Tessera, Inc. v. Sony Corporation

Filing 83

ORDER by Magistrate Judge Howard R. Lloyd on 77 Discovery Dispute Joint Report #4. (hrllc1, COURT STAFF) (Filed on 10/10/2012)

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*E-filed: October 10, 2012*

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

NOT FOR CITATION

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United States District Court

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SAN JOSE DIVISION

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TESSERA, INC.,
Plaintiff,

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No. C11-04399 EJD (HRL)
ORDER ON DDJR #4

v.
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[Dkt. 77]
SONY CORP.,

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Defendant.
____________________________________/
In 1997 Tessera and Sony entered a licensing agreement. In it Sony agreed to pay Tessera a

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royalty each time Sony sold, transferred, or used a “ball grid array” or “land grid array”

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semiconductor package which had a particular orientation or grouping of its structural components

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(the “technology”) and that had been “made by or for Sony.” All went well for years, but then a

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supposedly independent audit commissioned by Tessera for the years 2006 thru June 2010

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concluded that Sony had been underpaying. This lawsuit resulted.

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Presently before this court is Discovery Dispute Joint Report #4 (DDJR#4). In its Second

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Set of Requests for Production and Second Set of Interrogatories Tessera sought documents and

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information to enable it to calculate its claimed measure of damages. The parties have met and

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conferred and to a certain extent narrowed the scope of the discovery and agreed on a framework for

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responding, but they are stuck on two issues.

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First, Sony says discovery should be limited to technology either made by Sony or made by
someone else specifically to Sony’s specifications. Not so, says Tessera, who argues that third-

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party-supplied off-the-shelf components that contain the technology are also subject to the license.

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While this court thinks Tessera is pushing for a rather extreme interpretation of the language of the

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licensing agreement, it is not prepared to rule as a matter of law that the agreement must be

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interpreted as Sony urges. The question of which of Sony’s products are royalty-bearing under the

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Tessera license is for the moment an open one, and Tessera is entitled to reasonable damages

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discovery based on its interpretation.

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Second, Tessera wants damages information going all the way back to when the agreement

2010). The complaint seems to focus on that period of time. Anything earlier would be barred by

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For the Northern District of California

was entered in 1997. Nonsense, says Sony. The lawsuit was triggered by the final audit (2006-

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United States District Court

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the statute of limitations or because all earlier periods were audited and the audits were accepted.

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Well, says Tessera, the license agreement waives the statute of limitations and we never knew we

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were being shortchanged all those years until now, so now is not too late.

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As with the first issue, the second one raises legitimate points going to the merits of the case,

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points that will be decided some time in the future. For now, and remembering that this is discovery

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for potential damages that may never be admissible, this court concludes that plaintiff is entitled to

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reasonable damages discovery for the full life of the license agreement.

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In addition to arguing the sought-after discovery is irrelevant as a matter of law (which this

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court rejects), Sony also claims that the burden of production would be too great. Neither of Sony’s

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two submissions to the court articulated this burden, other than to say that Sony would be required

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to analyze “10,000 or more third-party chips.” At the hearing on DDJR#4 the court pressed

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defendant’s counsel to explain the burden. Exactly what would be involved in producing the

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information/documents plaintiff seeks to flesh out figures to put to its damage claims? How would

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Sony go about it? What procedures, how much time, what cost? Counsel could not so much as

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sketch an outline for compliance with the task. Accordingly, the court rejects defendant’s claim of

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undue burden.

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Because Tessera’s discovery requests do cut a wide swath, this court believes the best
solution would be for the two sides to agree on a fair selection of representative Sony products that

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contain the technology, including third-party-supplied off-the-shelf technology, and produce

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responsive documents/information for them for the lifetime of the agreement.

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If the parties cannot agree, then to the extent it has not already done so, Sony shall produce

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responsive documents/information for all Sony products that contain the technology, including

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third-party-supplied off-the-shelf technology, for the lifetime of the agreement.

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Sony shall make its production no later than November 8, 2012.

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IT IS SO ORDERED.

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Dated: October 10, 2012

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For the Northern District of California

United States District Court

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HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE

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C11-04399 EJD (HRL) Notice will be electronically mailed to:

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Melissa McCormick
Benjamin Hattenbach
Brian Ledahl
Morgan Chu
Nathan Lowenstein
Richard Krebs
Eileen Ridley
Aaron Moore
Matthew Lowrie
Ruben Rodrigues

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[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

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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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For the Northern District of California

United States District Court

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