Nikon Corporation v. GlobalFoundries U.S., Inc.

Filing 47

ORDER DENYING 27 RESPONDENT GLOBALFOUNDRIES' MOTION FOR RELIEF FROM MAGISTRATE JUDGE'S ORDER. Signed by Judge Beth Labson Freeman on 10/16/2017.(blflc1S, COURT STAFF) (Filed on 10/16/2017)

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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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IN RE: APPLICATION PURSUANT TO 28
U.S.C. § 1782 BY NIKON CORP.,
Petitioner,

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v.
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GLOBALFOUNDRIES U.S., INC.,

Case No. 17-mc-80071-BLF
ORDER DENYING RESPONDENT
GLOBALFOUNDRIES’ MOTION FOR
RELIEF FROM MAGISTRATE
JUDGE’S ORDER
[Re: ECF 27]

Respondent.

United States District Court
Northern District of California

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Respondent GlobalFoundries U.S., Inc. seeks relief from Magistrate Judge Susan van

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Keulen’s order granting Petitioner Nikon Corporation’s application for leave to take discovery for

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use in foreign proceedings under 28 U.S.C. § 1782. On September 22, 2017, the Court stayed

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Judge van Keulen’s order and submitted GlobalFoundries’ motion for relief without oral

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argument. See Order Granting Respondent’s Motion for Stay, ECF 46. The motion is DENIED

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for the reasons discussed below.

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I.

BACKGROUND
Nikon makes microlithography systems, which are used in semiconductor fabrication.

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Nikon has instituted patent infringement proceedings against a competitor, ASML Holding N.V.

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(“ASML”), in the Netherlands and in Japan. Nikon’s Applic. at 1, ECF 1. Nikon also has

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instituted patent infringement proceedings in Germany against ASML’s optical component

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supplier, Carl Zeiss SMT GmbH (“Zeiss”). Id. On June 6, 2017, Nikon filed an application in this

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district pursuant to 28 U.S.C. § 1782, seeking leave to obtain discovery from third-party

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GlobalFoundries for use in its foreign proceedings against ASML and Zeiss. Id. GlobalFoundries

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is a semiconductor chip maker and one of ASML’s largest customers. Id. at 2. Nikon seeks leave

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to serve a subpoena on GlobalFoundries requiring production of five categories of documents:

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(1) “All manuals, instructions, guides, and reference materials regarding the use, operation,

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maintenance, testing, calibration, installation, and troubleshooting of each ASML Product”;

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(2) “All presentation materials, brochures, and training (including DVDs and computer-based

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training) materials regarding any and all of the ASML Products”; (3) “All records of maintenance

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for the ASML Products, and all lists, specifications and instructions regarding repair, replacement

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or upgrade of parts or components for the ASML Products”; (4) “Photographs, diagrams,

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drawings, schematics, depictions, and accompanying explanatory text” regarding specified

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features of the ASML Products; and (5) “Videos, DVDs and depictions of the movements of the

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wafer stages in the ASML Products.” Subpoena, ECF 1-2.
Judge van Keulen, to whom Nikon’s application initially was assigned, held a hearing on

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August 15, 2017 and granted the application on the record at the close of argument. Minute Entry,

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United States District Court
Northern District of California

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ECF 20. Two days later, on August 17, 2017, she followed up with a written order granting

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Nikon’s application and directing GlobalFoundries to provide the documents in question within

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forty-five days, or by October 2, 2017. Judge van Keulen’s Order, ECF 26. GlobalFoundries filed

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the present motion for relief from Judge van Keulen’s order on August 28, 2017, and the case was

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reassigned to the undersigned on August 30, 2017. Nikon filed opposition on September 11, 2017

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and GlobalFoundries filed a reply on September 18, 2017.

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II.

LEGAL STANDARD
The parties disagree as to the legal standard applicable to GlobalFoundries’ motion for

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review of Judge van Keulen’s order. GlobalFoundries has framed its motion as a motion for de

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novo review of a “dispositive” ruling of a magistrate judge. Nikon challenges GlobalFoundries’

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characterization of Judge van Keulen’s order, asserting that a magistrate judge’s order permitting

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discovery under 28 U.S.C. 1782 is a “non-dispositive” ruling subject to review for clear error.

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Under 28 U.S.C. § 636(b)(1)(A), a judge may refer a non-dispositive matter to a magistrate
judge as follows:
[A] judge may designate a magistrate judge to hear and determine any pretrial
matter pending before the court, except a motion for injunctive relief, for judgment
on the pleadings, for summary judgment, to dismiss or quash an indictment or
information made by the defendant, to suppress evidence in a criminal case, to
dismiss or to permit maintenance of a class action, to dismiss for failure to state a
claim upon which relief can be granted, and to involuntarily dismiss an action.
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28 U.S.C. § 636(b)(1)(A). When a magistrate judge rules on a non-dispositive matter governed

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by § 636(b)(1)(A), the district court “must consider timely objections and modify or set aside any

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part of the order that is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a).

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Under 28 U.S.C. § 636(b)(1)(B), a judge may refer a dispositive matter to a magistrate

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judge for a recommended disposition. 28 U.S.C. § 636(b)(1)(B). The magistrate judge “must

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promptly conduct the required proceedings when assigned,” make a record of all evidentiary

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proceedings, and “enter a recommended disposition, including, if appropriate, proposed findings

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of fact.” Fed. R. Civ. P. 72(b)(1). “The district judge must determine de novo any part of the

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magistrate judge’s disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3). “The
district judge may accept, reject, or modify the recommended disposition; receive further

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United States District Court
Northern District of California

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evidence; or return the matter to the magistrate judge with instructions.” Id.

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Neither the Supreme Court nor the Ninth Circuit has squarely addressed which standard a

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district court is to apply to a magistrate judge’s order on an application for discovery under 28

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U.S.C. 1782. In Four Pillars Entertainment Co., Ltd. v. Avery Dennison Corp., 308 F.3d 1075

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(9th Cir. 2002), the Ninth Circuit reviewed an order granting in part and denying in part a request

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for discovery under § 1782. The order was issued by the magistrate judge assigned to the case and

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reconsideration was denied by the district judge. Id. at 1078. The Ninth Circuit applied an abuse

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of discretion standard in reviewing the order, holding that “[t]he magistrate judge did not abuse his

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discretion in denying much of the relief sought . . . pursuant to 28 U.S.C. § 1782” and that the

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district judge “did not abuse his discretion in denying reconsideration of that order.” Id. at 1078,

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1081. Although the Ninth Circuit did not discuss expressly the scope of the magistrate judge’s

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authority, some courts within the Ninth Circuit have relied on Four Pillars in concluding that a §

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1782 application is a non-dispositive matter subject to review for clear error under 28 U.S.C. §

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636(b)(1)(A) and Federal Rule of Civil Procedure 72(a). See, e.g., In re Application of Rainsy,

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No. 16-mc-80258-DMR, 2017 WL 528476, at *1 n.1 (N.D. Cal. Feb. 9, 2017). The majority of

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other courts to address the issue, both in and out of the Ninth Circuit, have reached the same

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conclusion on other grounds. See, e.g.,In re Application of AIS GmbH Aachen Innovative Sols. &

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Abiomed Europe GmbH, No. 5:16-MC-80094-EJD, 2017 WL 3115228, at *3 (N.D. Cal. July 21,
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2017); Matter of A Petition for Judicial Assistance Pursuant to 28 U.S.C. § 1782 by Macquarie

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Bank Ltd., No. 2:14-CV-00797-GMN-NJK, 2015 WL 7258483, at *3 (D. Nev. Nov. 17, 2015);

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Interbrew Cent. European Holding BV v. Molson Coors Brewing Co., No. 13-CV-02096-MSK-

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KLM, 2013 WL 5567504, at *1 (D. Colo. Oct. 9, 2013).
GlobalFoundries has not cited, and this Court has not discovered, a single case within the

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Ninth Circuit holding that a magistrate judge’s order on a § 1782 application is a dispositive ruling

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subject to de novo review. GlobalFoundries’ citation In re Premises Located at 840 140th Ave.

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NE, Bellevue, Wash., 634 F.3d 557 (9th Cir. 2011), does not advance its position. While the Ninth

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Circuit held in that case that an order granting discovery under § 1782 is a final order for purposes
of appellate jurisdiction, it did not address the appropriate characterization of such an order as

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United States District Court
Northern District of California

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dispositive or non-dispositive for purposes of 28 U.S.C. § 636 or Federal Rule of Civil Procedure

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72. Id. at 567-68. With respect to the cases which do support GlobalFoundries’ position, this

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Court finds them to be unpersuasive. See, e.g., In Re Green Dev. Corp. S.A. De C.V., No. CCB-

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15-2985, 2016 WL 640791 (D. Md. Feb. 18, 2016) (applying de novo review to magistrate judge’s

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report and recommendation re § 1782 application without discussion of scope of magistrate

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judge’s authority).
Accordingly, this Court will modify or set aside Judge van Keulen’s order only to the

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extent that it “is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). Under that

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standard, Judge van Keulen’s factual determinations are reviewed for clear error and will be

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overturned only if the Court “reaches a definite and firm conviction that a mistake has been

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committed.” Perry v. Schwarzenegger, 268 F.R.D. 344, 348 (N.D. Cal. 2010). “The magistrate’s

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legal conclusions are reviewed de novo to determine whether they are contrary to law.” Id.

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III.

DISCUSSION
There is no dispute regarding the substantive law governing Nikon’s application. “A

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district court is authorized to grant a section 1782 application where (1) the person from whom the

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discovery is sought resides or is found in the district of the district court to which the application is

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made, (2) the discovery is for use in a proceeding before a ‘foreign or international tribunal,’ and

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(3) the application is made by the foreign or international tribunal or ‘any interested person.’” In
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re Application of Rainsy, 2017 WL 528476, at *2 (quoting 28 U.S.C. 1782). However, “a district

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court is not required to grant a § 1782(a) discovery application simply because it has the authority

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to do so.” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004). If the three

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statutory factors identified above are satisfied, the district court must exercise its discretion in

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deciding whether to grant the § 1782 application. Id. The Supreme Court has identified several

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factors, referred to as the “Intel factors,” to aid courts in exercising their discretion: (1) whether

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the person from whom discovery is sought is a participant in the foreign case; (2) whether the

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foreign court is receptive to judicial assistance from the United States; (3) whether the discovery

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request is an attempt to avoid foreign evidence-gathering restrictions; and (4) whether the

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discovery request is unduly intrusive or burdensome. Intel, 542 U.S. at 264-66.

United States District Court
Northern District of California

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While GlobalFoundries asserts that Judge van Keulen ignored the Intel factors, it is clear

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from the hearing transcript and from Judge van Keulen’s written order that she determined both

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that the statutory factors were satisfied and the Intel factors favored Nikon’s application. See Hrg.

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Tr. 18:24, ECF 24 (Judge van Keulen asking counsel for argument under the Intel factors); 25:12-

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13 (same); 36:18-40:18 (discussing statutory factors and Intel factors); Judge van Keulen’s Order

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at 1, ECF 26 (“The Court finds that the statutory requirements of 28 U.S.C. § 1782 have been

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satisfied, and that the discretionary Intel factors favor, for reasons stated during the hearing,

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granting the requested discovery in this case.”). Because Judge van Keulen applied the correct

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legal standards, her ruling is not contrary to law. To the extent that GlobalFoundries believes that

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Judge van Keulen erred in her findings with respect to each factor, and in her balancing of the

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factors, it must show that Judge van Keulen’s ruling is clearly erroneous in order to obtain relief.

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First Intel Factor

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The first Intel factor is whether the person from whom discovery is sought is a participant

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in the foreign case. “[W]hen the person from whom discovery is sought is a participant in the

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foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is

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when evidence is sought from a nonparticipant in the matter arising abroad.” Intel, 542 U.S. at

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264. “A foreign tribunal has jurisdiction over those appearing before it, and can itself order them

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to produce evidence.” Id. Judge van Keulen did not specifically address this factor on the record
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or in her order. However, a judge presented with a § 1782 application is “not required to address

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explicitly every factor or argument.” Akebia Therapeutics, 793 F.3d at 1112.

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The Court notes that GlobalFoundries identifies the first Intel factor as “whether the

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material sought is within the foreign tribunal’s jurisdictional reach and thus accessible absent

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Section 1782 aid.” GlobalFoundries’ Mot. at 7, ECF 27. GlobalFoundries copied that

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phraseology from Judge van Keulen’s Order to Show Cause, which had quoted a summary of the

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Intel factors provided in an unpublished decision from the Southern District of New York. See

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Order to Show Cause at 2, ECF 6. The actual language used by the Supreme Court in Intel asks

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whether “the person from whom discovery is sought is a participant in the foreign proceeding,”
noting that “nonparticipants in the foreign proceeding may be outside the foreign tribunal’s

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United States District Court
Northern District of California

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jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable

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absent § 1782(a) aid.” Intel, 542 U.S. at 264. However, to the extent that Judge van Keulen and

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the parties framed the first Intel factor as asking whether the material sought is equally available in

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the foreign jurisdiction, Judge van Keulen concluded that it “sounds likely that they exist as well

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in the foreign jurisdiction.” Hrg. Tr. 37:3-5. As discussed below, she nonetheless held that

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despite that factual determination, on balance the factors favored granting Nikon’s application.

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Second Intel Factor

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The second Intel factor is whether the foreign court is receptive to judicial assistance from

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the United States. Judge van Keulen made an express finding that the foreign tribunals in the

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Netherlands, Germany, and Japan “are receptive to U.S. judicial assistance, in this case the receipt

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and production of documents.” Hrg. Tr. 37:6-10, ECF 24. GlobalFoundries does not dispute this.

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Third Intel Factor

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The third Intel factor is whether the discovery request is an attempt to avoid foreign

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evidence-gathering restrictions. Judge van Keulen made a factual finding after a lengthy hearing

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that “the seeking of documents from a customer in patent litigation as presented on the facts here”

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does not constitute “circumvention of any foreign proceeding.” Hrg. Tr. 37:14-18.

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GlobalFoundries devotes several pages of argument to this factor, which in the end boil down to

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its contention that Judge van Keulen’s determination is simply wrong and that in fact Nikon is
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attempting to use § 1782 to circumvent foreign restrictions. Having reviewed the parties’

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arguments and evidence on this point, including Nikon’s citation to authorities holding that

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seeking more discovery than would be allowed in the foreign jurisdiction does not constitute

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circumvention, see In re: Application of Joint Stock Co. Raiffeinsenbank, No. 16-MC-80203-MEJ,

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2016 WL 6474224, at *6 (N.D. Cal. Nov. 2, 2016), this Court cannot conclude that Judge van

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Keulen’s factual finding is clearly erroneous.
Fourth Intel Factor

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The fourth Intel factor is whether the discovery request is unduly intrusive or burdensome.

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Judge van Keulen found that although some of the discovery requests “may be broad,” in her view

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that did not warrant denying Nikon’s application. Hrg. Tr. 37:19-22. Judge van Keulen attempted

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United States District Court
Northern District of California

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to mitigate the burden to GlobalFoundries by directing the parties to meet and confer regarding the

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scope of production and an appropriate protective order. Hrg. Tr. 37:22-25. She also ordered that

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“Nikon will reimburse GlobalFoundries’s reasonable out-of-pocket expenses in locating, copying

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and delivering to counsel for Nikon the documents produced under this Order.” Judge van

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Keulen’s Order at 2 ECF 26.

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At the hearing, Judge van Keulen noted that many of the documents requested by Nikon in

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the present § 1782 application also were requested in a parallel § 1782 application filed by Nikon

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against ASML US, Inc. (“ASML US”) in the United States District Court for the District of

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Arizona. Judge van Keulen observed that GlobalFoundries and ASML US are represented by the

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same counsel and stated that she expected counsel to “work out the necessary logistics to avoid

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duplication of production” in the event that the Arizona application were granted. Hrg. Tr. 38:1-7.

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The Arizona court subsequently granted in part and denied in part the application before it,

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ordering production of “document that are possessed, controlled or stored by ASML US in the

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United States.” Arizona Order, Reply Exh. 1, ECF 41-1. It light of that ruling, it may be that the

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burden of production imposed on GlobalFoundries, already reduced in part by Judge van Keulen’s

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order that Nikon bear the reasonable cost of that production, is reduced even further to the extent

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that the same documents are covered by both courts’ orders.

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Conclusion

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Judge van Keulen applied the correct substantive law to Nikon’s § 1782 application. She

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made factual findings with respect to several of the factors and clearly stated her conclusion that

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on balance the factors favor granting the application. Thus even though reasonable minds could

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differ as to the appropriate balancing of the Intel factors in this case, this Court will disturb Judge

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van Keulen’s decision only if it is “left with a firm and definitive conviction that a mistake has

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been made.” Matter of A Petition for Judicial Assistance Pursuant to 28 U.S.C. § 1782 by

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Macquarie Bank Ltd., 2015 WL 7258483, at *4. The Court is not persuaded that a mistake has

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been made, as Judge van Keulen “has not gone beyond the bounds of what a reasonable person

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could determine in weighing the evidence the parties presented.” Id.
The bulk of the forty-five days that Judge van Keulen allotted for production had elapsed

United States District Court
Northern District of California

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prior to this Court’s stay of Judge van Keulen’s order pending disposition of GlobalFoundries’

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motion. In recognition of the volume of documents in question, and the need to coordinate the

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production efforts of GlobalFoundries and ASML US to avoid duplication, the Court extends the

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deadline for compliance with Judge van Keulen’s order to November 15, 2017, thirty days from

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the date of this order.

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IV.

ORDER

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For the reasons discussed above,

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(1)

GlobalFoundries’ motion for relief from Judge van Keulen’s order is DENIED; and

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(2)

GlobalFoundries’ deadline for compliance with Judge van Keulen’s order is

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EXTENDED to November 15, 2017.

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Dated: October 16, 2017
______________________________________
BETH LABSON FREEMAN
United States District Judge

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