Rembrandt Diagnostics, LP v. Alere, Inc. et al
Filing
136
ORDER on 127 , 130 Joint Motion for Determination of Discovery Dispute No. 1. Court denies Plaintiff Rembrandt Diagnostic, LP's motion to compel further responses and documents from Defendant consistent with the terms set forth in this Order. Signed by Magistrate Judge Nita L. Stormes on 10/3/2017. (jah) (Main Document 136 replaced on 10/3/2017 re redacted version ) (jjg).
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
SOUTHERN DISTRICT OF CALIFORNIA
10
11
REMBRANDT DIAGNOSTICS, LP,
Case No.: 3:16-cv-0698 CAB (NLS)
Plaintiff,
12
13
v.
14
ORDER ON JOINT MOTION FOR
DISCOVERY DISPUTE NO. 1
DENYING REMBRANDT’S
MOTION TO COMPEL
INNOVACON, INC.,
Defendant.
15
(ECF Nos. 127, 130)
16
17
18
Before the Court is the parties’ Joint Motion for Determination of Discovery
19
Dispute No. 1. ECF Nos. 127, 130. A redacted version the Joint Motion was filed
20
contemporaneously with the Joint Motion to File Documents under Seal. ECF Nos. 125,
21
127. The Court granted the Motion to File Documents under Seal on September 12,
22
2017. ECF No. 129. For the reasons outlined herein, plaintiff Rembrandt Diagnostics,
23
LP’s (“Rembrandt”) motion to compel further responses and documents from defendant
24
Innovacon, Inc. (“Innovacon”) is DENIED.
25
I.
BACKGROUND
26
In this case, Rembrandt accuses Innovacon of breaching a Patent License
27
Agreement. See ECF No. 94, Exhibit 6 to the Second Amended Complaint (“SAC”).
28
Under the licensing agreement, Rembrandt’s predecessor granted Innovacon’s
1
3:16-cv-0698 CAB (NLS)
1
predecessor a license to several U.S. and foreign patents relating to test cups used to
2
quickly screen urine for illegal drugs. Under the agreement, Innovacon’s predecessor
3
agreed to pay Rembrandt’s predecessor royalties for each test cup sold that would
4
otherwise infringe the patents. Innovacon has paid no royalties. It contends that no
5
royalties are owed because the licensed patents are invalid and because the test cups it
6
and its Affiliates sold during the relevant time period do not infringe the patent.
7
Rembrandt issued various interrogatories, requests for production, and requests for
8
email production seeking discovery related to their claims and theories of the case. See
9
generally, ECF No. 127-1, 130-1 (Joint Statements, redacted and sealed). Relevant to the
10
Joint Motion before the Court, Innovacon responded to the discovery requests by, inter
11
alia, limiting its responses to the accused products, representative products, a limited
12
timeframe, by reference to documents, or with objections that the requests were
13
disproportionate to the needs of the case. Id. The parties met and conferred regarding
14
their positions relative to the discovery and responses, but were unable to informally
15
resolve them and filed a Joint Motion for Determination of Discovery Dispute No. 1.
16
ECF Nos. 127, 130. The Joint Motion consisted of 196 pages and presented nine separate
17
issues affecting numerous interrogatories and requests for production.
18
In response to the voluminous discovery dispute, this Court directed lead trial
19
counsel to further meet and confer, in person, to narrow or limit the discovery disputes
20
before the Court, and set oral argument for September 27, 2017. ECF No. 128. In
21
advance of the oral argument, the parties filed a Joint Status Report advising the Court
22
that as a result of the continued meet and confer efforts, the parties had resolved Issues 3
23
and 7, and had narrowed the interrogatories and production requests that were in dispute
24
for certain other issues.1 ECF No. 131. The Court thanks the parties for their efforts and
25
26
27
28
1
Specifically, the parties resolved: Issue 2, RFP No. 24; Issue 3 entirely, encompassing Interrogatories
1, 9 and RFP Nos. 21 and 49; Issue 4, RFP No. 9; Issue 7 entirely, encompassing RFP Nos. 41, 56 and
57; and Issue 9, RFP 7. ECF No. 131.
2
3:16-cv-0698 CAB (NLS)
1
for the submission of the Joint Status Report, and will not address those issues,
2
interrogatories, and requests for production on which the parties reached agreement,
3
except to set deadlines for compliance with their agreement.
4
5
II.
LEGAL STANDARD
Rule 26 permits discovery of “any nonprivileged matter that is relevant to any
6
party’s claim or defense and proportional to the needs of the case, considering the
7
importance of the issues at stake in the action, the amount in controversy, the parties’
8
relative access to relevant information, the parties’ resources, the importance of the
9
discovery in resolving the issues, and whether the burden or expense of the proposed
10
discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). Information need not
11
be admissible to be discoverable. Id. Once the propounding party establishes that the
12
request seeks relevant information, “[t]he party who resists discovery has the burden to
13
show discovery should not be allowed, and has the burden of clarifying, explaining, and
14
supporting its objections.” Superior Commc’ns v. Earhugger, Inc., 257 F.R.D. 215, 217
15
(C.D. Cal. 2009); see Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)
16
(requiring defendants “to carry heavy burden of showing why discovery was denied”).
17
“The 2015 amendments to Rule 26(b)(1) emphasize the need to impose ‘reasonable
18
limits on discovery through increased reliance on the common-sense concept of
19
proportionality.’” Roberts v. Clark County Sch. Dist., 312 F.R.D. 594, 603 (D. Nev.
20
2016). The fundamental principle of amended Rule 26(b)(1) is “that lawyers must size
21
and shape their discovery requests to the requisites of a case.” Id. Discovery and Rule
22
26 is intended to provide parties with “efficient access to what is needed to prove a claim
23
or defense, but eliminate unnecessary or wasteful discovery.” Id. This requires active
24
involvement of federal judges to make decisions regarding the scope of discovery. Id.
25
26
27
III.
DISCUSSION
Following the meet and confer efforts of the parties, the issues that remain before
the Court are each addressed individually.
28
3
3:16-cv-0698 CAB (NLS)
1
2
3
4
5
6
7
a. Issue 1: Limiting Responses and Production to Test Cups Identified in
the Pleadings and Infringement Contentions and those Substantially
Similar in Design (Interrogatories 1, 6, 9, 14, 18, 19 and Requests for
Production 1-4, 11, 15-18, 21-28, 32-40, 42-43, 45, 47-49, 51-55, 57, 58,
68, 85)
The parties reached agreement on how to proceed on this issue, which the Court
includes here only to set deadlines as discussed at oral argument:
Innovacon is to produce two samples of each of the test cup designs agreed upon
8
by counsel in their Joint Status Report (ECF No. 131) by Monday, October 2, 2017.
9
Rembrandt is to inform Innovacon by Friday, October 6, 2017 if Rembrandt believes any
10
of the produced test cups infringe the patent and are therefore subject to the licensing
11
agreement. For any cup that Rembrandt believes to be infringing, Rembrandt must seek
12
leave to amend its infringement contentions and produce revised infringement contention
13
charts by Friday, October 20, 2017. In the event Plaintiff proceeds to amend its
14
infringement contentions as to any of the test cups produced pursuant to the agreement of
15
the parties, Defendant shall have an opportunity to amend its invalidity contentions.
16
17
18
19
20
21
22
23
Accordingly, the Court DENIES Rembrandt’s motion to compel further responses
to the interrogatories and requests for production identified in this issue.
b. Issue 2: Limiting Certain Responses and Production to
“Representative” Test Cups (Interrogatory 1, Requests for Production
1-3, 27)
In response to Interrogatory No. 1, and Requests for Production 1-3, and 27,
Innovacon’s responses were based on “representative” products. Rembrandt objects to
the reliance on representative products and seeks to compel exact compliance with its
requests as to each test cup sold by Innovacon and its affiliates. Rembrandt argues that
24
its requests call for “non-duplicative information regarding the instructions for use, the
25
design, the development, and the regulatory approval of Innovacon’s and its affiliates’
26
test cups.” ECF No. 127 at 7.
27
28
4
3:16-cv-0698 CAB (NLS)
1
At oral argument, Innovacon brought demonstrative examples of the test cups it
2
designated as “representative” including the iCup Dx Pro, iCup A.D., Amedicheck,
3
DrugSmart and UScreen, which can also be categorized as “the round cup, the square
4
cup, and the backpack cup.” Innovacon explained that due to the nature of the products,
5
the requests at issue were duplicative and burdensome. For example, Interrogatory 1
6
seeks to identify of all products based in part on SKU number.2 Innovacon submits a
7
single product could have dozens of SKUs, and Innovacon had identified 115 separate
8
SKUs for three designs. Requests for Production numbers 1-3 seek, for each item
9
identified in response to Interrogatory 1, production of (1) ten sample cups, (2) test cup
10
inserts for each, and (3) instructions for use. As a result, the practical effect of
11
Rembrandt’s request could result in the production at least 1,150 test cups along with
12
inserts and instructions for use that are identical in all respects relevant to the patent
13
litigation, i.e., the structure of the cup. Innovacon explained that any differences in the
14
products, inserts, or instructions would be irrelevant to the litigation, such as the brand
15
associated with the test cup (e.g. CVS brand vs. Wal-mart brand), and possibly the
16
number of strips, orientation of strips or the type of drug for which the cup was testing.
17
Innovacon concludes that the extensive production sought is duplicative, burdensome,
18
and disproportionate to the needs of the case. What is relevant according to Innovacon
19
and what it has agreed to produce is design file histories and regulatory submissions for
20
all accused products. ECF No. 127-1 at 8:10-11.
21
Rembrandt explained that it can not know with certainty that the products, inserts,
22
and instructions are the same without reviewing them, and is concerned that Innovacon
23
gets to unilaterally select representative samples. Rembrandt also argued that while some
24
of the cups, inserts and instructions may be the same, what was said to regulatory
25
agencies may have differed. Rembrandt understands that Innovacon’s parent, Alere, Inc.
26
27
28
2
SKU stands for “Stock Keeping Unit” and is identified with individual bar codes.
5
3:16-cv-0698 CAB (NLS)
1
(“Alere”), purchased companies and brought products in-house as result of those
2
acquisitions and mergers. Rembrandt contends information that may have been provided
3
to governmental and regulatory agencies may have included comparisons to other
4
products, and Rembrandt argues, makes the licenses and regulatory certifications relevant
5
to infringement. Innovacon challenges this assessment, and submits that the “regulatory
6
licenses, approvals, or certifications” sought via Request for Production 27 do not reflect
7
what Innovacon said about the products, but is rather the government’s assessment.
8
9
The Court agrees with Innovacon. The production of duplicative and irrelevant
product samples, inserts, and instructions is disproportionate to the needs of the case and
10
unduly burdensome. Further, Rembrandt has not articulated the relevance of the
11
regulatory licenses, approvals and certifications to its infringement analysis sufficient to
12
justify production for each individual test cup and overcome the burdensome nature of
13
the request. Rembrandt’s motion to compel a further response to Interrogatory 1, and
14
further production in response to Request for Production numbers 1-3 and 27 is
15
DENIED.
16
c. Issue 4: Reliance on Rule 33(d) without Identifying Products (Requests
for Production 12 and 14)
17
18
In response to Interrogatory numbers 12 and 14, Innovacon relied on Federal Rule
19
of Civil Procedure 33(d), which permits a party to refer to its document production in lieu
20
of a response. Rembrandt objected to the responses as insufficient because no documents
21
or Bates ranges were identified in response to Interrogatory 12, and in response to
22
Interrogatory 14, the Bates ranges identified included only product labels and inserts.
23
The parties appear to have reached some agreement on this issue, at least in the
24
course of oral argument. Innovacon represented to the Court that at the time of its
25
response, review and production was not complete, but that Innovacon had agreed to
26
fully supplement its responses to identify Bates ranges as it produces additional
27
documents.
28
///
6
3:16-cv-0698 CAB (NLS)
1
2
3
4
5
Accordingly, the Court DENIES WITHOUT PREJUDICE Rembrandt’s motion
to compel further responses to Interrogatories 12 and 14.
d. Issue 5: Discovery Requests Directed to Verifying Sales Data (Requests
for Production 28-31, 39, 42-43)
Rembrandt issued several requests for production (28-31, 39, and 42-43) that
6
sought broad categories of “contracts regarding the manufacture and sale of test cups”
7
including volume, market share, and revenue. ECF No. 127 at 12; see also ECF No. 130-
8
1 at 92-101, 125-129, 134-141. Innovacon objected to these requests as overbroad and
9
burdensome, as well as irrelevant and disproportionate to the claims at issue.
10
In the Joint Motion and at oral argument, Innovacon argued that the requested
11
contracts between Innovacon and its affiliates will not verify the sales data it provided.
12
Innovacon already produced sales data from its financial data base on a product-by-
13
product basis for the calculation of damages per the agreement. It contends that a
14
deposition of an appropriate witness as to how that data was collected is a more efficient
15
and focused discovery vehicle.
16
Rembrandt countered that the financial information was provided without any
17
information to back up Innovacon’s figures, and without “back up” information,
18
Rembrandt has no basis to challenge or cross examine a deponent. Rembrandt argues
19
that contracts such as merger agreements between companies include a purchase price
20
based on revenue and so “baked in” to the purchase price is an indication of units sold.
21
Rembrandt also asserts that agreements may be relevant to alter ego allegations.
22
In response, Innovacon pointed out that most contracts within the scope of
23
Rembrandt’s requests are outside the relevant time period, and thus still unable to verify
24
any sales within the relevant time period. Additionally, Innovacon argues it provided
25
information for all its affiliates, rendering alter ego discovery moot.
26
The Court is not persuaded by Rembrandt’s argument that the contracts it seeks in
27
the categories identified will verify the sales data provided. The broad nature of the
28
requests, coupled with the number of contracts potentially implicated (i.e., 19,025), leave
7
3:16-cv-0698 CAB (NLS)
1
Rembrandt’s Requests for Production overbroad, unduly burdensome, and
2
disproportionate to the needs of the case. Additionally, the Court finds no alter ego
3
allegations in the operative complaint. Rembrandt’s motion to compel further production
4
in response to Request for Production numbers 28-31, 39, and 42-43 is DENIED.
5
e. Issue 6: Requests re: Indicia of Nonobviousness (Interrogatory 6,
Requests for Production 10 and 35)
6
7
Rembrandt asserts that Interrogatory 6 and Requests for Production numbers 10
8
and 35 seek evidence relevant to indicia of nonobviousness, and thus to Rembrandt’s
9
defenses to invalidity contentions. Interrogatory 6 seeks information regarding
10
Innovacon and its affiliates’ first awareness of the patents, Request 10 seeks all
11
documents and things related to “knowledge of the Asserted Patents prior to filing this
12
action,” and Request 35 seeks all documents relating to “any comparison of Your test
13
cups to any other product.” ECF No. 127-1 at 6-10, 52-54, 112-115.
14
Innovacon does not dispute that evidence relating to nonobviousness will be
15
admissible, but responds that the requests are again disproportionate to the needs of the
16
case. Innovacon argues that dates of first awareness (Interrogatory 6 and RFP 10) are
17
disproportionate because there is no dispute regarding knowledge of the patent given the
18
2004 Patent License Agreement. Similarly, Innovacon contends that Request 35 which
19
seeks “[a]ll documents referring to or relating to any comparison of Your test cup to any
20
other products,” is disproportionate as there are no allegations of third party infringement
21
and no indication that comparison to third party products will provide evidence of
22
secondary considerations.
23
At oral argument, Rembrandt articulated that comparison information would
24
provide an “objective measure of how Innovacon characterizes its own products,” and
25
comparisons to successful products equate to industry praise. As to awareness,
26
Rembrandt argues because affiliates other than Innovacon may have designed certain
27
products, the dates those companies gained awareness of the patent may be relevant.
28
8
3:16-cv-0698 CAB (NLS)
1
Innovacon countered that the dates of awareness remain irrelevant due to the
2
operation of the 2004 Patent License Agreement. Innovacon contends the product
3
design and structure can be found within the design files, which Innovacon already
4
agreed to produce.
5
The Court finds that the Interrogatory 6 and RFP 10 regarding first awareness are
6
not proportional to the needs of the case. This case is primarily a breach of contract
7
action governed by the 2004 Patent License Agreement. Extensive interrogatories and
8
document production related to first awareness of products that are admittedly covered by
9
the scope of the License Agreement are unnecessary and disproportionate.
10
As to Request No. 35, the Court agrees the request is overbroad and
11
disproportionate by including “any other products.” Rembrandt does not limit, qualify,
12
or specify what it is seeking and did not provide adequate explanation of how such
13
information might be relevant to secondary considerations sufficient to overcome the
14
burdensome nature of the request.
15
16
17
18
19
Rembrandt’s motion to compel further response to Interrogatory 6 and further
production in response to Requests for Production 10 and 35 is DENIED.
f. Issue 8: Requests re Information Provided to Abbott Laboratories
(Requests for Production 59-62)
Innovacon is a subsidiary of Alere. Abbott Labs recently announced its intention
20
to acquire Alere. Requests for Production Nos. 59-62 seek documents provided to or
21
exchanged with Abbott Labs regarding the test cup business. ECF No. 127-1 at 173-180.
22
Rembrandt contends this information was likely part of the due diligence leading to the
23
Alere acquisition and such materials “bear on damages and the accuracy and
24
completeness of the sales figures Innovacon provided Rembrandt. Innovacon objected to
25
the requests as disproportionate, overbroad, and irrelevant to any claims and defenses
26
asserted in the case. Id.
27
28
At oral argument, Innovacon explained that information given to Abbott Labs was
not provided on a product level, or even at the level that would be limited to test cups.
9
3:16-cv-0698 CAB (NLS)
1
Test cups are one component of “rapids,” a subset of “reagents,” which is in turn a subset
2
of the toxicology business. In short, these documents would not yield evidence relevant
3
to damages. Rembrandt argues that from the larger picture of “toxicology” or “reagents”
4
or “rapids” it might be able to “glean” information regarding the subsets of products to
5
piece together a larger picture, which would be relevant to its damages analysis.
6
The Court is satisfied that Innovacon has produced evidence of actual revenue and
7
unit sales figures for the accused test cups. And, it has agreed to produce market share
8
information. Nothing further is required. Rembrandt’s motion to compel further
9
production in response to Request for Production numbers 59-62 is DENIED.
10
g. Issue 9: Email Production (Requests for Email Nos. 9 and 10)
11
Plaintiff issued requests for production of emails from 2 custodians, Scott Tallie
12
and Anne Becknell, who Defendant identified as knowledgeable regarding the
13
marketing/sales and design/use of the test cups. ECF No. 127 at 19. Defendant
14
responded with objections to these email requests as overbroad and disproportionate, and
15
that the search terms provided were not likely to yield responsive or proportional
16
information.
17
At oral argument, counsel for Innovacon further explained that the design and
18
marketing information for which these individuals were identified as knowledgeable is
19
being produced in other, more appropriate and less costly forms, for example, Innovacon
20
has already agreed to produce the design files, rendering emails on design duplicative. In
21
addition, Innovacon represented to the Court that these two custodians have over one
22
million emails constituting approximately 300 gigabytes of data that would need to be
23
exported, searched, and reviewed at great cost (likely upwards of $30,000). This cost is
24
particularly problematic to the Court in light of Innovacon’s explanation that the search
25
terms provided (Syntron; Tydings; Assurance and Biotech; 6,548,019; 019; and
26
QuikScreen) are not likely to yield marketing or development information for which
27
these custodians were identified as knowledgeable.
28
10
3:16-cv-0698 CAB (NLS)
1
The Court is persuaded by Innovacon’s argument that the emails sought are
2
disproportionate, and any information Rembrandt seeks from these custodians could be
3
obtained in deposition. See In re JDS Uniphase Corp. Securities Litig., C-02-1486 CW
4
(EDL), 2005 WL 6296194, at *2 (N.D. Cal. Sept. 23, 2005) (This is the type of
5
information [the moving party] can better seek through deposition, rather than through a
6
document request. If a deposition reveals a more specific, narrow document or set of
7
documents that are relevant, [the moving party] can request them.”). Rembrandt’s
8
motion to compel further production in response to Request for Emails numbers 9 and 10
9
is DENIED.
10
11
12
13
14
IV.
CONCLUSION
For the foregoing reasons, the Court DENIES Rembrandt’s motion to compel
consistent with the terms as set forth in this Order.
IT IS SO ORDERED.
Dated: October 3, 2017
15
16
17
18
19
20
21
22
23
24
25
26
27
28
11
3:16-cv-0698 CAB (NLS)
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?