Tessera, Inc. v. UTAC (Taiwan) Corporaiton

Filing 398

ORDER denying 239 , 294 Motions for Relief from Non-dispositive Pretrial Orders of Magistrate Judge. Signed by Judge Edward J. Davila on 1/15/2016. (ejdlc1S, COURT STAFF) (Filed on 1/15/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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TESSERA, INC.,

Case No. 5:10-cv-04435-EJD

United States District Court
Northern District of California

Plaintiff,
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v.
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UTAC (TAIWAN) CORPORATION,
Defendant.

ORDER DENYING PLAINTIFF’S
MOTIONS FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDERS OF
MAGISTRATE JUDGE
Re: Dkt. Nos. 239, 294

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I.

INTRODUCTION
Plaintiff Tessera, Inc. (“Tessera”) and Defendant UTAC (Taiwan) Corporation (“UTC”)

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entered into an agreement in 2001 which granted UTC a nonexclusive license to certain of

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Tessera’s patents and patent applications in exchange for the payment of royalties. After UTC

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notified Tessera that it would cease paying royalties for patents that were due to expire, Tessera

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initiated this case in 2010 for breach of contract, declaratory relief, and breach of the covenant of

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good faith and fair dealing.

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Since then, the parties have litigated no fewer than 18 discovery disputes before Magistrate

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Judge Howard R. Lloyd. In Discovery Dispute Joint Report #4, the parties could not agree

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whether UTC must produce technical and sales information relating to semiconductor packages

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for which UTC may only provide testing services. In Discovery Dispute Joint Report #7, the

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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE

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parties disputed whether UTC should respond to discovery which Tessera asserts is relevant to the

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interpretation of the license agreement.
Judge Lloyd ruled on both of these disputes. See Docket Item Nos. 225, 289. Now before

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this court are Tessera’s motions for relief from Judge Lloyd’s orders. Because its arguments are

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without merit, these motions will be denied.

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II.

LEGAL STANDARD
Subject to limitations not relevant here, any non-dispositive pretrial matter before the

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district court may be referred to a magistrate judge for determination. 28 U.S.C. § 636(b)(1)(A).

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Once rendered, the decision of the magistrate judge may only be reconsidered by the district court

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where the order is “clearly erroneous” or “contrary to law.” Id.; Fed. R. Civ. P. 72(a). “A finding

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United States District Court
Northern District of California

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is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court, after

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reviewing the entire evidence, is left with the definite and firm conviction that a mistake has been

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committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). “An order is contrary

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to law when it fails to apply or misapplies relevant statutes, case law or rules of procedure.”

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Tompkins v. R.J. Reynolds Tobacco Co., 92 F. Supp. 2d 70, 74 (N.D.N.Y. 2000).
The § 636(b)(1)(A) standard is not easily satisfied because it affords the magistrate judge

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significant deference. United States v. Abonce-Barrera, 257 F.3d 959, 969 (9th Cir. 2001) (“[T]he

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text of the Magistrates Act suggests that the magistrate judge’s decision in such nondispositive

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matters is entitled to great deference by the district court.”). This deference is particularly strong

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when it comes to discovery. “[M]agistrate judges are given broad discretion on discovery matters

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and should not be overruled absent a showing of a clear abuse of discretion.” Anderson v. Equifax

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Info. Servs. LLC, No. CV 05-1741-ST, 2007 U.S. Dist. LEXIS 61937, at *5, 2007 WL 2412249

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(D. Or. Aug. 20, 2007).

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III.

DISCUSSION

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A.

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Tessera argues that Judge Lloyd’s decision to deny disclosure of information related to

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Discovery Dispute Joint Report #4

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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE

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UTC’s testing-only services is clearly erroneous because it misconstrues the First Amended

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Complaint (“FAC”). It also argues the order is contrary to “well-established law holding that

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discovery should be liberally granted.” UTC disagrees with this assessment, and contends that

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Judge Lloyd correctly determined that royalties related testing-only services are not put at issue by

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the FAC.

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This is a dispute about relevance. Under the version of Federal Rule of Civil Procedure

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26(b) in a effect at the time of Judge Lloyd’s ruling, 1 “[p]arties may obtain discovery regarding

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any nonprivileged matter that is relevant to any party’s claim or defense - including the existence,

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description, nature, custody, condition, and location of any documents or other tangible things and
the identity and location of persons who know of any discoverable matter.” Rule 26(b) also

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clarifies that relevance for the purposes of discovery is a concept broader than the standard used to

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determine admissibility at trial. So long as it “appears reasonably calculated to lead to the

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discovery of admissible evidence,” a party’s request for information will be deemed proper. See

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Fed. R. Civ. P. 26(b)(1).
But although broad, the universe of what “is relevant to any party’s claim or defense” is

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not unlimited. See Oppenheimer Fund v. Sanders, 437 U.S. 340, 351-52 (1978); see also

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Gonzales v. Google, Inc., 234 F.R.D. 674, 680 (N.D. Cal. Mar. 17, 2006) (observing that

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relevancy for discovery “is not without ‘ultimate and necessary boundaries.’”). Indeed, Rule 26(b)

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provides its own implied restriction. Since “discovery of any matter relevant to the subject matter

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involved in the action” can only be pursued upon a showing of good cause, discovery “relevant to

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any party’s claim or defense” must be a category that is more limited in scope. Fed. R. Civ. P.

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26(b)(1).
With this standard in mind, resolution of Tessera’s challenge becomes a straightforward

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exercise. Without explicitly saying as much, Judge Lloyd essentially found that Tessera failed to

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satisfy its primary burden to establish that the information sought fell within the permissible scope

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An amended version of Rule 26(b) became effective on December 1, 2015.
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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE

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of discovery. See Khalilpour v. Cellco P’ship, No. C 09-02712 CW (MEJ), 2010 U.S. Dist.

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LEXIS 43885, at *4, 2010 WL 1267749 (N.D. Cal. Apr. 1, 2010) (“Once the moving party

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establishes that the information requested is within the scope of permissible discovery, the burden

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shifts to the party opposing discovery.”). This was so because, as Judge Lloyd explained, “the

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first amended complaint does not claim royalties on UTC’s testing-only services . . . . Rather, the

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first amended complaint asserts a claim only against packages that are ‘made by’ UTC.” This

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determination was not clearly erroneous; the FAC nowhere mentions royalties relating to products

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that UTC tests but does not make.

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Nor did Judge Lloyd misapply discovery law. As already noted, information is generally
discoverable under Rule 26(b) when it is relevant to a party’s claim or defense, and Tessera did

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Northern District of California

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not attempt to make a showing of good cause for “subject matter” discovery. Thus, once Judge

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Lloyd determined that testing-only royalties were not encompassed by the FAC, discovery related

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to that topic was properly denied as irrelevant.

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Tessera’s other arguments are similarly without merit. Tessera believes that Judge Lloyd

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de facto decided a disputed issue of contract interpretation by construing the FAC in a way that

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excludes testing-only royalties. But Judge Lloyd explicitly disclaimed any such decision in the

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written order and explained the ruling was based solely on the FAC, not the terms of the contract.

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This court will not read something more into the decision beyond what it says, particularly when

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using the allegations of the complaint to set the bounds of discovery is not clearly erroneous. See

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Coleman v. Quaker Oats Co., 232 F.3d 1271, 1292 (9th Cir. 2000) (explaining that “[a] complaint

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guides the parties’ discovery”). As Judge Lloyd noted, the question presented by this dispute is

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not whether the parties’ contract may provide for testing-only royalties, but rather whether

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Tessera’s pleading sought such royalties. Those are distinct issues.

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Moreover, the court is not persuaded that decisions made in Tessera, Inc. v. Sony Corp.,

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No. 5:11-cv-04399 EJD, 2012 U.S. Dist. LEXIS 168277, 2012 WL 5915417 (N.D. Cal. Nov. 26,

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2012), and Powertech Technology, Inc. v. Tessera, Inc., No. C 11-6121 CW, 2014 U.S. Dist.

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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE

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LEXIS 5441, 2014 WL 171830 (N.D. Cal. Jan. 15, 2014), compel some other result. Neither of

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those decisions discussed whether a discovery request was permissible under Rule 26(b) based on

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the allegations in a complaint.
Because Judge Lloyd’s decision on Discovery Dispute Joint Report #4 is neither clearly

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erroneous nor contrary to law, the court declines Tessera’s request to overrule it.
B.

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According to Tessera’s motion, the discovery at issue in Discovery Dispute Joint Report

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#7 is directly relevant to arguments made by UTC in a motion for summary judgment regarding

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contract interpretation. There, the parties disputed whether the licensing agreement contained an

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implicit geographical limitation based on the legal effectiveness of patents generally. This issue

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Northern District of California

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has yet to be finally resolved.

Discovery Dispute Joint Report #7

However, the pendency of that issue does not mean that Tessera is entitled to the discovery

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which it seeks here. The court has reviewed Judge Lloyd’s determinations on Tessera’s specific

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requests and cannot find that any those decisions are either clearly erroneous or contrary to law.

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Indeed, Judge Lloyd found the requests were mostly cumulative and unnecessary or overbroad and

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unduly burdensome. This court concurs with Judge Lloyd’s findings. In addition, the court agrees

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with Judge Lloyd’s determination that some of the requests sought information irrelevant to the

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geographic scope issue.
Tessera’s attempt to reframe Judge Lloyd’s ruling as a misapplication of California

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contract law is unpersuasive. Even if the court assumes that all of what Tessera sought through

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Discovery Dispute Joint Report #7 is somehow relevant to what the parties intended on the issue

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geographic scope of royalties – which it notably is not – that does not mean that production of

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such discovery is neither cumulative, overbroad or unduly burdensome. Accordingly, the court

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will not modify the order addressing Discovery Dispute Joint Report #7.

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IV.

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ORDER
Tessera’s motions for relief from the orders addressing Discovery Dispute Joint Reports #4

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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE

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and #7 (Docket Item Nos. 239, 294) are DENIED.

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IT IS SO ORDERED.
Dated: January 15, 2016
______________________________________
EDWARD J. DAVILA
United States District Judge

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United States District Court
Northern District of California

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Case No.: 5:10-cv-04435-EJD
ORDER DENYING PLAINTIFF’S MOTIONS FOR RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDERS OF MAGISTRATE JUDGE