Wi-LAN, Inc. et al v. Lenovo Group, LTD. et al

Filing 51

ORDER Granting in Part and Denying in Part 40 Motion for Discovery. Signed by Magistrate Judge Mitchell D. Dembin on 7/27/2017. (knb)

1
2
3
4
5
6
7
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

8
9
10
11

WI-LAN INC., WI-LAN USA, INC.,
and WI-LAN LABS, INC.,

12

Plaintiffs, ORDER GRANTING LIMITED
EXPEDITED DISCOVERY

13

v.

14

LENOVO (UNITED STATES), INC.,
et al.,

15
16

Case No.: 17cv365-BEN-MDD

[ECF NO. 40]

Defendants.

17
18
19

On February 23, 2017, Wi-LAN, Inc., Wi-LAN USA, Inc., and Wi-LAN

20

Labs, Inc., (“Wi-LAN”) filed a complaint alleging patent infringement against

21

Lenovo (United States), Inc., Lenovo Holding Company, Inc., Motorola

22

Mobility, LLC, and Motorola Mobility Holdings, LLC (“Lenovo”). (ECF No.

23

1). Wi-LAN alleges that Lenovo infringes its U.S. Patent Nos. 8,787,924 (“the

24

'924 patent”), 8,867,351 (“the ‘351 patent”), 9,226,320 (“the ‘320 patent”), and

25

9,497,743 (“the ‘743 patent”) by manufacturing, using, selling, offering to sell,

26

and/or importing various wireless communication products without license.

27

(Id. ¶¶ 1, 37, 45, 59, 73, 87).
1
17cv365-BEN-MDD

1

On June 16, 2017, Defendants filed a motion to dismiss for improper

2

venue or transfer to the Northern District of California. (ECF No. 39). On

3

June 29, 2017, Plaintiffs filed the instant ex parte motion for leave to seek

4

expedited discovery. (ECF No. 40). The motion was referred to this Court by

5

the district judge. Defendants responded in opposition on July 13, 2017.

6

(ECF No. 48). Both sides filed supplemental authority. (ECF Nos. 43, 50).

7

As provided herein, Plaintiffs’ Motion for Expedited Discovery is

8
9

GRANTED in part and DENIED in part.
DISCUSSION

10

A. Legal Standard for Motion for Expedited Discovery

11

Federal Rule of Civil Procedure 26(d) states:

12

A party may not seek discovery from any source before the
parties have conferred as required by Rule 26(f), except in a
proceeding exempted from initial disclosure under Rule 26(a)(1)(B),
or when authorized by these rules, by stipulation, or by court order.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

In the instant case, Plaintiffs may obtain early discovery only by court
order. In this Circuit, courts must find “good cause” to determine whether to
permit discovery before the Rule 26(f) conference. Good cause exists where
the need for expedited discovery, in consideration of the administration of
justice, outweighs the prejudice to the responding party. See, e.g., Arista
Records, LLC v. Does 1–43, Case No. 07cv2357-LAB-POR, 2007 WL 4538697,
at *1 (S.D. Cal. Dec. 20, 2007). In considering whether good cause exists,
factors courts may consider include "(1) whether a preliminary injunction is
pending; (2) the breadth of the discovery request; (3) the purpose for
requesting the expedited discovery; (4) the burden on the defendants to
comply with the requests; and (5) how far in advance of the typical discovery
process the request was made." Palermo v. Underground Sols., Inc., Case No.
2
17cv365-BEN-MDD

1

12cv1223-WQH-BLM, 2012 WL 2106228, at *2 (S.D. Cal. June 11, 2012).

2

B. ANALYSIS

3

Plaintiffs assert that expedited discovery is necessary to address

4

whether Defendants have a “regular and established place of business” in the

5

Southern District of California. (ECF No. 40-1 at 5). In support, Plaintiffs

6

claim to have independently discovered multiple Lenovo employees in the

7

Southern District of California, “including at least one witness at the

8

executive level.” (Id. at 7). Defendants, on the other hand, assert that

9

Plaintiffs’ arguments are “flatly contradicted” by those individuals’

10

declarations. (ECF No. 48 at 8). As Plaintiffs note, however, counsel for

11

Defendants conceded that even after filing their motion and declarations,

12

they did not know how many employees Defendants have in the Southern

13

District of California. (ECF No. 40-1 at 7).

14

Plaintiffs have served eight requests for production, five interrogatories,

15

one deposition notice under Rule 30(b)(6), and a deposition notice for Brian

16

Siegel, Lenovo’s Executive Director of Consumer Sales (who submitted a

17

declaration in support of Lenovo’s venue motion). (See ECF Nos. 40-4, 40-5,

18

40-6, 40-7). The scope of Plaintiffs’ requests broadly include residences of

19

Defendants’ personnel; Defendants’ relationships with personnel, customers,

20

and other companies; activities in connection with any of Defendants’

21

products; and Defendants’ property. (See id.). The scope of Plaintiffs’

22

requests are limited in time from July 22, 2014, the earliest issue date of the

23

patents-in-suit, to present. (ECF No. 40-1 at 9. See 40-5 at 6). Plaintiffs’

24

requests are limited in place to the Southern District of California. (See ECF

25

Nos. 40-4, 40-5, 40-6).

26
27

Defendants claim that much of the information Plaintiffs request is
“irrelevant” to establishing venue, citing Logantree LP v. Garmin Int’l, Inc.,
3
17cv365-BEN-MDD

1

Case No. SA-17-CA-0098-FB, 2017 WL 2842870 (W.D. Tex. June 22, 2017)

2

(Biery, F.). (ECF No. 48 at 6). Defendants’ reliance on Logantree is

3

misguided. While the court in Logantree rules that certain contacts in a

4

district do not individually establish venue, it does not address whether such

5

contacts, individually or collectively, are irrelevant to a question of venue.

6

This Court finds that the information Plaintiffs request, subject to the

7

limitations set out below, is relevant to establishing venue.

8
9

The Court finds good cause for strictly limited expedited discovery as
Plaintiffs have demonstrated that the need for some expedited discovery

10

outweighs the prejudice to Defendants in having to respond to limited

11

discovery at this stage of the case. The discovery Plaintiffs seek, however, is

12

overbroad.

13

For instance, Plaintiffs have not demonstrated that the need for an

14

expedited 30(b)(6) deposition outweighs the prejudice to Defendants. Rule

15

30(b)(6) provides that a witness testifying on behalf of a corporation “must

16

testify about information known or reasonably available to the organization.”

17

Under the Federal Rules, Plaintiffs normally would not be permitted to notice

18

a 30(b)(6) deposition until after the early neutral evaluation conference.

19

Moreover, in the ordinary course of discovery, 30(b)(6) depositions generally

20

are not taken at the inception of discovery. To require Defendants to prepare

21

for a 30(b)(6) deposition on such broad topics and on such a tight timeline

22

would be unduly burdensome. Apple Inc. v. Samsung Elecs. Co., Case No.

23

11cv1846-LHK, 2011 WL 1938154 (N.D. Cal. May 18, 2011) (Koh, L.). See

24

also Semitool, Inc., v. Tokyo Electron America, Inc., 208 F.R.D. 273, 276 (N.D.

25

Cal. 2002) (granting expedited discovery in part because request did not

26

involve “a free ranging deposition for which a representative of Defendants

27

may not have had sufficient time or information with which to prepare”).
4
17cv365-BEN-MDD

1

The same can be said of Plaintiffs’ written discovery demands, both

2

interrogatories and requests for production of documents. For instance, the

3

written demands concerning Defendants’ relationships with customers,

4

personnel, “vendors, suppliers, researchers, designers, manufacturers,

5

collaborators,” and “any [other] person[s]” who have a presence in the forum

6

is nothing more than a prohibited fishing expedition. (EFC No. 40-4

7

(Document Requests Nos. 1, 2, 3 and 7; Interrogatories Nos. 1 and 2)). These

8

requests are over-inclusive because they sweep in even those relationships

9

that do not require Defendants to conduct any activity in this District merely

10

because the third party has a presence in this District. A recent opinion from

11

a District Court in South Carolina held, albeit without supporting law or

12

analysis, that the identity of the defendant’s in-district customers, the

13

volume of sales to in-district customers, and the presence of a third party

14

distributing defendant’s products in-district are all irrelevant to the §1400(b)

15

venue analysis. Hand Held Prod., Inc., v. The Code Corp., Case No.

16

2:17cv167-RMG *7, 2017 WL 3085859, at *4 (D. S.C. July 18, 2017) (Gergel,

17

R.) (available on this docket at ECF No. 50-1 at 8-9).

18

Plaintiffs may seek discovery of only those third party relationships

19

that either 1) require Defendants to conduct regular activity in this District,

20

or 2) require a third party to regularly conduct activity directly on behalf of

21

Defendants in this District (e.g., if Defendants have delegated an essential

22

business function to a third party such as direct sales, customer service or

23

product storage and distribution). The Court specifically finds that Plaintiffs

24

may not seek information about the residences of personnel absent some

25

connection of that residence to Defendants’ business activities. (See ECF No.

26

40-4 (Document Request No. 2 and Interrogatory No. 2)). Further, Plaintiffs’

27

requests regarding distribution and storage of Defendants’ products are
5
17cv365-BEN-MDD

1

limited to inventory directly owned and controlled by Defendants; branded

2

products owned by third parties are excluded, as is any inventory owned by

3

Defendants for which they have relinquished control of distribution and

4

storage.

5

Defendants further claim that discovery must be limited in time to the

6

date Plaintiffs filed suit, citing Hoffman v. Blaski, 363 U.S. 335 (1960). (ECF

7

No. 48 at 11). It is unclear where Defendants find support for their claim in

8

Hoffman. Regardless, this Court adopts the view that “under the patent

9

venue statute, venue is properly lodged in the district if the defendant had a

10

regular and established place of business at the time the cause of action

11

accrued and suit is filed within a reasonable time thereafter.” Welch Sci. Co.

12

v. Human Eng’g Inst., Inc., 416 F.2d 32, 35 (7th Cir. 1969), cert. denied, 396

13

U.S. 1003 (1970) (emphasis added); Raytheon Co. v. Cray, Inc., Case No.

14

2:15cv1554-JRG, 2017 WL 2813896, at *3 (E.D. Tex. June 29, 2017) (Gilstrap,

15

R.). Plaintiffs are not entitled to venue discovery before the claims accrued.

16

Plaintiffs are not necessarily entitled to venue discovery through the present.

17

Accordingly, all discovery requests must be limited in time to the date the

18

claims accrued plus a reasonable time thereafter.

19

Finally, Defendants contend that venue discovery should be limited to

20

only the infringing products. This Court adopts the view that the patent

21

venue statute “creates no relationship between the act of infringement and

22

the regular and established place of business.” Raytheon, 2017 WL 2813896,

23

at *7. See also Gaddis v. Calgon Corp., 449 F.2d 1318, 1320 (5th Cir. 1971)

24

(concluding that the particular company division charged with the

25

infringements need not be present in the district to establish that the

26

company had a regular and established place of business in the district).

27

Plaintiffs are not required to limit their discovery to only infringing products.
6
17cv365-BEN-MDD

CONCLUSION

1
2
3
4
5
6
7
8

For the foregoing reasons, Plaintiffs’ Motion for Expedited Discovery is
GRANTED in part and DENIED in part.
Defendants are ORDERED to respond to limited discovery requests by
Plaintiffs. Discovery shall be subject to the following limitations:
(1) Discovery mechanisms: requests for production, interrogatories, and
the deposition of Brian Siegel;
(2) Subjects:
a. personnel working—not merely residing—in the Southern
District of California;

9
10

b. customers, business partners, and third party
relationships that either 1) require Defendants to conduct regular
activity in this District, or 2) require a third party to conduct
activity directly on behalf of Defendants in this District;

11
12
13

c. property located in this District that is directly owned by
Defendants;

14

d. Defendants’ sales offers and product maintenance and
support services in connection with Defendants’ products;

15
16

e. distribution and storage of Defendants’ products are
limited to inventory directly owned and controlled by Defendants;
Defendant-branded products owned by third parties are excluded,
as is any inventory owned by Defendants for which Defendants
have relinquished control of distribution and storage;

17
18
19
20
21

(3) Time: the time the claim or claims accrued plus a reasonable time
thereafter;

22

(4) Place: the Southern District of California.

23

IT IS SO ORDERED.

24

Dated: July 27, 2017

25
26
27
7
17cv365-BEN-MDD