Elan Microelectronics Corporation v. Apple, Inc.

Filing 357

MOTION to Compel Discovery on Various Issues filed by Elan Microelectronics Corporation. Motion Hearing set for 8/30/2011 10:00 AM in Courtroom 5, 4th Floor, San Jose before Magistrate Judge Paul Singh Grewal. Responses due by 8/9/2011. Replies due by 8/16/2011. (Attachments: # 1 Proposed Order)(Bu, Jane) (Filed on 7/26/2011)

1
2
3
4
5
6
7
8
9
10
11

YITAI HU (SBN 248085)
[e-mail]
SEAN P. DEBRUINE (SBN 168071)
[e-mail]
ELIZABETH H. RADER (SBN 184963)
[e-mail]
JANE HAN BU (SBN 240081)
[e-mail]
JENNIFER LIU (SBN 268990)
[e-mail]
PALANI P. RATHINASAMY (SBN 269852)
[e-mail]
ALSTON & BIRD LLP
275 Middlefield Road, Suite 150
Menlo Park, CA 94025-4008
Telephone:
650-838-2000
Facsimile:
650-838-2001
Attorneys for Plaintiff and Counterdefendant
ELAN MICROELECTRONICS
CORPORATION

12
UNITED STATES DISTRICT COURT

13

NORTHERN DISTRICT OF CALIFORNIA

14

SAN FRANCISCO DIVISION

15
16
17
18

ELAN MICROELECTRONICS
CORPORATION,
Plaintiff and Counterdefendant,

21
22
23

ELAN MICROELECTRONICS
CORPORATION’S NOTICE OF
MOTION AND MOTION TO COMPEL
DISCOVERY ON VARIOUS ISSUES

Defendant and Counterplaintiff.

19
20

Case No. 5:09-cv-01531 RS (PSG)

Date: August 30, 2011
Time: 10:00 a.m.
Courtroom 5
Hon. Paul S. Grewal

v.
APPLE, INC.,

AND RELATED COUNTERCLAIMS

24
25
26
27
28
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

Case No. 5:09-cv-01531 RS (PSG)

NOTICE OF MOTION AND MOTION

1
2

TO APPLE, INC. AND ITS ATTORNEYS OF RECORD:

3

PLEASE TAKE NOTICE that on August 30, 2011, at 10:00 a.m. or another time as the

4

matter may be heard, in Courtroom 5, located at 280 South First Street, Fifth Floor, San Jose,

5

California, Plaintiff Elan Microelectronics Corporation (“Elan”) will and hereby does move this

6

Court, pursuant to L.R. 7 and Fed. R. Civ. P. 37(a)(1) and 37(a)(4) to compel Apple to produce 1)

7

financial discovery related to Apple’s previous generations of the accused products, 2) Apple’s

8

communications with Elan customers or potential customers concerning this lawsuit or Apple

9

patents pursuant to Elan Request for Production (“RFP”) 29, and 3) Apple test data and documents

10

generated by certain tools Apple had developed relating to the accused feature responsive to Elan

11

RFPs 101-104.

12

In this case, Elan is asserting, inter alia, that Apple infringes its patent claiming touch

13

sensitive input devices capable of recognizing input from multiple fingers simultaneously. On

14

April 12, 2011, Elan served RFPs 79-81, among other requests, requesting that Apple provide

15

discovery comparing accused products containing the accused functionality to earlier versions of

16

the products without the accused functionality. Apple agreed to produce responsive documents

17

but merely pointed Elan to the general marketing and survey documents it had previously

18

produced. Those documents were not fully responsive. Subsequently, during meet and confer,

19

Elan asked for a narrow category of documents, namely financial sales data for prior unaccused

20

versions of the accused products, so that Elan can conduct its own comparative analysis to

21

determine the profit Apple obtained by offering the accused feature. Apple, however, has refused

22

to provide such financial data.

23

Second, in May of this year, Apple issued a set of third party subpoenas without notifying

24

Elan, which strongly implies that Apple is directly communicating with Elan’s customers or

25

potential customers concerning this lawsuit. Elan’s RFP 29 expressly calls for the production of

26

such communications, but Apple has so far refused to commit to the production of this

27

information.

28

Finally, Elan requested Apple to produce, pursuant to RFPs 101 through104, documents,
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

1

Case No. 5:09-cv-01531 RS (PSG)

1

data, and tests generated or conducted by Apple’s own employees relating to a certain testing tool

2

Apple had developed to test the accused functionality of Elan’s asserted U.S. Patent No.

3

5,875,352, (the “352 patent”). The Court had previously determined that the tool itself is

4

discoverable, yet Apple has refused to produce the requested data on the basis of alleged burden.

5

This discovery is relevant to Elan’s case and its requests are narrowly tailored to obtain

6

only the information necessary for Elan’s damages and infringement analysis. And Apple has not

7

offered any showing that production of such information would be unduly burdensome.

8

Accordingly, Elan respectfully requests that the Court compel Apple to produce the requested

9

documents and other information pursuant to Elan RFPs 29, 79-81 and 101-104.

10

This motion is based upon this Notice of Motion, Memorandum of Points and Authorities,

11

and the Declaration of Jane H. Bu (“Bu Decl.”) filed herewith and on such other argument and

12

evidence as may be presented to the Court at or prior to the hearing on this motion.

13
14
15

MEMORANDUM OF POINTS AND AUTHORITIES

16

MOTION TO COMPEL SALES DATA FOR APPLE’S OLDER VERSIONS
OF THE ACCUSSED PRODUCTS

17

A.

18

I.

Facts

In this case Elan asserts, inter alia, that Apple infringes the 352 patent, which covers

19

touchpads and touchscreens capable of detecting the simultaneous use of two or more fingers on

20

the touch input device, and the correlation of multi-finger contacts into user input commands.

21

Some of the Apple products accused of infringement include the MacBook, iPhone, iPod Touch

22

and iPad products. Since the time Apple released its first iPhone, Apple has touted the importance

23

to these products of what it calls its “Multi-Touch” interface technology, which allows a user to

24

operate the products’ touchscreens or touchpads using multiple finger inputs. Therefore, in order

25

to obtain discovery relating to the benefit and value of Apple’s Multi-Touch technology, which is

26

the accused functionality covered by the 352 patent, Elan requested that Apple produce:

27
28

RFP 79: All documents relating to any internal analysis or study of anticipated and
realized changes in profit price, profits per units and sales volumes due to the
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

2

Case No. 5:09-cv-01531 RS (PSG)

1
2

incorporation of the Accused Instrumentality and/or Multi-Touch technology into the
Accused Products.

3

RFP 80: All documents related to customer acceptance of the iPod Touch compared
to the iPod without the Multi-Touch technology.

4

RFP 81: All documents related to customer acceptance of MacBooks with MultiTouch technology compared to those without.

5
6

Bu Decl., Exh. A. Apple initially agreed to produce documents responsive to these requests. Id.

7

However, Apple narrowly interpreted these requests as seeking only customer surveys and

8

marketing documents and pointed Elan to general marketing and survey documents that Apple had

9

previously produced in response to Elan’s other document requests. Bu Decl., Exhs. A and B at 6,

10

12. The documents Apple referenced are not entirely responsive to these requests; indeed, many

11

of them relate to foreign buyer studies or general marketing materials that were not called for by

12

these very specific requests. Bu Decl., Exh. B at 8-9.

13

to conduct the comparative analysis called for in RFPs 79-81, Elan requested that Apple provide,

14

in native spreadsheet format, sales, pricing, profit and cost information for the older versions of

15

the accused products that do not support the accused multiple-finger input feature. Id. While Elan

16

does not intend to rely upon financial data for unaccused products for its base royalty rate,

17

comparison of the sales and profits for prior versions of the accused products against the

18

subsequent version with the patented feature may provide insight into the value of the patented

19

feature added to the accused products. Id. However, Apple has refused to produce the requested

20

sales information on the basis that this discovery seeks financial data for products not accused of

21

infringement, and because Apple contends this information is not requested by any of Elan’s

22

discovery requests. Bu Decl., Exh. B at 1, 6. Elan disagrees on both counts, and Apple’s refusal

23

to produce the financial data for the previous generations of the accused products leaves Elan no

24

choice but to seek Court assistance on this issue.

25
26
27
28

B.

In subsequent meet and confers, in order

Financial Information for the Prior Versions of Accused Products
Provides Insight to the Value of the Patented Feature, Which is Found in
the Accused Products

The financial information for Apple’s previous generations of the accused products is
relevant to Elan’s damages case, even though the older products themselves are not accused. Fed.

ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

3

Case No. 5:09-cv-01531 RS (PSG)

1

R. Civ. P. 26(b)(1) (“[p]arties may obtain discovery regarding any non-privileged matter that is

2

relevant to any party’s claim or defense” or that “appears reasonably calculated to lead to the

3

discovery of admissible evidence.”); see also, Beinin v. Ctr. for the Study of Popular Culture,

4

2006 U.S. Dist. LEXIS 96088, *8-9, NO. C 06-2298 JW, (N.D. Cal. Oct. 31, 2006) (ordering

5

defendant to produce profits from non-accused products because such information is reasonably

6

calculated to lead to the discovery of admissible evidence); Uniloc USA, Inc. v. Microsoft Corp.,

7

632 F.3d 1292, 1318 (Fed. Cir. 2011) (holding the damages expert must “give evidence tending to

8

separate or apportion the defendant’s profits and the patentee’s damages between the patented

9

feature and the unpatented features”); Biax Corp. v. NVIDIA Corp., 271 F.R.D. 200, 215 (D. Colo.

10

2010) (finding reasonable royalty may be affected by the sales of related products that are not

11

covered by the Patents-in-Suit). In particular, comparison of the financial performance of the

12

older versions of the products that do not use the patented multi-finger input feature to those

13

products that do is relevant to Elan’s reasonable royalty analysis. Therefore, the discovery Elan

14

sought is relevant to determining the value to Apple of the patented features.

15

Further, to determine the incremental value of the Multi-Touch functionality, one possible

16

method is to compare the revenues and/or profits Apple earned from sales of the accused products

17

to those from the older versions of the same products that do not support the accused Multi-Touch

18

feature. Such comparative analysis was explicitly endorsed by the Federal Circuit in Uniloc and

19

Lucent Techs. See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d at 1318 (noting that one

20

accepted method of quantifying the profit premium attributed to patented features is to compare

21

the profits derived from accused products containing the features to those from similar products

22

without the features); Lucent Techs. v. Gateway, Inc., 580 F.3d 1301, 1337 (Fed. Cir. 2009)

23

(same). Moreover, this type of comparison data is relevant to an evaluation of a reasonable

24

royalty because it speaks directly to the incremental value the consumers may have placed on the

25

accused products incorporating the accused Multi-Touch functionality. Therefore, the financial

26

data for previous generations of the accused products, such as Apple iPods and MacBooks, is

27

relevant and reasonably calculated to lead to admissible evidence. See Sun Microsystems, Inc. v.

28

Network Appliance, 2009 U.S. Dist. LEXIS 122779 (N.D. Cal. Dec. 21, 2009) (granting
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

4

Case No. 5:09-cv-01531 RS (PSG)

1

deposition on financial information for services not accused in the action); Beinin v. Ctr. for the

2

Study of Popular Culture, 2006 U.S. Dist. LEXIS 96088 at *8-9 (granting motion to compel

3

defendant to produce financial information for non-accused products because such information is

4

reasonably calculated to lead to the discovery of admissible evidence).

5

C.

6

The Financial Information for the Prior Versions of Accused Products
Was Requested by Elan in its Discovery Requests

7

Apple also refused to provide this discovery on the asserted basis that none of Elan’s

8

document requests calls for such sales data. Bu Decl., Exh. B. Apple is wrong. Elan’s discovery

9

requests clearly ask for, inter alia, documents relating to the anticipated and realized financial

10

benefits due to incorporation of the patented multiple-finger input feature, as well as documents

11

relating to “customer acceptance” of the accused versions of the products over the earlier non-

12

accused versions without the patented features. See Bu Decl., Exh. A, RFPs 79, 80, 81. Apple has

13

already produced the financial spreadsheets for the accused products. Permitting Elan access to the

14

financial data for the older (non-accused) generations of Apple’s accused products will allow Elan

15

to conduct the comparative analysis called for by these requests and required by the recent Federal

16

Circuit cases. See Lucent Techs. v. Gateway, Inc., 580 F.3d at 1337; Uniloc USA, Inc. v. Microsoft

17

Corp., 632 F.3d at 1318. Therefore, Elan respectfully requests that Apple be compelled to produce

18

this information.

19
20
21

D.

Apple’s Refusal to Produce the Requested Financial Information Due to
Its Claims That Elan’s Damages Theory is Unsound is Not a Proper
Basis for Denying Discovery

Apple also refused to produce this relevant data by arguing that Elan’s damages theory is

22

unsound. Bu Decl., Exh. B at 1-2. Apple stated that “if Elan wants to compare completely

23

different Apple products (e.g., a classic iPod vs. an iPod Touch) as part of its damages analysis,

24

you are free to do so based on publicly available sales prices and we will respond as appropriate in

25

expert discovery, motions in limine and Daubert motions.” Id. Apple misses the point again. The

26

issue for discovery is relevance, not the alleged strength or weakness of a party’s ultimate position.

27

Apple will have an opportunity to rebut Elan’s damages analysis during expert discovery, and

28

through any potential motions Apple expects to file. But the Federal Circuit has made clear in
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

5

Case No. 5:09-cv-01531 RS (PSG)

1

recent cases that damages experts must provide “evidence tending to separate or apportion the

2

defendant’s profits and the patentee’s damages between the patented feature and the unpatented

3

features.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d at 1318. Therefore, Elan has clearly

4

demonstrated the relevance and need for such data, and Apple cannot be permitted to deny Elan

5

access to relevant discovery simply because Apple contends now that it may be able to rebut

6

Elan’s damages theory. See, e.g., Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1326-

7

1327 (Fed. Cir. 1990) (“discovery rules are designed to assist a party to prove a claim it

8

reasonably believes to be viable without discovery, not to find out if it has any basis for a claim”).

9

E.

10
11

Apple Will Not Be Unduly Burdened By Production of Additional
Financial Data in Response to Elan’s Narrowly Tailored Requests

Finally, Apple claims that it will be unduly burdened if ordered to produce the requested

12

financial data. See Bu Decl. Exh. B at 1-2. The discovery Elan seeks, however, is narrowly

13

tailored to obtain only the information necessary to its damages analysis. Both parties have

14

already agreed to produce native spreadsheets of accused products’ sales information. Elan is

15

merely requesting the same type of spreadsheets for a few additional previous generations of the

16

accused products. Therefore, generating a few more native spreadsheets is neither an undue

17

burden nor a justification for Apple’s refusal to produce this relevant data. Moreover, the

18

relevance of this data to Elan’s damages analysis, which is further supported by the Federal

19

Circuit’s damages cases, outweighs any purported burden claimed by Apple. Lucent Techs. v.

20

Gateway, Inc., 580 F.3d at 1337; Uniloc USA, Inc. v. Microsoft Corp, 632 F.3d at 1318; see also,

21

e.g., SEC v. Berry, No. C07-04431-RMW (N.D. Cal. April 1, 2011) (order granting motion to

22

compel interrogatory and rejecting defendant’s “burdensome” argument in part based on the

23

amount of time defendant was aware of interrogatory request).

24
25

II.

MOTION TO COMPEL APPLE COMMUNICATIONS WITH ELAN
CUSTOMERS CONCERNING THIS LAWSUIT PURSUANT TO RFP 29

26

During May 2011, Apple’s counsel served third party subpoenas to certain entities who are

27

Elan’s customers or potential customers. The subpoenaed parties included Dell, Sony and Lenovo.

28

The subpoenas call for these companies to produce sales information for their products that
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

6

Case No. 5:09-cv-01531 RS (PSG)

1

incorporate Elan components. Apple never notified Elan of these subpoenas prior to serving them

2

as mandated under Fed. R. Civ. P. 45(b)(1), nor did Apple serve Elan copies of these subpoenas

3

when they were served on the third parties. Bu Decl., Exh. C. Due to the lack of service of these

4

third party subpoenas, Elan is concerned that Apple may be directly communicating with Elan

5

customers concerning this lawsuit. On July 13, 2011, after Apple provided copies of documents

6

produced by certain of the third parties, Elan promptly requested Apple to produce copies of all

7

the third party subpoenas, copies of all documents produced by the third parties, and all of Apple’s

8

communications with these entities concerning this case or Apple’s patents-in-suit. Id. Elan

9

pointed out to Apple that Elan had expressly requested this type of third party communications in

10

its document requests. Id. Particularly, RFP 29 seeks “[a]ll documents and things relating to or

11

comprising Apple’s communications with Elan’s customers or potential customers concerning the

12

Apple Patents, Elan’s Product(s), or products that incorporate Elan’s Product(s).” Bu Decl., Exhs.

13

C and D. Apple agreed produce such documents in its discovery responses. Bu Decl., Exh. D. To

14

date, Apple has provided copies of the subpoenas and has agreed to produce communications with

15

Elan’s customers concerning the compliance with the subpoenas. However, Apple has ignored

16

Elan’s repeated requests for production of all of its communications with Elan customers

17

concerning this lawsuit or Apple’s patents regardless whether it relates to the subpoena or not. Bu

18

Decl., Exh. E. Accordingly, Elan respectfully requests that the Court compel Apple to produce

19

any and all of the communications it has had with Elan customers or potential customers regarding

20

this lawsuit or Apple patents pursuant to Elan RFP 29.

21

III.

MOTION TO COMPEL DOCUMENTS RESPONSIVE TO ELAN RFPS 101104

22

Elan had previously filed a motion to compel Apple’s testing tool that Apple had developed

23

to specifically analyze the accused functionalities of the accused products. See Dkt. No. 266. The

24

Court has already found the tool itself discoverable and partially granted Elan’s motion for

25

inspection of this tool. Id. at 4. As discussed in that motion, Apple’s own witness in the parallel

26

International Trade Commission (“ITC”) hearing had described the capabilities of and data captured

27

by the tool. Id. at 2. On June 14, 2011, after the Court granted Elan’s motion to inspect the tool,

28

Elan issued document requests expressly requesting documents relating to these type of tools,
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

7

Case No. 5:09-cv-01531 RS (PSG)

1

Apple’s screenshots and data obtained from these tools, and the tests and data captured by Apple

2

when using the tools. Bu Decl., Exh. G (RFPs 101-103). Elan also requested documents relating to

3

the source code algorithm of the key accused feature of the 352 patent. Id. at 104. In assisting

4

Apple to locate relevant documents, Elan identified exemplary documents already produced by

5

Apple in this matter. Id. Apple, however, refused to produce any additional documents or data

6

responsive to these requests on the grounds that the requests are “overbroad, unduly burdensome

7

and not reasonably calculated to lead to the discovery of admissible evidence.” Id.; Bu Decl., Exh.

8

F. Apple further objected to the production of this test data on the basis that the information is

9

“available to Elan through other sources, including through the inspection or testing of the accused

10

products and/or [Apple tool] made available by Apple….” Id. Neither of these reasons has merit.

11

First, the Court has already determined that Apple’s test tool is relevant in this matter, and

12

the data and documents produced through use of that tool would also clearly be relevant. At a

13

minimum, this information is relevant to show that Apple’s employees use the accused products in

14

this country in an infringing manner. The importance of this data is highlighted by Apple’s own

15

arguments made in the ITC Investigation and before this Court that Elan has allegedly provided no

16

evidence that Apple employees use the accused products in an infringing manner. See Dkt. 238

17

[June 2, 2011 Apple’s Opp’n to Elan’s Motion for Partial Summary Judgment filed under seal] at 15)

18

(alleging “[h]owever, for the reasons stated above, the fact that multi-finger gestures have been

19

performed does not establish that [any Apple employee] has performed the allegedly infringing

20

method.”). Data generated using the testing tool on accused products is evidence of infringing

21

activity by Apple’s own employees, and is therefore directly relevant to Elan’s infringement case.

22

Bu Decl., Exh. G.

23

Furthermore, the documents requested by Elan are also relevant because Apple argues that

24

infringement can occur only if the underlying capacitance exceeds a threshold amount. See Dkt.

25

238 [June 2, 2011 Apple’s Opp’n] at 14). Apple further argues that Elan has failed to present any

26

evidence that such a condition occurs. Id. at 15 (“Having failed to present any evidence on this

27

issue, Elan cannot meet its burden on summary judgment.”). The types of discovery requested in

28

Elan’s RFPs 101-104 precisely relate to the capacitance data that Apple claims Elan has allegedly
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

8

Case No. 5:09-cv-01531 RS (PSG)

1

failed to present.1 Bu Decl., Exh. G. Further, Apple’s reliance on Elan’s ability to inspect or test

2

Apple’s tools is equally unavailing because Elan’s inspection of the accused products and testing

3

tools would lead to data generated by Elan – not Apple employees. Bu Decl., Exh. G.
Finally, in reducing Apple’s alleged burden, Elan has provided Apple significant guidance

4
5

as to these document requests. Bu Decl., Exhs. F and G. Elan has provided numerous examples of

6

the types of relevant documents Elan seeks by pointing Apple to specific documents in Apple’s own

7

production, and simply requesting that all such documents and data be produced. Id. Thus, the

8

information requested by Elan is both relevant and its benefit far outweighs any boilerplate and

9

purported burden alleged by Apple. The parties last met and conferred by telephone and by email

10

correspondences on July 26, 2011 and Apple maintained its objection that Elan’s request is unduly

11

burdensome and refused to produce the requested documents responsive to RFPs 101-104. Bu

12

Decl., Exh. F. Accordingly, Elan respectfully requests that the Court compel Apple to immediately

13

produce documents responsive to RFPs 101-104 relating to the accused functionality of the accused

14

products.

15
IV.

16

CONCLUSION

For the foregoing reasons, Elan respectfully requests that the Court grant Elan’s motion to

17
compel Apple to produce:
18
1. Sales, profit, cost information, in native spreadsheet format, for iPod and MacBook
19
products without the Multi-Touch feature since 2003;
20
2. All communications with third parties concerning Apple patents-in-suit, Elan, Elan
21
products, the issued subpoenas or any aspect of this lawsuit pursuant to RFP 29;
22
3. All documents responsive to RFPs 101-104 relating to the accused functionality of the
23
accused products.
24
25
26
27
28

1

As Elan explained in its Reply Brief in Support of Motion for Partial Summary Judgment of
Infringement, it is Elan’s position that infringement occurs regardless of whether the capacitance
data is above, equal to, or below the threshold.
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

9

Case No. 5:09-cv-01531 RS (PSG)

1
2

DATED: July 26, 2011

Respectfully submitted,
ALSTON & BIRD LLP

3
4

By:

/s/ Jane H. Bu
Jane H Bu
Attorneys for Plaintiff and Counterdefendant
ELAN MICROELECTRONICS CORPORATION

5
6
7

LEGAL02/32760828v4

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ELAN’S MOT. TO COMPEL DISCOVERY ON VARIOUS ISSUES

10

Case No. 5:09-cv-01531 RS (PSG)