Flowrider Surf, Ltd. et al v. Pacific Surf Designs, Inc.
Filing
96
ORDER Granting in Part and Denying in Part Defendant's 76 Motion to Compel Plaintiffs' Discovery Responses. Signed by Magistrate Judge Barbara Lynn Major on 11/3/2016. (knb)
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
SOUTHERN DISTRICT OF CALIFORNIA
10
11
FLOWRIDER SURF, LTD., et al.,
Case No.: 15cv1879-BEN (BLM)
Plaintiffs,
12
13
v.
14
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION TO COMPEL PLAINTIFFS’
DISCOVERY RESPONSES
PACIFIC SURF DESIGNS, INC.,
15
16
[ECF No. 76].
Defendant.
AND RELATED COUNTERCLAIMS
17
18
19
Currently before the Court is Defendant’s September 9, 2016 “Motion to Compel
20
Discovery” [ECF No. 76-1 (“Mot.”)], Plaintiffs’ September 16, 2016 opposition to the motion [ECF
21
No. 87 (“Oppo.”)], and Defendant’s September 23, 2016 reply [ECF No. 91 (“Reply”)]. Having
22
considered the briefing submitted by the parties and having reviewed all of the supporting
23
1
15cv1879-BEN (BLM)
1
exhibits, the Court GRANTS IN PART and DENIES IN PART Defendant’s motion for the
2
reasons set forth below.
3
FACTUAL AND PROCEDURAL BACKGROUND
4
On August 24, 2015, Plaintiffs FlowRider Surf Ltd. (“FlowRider”) and Surf Waves, Ltd.
5
(“Surf Waves”)1 filed this suit against Defendant Pacific Surf Designs (“PSD”) for patent
6
infringement. ECF No. 1. FlowRider is the exclusive global licensee of U.S. Patent No. 6,491,589
7
(the “‘589 Patent”) entitled “Mobile Water Ride Having Sluice Slide-Over Cover,” issued on
8
December 10, 2002. Id. at 3. The ‘589 Patent is “generally directed to a simulated wave water
9
ride attraction having one or more water covers for ensuring the safety of riders and lowering
10
the risk of injury or interference with ride operation.” Id. Plaintiff Surf Waves owns the U.S.
11
Patent No. 8,088,016 (the “‘016 Patent”), entitled “Half-Pipe Water Ride,” issued on January 3,
12
2012. Id. The ‘016 Patent is “generally directed to a half-pipe water ride including a substantially
13
flat middle section, a first curved sidewall, and a second curved sidewall opposite to the first
14
curved sidewall.” Id.
15
Defendant competes with Plaintiffs in the waterpark rides industry. Plaintiffs accuse
16
Defendant of making and selling infringing waterpark rides. Specifically, Plaintiffs assert that
17
Defendant “makes, has made, imports, uses, offers for sale and/or sells products that infringe
18
one or more claims” of the patents-in-suit, including “ProFlow Single,” “ProFlow Double,”
19
“ProFlow Triple,” “ProFlow Quad,” “ProFlow Mini Single,” “ProFlow Mini Double,” “ProFlow
20
Quarterpipe,” “ProFlow Halfpipe,” “Supertube,” and Defendant’s unnamed refurbishment of
21
surfing rides (the “Accused Products.”). Id. at 4. On October 22, 2015, Defendant counter-
22
23
Flow Rider and Surf Waves are wholly owned subsidiaries of Whitewater West Industries, Ltd.
(“Whitewater”). See ECF No. 88 at 1.
1
2
15cv1879-BEN (BLM)
1
claimed denying infringement of the ‘589 Patent and ‘016 Patent (“the Asserted Patents”), and
2
alleging that both patents are invalid. ECF No. 13 at 8-10.
3
LEGAL STANDARD
4
The scope of discovery under the Federal Rules of Civil Procedure is defined as follows:
5
Parties may obtain discovery regarding any nonprivileged matter that is relevant
to any party’s claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the action, the amount in
controversy, the parties’ relative access to relevant information, the parties’
resources, the importance of the discovery in resolving the issues, and whether
the burden or expense of the proposed discovery outweighs its likely benefit.
Information within this scope of discovery need not be admissible in evidence to
be discoverable.
6
7
8
9
10
Fed. R. Civ. P. 26(b)(1).
11
District courts have broad discretion to determine relevancy for discovery purposes. See
12
Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002). District courts also have broad discretion
13
to limit discovery to prevent its abuse. See Fed. R. Civ. P. 26(b)(2) (instructing that courts must
14
limit discovery where the party seeking the discovery “has had ample opportunity to obtain the
15
information by discovery in the action” or where the proposed discovery is “unreasonably
16
cumulative or duplicative,” “obtain[able] from some other source that is more convenient, less
17
burdensome, or less expensive,” or where it “is outside the scope permitted by Rule 26(b)(1)”).
18
A party may request the production of any document within the scope of Rule 26(b).
19
Fed. R. Civ. P. 34(a). “For each item or category, the response must either state that inspection
20
and related activities will be permitted as requested or state with specificity the grounds for
21
objecting to the request, including the reasons.” Id. at 34(b)(2)(B). The responding party is
22
responsible for all items in “the responding party’s possession, custody, or control.” Id. at
23
34(a)(1). Actual possession, custody or control is not required. Rather, “[a] party may be
3
15cv1879-BEN (BLM)
1
ordered to produce a document in the possession of a non-party entity if that party has a legal
2
right to obtain the document or has control over the entity who is in possession of the
3
document.” Soto v. City of Concord, 162 F.R.D. 603, 619 (N.D. Cal. 1995).
4
An interrogatory may relate to any matter that may be inquired under Rule 26(b). Fed.
5
R. Civ. P. 33(a)(2).
“The grounds for objecting to an interrogatory must be stated with
6
specificity,” and any interrogatory not objected to must be answered fully in writing under oath.
7
Fed. R. Civ. P. 33(b)(4).
8
Pursuant to Federal Rule of Civil Procedure 37, “a party may move for an order compelling
9
disclosure or discovery.” Fed. R. Civ. P. 37(a)(1). The party seeking to compel discovery has
10
the burden of establishing that its request satisfies the relevance requirement of Rule 26. Soto,
11
162 F.R.D. at 610. Thereafter, the party opposing discovery has the burden of showing that the
12
discovery should be prohibited, and the burden of “clarifying, explaining, and supporting its
13
objections.” DIRECTV, Inc. v. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002) (citing Blankenship
14
v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)).
15
DISCUSSION
16
Defendant asks the Court to compel Plaintiffs’ responses and document production, in
17
response to Interrogatory No. 1 and RFP Nos. 1-3. Mot. at 2, 5-7. Defendant also seeks
18
document production in response to its ESI requests without further culling for relevance. Id.
19
at 2, 5, 7-9. The Court will address each category of requests below.
20
I.
Revival Discovery Requests
21
Defendant seeks information and documents concerning the abandonment and expiration
22
of Plaintiffs’ Asserted Patents (“revival discovery”). Id. at 2. Defendant asserts that the revival
23
discovery is relevant to the inequitable conduct and revival counterclaims and defenses that it
4
15cv1879-BEN (BLM)
1
seeks to add [see ECF No. 50],2 and to the laches and equitable estoppel defenses asserted in
2
its Answer and Counterclaims. Mot. at 2, 6-7; see also ECF No. 13 at 1, 7-8. Defendant alleges
3
that Plaintiffs intentionally permitted the Asserted Patents to expire, and that the revival
4
discovery is thus relevant to its laches defense element that “patentee does not intend to enforce
5
its patent against the alleged infringer,” and could establish that Plaintiffs’ delay was
6
“unreasonable and inexcusable,” which is required to establish its equitable estoppel defense.
7
See Mot. at 6-7 (citing A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1028 (Fed.
8
Cir. 1992)). Defendant further argues that whether or not Plaintiffs intentionally allowed the
9
Asserted Patents to expire is relevant to the “misleading conduct” showing of its defense. Id.
10
at 7. Defendant also states that Plaintiffs refused to disclose the revival discovery on the basis
11
of privilege, but have not produced a privilege log, thereby foreclosing Defendant’s ability to
12
challenge Plaintiffs’ assertion of privilege. Id. Finally, Defendant asks the Court, in case it
13
compels the production of the revival discovery, to also compel Plaintiffs to conduct ESI searches
14
for the following terms: “reviv*,” “abandon*,” “expire*,” “maintenance fee,” “late fee,” and
15
“patent fee.” Id. at 2 n.1.
16
Plaintiffs argue in their opposition that Defendant’s discovery requests seek irrelevant and
17
privileged documents and information. Oppo. at 5-6, 17-22. Plaintiffs initially claim that the
18
19
20
21
22
23
2
On June 22, 2016, Defendant filed a “Motion for Leave to File its First Amended Answer and
Counterclaim,” which is currently pending in front of the District Judge. See ECF No. 50.
Specifically, Defendant seeks to “amend its Answer and Counterclaims to add defenses and an
inequitable conduct claim related to the improper revival of both [A]sserted [P]atents in this
case,” and alleges that Plaintiffs “purposefully and knowingly allowed [the Asserted Patents] to
expire by failing to pay the requisite maintenance fees.” Id. at 2. Defendant alleges that
Plaintiffs revived the Asserted Patents, and represented that the entire period of delay in the
payment of maintenance fees was unintentional. Id. at 3. Defendant argues that it “has reason
to believe” that such statements were false and that, therefore, the Asserted Patents are
unenforceable. Id.
5
15cv1879-BEN (BLM)
1
revival discovery is premature and ask the Court to postpone its ruling on Defendant’s motion
2
to compel the revival discovery until the Court’s ruling on Defendant’s pending motion to amend.
3
Id. at 18. Plaintiffs assert that Defendant’s equitable estoppel and laches defenses are based
4
on Plaintiffs’ dismissal of their initial infringement suits against Defendant, and not on their
5
maintenance fee payments. Id. at 5, 18-19. Plaintiffs also contend that even if Defendant’s
6
equitable estoppel and laches defenses could be broadly interpreted to encompass Defendant’s
7
new allegations regarding patent revival, those defenses do not permit Defendant to investigate
8
Plaintiffs’ and their counsel’s internal activities regarding the maintenance fee payments. Id. at
9
5, 19-20. In support, Plaintiffs argue that the Federal Circuit indicated that courts cannot inquire
10
into the procedural minutiae of the PTO, including its acceptance of late maintenance fee
11
payments. Id. at 5-6, 19-20 (citing Aristocrat Techs. Australia PTY Ltd. v. Int’l Game Tech., 543
12
F.3d 657, 663 (Fed. Cir. 2008) and Network Signatures, Inc. v. State Farm Mut. Auto. Ins. Co.,
13
731 F.3d 1239, 1243-44 (Fed. Cir. 2013)). Plaintiffs further assert that equitable estoppel is
14
assessed by looking at the prejudice to Defendant based on what Defendant knew at the time
15
of the alleged infringing act, and claim that Plaintiffs’ intent and internal activities are therefore
16
irrelevant.
17
Defendant’s laches claim, Plaintiffs state that there was an eight-month delay from the time the
18
tolling agreement expired to the time that they reinitiated suit against Defendant, and that
19
consequently, the only relevant inquiry is whether an eight-month delay in reinitiating suit was
20
reasonable or excusable.
21
improperly seeks information protected by the attorney-client privilege and work-product
22
doctrine. Id. at 6, 21. Plaintiffs explain that the discovery requests at issue seek not only the
23
underlying facts regarding the patent revival, but also documents and information from Plaintiffs’
Id. at 20-21 (citing A.C. Aukerman Co., 960 F.2d at 1028). With respect to
Id. at 20-21.
Finally, Plaintiffs assert that the revival discovery
6
15cv1879-BEN (BLM)
1
counsel regarding the investigation into the cause for the delayed maintenance fee payments,
2
as well internal communications regarding the patent revival. Id. at 21. Plaintiffs thus ask the
3
Court to deny Defendant’s motion to compel the revival discovery. Id. at 22.
4
Defendant replies that it is entitled to broad discovery under equitable estoppel, laches,
5
or any other claim or defense. Reply at 2. Defendant acknowledges that it did not initially use
6
revival as a basis for its equitable estoppel and laches defenses, but claims that based on the
7
discovery conducted to date it now believes that the facts surrounding the revival of the Asserted
8
Patents are relevant to those defenses. Id. at 3. Defendant alleges that the ‘016 Patent expired
9
after it filed its Answer and Counterclaims, that Plaintiffs produced the ‘589 Patent revival
10
application two weeks after the amended pleading deadline, and that, consequently, it could not
11
have used the revival as a basis for its laches and equitable estoppel defenses. Id. at 3-5.
12
Defendant reiterates its arguments that the revival discovery is relevant to its defenses. Id. at
13
5. Finally, Defendant argues that facts and circumstances relevant to how the Asserted Patents
14
were abandoned, which person(s) made the realization, why maintenance fees were not paid,
15
and when the decision to revive the patents were made, are not privileged, and that Plaintiffs’
16
attorney’s investigations into those facts and signing of a petition stating that the delay was
17
unintentional do not render the underlying facts privileged. Id. at 6.
18
a. Applicable Law
19
Patent applicants have a duty to prosecute patents in the PTO with candor and good
20
faith, including a duty to disclose information known to the applicants to be material to
21
patentability, and patent applicant’s breach of this duty may result in a finding of inequitable
22
conduct. See 37 C.F.R. § 1.56; Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995).
23
“To prove inequitable conduct, the challenger must show by clear and convincing evidence that
7
15cv1879-BEN (BLM)
1
the patent applicant (1) misrepresented or omitted information material to patentability, and
2
(2) did so with specific intent to mislead or deceive the PTO.” Network Signatures, Inc., 731
3
F.3d at 1242 (quoting In re Rosuvastatin Calcium Patent Litig., 703 F.3d 511, 519 (Fed. Cir.
4
2012)). “Materiality and intent must be separately established.” Id. Materiality is established
5
when “the PTO would not have allowed the claim but for the nondisclosure or
6
misrepresentation.” Network Signatures, Inc., 731 F.3d at 1242 (quoting In re Rosuvastatin
7
Calcium Patent Litig., 703 F.3d 511, 519 (Fed. Cir. 2012)). To establish intent, intent to deceive
8
the PTO must be “the single most reasonable inference able to be drawn from the evidence.”
9
Id.
10
Laches and equitable estoppel are cognizable under 35 U.S.C. § 282 as equitable defenses
11
to a claim for patent infringement. A.C. Aukerman Co., 960 F.2d at 1028 (citing 35 U.S.C.
12
§ 282). The equitable defense of laches requires a showing of the following two elements:
13
“(a) the patentee’s delay in bringing suit was unreasonable and inexcusable, and (b) the alleged
14
infringer suffered material prejudice attributable to the delay.” Id. The period of delay is defined
15
as the time from when the patentee knew or reasonably should have known of the alleged
16
infringing acts until the date of suit. Id.; Lucent Techs. Inc. v. Getaway, Inc., 470 F. 2d 1187,
17
1190 (S.D. Cal. 2007) (“[f]or laches to apply, a defendant must prove that plaintiff unreasonably
18
delayed in filing suit from the time plaintiff knew or should have known of the
19
infringement . . . .”). The resulting prejudice may be evidentiary, affecting the defendant’s
20
ability to put on a full and fair defense, or the prejudice may be economic. Id. (citing A.C.
21
Aukerman Co., 960 F.2d at 1033).
22
The equitable estoppel defense requires the showing of the following elements:
23
8
15cv1879-BEN (BLM)
1
2
a. The patentee, through misleading conduct, leads the alleged infringer to
reasonably infer that the patentee does not intend to enforce its patent against
the alleged infringer. “Conduct” may include specific statements, action, inaction,
or silence where there was an obligation to speak.
3
4
b. The alleged infringer relies on that conduct.
5
c. Due to its reliance, the alleged infringer will be materially prejudiced if the
patentee is allowed to proceed with its claim.
6
A.C. Aukerman Co., 960 F.2d at 1028. Where the alleged infringer establishes all three elements
7
of the equitable estoppel defense, the court must consider “any other evidence and facts
8
respecting the equities of the parties in exercising its discretion and deciding whether to allow
9
the defense of equitable estoppel to bar suit.” Id. at 1043.
10
Acceptance of late payment of maintenance fees is authorized and implemented by
11
statute. See 35 U.S.C. § 41(c)(1); 37 C.F.R. § 1.378(a); Network Signatures, Inc., 731 F.3d at
12
1242. The PTO Director
13
15
may accept the payment of any maintenance fee due on a patent after expiration
of the patent if, upon petition, the delay in payment of the maintenance fee is
shown to the satisfaction of the Director to have been unintentional. If the Director
accepts payment of the maintenance fee upon petition, the patent shall be
considered as not having expired . . . .
16
37 C.F.R. § 1.378(a). The PTO provides a standard form for late payment, and “unintentional”
17
delay is sufficient ground for acceptance of late payment. Network Signatures, Inc., 731 F.3d
18
at 1243.
19
compliance with the internal rules of patent examination becomes irrelevant after the patent has
20
issued.” Aristocrat Techs. Australia PTY Ltd., 543 F.3d at 663. The court reasoned that
21
[o]nce a patent has issued, the procedural minutia of prosecution have little
relevance to the metes and bounds of the patentee’s right to exclude. If any
prosecution irregularity or procedural lapse, however minor, became grist for a
later assertion of invalidity, accused infringers would inundate the courts with
arguments relating to every minor transgression they could comb from the file
14
22
23
“Absent proof of inequitable conduct, the examiner’s or the applicant’s absolute
9
15cv1879-BEN (BLM)
1
wrapper. This deluge would only detract focus from the important legal issues to
be resolved—primarily, infringement and invalidity.
2
3
Id.
4
“The attorney-client privilege exists where: ‘(1) [ ] legal advice of any kind is sought
5
(2) from a professional legal adviser in his capacity as such, (3) the communications relating to
6
that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently
7
protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection be
8
waived.’” United States v. Richey, 632 F.3d 559, 566 (9th Cir. 2011) (quoting United States v.
9
Graf, 610 F.3d 1148, 1156 (9th Cir. 2010)). “Because it impedes full and free discovery of the
10
truth, the attorney-client privilege is strictly construed.” United States v. Martin, 278 F.3d 988,
11
999 (9th Cir. 2002) (quotation omitted). The privilege “protects only those disclosures necessary
12
to obtain informed legal advice which might not have been made absent the privilege,” and
13
applies “only when necessary to effectuate its limited purpose of encouraging complete
14
disclosure by the client.” See Fisher v. United States, 425 U.S. 391, 403 (1976); Griffith v. Davis,
15
161 F.R.D. 687, 694 (C.D. Cal. 1995) (quoting Tornay v. United States, 840 F.2d at 1428). The
16
party asserting the attorney-client privilege bears the burden to establish that the privilege
17
applies to the requested documents. Griffith, 161 F.R.D. at 694 (quoting Tornay, 840 F.2d at
18
1426). “[A]ttachments which do not, by their content, fall within the realm of the [attorney-
19
client] privilege cannot become privileged by merely attaching them to a communication with
20
the attorney.” Our Children’s Earth Found. V. Nat’l Marine Fisheries Serv., 85 F. Supp. 3d 1074,
21
1088 (N.D. Cal. 2015); see also Hanson v. Wells Fargo Home Mortg., Inc., 2013 WL 5674997,
22
at *4 (W.D. Wash. Oct. 17, 2013) (“Documents attached to or included in an attorney[-]client
23
10
15cv1879-BEN (BLM)
1
communication are not automatically privileged, and the party asserting privilege must prove
2
that each attachment is protected by privilege.”)).
3
“[A] party may not discover documents and tangible things that are prepared in
4
anticipation of litigation or for trial by or for another party or its representative (including the
5
other party’s attorney, consultant, surety, indemnitor, insurer, or agent).”
6
26(b)(3)(A).
7
discoverable under Rule 26(b)(1); and (ii) the party shows that it has substantial need for the
8
materials to prepare its case and cannot, without undue hardship, obtain their substantial
9
equivalent by other means.” Id. However, even when substantial need for work product has
10
been shown, the court must still “protect against disclosure of the mental impressions,
11
conclusions, opinions, or legal theories of a party’s attorney or other representative concerning
12
the litigation.” Fed. R. Civ. P. 26(b)(3)(B).
13
Fed. R. Civ. P.
Nevertheless, those materials may be discovered if “(i) they are otherwise
b. Analysis
14
Defendant’s Interrogatory No. 1 requests the following:
15
State all facts relating to Your payment and/or failure to pay maintenance fees for
the Asserted Patents including, without limitation, the dates on which all
maintenance fee payments were made and the Person(s) involved in making such
payments, the cause(s) of the entire delay in paying any maintenance fee, date(s)
on which the failure to timely pay any maintenance fee was discovered and the
Person(s) who discovered or had knowledge of such failure, the nature of any
investigation into the cause of any delay in the payment of a maintenance fee and
the Person(s) who conducted such investigation, the basis for any conclusion that
the entire delay in paying a maintenance fee was unintentional or unavoidable,
and all efforts to revive the Asserted Patents and the Person(s) involved in such
efforts.
16
17
18
19
20
21
22
23
Shah Decl., Exh. A at 5. Defendant’s RFP Nos. 1-3 seek the following:
REQUEST FOR PRODUCTION OF DOCUMENTS NO. 1:
All Documents relating to Your Petition To Revive the ‘589 Patent Under 37
CFR 1.378 dated February 20, 2015 or Your Renewed Petition To Revive the ‘589
11
15cv1879-BEN (BLM)
1
2
3
4
5
6
7
Patent Under 37 CFR 1.378 dated August 11, 2015 and their preparation and
submission, including any investigation into the cause of the entire delay in
payment of maintenance fees for the ‘589 Patent.
REQUEST FOR PRODUCTION OF DOCUMENTS NO. 2:
All Documents relating to Your payment or failure to pay any maintenance
fee for any of the Asserted Patents, including documents relating to any delay in
payment, regardless of whether such delay was intentional or unintentional.
REQUEST FOR PRODUCTION OF DOCUMENTS NO. 3:
All Documents relating to any inquiry made by You to ascertain whether the
delay in paying any maintenance fee(s) was unintentional or intentional.
8
Id. at 12. Plaintiffs objected, inter alia, that the discovery requests at issue sought information
9
protected by the attorney-client privilege and/or the work product doctrine, that Defendant had
10
not alleged inequitable conduct with respect to the Patents-in-Suit, and that circumstances
11
regarding the expiration of and/or Plaintiffs’ revival of the ‘589 Patent were not relevant to any
12
claim or defense in this case. Id., Exh. B at 6-7, 10-12.
13
Plaintiffs sued Defendant for infringement of the Asserted Patents on May 1, 2014 [see
14
FlowRider Surf., Ltd. v. Alleshouse, et al., 14cv1110-GPC (BLM); Surf Waves Ltd. v. Pacific Surf
15
Design, Inc., et al., 14cv1108-BEN (JMA)], and dismissed the suits without prejudice on June 30,
16
2014, pursuant to the parties’ tolling agreement pending their settlement discussions. See id.
17
The parties were unable to reach a settlement, the tolling agreement expired on December 31,
18
2014, and Plaintiffs initiated the instant action reasserting their claims against Defendant for
19
infringement of the Asserted Patents on August 24, 2015. See Oppo. at 7; ECF No. 1.
20
Both Asserted Patents expired for failure to pay maintenance fees. Specifically, the ‘589
21
Patent expired on January 2, 2015, Plaintiffs’ counsel petitioned the PTO to pay its
22
unintentionally delayed maintenance fee payment on February 20, 2015, and the PTO granted
23
the petition on August 24, 2015. See Declaration of Shaun Hoting (“Hoting Decl.”) at 2-3; id.,
12
15cv1879-BEN (BLM)
1
Exhs. 2-3. The ‘016 Patent expired after this suit was filed, on January 29, 2016, Plaintiffs’
2
counsel filed a petition to pay its unintentionally delayed maintenance fee payment on
3
February 10, 2016, and the PTO granted the petition on the same day. Hoting Decl. at 2-3; id.,
4
Exh. 4.
5
Defendant has alleged in its answer and counterclaim defenses of laches and equitable
6
estoppel. See ECF No. 13 at 1, 7-8. In support of its equitable estoppel defense, Defendant
7
alleges that “[t]hrough their affirmative statements, conduct and/or silence in the course of
8
dismissing [the initially filed] complaints, Plaintiffs misled [Defendant] to reasonably infer that
9
Plaintiffs did not intend to enforce the [Asserted Patents] or allege that any of [Defendant’s]
10
actions to date have infringed those patents.” Id. at 7-8. In support of its laches defense,
11
Defendant alleges that Plaintiffs knew or reasonably should have known of its alleged acts of
12
infringement of the Asserted Patents since at least May 1, 2014, when they initially sued
13
Defendant, and that Plaintiffs’ delay in re-filing suit was unreasonable and prejudicial because
14
Plaintiffs gave no indication that they intended to re-file suit and Defendant continued to market
15
and sell the allegedly infringing products in the interim. Id. at 7.
16
The Court initially notes that Plaintiffs ask the Court to defer its ruling on the instant
17
motion to compel until the District Judge’s ruling on Defendant’s pending motion to amend. See
18
Oppo. at 18. The Court DENIES Plaintiffs’ request and will address Defendant’s motion to
19
compel at this time. Both parties agree that the revival discovery is relevant to Defendant’s
20
inequitable conduct defenses and counterclaims asserted in the pending “Motion for Leave to
21
File [Defendant’s] First Amended Answer and Counterclaims.” See id.; Reply at 2-3; see also
22
ECF No. 50. As such, if the District Judge grants Defendant’s motion to amend, Plaintiffs will
23
need to produce the requested revival discovery.
13
15cv1879-BEN (BLM)
1
The remaining issue is whether the requested revival discovery is relevant to Defendant’s
2
current laches and equitable estoppel defenses. See ECF No. 13. The Court finds that it is as
3
to the ‘589 Patent, but not as to the ‘016 Patent. With regard to both defenses, Defendant must
4
establish that Plaintiffs’ conduct was either “unreasonable and inexcusable” or misleading in a
5
way that led Defendant to infer that Plaintiffs did not intend to enforce its patents against
6
Defendant. The ‘589 Patent expired on January 2, 2015, three days after the tolling agreement
7
ended, and Plaintiffs did not petition the PTO until February 20, 2015. The requested discovery
8
seeks to determine whether Plaintiffs intentionally allowed the patent to expire. If Plaintiffs
9
intentionally failed to renew the patent, Defendant could use that evidence to argue that the
10
delay in filing this action was unreasonable and/or inexcusable. Evidence of an intentional failure
11
to renew the patent also could be relevant to whether Plaintiffs misled Defendant regarding their
12
intent to enforce the patent. As such, the revival discovery as to the ‘589 Patent is relevant to
13
Defendant’s current defenses and claims. On the other hand, the ‘016 Patent did not expire
14
until after Plaintiffs filed the instant case and therefore evidence relating to its expiration and
15
renewal is not relevant to Defendant’s current defenses and claims.
16
Plaintiffs rely on Network Signatures, Inc., 731 F.3d at 1243, and Aristocrat Techs.
17
Australia PTW Ltd., 543 F.3d at 663, to argue that the requested discovery is irrelevant and
18
impermissible since the decision to accept late maintenance fee payments is given to the PTO
19
Director and once the Director accepts the late payment and revives the patent, any rule
20
violations are irrelevant. Oppo. at 19-20. The Court disagrees with Plaintiffs’ interpretation of
21
the cases and finds that while they are instructive on the type and amount of evidence required
22
to establish inequitable conduct, they do not prohibit discovery on the issues of patent
23
expiration, late payment of maintenance fees, and revival. In fact, the Aristocrat Techs. Australia
14
15cv1879-BEN (BLM)
1
PTW Ltd. court specifically tempered its strong statement that “compliance with the internal
2
rules of patent examination becomes irrelevant after the patent has issued” by stating that the
3
statement was true only “absent proof of inequitable conduct.” Aristocrat Techs. Australia PTW
4
Ltd., 543 F.3d at 663 (“[w]e wish to stress, however, . . . that where the procedural irregularity
5
involves an ‘affirmative misrepresentation of a material fact, failure to disclose material
6
information or submission of false material, coupled with an intent to deceive,’ it may rise to the
7
level of inequitable conduct”).
8
irregularities” and “prosecution laches” and opined that prosecution laches remains a viable
9
defense. Id. at 663 n.4. As such, Defendant must have the opportunity to conduct discovery
10
to determine whether there is such inequitable conduct and/or whether Plaintiffs intentionally
11
failed to renew the ‘589 Patent. The Court therefore GRANTS Defendant’s motion to compel
12
responses to Interrogatory No. 1 and RFP Nos. 1-3 as to the ‘589 Patent and DENIES
13
Defendant’s motion as to the ‘016 Patent. Plaintiffs asserted the attorney-client privilege and
14
the work-product doctrine with respect to the revival discovery requests, but did not provide a
15
privilege log. If Plaintiffs continue to withhold responsive documents on the basis of privilege,
16
they must produce a privilege log to Defendant specifying which documents/communications
17
they are withholding and the basis on which they are being withheld.
The court also noted the difference between “prosecution
18
Defendant also asks the Court to compel Plaintiffs to conduct ESI searches for the terms:
19
“reviv*,” “abandon*,” “expire*,” “maintenance fee,” “late fee,” and “patent fee.” Mot. at 2 n.1.
20
Plaintiffs do not specifically address this aspect of Defendant’s motion.
21
DENIES Defendant’s request as the requested search terms are overbroad, especially given the
22
scope of this order. Rather, the Court requires Plaintiffs to produce responsive documents,
23
including electronic documents, as directed in this order.
Oppo.
The Court
15
15cv1879-BEN (BLM)
1
II.
2
Defendant seeks to compel the production of all documents that “hit” on the parties’
3
agreed-upon ESI search terms without further relevance review by Plaintiffs. Mot. at 2, 5, 7-9.
4
In support, Defendant argues that each search term is narrowly-tailored to specific issues in this
5
case and thus any resulting “hits” are presumptively relevant and responsive.
6
Defendant asserts that Plaintiffs’ culling based on relevance is not contemplated by the ESI
7
Order, and that Plaintiffs waived any arguments that the search terms are overly broad because
8
they agreed to those search terms. Id. at 7-8. Defendant thus expresses a “concern” that
9
Plaintiffs’ culling for relevance would not produce the full scope of materials anticipated by Fed.
10
ESI Discovery Requests
Id. at 2.
R. Civ. P. 26 and the ESI protocol. See id. at 2-3, 8.
11
Plaintiffs argue in their opposition that Defendant’s interpretation of the parties’ ESI Order
12
is contrary to law and the purposes of the ESI Order. Oppo. at 22-29. Plaintiffs allege that
13
Defendant’s requests conflict with the plain language of Fed. R. Civ. P. 26(b)(1), and that the
14
parties’ ESI Order does not require the production of irrelevant documents or documents that
15
“hit” on a particular search term regardless of relevance. See id. Plaintiffs further contend that
16
Defendant’s interpretation of the ESI Order as permitting discovery into irrelevant documents
17
renders the Order in violation of the FRCP 83 and conflicts with the Federal Circuit advisory
18
Council’s purpose in creating the ESI Order. Id. at 6-7, 24. Plaintiffs also maintain that they
19
have not waived objections to Defendant’s search terms and assert that they have produced all
20
documents in their possession responsive to Defendant’s requests. Id. at 7, 26-28. Finally,
21
Plaintiffs allege that the volume of their document production is appropriate, and ask the Court
22
to deny Defendant’s motion to compel. Id. at 28-29.
23
16
15cv1879-BEN (BLM)
1
Defendant replies that each agreed-upon search term in their ESI Order is narrowly-
2
tailored to the issues in this case, and that any resulting hits therefore are presumptively
3
relevant. Reply at 7-9. Defendant claims that because Plaintiffs’ production included only 1,537
4
pages of documents, such “limited” production is not possible “unless either Plaintiffs have been
5
taking an overly restrictive definition of ‘relevant’ or . . . have not maintained any documents
6
over the last thirty years.” Id. at 6 n.3. Defendant thus asks the Court to grant its motion to
7
compel. Id. at 9.
8
Rule 26 permits “discovery regarding any nonprivileged matter that is relevant to any
9
party’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1)
10
(emphasis added). The parties agreed to produce “all electronically stored documents and
11
information” in accordance with the Southern District’s Order Governing Discovery of
12
Electronically Stored Information. See ECF No. 19 at 4. The ESI Order states that it is intended
13
to streamline ESI production to “promote a ‘just, speedy, and inexpensive determination’” of the
14
action. ESI Order ¶1. The ESI Order further provides that “[e]mail production requests will only
15
be propounded for specific issues, rather than general discovery of a product or business.” Id.
16
¶ 8.
17
Plaintiffs’ search for the term “Proslide” resulted in approximately 6,400 hits, and the
18
search for the term “Lochtefeld” yielded approximately 38,000 hits. See Oppo. at 16, 24; Hoting
19
Decl. at 8; id., Exh. 23. Plaintiffs claim that that the above “hits” yield a substantial number of
20
irrelevant documents and provide a supporting declaration from Mr. Myrman, a Chief Operating
21
Officer of Plaintiff FlowRider. See ECF No. 87-8, Declaration of Marshall Myrman (“Myrman
22
Decl.”). Mr. Myrman asserts that Mr. Lochtefeld is the named inventor of the ‘589 Patent and a
23
prolific inventor of other water-ride attraction technologies, which are unrelated to the issues in
17
15cv1879-BEN (BLM)
1
this case. Id. at 2. Mr. Myrman further declares that the history between Plaintiffs’ parent
2
company, Whitewater, and Mr. Lochtefeld “extends more than a decade and goes well beyond
3
issues relating to the ‘589 Patent or any of the issues in this case.” Id. For example, Mr.
4
Lochtefeld served on FlowRider’s Board of Directors from February 2014 through
5
November 2015, and performed “operational and ministerial activities at FlowRider having
6
nothing to do with the Asserted Patents.” Id. Mr. Myrman also asserts that Proslide Technology
7
Inc. and Whitewater compete “across the globe for all types of projects, including bidding,
8
designing, manufacturing, and installing countless different water attractions involving
9
technologies not at issue in this litigation,” and they have engaged in “numerous instances of
10
contentious confrontation,” which included multiple cease and desist letters and reexamination
11
proceedings. Id. at 2-3.
12
Mr. Myrman’s declaration demonstrates that despite the parties’ efforts to tailor the
13
search terms to the issues in this case, the resulting “hits” contain many irrelevant and
14
unresponsive documents, and the Court therefore agrees with Plaintiffs that culling for relevance
15
is warranted. See id.; Fed. R. Civ. P. 26(b)(1). The Court finds that Plaintiffs have not waved
16
their relevance and over breadth objections. Plaintiffs’ agreement to run a search using the
17
parties’ agreed-upon terms does not constitute Plaintiffs’ acquiescence to produce all resulting
18
documents. Further, in light of the fact that Plaintiffs purchased the rights to the Asserted
19
Patents and certain assets after the Asserted Patents had been issued and associated products
20
had been designed [see Oppo. at 28], the Court also finds Defendant’s objection based on the
21
allegedly insufficient number of produced documents unavailing. See Mot. at 2-3; Reply at 6
22
n.3. The Court thus DENIES Defendant’s motion to compel Plaintiffs to produce all documents
23
18
15cv1879-BEN (BLM)
1
that “hit” on the parties’ ESI search terms. Plaintiffs may review the documents that “hit” on
2
the parties’ agreed-upon search terms for relevance before producing them to Defendant.
3
4
SUMMARY AND CONCLUSION
For the foregoing reasons, the Court:
5
(1) GRANTS IN PART and DENIES IN PART Defendant’s motion compel
6
Plaintiffs’ responses and document production, in response to Interrogatory No. 1 and RFP
7
Nos. 1-3. Plaintiffs are ORDERED to respond to Interrogatory No. 1 and produce responsive
8
documents to RFP Nos. 1-3 as to the ‘589 Patent by November 18, 2016;
9
10
11
12
(2) DENIES Defendant’s motion to compel Plaintiffs to produce all documents that “hit”
on the parties’ ESI search terms without further culling for relevance.
IT IS SO ORDERED.
Dated: 11/3/2016
13
14
15
16
17
18
19
20
21
22
23
19
15cv1879-BEN (BLM)
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?