Tessera, Inc. v. UTAC (Taiwan) Corporaiton

Filing 325

ORDER Re: Discovery Dispute Joint Report #12 288 . Signed by Magistrate Judge Howard R. Lloyd on 5/27/2015. (hrllc1, COURT STAFF) (Filed on 5/27/2015)

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*E-Filed: May 27, 2015* 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 For the Northern District of California NOT FOR CITATION 8 United States District Court 7 SAN JOSE DIVISION 11 TESSERA, INC., Plaintiff, 12 v. No. C10-04435 EJD (HRL) ORDER RE: DISCOVERY DISPUTE JOINT REPORT #12 13 UTAC (TAIWAN) CORPORATION, [Dkt. No. 288] 14 15 Defendant. ____________________________________/ 16 Plaintiff Tessera, Inc. (“Tessera”) sues Defendant UTAC (Taiwan) Corporation (“UTC”) for 17 alleged failure to pay royalties under a license agreement. The first phase of this action concerned a 18 contract interpretation dispute between Tessera and UTC about the criteria for determining which 19 UTC products are royalty-bearing. Following discovery on that subject, the parties submitted 20 summary judgment motions relating to contract interpretation, which were ruled on by the court. 21 In the second phase of this action, Tessera served UTC with infringement disclosures 22 identifying the products that Tessera contends are royalty-bearing under the agreement. Tessera’s 23 July 8, 2014 disclosures identified 32 claims of 12 licensed patents and provided claim charts 24 contending that two types of UTC packages—its w-BGA packages and DFN packages—are 25 covered by the claims of licensed patents and are therefore royalty-bearing. Tessera’s disclosure 26 asserted that Tessera did not have enough information to determine whether a third type of package, 27 UTC’s LGA SiP package, is covered by the claims of the licensed patents and is therefore royalty- 28 bearing. UTC disputes Tessera’s contentions, and also served Tessera with invalidity contentions. 1 UTC has filed a motion for partial summary judgment, which is currently pending. Dkt. 2 Nos. 208, 247. Tessera opposed the motion, and the court has not yet issued a ruling. The parties 3 have also briefed and argued claim construction issues, and the court has not yet issued a claim 4 construction order. 5 Presently before the Court is the parties’ Discovery Dispute Joint Report (“DDJR”) #12. 6 Dkt. No. 288. The parties’ dispute relates to the subpoena that Tessera served on UGS America 7 Sales Inc. (“UGS America”) on February 18, 2015, which includes 16 document requests and 21 8 deposition topics. UGS America provides sales support services in the United States for various 9 companies. For the Northern District of California United States District Court 10 Tessera requests that the Court order UGS America to produce responsive documents to 11 each of Tessera’s document requests and designate a witness to testify to each of the deposition 12 topics. First, Tessera argues that UGS America’s relationship with UTC is relevant to UTC’s 13 assertions about its nexus to the United States. According to Tessera, UTC put at issue how much 14 of its business has a nexus to the United States or U.S. companies in its motion for summary 15 judgment (Dkt. No. 247), and testing UTC’s assertions requires allowing inquiry about the various 16 connections between UTC and UGS America. Second, Tessera argues that the requested discovery 17 seeks information relevant to determining the full scope of royalties owed by UTC under the 18 agreement. According to Tessera, UTC has improperly limited its disclosures to only those 19 products it made and sold exclusively in Taiwan, and UGS America similarly seeks to limit its 20 deposition to such products. Third, Tessera argues that discovery regarding UGS America’s 21 marketing activities is relevant to UTC’s exploitation of patented technologies that it licensed from 22 Tessera in the U.S. market. According to Tessera, UGS America’s marketing materials are relevant 23 to determining whether there are offers for sale in the United States for UTC’s products and the 24 extent of UTC’s presence in the U.S. market. These materials would also show how the UTC 25 products at issue are described to potential customers, which is relevant to both UTC’s use of 26 Tessera’s patents and refuting UTC’s contention that the asserted Tessera patents are obvious. 27 Fourth, Tessera argues that it seeks information relating to UTC’s involvement in the selling, 28 2 1 distributing, or marketing of products at issue, which is relevant to testing UGS America’s 2 assertions that it is not aware of any UGS America sales of UTC products. 3 UTC argues that the subpoena seeks deposition testimony and documents that do not relate 4 to this case or concern parties to this case, and that would impose an extraordinary burden on a non- 5 party. UTC requests that the subpoena be quashed, or in the alternative, limited to the topic of the 6 actual sale of UTC products by UGS America and narrowed to seek only documents in the 7 possession of UGS America (and not its corporate affiliates). 8 9 Rule 45 of the Federal Rules of Civil Procedure authorizes the issuance of a subpoena commanding a non-party to attend and testify; produce designated documents, electronically stored For the Northern District of California United States District Court 10 information, or tangible things in that non-party’s possession, custody or control; or permit the 11 inspection of premises. Fed. R. Civ. P. 45(a)(1)(A)(iii). The scope of discovery through a Fed. R. 12 Civ. P. 45 subpoena is the same as that applicable to Fed. R. Civ. P. 34 and the other discovery 13 rules. Fed. R. Civ. P. 45 advisory committee’s note (1970). 14 Parties may obtain discovery about any nonprivileged matter that is relevant to any party’s 15 claim or defense. Fed. R. Civ. P. 26(b)(1). “Relevance under Rule 26(b)(1) is construed more 16 broadly for discovery than for trial.” Truswal Sys. Corp. v. Hydro-Air Eng’g, Inc., 813 F.2d 1207, 17 1211 (Fed. Cir. 1987). “Relevant information need not be admissible at the trial if the discovery 18 appears reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 19 26(b)(1). 20 Discovery is not unfettered, however. A court must limit the extent or frequency of 21 discovery if it finds that (a) the discovery sought is unreasonably cumulative or duplicative or can 22 be obtained from a source that is more convenient, less burdensome or less expensive; (b) the party 23 seeking discovery has had ample opportunity to obtain the information through discovery; or (c) the 24 burden or expense of the discovery sought outweighs its likely benefit, considering the needs of the 25 case, the amount in controversy, the parties’ resources, the importance of the issues at stake, and the 26 importance of the discovery in resolving those issues. Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii). 27 28 Fed. R. Civ. P. 45(d)(3)(B) provides that the court may quash or modify a subpoena if it requires: “(i) disclosing a trade secret or other confidential research, development, or commercial 3 1 information; or (ii) disclosing an unretained expert’s opinion or information that does not describe 2 specific occurrences in dispute and results from the expert’s study that was not requested by a 3 party.” Additionally, Fed. R. Civ. P. 45(d)(3) provides that the court must quash or modify a 4 subpoena that imposes an undue burden. 5 First, in regards to RFPs 2, 5, 9, 15, and 16 as well as Deposition Topics 5, 8, 13, 15, 16, 17, 6 19, and 20, Tessera’s subpoena demands documents and deposition testimony about companies 7 other than UTC. This demand for discovery concerning parties other than UTC would produce 8 irrelevant information. UGS America provides sales services for several companies, all of which 9 Tessera includes under the label “UTAC Group.” For instance, included in UTAC Group is United For the Northern District of California United States District Court 10 Test and Assembly Center Ltd. (“UTAC Singapore”)—UTC’s parent—which has its own license 11 with Tessera and is not covered by the agreement at issue here. The other companies included under 12 the label “UTAC Group” are not parents or subsidiaries of UTC. These companies are not subject 13 to the license agreement between Tessera and UTC, and are irrelevant to the action. 14 Second, Tessera’s requests for matters other than UGS America’s sales of UTC products 15 would impose an undue burden and produce irrelevant information. In regards to RFPs 1, 2, 4, 5, 6, 16 8, 9, 11, 13, 14, and 15 as well as Deposition Topics 1, 2, 5, 7, 8, 9, 10, 12, 13, 15, 16, 17, 18, 19, 17 and 20, Tessera’s subpoena demands documents and information that do not concern sales of UTC 18 products and therefore have no bearing on this action. 19 For example, RFP 4 seeks “all communications” between UGS America and UTC. UTC 20 objects to searching for and collecting all communications that might have occurred between UTC 21 and UGS America, regardless of what the communications might relate to, because it would be 22 burdensome and unjustified. See Convolve, Inc. v. Dell, Inc., No. C10-80071 WHA, 2011 WL 23 1766486, at *2 (N.D. Cal. May 9, 2011) (“Requests to non-parties should be narrowly drawn to 24 meet specific needs for information.”). However, UTC states that UGS America is willing to 25 produce discovery concerning any sales that it made or participated in of products made by UTC. 26 Moreover, the subpoena requests financial and marketing information, which is irrelevant to 27 determining UTC’s potential royalty obligations under the agreement. As discussed in the Order 28 Re: Discovery Dispute Joint Report #11, the royalties owed is calculated based on the number of 4 1 billable pins in certain packages multiplied by the number of such packages sold. Dkt. No. 313, at 2 2-3. The profits UTC may earn are irrelevant. Further, marketing activities that do not result in a 3 sale cannot trigger the royalty obligation. In addition, the subpoena seeks to impose on UGS America an obligation to obtain 4 identify all expenses, costs, revenues, or profits incurred or received by [UTC] for importations or 7 sales of any Packages at Issue.” If this information is provided, it should come from UTC as a party 8 to the case. See Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 577 (N.D. Cal. 2007) 9 (quashing a non-party subpoena that sought information that was “obtainable from a source more 10 For the Northern District of California information that should come from UTC. For instance, RFP 6 seeks “Documents sufficient to 6 United States District Court 5 direct, convenient, and less burdensome—namely, from Defendants”). Moreover, RFP 1 requests 11 all documents relating to the agreement or Tessera, and Deposition Topic 10 requests a witness to 12 testify about “discussions between [UTC] and any other person or entity, relating to the Agreement 13 or Tessera, Inc.” among other things. However, UTC is the party to the agreement with Tessera, 14 and UTC has already fully provided discovery on these subject. This discovery is not appropriate to 15 impose on a non-party. Accordingly, Tessera’s subpoena is limited to the topic of the actual sale of UTC products 16 17 by UGS America and narrowed to seek only documents in the possession of UGS America (and not 18 its corporate affiliates). If UGS America has not already done so, it shall produce all responsive 19 documents within fourteen (14) days of the date this order is filed and designate a witness to testify 20 to Deposition Topics 1, 2, 5, 7, 10, 12, 13, 16, 17, 18, 19, and 20, 1 as narrowed, at a mutually 21 agreeable date shortly following the document production. IT IS SO ORDERED. 22 23 Dated: May 27, 2015 24 HOWARD R. LLOYD UNITED STATES MAGISTRATE JUDGE 25 26 27 1 28 Deposition Topics 8, 9, and 15 request financial and marketing information. As explained above, this information is irrelevant to determining UTC’s potential royalty obligations under the agreement. 5 1 C10-04435 EJD (HRL) Order will be electronically mailed to: 2 Anup M Shah 3 Benjamin W. Hattenbach 4 David H. Herrington 5 Dominik B. Slusarczyk 6 Jackson Samuel Trugman 7 Jacob Johnston 8 Joseph Mark Lipner 9 Lawrence B. Friedman ashah@kslaw.com bhattenbach@irell.com dherrington@cgsh.com, dherrington@cgsh.com dslusarczyk@irell.com, mspillner@tessera.com jtrugman@irell.com jjohnston@cgsh.com jlipner@irell.com, csilver@irell.com, hhyun@irell.com, slee@irell.com lfriedman@cgsh.com, maofiling@cgsh.com For the Northern District of California United States District Court 10 Michael F. Heafey mheafey@kslaw.com, rgowins@kslaw.com 11 Morgan Chu 12 Morvarid Metanat mmetanat@orrick.com 13 Nathaniel E. Jedrey njedrey@cgsh.com 14 Polina Bensman 15 Richard William Krebs rkrebs@irell.com, cmedina@irell.com, rbrown@tessera.com, Slee@irell.com, sveeraraghavan@tessera.com, tegarcia@tessera.com mchu@irell.com lbensman@cgsh.com 16 Ryan Alexander Ward rward@irell.com 17 Sri Kuehnlenz skuehnlenz@cgsh.com 18 19 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. 20 21 22 23 24 25 26 27 28 6

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