. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA (SAN JOSE) Louis Vuitton Malletier, S.A., Plaintiff, v. Akanoc Solutions, Inc., et al. Defendants. ) ) ) ) ) ) ) ) ) ) ) Case No. C 07 3952 JW EXHIBIT A TO PLAINTIFF'S NOTICE AND MOTION FOR MODIFICATION OF ORDER FOR INSPECTION AND SANCTIONS

MANUAL FILING NOTIFICATION Regarding: EXHIBIT A to PLAINTIFF'S NOTICE AND MOTION FOR

MODIFICATION OF ORDER FOR INSPECTION AND SANCTIONS.

This filing is in paper or physical form only, and is being maintained in the case file in the Clerk's office. If you are a participant in this case, this filing will be served in hard-copy shortly. For information on retrieving this filing directly from the court, please see the court's main web site at http://www.cand.uscourts.gov under Frequently Asked Questions (FAQ).

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This filing was not efiled for the following reason(s): [_] Voluminous Document (PDF file size larger than the efiling system allows) [_] Unable to Scan Documents [_] Physical Object (description): _____________________________________ _____________________________________________________________ [_] Non-Graphic/Text Computer File (audio, video, etc.) on CD or other media [X] Item Under Seal [_] Conformance with the Judicial Conference Privacy Policy (General Order 53). [_] Other (description): _____________________________________________ _____________________________________________________________

Dated: April 14, 2009

J. Andrew Coombs, A Professional Corp. ____/s/ J. Andrew Coombs By: J. Andrew Coombs Annie S. Wang Attorneys for Plaintiff Louis Vuitton Malletier, S.A.

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EXHIBIT B

Case 5:07-cv-03952-JW

Document 65

Filed 07/15/2008

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1 2 3 4 5 6 7 8 9 10 NOT FOR CITATION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION LOUIS VUITTON MALLETIER, S.A., Plaintiff, v. AKANOC SOLUTIONS, INC., MANAGED SOLUTIONS GROUP, INC. STEVEN CHEN and DOES 1 THROUGH 10, Defendants. / No. C07-03952 JW (HRL) ORDER GRANTING PLAINTIFF'S MOTION TO COMPEL DOCUMENTS [Re: Docket No. 30] *E-FILED 7/15/2008*

United States District Court

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For the Northern District of California

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Plaintiff Louis Vuitton Malletier, S.A. moves for an order compelling defendants to produce documents, or alternatively, permitting plaintiff to conduct a forensic examination of a sampling of defendants' servers. Defendants oppose the motion. Upon consideration of the moving and responding papers,1 as well as the arguments presented, this court grants the motion.

Defendants object to plaintiff's reply brief and to certain portions of the supporting declaration of plaintiff's counsel, Andrew Coombs. The stated objections are based on one or more of the grounds of relevance, lacking in foundation or personal knowledge, speculation, or hearsay. Defendants argue that plaintiff's reply brief and Coombs' declaration contain new facts and arguments that were not raised in the initial moving papers. However, the court finds that the challenged statements were properly raised in response to arguments that defendants made (apparently for the first time) in their opposition. Moreover, the court finds that defendants had sufficient opportunity to respond to those arguments at the motion hearing. The court appreciated what was relevant and what was not and considered the declaration for what it was worth. Exhibit B, Page 18
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Case 5:07-cv-03952-JW

Document 65

Filed 07/15/2008

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Plaintiff sues for alleged trademark and copyright infringement. It claims that defendants are secondarily liable for infringement because they provide Internet hosting services for a number of websites that sell counterfeit Louis Vuitton merchandise. Defendants say that they simply provide access to the Internet by renting Internet Protocol ("IP") addresses and Internet bandwidth to third-party resellers and other Internet hosting companies who, in turn, host individual websites. Defendants further contend that, unless a specific complaint is brought to their attention, they have no knowledge or control over the contents of websites hosted on their servers. Plaintiff moves to compel two categories of documents concerning the websites2 ­ namely: (1) publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise on the websites; and (2) traffic logs that evidence the volume of underlying counterfeit activity. Plaintiff says that these documents are called for by Request Nos. 1, 5, 7, 12, 13, 21, 22, 24 and 25. Defendants agreed to produce correspondence and emails sent to them concerning the websites and any subsequent "take down" notices sent to re-sellers. However, defendants assert that responsive documents otherwise never existed or are not in their possession, custody or control. (See Lowe Decl., Exs. 1501 and 1502). Apparently for the first time in their opposition brief, defendants also contend that their production of the requested information would violate the federal Wiretap Act (18 U.S.C. § 2510, et seq.) and the Stored Communications Act (18 U.S.C. § 2702). A. Defendants' General Objections Preliminarily, plaintiff argues that defendants did not object to any of the specific requests at issue. Defendants maintain that they properly objected by asserting General Objections on several grounds, including that the information is protected by the attorney-client

United States District Court

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2 Plaintiff's requests reportedly defined "website" or "websites" as terms "refer[ring] to all Internet content hosted by YOU at each of the Interest websites located within uniform resource locators or domain names including but not limited to those listed in Exhibit A attached hereto." (Reply at 2 n.1).

2

Exhibit B, Page 19

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Document 65

Filed 07/15/2008

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privilege and the attorney work product doctrine, and that the requests are vague, ambiguous, overbroad and unduly burdensome. (Lowe Decl., Exs. 1501 and 1502). Grounds for objection to discovery requests must be stated with specificity as to each request. See FED.R.CIV.P. 34(b)(2). This is particularly true with respect to claims of privilege. See FED.R.CIV.P. 26(b)(5)(A). Here, defendants merely asserted a number of boilerplate, blanket General Objections at the outset of their responses. This practice obscures the extent to which defendants may be withholding information in response to each request and does not satisfy the requirement for specificity under Fed. R. Civ. P. 34. Accordingly, this court concludes that, except as to any objections asserted in response to specific requests, defendants did not properly object to the requests in question. B. Publicly Posted Internet Content and Traffic Logs Defendants initially took the position that they do not deal directly with individual websites and are therefore unable to produce the requested data. However, they acknowledge that they own the servers on which the requested information resides; and, Federal Rule of Civil Procedure 34 requires a party to produce not only documents in its control, but also those in its possession or custody. FED.R.CIV.P. 34(a)(1). Nonetheless, defendants now contend that, even if they could be said to possess the requested information, they are prohibited from disclosing it to plaintiff by the federal Wiretap Act, 18 U.S.C. § 2510, et seq., and the Stored Communications Act, 18 U.S.C. § 2702. Congress passed the Electronic Communications Privacy Act (ECPA) in 1986 to protect the privacy of electronic communications. See Konop v. Hawaiian Airlines, Inc., 302 F.3d 868, 874 (9th Cir. 2002). "Title I of the ECPA amended the federal Wiretap Act, which previously addressed only wire and oral communications, to `address[] the interception of . . . electronic communications.'" Id. (quoting S. Rep. No. 99-541, at 3 (1986)). "Title II of the ECPA created the Stored Communications Act (SCA), which was designed to `address[] access to stored wire and electronic communications and transactional records." Id. (quoting S. Rep. No. 99-541, at 3 (1986)).

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3

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Louis Vuitton's requested production is not prohibited by the federal Wiretap Act. "The Wiretap Act makes it an offense to `intentionally intercept [] . . . any wire, oral, or electronic communication.'" Konop, 302 F.3d at 876 (quoting 18 U.S.C. § 2511(1)(a)). The Ninth Circuit has held that, in order for information to be "intercepted" within the meaning of the Wiretap Act, "it must be acquired during transmission, not while it is in electronic storage." Id. at 878. Here, plaintiff says that it is not seeking information during transmission and agrees to exclude any such communications from its requests. Defendants nonetheless maintain that the requested production will cause them to violate the SCA. "Generally, the SCA prevents `providers' of communication services from divulging private communications to certain entities and/or individuals." Quon v. Arch Wireless Operating Co., __ F.3d __, 2008 WL 2440559 at *5 (9th Cir., June 18, 2008). Defendants say that they are prohibited from producing the requested information by SCA Section 2702(a)(1), which makes it unlawful for a person or entity providing an "electronic communication service" to the public to "knowingly divulge to any person or entity the contents of a communication while in electronic storage by that service." 18 U.S.C. § 2702(a)(1). Defendants have provided few details about how their business operates or the nature of their relationship with their customers; and, the little information that has been is very generalized. However, the cases cited by defendants concern the disclosure of the contents of email messages, personal text messages, private messages posted for a limited number of subscribers on a secure website, and the like. Here, by contrast, plaintiff seeks information ­ publicly posted content evidencing offers of counterfeit Louis Vuitton merchandise ­ that was broadcast on publicly accessible websites to the public at large. "The legislative history and the statutory structure [of the ECPA] clearly show that Congress did not intend to criminalize or create civil liability for acts of individuals who `intercept' or `access' communications that are otherwise readily accessible by the general public." Snow v. Directv, Inc., 450 F.3d 1314, 1320-21 (11th Cir. 2006). Nor is there anything in the record presented to indicate that the requested server logs, which reflect the volume of traffic to the allegedly infringing websites, contain the

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4

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contents of any communications. Even if they did, plaintiff indicates that it is willing to accept a redacted production that excludes such communications. Although defendants assert that they have no ability to access the content on their own servers, they acknowledged at oral argument that such access is technologically feasible.3 It was further suggested at the hearing that defendants control the router that directs traffic to the assigned IP addresses ­ an assertion which defendants did not deny. And, the record presented suggests that they have the ability to conduct searches of some kind. (See Coombs Suppl. Decl., ¶¶ 5-6, Exs. A and B).4 Defendants argue that the requested discovery is unduly burdensome because they claim that the requests, as drafted, call for information from potentially thousands of websites. (Opp. at p. 2, n.2). However, plaintiff indicates that it is willing to limit the discovery to 67 websites that it has identified as selling allegedly counterfeit Louis Vuitton merchandise. (See Reply, Ex. B). As such, this court finds that the discovery is reasonably tailored and that any burden that may be imposed is not undue. Based on the foregoing, IT IS ORDERED THAT plaintiff's motion to compel is GRANTED as follows: No later than July 31, 2008, defendants shall either (1) produce all responsive publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying counterfeit activity, or (2) permit inspection of their servers to allow plaintiff an opportunity to ascertain the same. The discovery shall be limited to the 67 allegedly infringing websites identified by plaintiff. In the event an inspection Defendants say that they give password control to their customers. Nevertheless, at the motion hearing, defendants also confirmed that their servers rotate in and out of use, that defendants initially assign passwords to their clients, and that defendants also re-set passwords when servers have been "returned" or "abandoned."
3

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Plaintiff acknowledges that Mr. Coombs' supplemental declaration was not submitted in compliance with the court's Civil Local Rules. See Civ. L.R. 7-3(d). Nevertheless, the key issues in dispute were only raised by defendants for the first time in their opposition brief; and, given the nature of the parties' dispute, this court found that resolution of the instant dispute was aided by more information, not less. Moreover, at the motion hearing, each side had ample opportunity to address all issues raised in the papers. Accordingly, this court has exercised its discretion and considered the belated declaration. However, plaintiff is admonished to comply with the court's rules on all future filings.
4

5

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is held, it shall be conducted pursuant to an appropriate protocol. The court trusts that the parties should be able to agree upon a suitable protocol between themselves. However, if they are not, each side shall submit its proposed protocol for this court's consideration and the court shall decide upon the protocol to be followed. Dated: July 15, 2008 HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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Exhibit B, Page 23

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Document 65

Filed 07/15/2008

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5:07-cv-3952 Notice has been electronically mailed to: J. Andrew Coombs [e-mail], [e-mail] James A. Lowe [e-mail], [e-mail], [e-mail], [e-mail], [e-mail] Annie S Wang [e-mail], [e-mail] Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court's CM/ECF program.

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EXHIBIT C

Case 5:07-cv-03952-JW

Document 76

Filed 08/07/2008

Page 1 of 4

1 2 3 4 5 6 7 8 9 10 Louis Vuitton Malletier, S.A., v. Plaintiff, IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION NO. C 07-03952 JW ORDER OVERRULING DEFENDANTS' OBJECTION TO THE MAGISTRATE JUDGE'S ORDER COMPELLING PRODUCTION OF DOCUMENTS / I. INTRODUCTION Luis Vuitton Malletier, S.A. ("Plaintiff") brings this action against Akonoc Solutions, Managed Solutions Group, and Steven Chen (collectively, "Defendants"), alleging contributory and vicarious trademark and copyright infringement. Defendants are internet service providers who host third-party websites on their servers. Plaintiff alleges that Defendants have knowingly facilitated the sale of counterfeit products through their hosting of web sites that sell such goods. (See Amended Complaint for Contributory and Vicarious Trademark Infringement, Docket Item No. 71.) A discovery dispute arose concerning Plaintiff's request for information stored on Defendants' servers. On July 15, 2008, Magistrate Judge Lloyd granted Plaintiff's motion to compel. (hereafter, "Order to Compel," Docket Item No. 65.) Judge Lloyd ordered Defendants to "produce all responsive publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying counterfeit activity....The discovery shall be limited to the 67 allegedly infringing websites identified by plaintiff." (Id. at 5.)

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Akanoc Solutions, Inc., et al., Defendants.

Exhibit C, Page 25

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Filed 08/07/2008

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Presently before the Court is Defendants' objection to the order to compel. (hereafter, "Objection," Docket Item No. 69.) II. DISCUSSION Defendants object to the order on the grounds that: (1) disclosing information stored by third-parties would violate the Stored Communications Act ("SCA") 18, U.S.C. § 2702; and (2) producing the contents requested is impossible. (Objection at 1, 9.) A district court reviews a magistrate judge's ruling under the "clearly erroneous" or "contrary to law" standard. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); Bahn v. NME Hospitals, Inc., 929 F.2d 1404, 1414 (9th Cir. 1991). The Court considers each issue in turn. A. Stored Communications Act Defendants contend that Judge Lloyd erred by ordering discovery that would require them to violate the SCA. (Objection at 1.) The SCA "prevents `providers' of communication services from divulging private communication to certain entities and/or individuals." Quon v. Arch Wireless Operating Co., --F.3d--, 2008 WL 2440559 at *5 (9th Cir., June 18, 2008). However, the SCA does not "criminalize or create civil liability for acts of individuals who `intercept' or `access' communications that are otherwise readily accessible by the general public." Snow v. Directv, Inc., 450 F.3d 1314, 1320-21 (11th Cir. 2006). Defendants contend that the discovery sought violates the SCA because it requires them to disclose private information belonging to third-parties. (Objection at 3.) Defendants' contention blatantly misrepresents Judge Lloyd's order. Judge Lloyd specifically limited his order to all "publicly posted Internet content." (Order to Compel at 5.) Defendants are not required to disclose private information stored on their computers; they are only required to disclose information that the third-parties have made available to the public. Accordingly, the Court finds that the Order to Compel does not violate the SCA.

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2

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B.

Compliance Defendants contend that they cannot comply with the Order to Compel because (1) they do

not have access to the password protected content and (2) they have approximately 1500 servers, which make any search unduly burdensome. (Objection at 9.) First, as discussed above, the discovery is limited to publicly available contents. Defendants have offered no evidence to suggest that they cannot produce publicly available contents without accessing password protected contents. Second, although Defendants claim they have more than 1500 servers, discovery is limited to 67 specific web sites. (Order to Compel at 5.) Defendants have offered no evidence to suggest that they cannot narrow the number of servers on which responsive contents might exist based on these 67 specific web sites and their own business records. Accordingly, the Court finds Defendants have not shown that the discovery sought is unduly burdensome. III. CONCLUSION The Court OVERRULES Defendants' objection to the Order to Compel. As directed by Judge Lloyd, the parties shall meet and confer to determine an appropriate protocol for obtaining the discovery at issue. All other discovery disputes are referred to Judge Lloyd.

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Dated: August 7, 2008

JAMES WARE United States District Judge

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO: Annie S Wang [e-mail] Brian S. Edwards [e-mail] David A. Gauntlett [e-mail] J. Andrew Coombs [e-mail] James A. Lowe [e-mail]

Dated: August 7, 2008

Richard W. Wieking, Clerk By: /s/ JW Chambers Elizabeth Garcia Courtroom Deputy

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EXHIBIT D

Case 5:07-cv-03952-JW

Document 124

Filed 03/10/2009

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1 2 3 4 5 6 7 8 9 10 NOT FOR CITATION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION LOUIS VUITTON MALLETIER, S.A., Plaintiff, v. AKANOC SOLUTIONS, INC., MANAGED SOLUTIONS GROUP, INC. STEVEN CHEN and DOES 1 THROUGH 10, Defendants. / No. C07-03952 JW (HRL) ORDER RE DISCOVERY PROTOCOL [Re: Docket No. 94]
*E-FILED 3/10/2009*

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This is an action for alleged trademark and copyright infringement. Plaintiff claims that defendants are secondarily liable for infringement because they provide Internet hosting services for a number of websites that sell counterfeit Louis Vuitton merchandise. Defendants say that they simply provide access to the Internet by renting Internet Protocol ("IP") addresses and Internet bandwidth to third-party resellers and other Internet hosting companies who, in turn, host individual websites. Defendants further contend that, unless a specific complaint is brought to their attention, they have no knowledge or control over the contents of websites hosted on their servers. This court previously granted plaintiff's motion to compel and ordered defendants to "(1) produce all responsive publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying

Exhibit D, Page 29

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counterfeit activity, or (2) permit inspection of their servers to allow plaintiff an opportunity to ascertain the same." (Order, Docket No. 65 at 5). Discovery was limited to the 67 allegedly infringing websites identified by plaintiff. (Id.). In the event plaintiff proceeded with an inspection, the parties were directed to meet-and-confer to agree upon an appropriate protocol. (Id. at 5-6). Defendants' objections to that discovery order were overruled by the presiding judge. (Order, Docket No. 76). Plaintiff says that defendants have produced no documents, and the parties advise that they have not been able to agree on a protocol for an inspection of defendants' servers. Now before this court is plaintiff's "Administrative Motion re Discovery Orders."1 Plaintiff advises that the parties have resolved the dispute over payment of Mr. Livadkin's travel expenses, and that portion of plaintiff's motion has been withdrawn. Thus, the only remaining issues in dispute are an appropriate protocol for the inspection of defendants' servers and whether discovery sanctions should be imposed. Specifically, the parties seek this court's guidance on two issues: (1) the amount and nature of the advance notice (if any) to be given to defendants' customers re the inspection; and (2) how to search for and produce publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise.2 Plaintiff requests that, if the court concludes that data cannot be made available as a result of defendants' conduct in discovery, then the court should impose sanctions ­ i.e., either by deeming facts admitted or admitting alternate forms of evidence in support of plaintiff's allegations.

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Defendants contend that plaintiff's motion was improperly brought as one seeking "administrative" relief. Indeed, plaintiff's motion seeks relief well beyond administrative matters falling within the ambit of Civil Local Rule 7-11.
1

This court does not understand the portion of its July 15, 2008 discovery order requiring the production of traffic logs to be cabined by the phrase "publicly available." As such, it assumes that ordered production of traffic logs is not implicated in the instant dispute.
2

2 Exhibit D, Page 30

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Upon consideration of the moving and responding papers, and after weighing competing legitimate interests and possible prejudice, this court rules as follows: The primary issue in dispute is whether plaintiff's proposed protocol properly can accomplish what the court has ordered ­ i.e., production of publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise (as opposed to contents of non-public communications). Apparently, the current (and ongoing) stumbling block to this discovery is that defendants continue to insist that producing the ordered material is impossible. Defense counsel says that he spoke to various forensic experts who reportedly told him that they did not know of a way to conduct a server search that "distinguishes between private information and publically [sic] available contents stored on Defendants' Internet servers." (Lai Decl., ¶ 6). Defendant, however, has not provided this court with any expert declarations to aid in the determination of this motion, and defense counsel's hearsay pronouncements about the opinions of unnamed individuals ring hollow. Also, defendants have provided precious little information about their systems, how they work, or what an inspection of their servers would entail. Instead, defendants simply maintain (without proof) that any proposed inspection will be unworkable and offer no alternative ­ except to say that this court should conduct an in camera review of any server contents extracted by a forensic expert to figure it out ­ without indicating what this court would look for or how it would even make the determination. Plaintiff has not said that its forensic expert cannot conduct the inspection so as to distinguish between what is public and what is not; and, this court believes that an expert is in the best position to locate and identify public information. As for the dispute over the advance notice to be given to defendants' customers, plaintiff shall give 24-hours notice. However, this court is unpersuaded that defendants' desire to inform their customers of the reason for the inspection outweighs plaintiff's interest in obtaining any evidence of counterfeiting activity. Accordingly, this court adopts plaintiff's proposed protocol, with some modification: 1. Plaintiff shall provide 24-hours notice as to the servers to be inspected.

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2.

Defendants may not "tip off" or otherwise suggest to their customers the purpose of the inspection other than to state, after plaintiff has provided notice identifying a specific server, that "service may be disrupted on [a specified date]" as to the identified server only.

3.

Plaintiff will initially isolate 5 servers for inspection and will stagger additional inspections pursuant to the orders of the court.

4.

Plaintiff's forensic expert (and its personnel) shall sign Exhibit A to the Protective Order as necessary.

5.

The parties can agree that documents produced will be covered under the protective order and each party will have 20 days to designate material as confidential.

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6.

Plaintiff's forensic expert will go to defendants' premises where at least one technical person on defendants' side will be present should any questions arise.

7.

Plaintiff's forensic expert shall make best efforts by whatever means necessary to extract the discovery authorized by this court ­ namely, publicly posted Internet content evidencing offers made of counterfeit Louis Vuitton merchandise and traffic logs evidencing the volume of underlying counterfeit activity pertaining to the 67 websites identified by plaintiff.

8. 9. 10. 11.

Plaintiff's forensic expert will provide copies of results to plaintiff. Plaintiff's counsel will send digital copies to defense counsel. The inspection shall take place without delay. The parties will cooperate with each other in this process.

On the record presented, this court cannot determine whether evidentiary sanctions properly may be imposed. Accordingly, that portion of plaintiff's motion is denied without prejudice.

4 Exhibit D, Page 32

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Filed 03/10/2009

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1 2 3 4 5 6 7 8 9 10 Dated:

SO ORDERED. March 10, 2009 HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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5:07-cv-3952 Notice has been electronically mailed to: Annie S Wang [e-mail], [e-mail] Brian S. Edwards [e-mail] David A. Gauntlett [e-mail] J. Andrew Coombs [e-mail], [e-mail], [e-mail] James A. Lowe [e-mail], [e-mail], [e-mail], [e-mail], [e-mail], [e-mail] Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court's CM/ECF program.

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EXHIBIT E

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EXHIBIT F

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