Elan Microelectronics Corporation v. Apple, Inc.

Filing 423

ORDER RE DEFENDANT ELAN MICROELECTRONICS CORPORATION'S MOTIONS TO COMPEL by Judge Paul S. Grewal granting 357 Motion to Compel; granting 341 Motion to Compel (psglc1S, COURT STAFF) (Filed on 9/9/2011)

1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
NORTHERN DISTRICT OF CALIFORNIA
10
SAN JOSE DIVISION
11
12
13
14
15
16
17

ELAN MICROELECTRONICS
CORPORATION,

)
)
)
Plaintiff,
)
v.
)
)
APPLE, INC.,
)
)
Defendant.
)
___________________________________ )

Case No.: C 09-01531 RS (PSG)
ORDER RE DEFENDANT ELAN
MICROELECTRONICS
CORPORATION’S MOTIONS TO
COMPEL
(Docket Nos. 341, 357)

In this patent infringement case, Plaintiff Elan Microelectronics Corporation (“Elan”) moves

18

to compel Defendant Apple, Inc. (“Apple”) to produce discovery related to Apple iOS applications

19

(“iOS apps”) for the accused products. Separately, Elan moves to compel Apple to produce (1)

20

financial discovery related to Apple’s previous generations of accused products; (2) Apple’s

21

communications with Elan customers or potential customers regarding their sales of products that

22

incorporated Elan components; and (3) test data and documents generated by certain tools Apple

23

developed relating to the specifically accused feature. Apple opposes both motions. On August 30,

24

2011, the parties appeared for hearing. Having reviewed the papers and considered the arguments of

25

counsel,

26
27
28

IT IS HEREBY ORDERED that Elan’s motion to compel Apple to produce discovery
related to iOS apps for the accused products is GRANTED.
iOS apps refer to applications or programs that run on the iOS mobile operating system on
ORDER, page 1

1

Apple handheld products, including the accused iPhone, iPod Touch and iPad products. iOS apps

2

are not themselves accused of infringement in this action and do not include the accused feature.

3

Elan’s infringement claims are instead directed to touchpads and touchscreens capable of detecting

4

the simultaneous presence of two or more fingers, and the correlation of multi-finger contacts into

5

user input commands. Elan seeks financial data relating to both iOS apps that rely on the specific

6

“Multi-Touch” interface feature accused of patent infringement and those iOS apps that do not in

7

order to apportion the value of the claimed invention. In Uniloc USA, Inc. v. Microsoft1 and Lucent

8

Techs v. Gateway, Inc.,2 the Federal Circuit has made clear that damages experts must provide

9

“evidence tending to separate or apportion the defendant’s profits and the patentee’s damages

10

between the patented feature and the unpatented features.”3 Evidence of the demand for, and the

11

value of, the accused Multi-Touch interface feature in the iPhone, iPod Touch and iPad products is

12

therefore required.

13

Elan contends that its experts have detected a trend that shows that iOS apps using the Multi-

14

Touch interface feature enjoy greater consumer demand than those apps that do not. However,

15

because its experts have been limited thus far to only publicly-available information, Elan seeks

16

discovery to allow its experts to conduct a further and more extensive damages analysis. Although it

17

did not describe its proposed analysis as such, what Elan proposes is a classic regression analysis

18

aimed at determining the relationship of various independent variables – e.g., demand for the

19

accused product – and one or more independent variables – e.g., the Multi-Touch interface feature

20

accused of infringing Elan’s patents.4

21
22

Apple disputes that the discovery sought is relevant. Apple specifically complains that a
comparison based solely on apps that use multi-finger contacts, as opposed to those that do not, is

23
24

1

632 F.3d 1292, 1318 (Fed. Cir. 2011).

25

2

580 F.3d 1301, 1337 (Fed. Cir. 2009).

26

3

See Uniloc, 632 F.3d at 1318.

27

4

28

Alternatively, citing Factors 6 and 11 of the reasonable royalty analysis required under
Georgia-Pacific Corp. v.United States Plywood Cor., 718 F.Supp. 116, 1120 (S.D.N.Y. 1970), Elan
seeks to determine the relationship of demand for iOS apps and the Multi-Touch interface feature of the
accused products.
ORDER, page 2

1

not sound economic analysis. Apple notes that each app contains a large number of features,

2

including but not limited to, the content of the app, program or gameplay options, advanced

3

graphics, sound effects, music, design, updates, camera integration, voice or data network

4

connectivity, GPS integration, and user interface controls. As a result, the accused Multi-Touch

5

interface feature is but one part of a very large package of features that contribute to the

6

functionality and user experience, and “Elan presents no suggestion as to how it can disentangle the

7

economic value of multiple-finger input from this extensive range of features.”5 Finally, Apple

8

claims that the discovery sought is extensive and burdensome, although it offers no declaration or

9

other evidence to support its claim.

10

Apple might be right that Elan’s damages theory is unsound, and perhaps even inadmissible

11

under Fed. R. Civ. P. 702. The discovery sought is nevertheless appropriate. A Daubert challenge

12

is the proper vehicle to test the validity of Elan’s damages theory, not an opposition to a motion to

13

compel that invites the undersigned to usurp the authority of the presiding judge to determine what

14

damages theories should or should not go before the jury. If adopted, Apple’s position would

15

effectively require the production of a Rule 702-worthy damages analysis before any discovery that

16

supports such an analysis need be produced. Elan’s proposed regression analysis is not so facially

17

flawed as to require such a draconian result here. Apple’s claim of burden also is not persuasive.

18

As noted above, other than attorney argument, it has provided no declarations or other evidence to

19

substantiate its claim. Accordingly, Apple shall produce the following requested discovery no later

20

than September 30, 2011:

21

1.

The identity of the 100 top-selling iOS apps annually since 2007;

22

2.

For each of those apps, by year, spreadsheet(s) in native format, detailing the title,
volume of sales (or numbers downloaded), unit price, Apple’s costs, Apple’s revenue
or profit made on these apps;

3.

Underlying documentation that reflects the percentage of profit or revenue Apple is
entitled to obtain for the sale of any third party iOS apps;

4.

Any marketing information or ads relating to the iOS apps that highlight the use of
the multifinger input; and

5.

A Rule 30(b)(6) witness who can attest to the requested discovery from items 1-4.

5

Docket No. 369 at 5.

23
24
25
26
27
28

ORDER, page 3

1
2
3

IT IS FURTHER ORDERED that Elan’s motion to compel Apple to produce financial
discovery related to previous generations of the accused products is GRANTED.
Elan previously served Apple with requests for discovery comparing the accused products

4

containing the specifically accused Multi-Touch interface feature to earlier versions of the products

5

lacking the feature. According to Elan, these earlier versions include the MacBook, MacBook Pro

6

and iPod products. Despite past assurances from Apple that it would produce responsive

7

documents, Elan states that Apple has merely referred it to general marketing and customer survey

8

documents already produced. Elan now seeks financial data for prior unaccused versions of the

9

accused products so that it can conduct a comparative analysis to determine the economic return

10
11

Apple obtained by offering the accused feature.
As an initial matter, Apple disputes that Elan ever requested the actual discovery described

12

above. Elan’s original document request sought only “documents relating to any internal analysis or

13

study of anticipated and realized changes in product price, profits per units and sales volumes due to

14

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

15

Products.”6 Only after Apple explained that it did not have any, nor did it conduct any, comparative

16

analyses, did Elan request sales data of Apple’s previous generations of accused products.

17

Apple next argues that even if the court considers Elan’s discovery request, the discovery

18

sought is not relevant. Apple notes that while Elan requests financial information for the MacBook

19

products, Elan already has financial information, including cost and marketing information, for all of

20

the versions of the MacBook and MacBook Pro line of products. As a result, says Apple, any

21

request related to the MacBook and MacBook Pro line of products is now moot. Apple also notes

22

that the requested information for the iPod products is irrelevant because the iPod is not a previous

23

generation of any accused product, including the iPod Touch.

24

Elan notes that the iBook and PowerBook also are previous generation products to the

25

MacBook and MacBook Pro line of products, and financial information for those products also

26

should be produced. Elan also notes that despite Apple’s assertions that the iPod and iPod Touch

27

are different product lines, its damages expert is entitled to discovery to allow the expert to

28
6

See Docket No. 393 at 3.
ORDER, page 4

1

distinguish the value Apple derives from the accused Multi-Touch feature included in the iPod

2

Touch. Elan does not deny that there are other features in the iPod Touch not found in the iPod

3

classic but again urges that such issues of apportionment should be addressed in a Daubert hearing,

4

not discovery proceedings.

5

Based on the document request and Elan’s subsequent effort to narrow the request in light of

6

Apple’s response, the undersigned finds that it does encompass the specific discovery that Elan now

7

seeks. Additionally, the discovery sought is relevant. Even if the product lines radically differ as

8

Apple describes, Elan’s damages expert is entitled to pursue an analysis to determine any

9

incremental value of the Multi-Touch interface feature. As before, Apple has not presented any

10

evidence of undue burden. Instead, without any evidence or proof, it merely recounts that from

11

2003, financial data for 24 different iPod models, or “a mass of financial information,” would be

12

responsive to Elan’s document request. Apple shall produce sales, profit and cost information in

13

native spreadsheet format for iPod and iBook, PowerBook, and MacBook products sold since 2003

14

lacking the Multi-Touch interface feature no later than September 30, 2011.

15

IT IS FURTHER ORDERED that Elan’s motion to compel Apple to produce its

16

communications with Elan’s customers or potential customers regarding sales of products that have

17

incorporated Elan components is GRANTED.

18

Apple served approximately 30 of Elan’s customers and potential customers with subpoenas

19

to obtain documents reflecting sales of customer products that have incorporated Elan components.

20

Elan, in turn, served Apple with a document request seeking any responsive documents that Elan’s

21

customers and potential customers produced to Apple. Apple has provided some responsive

22

documents in response but Elan seeks to determine whether all responsive documents Apple has

23

obtained from Elan’s customers and potential customers have been produced.

24

While Apple contends that the issue is moot in light of its recent production of responsive

25

documents, Elan disputes that all responsive documents have been produced.

26

`

27

week, along with any formal responses [Elan] [has] not already received” and it confirmed at the

28

hearing that all responsive documents would be produced, Elan’s motion to compel is granted.

Because Apple has unambiguously agreed “to produce the correspondence [Elan] seek[s] this

ORDER, page 5

1

Apple shall produce any further responsive documents no later than September 30, 2011.

2
3

IT IS FURTHER ORDERED that Elan’s motion to compel Apple to produce test data and
documents generated by certain tools Apple developed relating to the accused feature is GRANTED.

4

Elan’s document request nos. 101-104 seek Apple’s internal testing documents since 2003.

5

The documents are sought to refute claims that Elan has failed to provide evidence that Apple

6

employees test or use its accused products in an infringing manner. Elan argues that “[s]ince

7

infringement occurs when the touchpad is operated with multi-finger touches or gestures, documents

8

reflecting the results of use of these testing tools may be clear evidence of direct infringement by

9

Apple employees.” The parties do not dispute that the discovery sought is relevant. Rather, Apple

10

claims that the discovery sought is vast, excessive, and unduly burdensome.

11

Apple states that the discovery sought is not maintained in a central repository or database.

12

The data is allegedly logged in raw data files in “one-off circumstances” or reflected in one-off

13

screen captures and if it exists, resides on the hard drives and in email files (of an unclear number)

14

of engineers on an ad hoc basis. Apple again complains that the discovery sought is staggeringly

15

overbroad and unduly burdensome. Moreover, Apple complains that Elan has refused any effort to

16

narrow the scope of its requests.

17

Aside from claiming that there is a staggering or impossible burden in meeting these

18

document requests, once again Apple has not provided any specific evidence, including any

19

declarations, showing the extent of any burden. Because the parties do not dispute the relevance of

20

the discovery sought and Apple has not demonstrated burden, Elan shall produce responsive

21

documents no later than September 30, 2011.

22
23

IT IS SO ORDERED.
Dated:

September 9, 2011

24
25

PAUL S. GREWAL
United States Magistrate Judge

26
27
28
ORDER, page 6