Uniloc USA, Inc. et al v. Apple Inc.

Filing 138

ORDER by Magistrate Judge Virginia K. DeMarchi re 124 Discovery Dispute re Apple's Document Requests Nos. 103-106. (vkdlc2S, COURT STAFF) (Filed on 7/30/2020)

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 1 of 7

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

SAN JOSE DIVISION

7
UNILOC USA, INC., et al.,

8

Plaintiffs,

9

ORDER RE DISCOVERY DISPUTE RE
APPLE'S DOCUMENT REQUESTS
NOS. 103-106

v.

10

APPLE INC,

11

United States District Court
Northern District of California

Case No. 19-cv-01692-EJD (VKD)

Defendant.

12

Re: Dkt. No. 124

13
The parties ask the Court to resolve a dispute concerning plaintiffs Uniloc USA, Inc.,

14
15

Uniloc Luxembourg S.A., and Uniloc 2017 LLC’s (collectively, “Uniloc”) objections to defendant

16

Apple Inc.’s (“Apple”) requests for production of documents. Dkt. No. 124. The Court held a

17

hearing on this matter on July 14, 2020. Dkt. Nos. 129, 134.
Having considered the parties’ submissions and oral argument during the hearing, the

18
19

Court concludes that Uniloc must produce documents responsive to the disputed document

20

requests, as narrowed by the Court.

21

I.

22

BACKGROUND
The asserted patent in this case, U.S. Patent No. 7,587,207 (“the ’207 patent”), originally

23

was owned by Koninklijke Philips Electronics, N.V. (“Philips”). In 2009, Philips sold the ’207

24

patent together with over one thousand other patents to IPG Electronics 503 (“IPG”). The parties

25

refer to this patent portfolio as the “Philips-IPG Patents.” Dkt. No. 124 at 1.

26

In 2012, IPG sold the ’207 patent to Pendrell Technologies LLC (“Pendrell”) as part of a

27

group of hundreds of other patents, including some from the Philips-IPG Patents portfolio and

28

some unrelated to that portfolio. In 2018, Pendrell sold the ’207 patent to Uniloc as part of yet

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 2 of 7

1

another large group of patents. Id.
Apple now seeks discovery of documents reflecting the value of any patent or group of

2
3

patents in the Philips-IPG Patents portfolio by means of the following document requests:

4

Request No. 103: All Documents reflecting any value attributed by Uniloc to
any Philips-IPG Patent other than the ’207 patent.

5

Request No. 104: All Documents which refer or relate to any prospective or
executed license, assignment, sale, or transfer of any rights relating to the
Philips-IPG Patents, including all Communications relating thereto.

6
7
8

Request No. 105: All Documents that refer [or] relate to any value assigned
to any one or more of the Philips-IPG Patents, including, but not limited to,
any valuations, appraisals, allocations, or reporting on any financial statement
or report.

9
10

United States District Court
Northern District of California

11

Request No. 106: All damages contentions, responses to interrogatories
seeking information from Uniloc concerning damages, damages expert
reports, and any transcripts of depositions of damages experts, including all
exhibits hereto, in any Uniloc Litigation On Philips-IPG Patents.

12
13
14

Id., Ex. 1. Uniloc objects to Apple’s efforts to obtain discovery concerning the value of any

15

patents other than the ’207 patent. Id., Ex. 2.

16

II.

LEGAL STANDARD
A party may obtain discovery of any matter that is relevant to a claim or defense and that is

17
18

“proportional to the needs of case, considering the importance of the issues at stake in the action,

19

the amount in controversy, the parties’ relative access to relevant information, the parties’

20

resources, the importance of the discovery in resolving the issues, and whether the burden or

21

expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).

22

III.

DISCUSSION
Relevance of Apple’s Discovery

23

A.

24

Apple argues that its document requests seek information that is relevant to Uniloc’s

25

demand for royalty damages for alleged infringement of the ’207 patent and Apple’s defense to

26

that demand. Dkt. No. 124 at 2-3. Specifically, Apple says that documents reflecting the value of

27

the Philips-IPG Patents portfolio, groups of patents within the portfolio, or individual patents

28

within the portfolio may inform how the ’207 patent was valued in comparison to other patents in
2

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 3 of 7

1

the portfolio. Id. For example, Apple expects discovery will reveal whether the ’207 patent was

2

considered particularly valuable in the Philips-IPG transaction and in subsequent transactions, or

3

whether the ’207 patent and all other patents in the portfolio were treated as equally valuable. Id.

4

at 2.
Uniloc agrees that documents reflecting the value of the ’207 patent are relevant, and it

5
6

represents that it has produced or will produce any such documents. Id. at 4. Uniloc has also

7

agreed to produce valuations and licenses for all patents it acquired from Pendrell that are asserted

8

in any of Uniloc’s other disputes with Apple. Id. However, Uniloc argues that discovery

9

concerning the value of any other patents in the Philips-IPG Patents portfolio is many steps
removed from the question of what damages should be awarded in this case, which will require a

11

United States District Court
Northern District of California

10

determination of reasonable royalty for infringement of only a single patent, the ’207 patent. Id. at

12

4-5.
Apple has already obtained discovery of documents reflecting the transactions in which

13
14

ownership of the ’207 patent transferred from Phillips to IPG, from IPG to Pendrell, and from

15

Pendrell to Uniloc, and the parties do not dispute that this information is discoverable.1 Among

16

other things, the transaction documents reflect the purchase price paid in each transaction and the

17

patents that were included in each transaction. The price paid to acquire all rights to a patent may

18

be considered in assessing a reasonable royalty for a hypothetical license to the patent. See, e.g.,

19

Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860, 871 (Fed.Cir.2003) (concluding that

20

damages award failed to taken into account several factors, including acquisition price for patent

21

owner and all of its assets), vacated and remanded on other grounds, 545 U.S. 193 (2005);

22

Parthenon Unified Memory Architecture LLC v. Apple Inc., No. 2:15-CV-621-JRG-RSP, 2016

23
24
25
26
27
28

1

Uniloc does argue that one transaction—the Uniloc-Pendrell transaction—is not relevant, but the
authority on which it relies does not support that position. See Dkt. No.124 at 5-6 (citing cases).
While the price paid to acquire a patent or patent portfolio does not establish an upper bound for a
reasonable royalty, the price paid nevertheless may be considered by the finder of fact. See, e.g.,
Spectralytics, Inc. v. Cordis Corp., 650 F. Supp. 2d 900, 914-16 (D. Minn. 2009) (“The Federal
Circuit thus said [in Integra Lifesciences], in effect, that an actual sale in 1996 of the patent rights
at issue in the hypothetical negotiation was relevant to calculating a reasonable royalty in that
hypothetical negotiation. But the Federal Circuit has never held that, as a matter of law, a
reasonable-royalty award cannot exceed what someone paid to acquire a patent portfolio that
includes the patent-in-suit.”)
3

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 4 of 7

WL 7670833 at *1 (E.D. Tex. Sept. 21, 2016) (permitting damages expert to provide opinion that

2

relied in part on patent purchase agreements); Robocast, Inc. v. Microsoft Corp., No. CV 10-1055-

3

RGA, 2014 WL 202399 at *3 (D. Del. Jan. 16, 2014) (jury may determine weight to be accorded

4

valuation of patent in patent sale). Here, because of the very large number of patents involved,

5

these transaction documents may be of limited use in the absence of information about the value of

6

the ’207 patent relative to the value of the many other patents within each portfolio. See

7

Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir. 2011) (affirming district court’s

8

conclusion that jury was entitled to consider other circumstances explaining low value assigned to

9

patent during asset sale), abrogated on other grounds, Halo Elecs., Inc. v. Pulse Elecs., Inc., 136

10

S. Ct. 1923 (2016); GPNE Corp. v. Apple, Inc., No. 12-cv-02885-LHK, 2014 WL 1494247 at *7

11

United States District Court
Northern District of California

1

(N.D. Cal. Apr. 16, 2014) (discussing necessity of accounting for relative contributions to a

12

standard of patents essential to that standard in assessing reasonable royalty).

13

Apple acknowledges this authority but says that the limited utility of the transaction

14

documents alone is precisely why it requires more information about the relative value of the

15

patents in the Philips-IPG Patents portfolio. Dkt. No. 124 at 3; Dkt. No. 134 at 5:13-22. The

16

Court agrees that discovery of this type of information generally is relevant to Apple’s defensive

17

damages case. The Court will now consider whether each of the disputed document requests is

18

limited to documents relevant to that issue.

19

Request No. 103 calls for valuations by Uniloc of patents other than the ’207 patent in the

20

Philips-IPG Patents portfolio. For the reasons discussed above, this request seeks relevant

21

information. However, Uniloc advises that it has no responsive documents because it performed

22

no such valuations.

23

Request No. 104 seeks production of executed licenses, assignments, sales or other transfer

24

of rights in any patent or patents in the Philips-IPG Patents portfolio, as well as “prospective”

25

transactions concerning those patents. Actual assignments or licenses for a patent or patents

26

within this portfolio likely constitute relevant evidence of the value of such patents. Although the

27

parties do not address whether offers to sell or license patent rights are also relevant, at least one

28

case cited by Uniloc supports the proposition that “prospective” transactions also may be relevant.
4

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 5 of 7

1

See In re ChanBond, LLC Patent Litigation, No. CV 15-842-RGA, 2020 WL 550786 at *3 (D.

2

Del. Feb. 4, 2020) (unconsummated offer to sell patent-in-suit is relevant “datapoint” and

3

admissible evidence at trial). However, the Court is not persuaded that “all documents” that “refer

4

or relate to” such actual or prospective transactions are necessarily relevant.

5

Request No. 105 seeks documents reflecting the value assigned to any one or more of the

6

Philips-IPG Patents by anyone. Unlike Request No. 103, this request is not limited to valuations

7

by Uniloc, and it encompasses valuations of the entire portfolio or a subset of it. For the reasons

8

discussed above, this request seeks relevant information.

9

Request No. 106 calls for the production of all documents that reflect positions taken in
any Uniloc litigation with respect to damages for any patent within the Philips-IPG Patents

11

United States District Court
Northern District of California

10

portfolio, and all supporting materials. To the extent Uniloc has taken positions on the value of

12

other patents within the Philips-IPG Patents portfolio, those positions are relevant to assessing the

13

value Uniloc attributes to the ’207 patent relative to the value of other patents in that portfolio,

14

regardless of whether those positions are taken in matters against Apple or against other accused

15

infringers. However, the Court is not persuaded that all documents within the scope of Request

16

No. 106 are relevant. For example, the request asks for all of Uniloc’s “responses to

17

interrogatories seeking information . . . concerning damages,” which is broad enough to

18

encompass information that has nothing to do with the value of particular patents or groups of

19

patents within the portfolio, and appears to encompass discovery of positions taken by Uniloc’s

20

litigation adversaries.
Burden of Apple’s Discovery

21

B.

22

Apart from an abbreviated reference to proportionality at the beginning of its portion of the

23

discovery dispute letter, Uniloc does not explain how Apple’s document requests impose a burden

24

on Uniloc that is not proportional to the needs of the case. See Dkt. No. 124 at 4. Moreover, as

25

the Court observed during the hearing, Uniloc’s general objections to Apple’s document requests

26

are not sufficient to satisfy Uniloc’s obligation under Rule 34(b)(2)(B) to “state with specificity

27

the grounds for objecting to the request, including the reasons.” Dkt. No. 134 at 27:12-23.

28

However, the Court understands the crux of Uniloc’s argument to be that searching for, reviewing,
5

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 6 of 7

1

and producing documents responsive to Apple’s requests is unduly burdensome in view of the

2

very large number of patents in the Philips-IPG Patents portfolio.

3

For its part, Apple emphasizes the amount in controversy and the importance of this

4

discovery to Apple’s rebuttal damages case. Apple says that Uniloc has demanded $1.1 billion in

5

damages for Apple’s alleged infringement of the ’207 patent. Dkt. No. 124 at 2. Apple argues

6

that the discovery it seeks from Uniloc is critical to evaluating the reasonableness and accuracy of

7

that demand. Id.
The Court has already determined that Apple’s document requests seek information

8
9

relevant to the damages asserted in this case. Although some of Apple’s document requests are
overbroad and encompass documents that are not strictly relevant to assessing the relative value of

11

United States District Court
Northern District of California

10

the patents in the Philips-IPG Patents portfolio, the burden associated with this overbreadth can be

12

mitigated by limiting the scope of Apple’s document requests. However, in all other respects, the

13

Court finds that Uniloc has not shown that Apple’s document requests seek discovery that is

14

disproportionate to the needs of the case.

15

IV.

16
17

CONCLUSION
Having considered the parties’ arguments concerning the relevance and scope of Apple’s

document requests, the Court orders as follows:

18

Request No. 103: Uniloc shall produce all documents reflecting any value attributed by

19

Uniloc to any Philips-IPG Patent other than the ’207 patent. If no responsive documents exist,

20

Uniloc must supplement or amend its answer to Request No. 103 to so state. If all responsive

21

documents have been produced, Uniloc need not supplement or amend its response.

22

Request No. 104: Uniloc shall produce all documents, including communications, that

23

constitute or reflect the terms of any prospective or executed license, assignment, sale, or transfer

24

of any rights relating to the Philips-IPG Patents. At this time, the Court will not require Uniloc to

25

search for and produce all documents that “refer or relate to” such actual or prospective

26

transactions.

27
28

Request No. 105: Uniloc shall produce all documents reflecting any value assigned to any
one or more of the Philips-IPG Patents, including, but not limited to, any valuations, appraisals,
6

Case 5:19-cv-01692-EJD Document 138 Filed 07/30/20 Page 7 of 7

1

allocations, or reporting on any financial statement or report. At this time, the Court will not

2

require Uniloc to search for and produce all documents that “refer or relate to” such materials.

3

Request No. 106: With respect to any Uniloc Litigation On Philips-IPG Patents, Uniloc
shall produce (a) all damages contentions by Uniloc regarding damages owed for infringement of

5

one or more patents within the Philips-IPG Patents portfolio, (b) all damages expert reports served

6

by Uniloc that concern damages for infringement of one or more patents within the Philips-IPG

7

Patents portfolio, and (c) all transcripts of the deposition(s) of any Uniloc damages expert who

8

expects to offer testimony regarding damages owed for infringement of one or more patents within

9

the Philips-IPG Patents portfolio. At this time, the Court will not require Uniloc to search for and

10

produce all of Uniloc’s damages-related interrogatory responses or the damages expert reports and

11

United States District Court
Northern District of California

4

deposition transcripts of opposing damages experts. In addition, the Court will not require Uniloc

12

to produce all exhibits used in the depositions of its damages experts in other matters, unless the

13

expert’s testimony cannot be understood without the exhibit.

14

The Court understands that Uniloc maintains all documents as electronically stored

15

information. See Dkt. No. 134 at 33:19-21. It may be that the burden of searching for documents

16

responsive to some of these requests can be mitigated further by the use of appropriate keyword

17

search terms to identify potentially responsive documents, and the Court encourages the parties to

18

discuss the possibility of using keyword search terms for this purpose, particularly with respect to

19

Requests Nos. 104 and 105.

20
21
22
23

Uniloc shall produce the documents responsive to Requests Nos. 103-106, as narrowed
above, by August 31, 2020.
IT IS SO ORDERED.
Dated: July 30, 2020

24
25
VIRGINIA K. DEMARCHI
United States Magistrate Judge

26
27
28
7