Fleming v. Escort, Inc. et al

Filing 303

MEMORANDUM DECISION & ORDER the motion for reconsideration filed by Fleming (docket no. 265 ) is GRANTED IN PART AND DENIED IN PART. It is further ORDERED, that the motion for reconsideration filed by Escort (docket no. 260 ) is DENIED. It is furt her ORDERED, that Fleming's fee petition (docket no. 238 ) is GRANTED and that Escort pay to Fleming the sum of $51,461 representing fees and costs. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
HOYT A. FLEMING,
Plaintiff,

Case No. 1:12-CV-066-BLW

v.

MEMORANDUM DECISION AND
ORDER

ESCORT, INC., et al.,
Defendants.

INTRODUCTION
The Court has before it motions to reconsider filed by both parties, and a
petition for attorney fees and costs filed by Fleming. The Court heard oral argument
on the motions to reconsider on July 23, 2015, and directed counsel to submit further
briefing. That supplemental briefing has now been received. For the reasons explained
below, the Court will deny Escort’s motion to reconsider, grant in part Fleming’s
motion to reconsider, and award fees and costs to Fleming in the sum of $51,461.
LITIGATION BACKGROUND
On January 9, 2015, the Court awarded $341,649 in sanctions to Fleming after
finding that Escort and its prior attorneys (who have since withdrawn) falsely claimed
that certain source code – labeled ESC17363 – containing non-infringing features was
the source code used in Escort’s allegedly infringing products. Escort’s false claim
was an attempt to mislead Fleming, requiring him to waste substantial time and effort.

Memorandum Decision & Order – page 1

With the award of $341,649, the Court compensated Fleming for the fees and costs he
incurred.
Thereafter, Fleming discovered that Escort appeared to have committed the
same misconduct with another line of source code labeled ESC18692. Once again,
Escort produced source code that appeared to be non-infringing and falsely
represented that it was used in Escort’s commercial products. In an earlier decision,
the Court held that these new allegations did in fact constitute misconduct. See
Memorandum Decision (Dkt. No. 231). The Court will not repeat the detailed
discussion contained there, but will simply summarize it here. Fleming had alleged
that Escort committed three types of misconduct: (1) Escort attempted to deceive
Fleming and the Court into believing that ESC18692 was the source code that operated
the GX65 product, (2) Escort committed spoliation by failing to maintain source code
that Fleming needs to prove infringement, and (3) Escort needlessly forced Fleming
through a wasteful discovery process. The Court agreed that Fleming was forced
through a wasteful discovery process but rejected the deception and spoliation charges.
More specifically, the Court held that Escort had not attempted to mislead
Fleming about the source code that actually operates the GX65 product, and did not
commit spoliation because the source code at issue – version 2.46 – was embedded in
a CD provided by Escort during discovery, labeled ESC18692. At the same time,
Escort needlessly forced Fleming through a wasteful discovery process, warranting an
award of the attorney fees and costs Fleming incurred in attempting to obtain version

Memorandum Decision & Order – page 2

2.46 from ESC18692. Fleming filed a petition seeking $51,461 in fees and costs.
That petition is pending and has been fully briefed.
The Court’s decision was based on a complicated set of facts and reached a
result not anticipated in the briefing by either side. Consequently, the Court invited
counsel to file motions to reconsider now that a target had been established for their
challenges. They both filed such motions, which are now before the Court for
resolution. The Court will address first Fleming’s motion for reconsideration.
Fleming’s Motion for Reconsideration
Logs & CD
Fleming argues first that the Court erred in finding that Escort produced its
product compatibility logs revealing the actual source code numbers assigned to the
GX65 product before it produced ESC18692, the CD that is the source of Fleming’s
deception argument. The Court’s finding that the logs were produced before the CD
was important to its conclusion that Escort did not attempt to deceive Fleming. But
the Court was incorrect – the logs were produced for the first time about two months
after Escort produced ESC18692.
Deception
Fleming argues next that the Court erred in rejecting his argument that Escort’s
production of the CD labeled ESC18692 was designed to deceive Fleming into
believing that source code version 3.46 operated the GX65. Escort was required to
produce the source code running its allegedly infringing products by Local Patent Rule

Memorandum Decision & Order – page 3

3.4. Source code is written by a programmer in a comprehensible language of words
and symbols, and is then transformed by a “compiler” into hex (or object) code, a
series of machine-readable binary numbers that actually operate the product. See
Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 448 at n. 8 (2007) (explaining
difference between source and hex code). Thus, source code is human-readable, while
hex code is machine-readable. See Orr Declaration (Dkt. No. 149-3) at ¶ 4. Source
code often contains programmer’s notes or comments that “try to make [the source
code] easier to understand.” See JustMed, Inc. v. Byce, 600 F.3d 1118, 1123 at n. 2
(9th Cir. 2010). In contrast, hex code is largely incomprehensible. That is why the
Court’s Local Patent Rule 3.4 requires production of the source code.
Escort knew that the source code for some versions of the GX65 was version
2.46. Yet instead of producing source code version 2.46, Escort produced a CD
labeled ESC18692 that contained, on its face, source code version 3.46. That version
was non-infringing – it did not contain the directional arrow that Fleming alleged
infringed his patent. Escort represented that the CD contained the “versions of source
code for the main and GPS processors from the beginning of this lawsuit that were
placed into production . . . .” See Letter (Dkt. No. 265-5). In other words, Escort
represented that version 3.46 was used in its commercially-sold products. That
representation was false; it is undisputed that version 3.46 has never been used in any
Escort commercial product.

Memorandum Decision & Order – page 4

The CD contained 20 lines of source code. If a certain line was modified, the
CD could produce source code version 2.46. But when Escort produced the CD, it
failed to tell Fleming that (1) version 2.46 operated the GX65, not version 3.46; (2)
that version 2.46 was on the CD but could only be accessed by modifying a line of the
source code on the CD; and (3) that version 3.46 had never been used in any Escort
commercial product.
Escort originally produced ESC18692 on October 7, 2013. It would be more
than two months before Fleming would reveal that version 2.46, rather than version
3.46, operated the GX65. On December 30, 2013, Escort produced product
compatibility logs. These logs identified the source code numbers for each model of
Escort’s allegedly infringing products. The log for two models of the GX65 (GX65
No Ku Versions A and B) revealed for the first time that source code version 2.46 was
used for those models. See Log (Dkt. No. 265-8). The logs also revealed for the first
time that source code version 3.46 was never used for any Escort commercial product,
including the GX65.
But the logs did not tell Fleming where, in Escort’s numerous prior submissions
of source code, he could locate the version 2.46 source code that operated the GX65.
Escort did not provide that information until May of 2014, when it represented that the
source code Fleming requested for the GX65 could be found in ESC18692. See
Escort’s Discovery Response (Dkt. No. 265-9) at p. 4.

Memorandum Decision & Order – page 5

So seven months after production, Escort finally revealed that version 2.46 was
used by the GX65 and that the source code could be found in ESC18692. But Escort
had still said nothing to Fleming about how ESC18692 must be modified to access
version 2.46.
On June 4, 2014, Fleming wrote a letter to Escort, detailing his attempts to
reconcile the log with ESC18692, accusing Escort of deception, and describing how
Fleming was finally able to discover how to modify the ESC18692 to reveal version
2.46. On June 20, 2014, Escort replied, denying the deception charge and confirming
the accuracy of Fleming’s methodology for accessing version 2.46.
Thus, Escort’s production of ESC18692 looks very similar to its production of
ESC17363. In both cases, Escort produced non-infringing source code and falsely
represented that it was used in Escort’s commercial products.
There are, however, important differences. Here, the allegedly infringing
element – the directional arrow – was a visible display on the GX65. Thus it was
obvious that version 3.46, which did not display an arrow, could not be the source
code used in the GX65 (Versions A and B). It seems unlikely that Escort was trying to
deceive Fleming on such an obvious point. While Escort’s production was not
intended to deceive, it was intended to be vexatious. Escort was trying to wear
Fleming down. For that conduct, the Court will award sanctions, but the Court cannot
find that Escort actually intended to deceive Fleming, and so affirms its earlier holding
in that regard.

Memorandum Decision & Order – page 6

Spoliation
Fleming argues that the Court erred in holding that (1) source code version 2.46
was embedded in ESC18692, and (2) Escort could not be guilty of spoliation because
it produced ESC18692 containing source code version 2.46. Fleming has the burden
of establishing spoliation by demonstrating that Escort destroyed documents and had
“some notice that the documents were potentially relevant to the litigation before they
were destroyed.” Ryan v. Editions Ltd. West, Inc., 786 F.3d 754, 766 (9th Cir. 2015).
Escort’s Senior Systems Engineer Jeff Stevens created version 2.46 source code
on July 17, 2013. See Stevens’ Declaration (Dkt. No. 192-10) at ¶ 14. About a month
later, Stevens admits that he “made changes to” source code version 2.46. Id. at ¶ 15.
He admits that he (1) removed the marked arrow location on the display, and (2)
changed “Russian language prompts and support for European-specific forms of radar
and speed detection.” Id.
On the date Stevens made changes to version 2.46, (1) this litigation had been
ongoing for over a year; (2) Escort knew that version 2.46 ran some models of the
GX65; and (3) Escort knew that the GX65 was alleged by Fleming to infringe his
patents. Under the authorities cited in Ryan, Escort was required to maintain the
original source code version 2.46 as it was created on July 17, 2013. Because Escort
failed to do so, it has committed spoliation.
Escort recognizes “that Mr. Fleming’s argument would be moot if Escort had
‘snapshotted’ version 2.46” before making those changes. See Supplemental Brief

Memorandum Decision & Order – page 7

(Dkt. No. 297) at p. 6. Escort argues, however, that its “failure to follow this course of
action was not in bad faith because it is not part of Escort’s standard business practice
to save stand-alone versions of its source code.” Id. But this business practice has no
relevance under Ryan because version 2.46 was so clearly relevant to this litigation.
Escort responds that it did not spoliate the source code version 2.46 because it
still exists on ESC18692. But it is undisputed that it does not exist as it was created on
July 17, 2013, by Escort’s Senior Systems Engineer Jeff Stevens. As Stevens himself
admits, he made certain changes to that original version 2.46. Stevens alleges that
those changes were minor and irrelevant to this litigation, but that does not change the
fact that Escort cannot produce the original version 2.46. That failure establishes
spoliation.
Spoliation of evidence “raises a presumption that the destroyed evidence goes
to the merits of the case, and further, that such evidence was adverse to the party that
destroyed it.” Apple Inc. v. Samsung, 888 F.Supp.2d 976, 998 (N.D.Cal. 2012). The
finding of spoliation shifts the burden of proof “to the guilty party to show that no
prejudice resulted from the spoliation” because that party “is in a much better position
to show what was destroyed and should not be able to benefit from its wrongdoing.”
Id.
To show a lack of prejudice, Escort compared the hex code version 2.46 on
ESC 18692 with the hex code actually loaded into Escort products, and found that they
are an exact match. See Stevens Declaration, supra at ¶ 18. In other words, the

Memorandum Decision & Order – page 8

functionality of the source code version 2.46 produced by Escort to Fleming is
identical to the functionality of the Escort products that Fleming accuses of
infringement.
It remains true that the loss of the original version 2.46 means that programmer
comments might be lost, although there is no way to be sure. While those comments
do not affect the functionality of a device, they do offer insight into what the
programmer was attempting to accomplish. Fleming’s expert Douglass Schmidt
testified that he uses these comments to “interpret the source code.” See Schmidt
Declaration (Dkt. No. 299-12) at p. 1. He goes on to state that “[w]ithout access to
meaningful source code comments and names, it is not possible to efficiently and
accurately understand complex software.” Id. Escort itself has shown the importance
it places on programmer comments by making over 100 changes to the source code on
ESC 17363 to add comments that would highlight the non-infringing nature of the
source code. See Memorandum Decision (Dkt. No. 178).
Nevertheless, Escort’s expert, Timothy Ramey, testified that in his opinion no
programmer comments were deleted. See Ramey Declaration (Dkt. No. 297-1) at ¶ 13.
He reached that opinion because “the comments in the code were uniform and
consistent – deleted comments would be apparent . . . .” Id.
As the Court sifts through all this evidence, it finds most important the
functional match between the version 2.46 produced by Escort and the version 2.46
actually running Escort’s allegedly infringing devices. While the Court cannot be sure

Memorandum Decision & Order – page 9

if programmer comments were deleted when Stevens changed the original version
2.46, Ramey’s opinion convinces the Court that it is unlikely that any substantive
comments were deleted.1
For all these reasons, the Court finds that Escort has carried its burden of
showing a lack of prejudice from the spoliation. While Fleming has urged the Court to
make a finding of infringement based on the spoliation, the Court will refuse to do so
because Escort has carried its burden of showing no prejudice.
Escort’s Motion for Reconsideration
Wasteful Discovery
The Court would first note that all of its comments in this decision concerning
Escort’s litigation conduct relate to its prior counsel who have since withdrawn, and do
not involve Escort’s current counsel.
The Court’s original decision found that Escort needlessly forced Fleming
through a wasteful discovery process. Escort objects to that conclusion, arguing that
(1) it produced version 2.46 precisely as it maintains that code in the ordinary course
of its business – that is, embedded in the CD labeled ESC18692; (2) Fleming had
previously objected to stand-alone versions of source code; (3) Fleming revealed that
he understood how to obtain version 2.46 from ESC18692 in his letter of June 4, 2014;

1

Fleming submitted an email purporting to show Escort’s “strategy” of making changes to
source code to trick Fleming into believing that the source code was not infringing. That email
involved ESC 17363 and so the Court will evaluate it in the context of other pending motions
involving ESC 17363.

Memorandum Decision & Order – page 10

(4) Escort quickly confirmed Fleming’s understanding in Escort’s letter of June 20,
2014; and (5) it is a relatively simple process to modify ESC18692 to obtain version
2.46, taking between 20 minutes and 2 hours.
But in the discussion above, the Court has largely rejected these arguments.
The key misconduct by Escort that forced Fleming to waste time and effort was
Escort’s long delay in (1) explaining the source code used for the GX65, (2)
explaining that the source code on the face of ESC 18692 was irrelevant, and (3)
explaining how ESC 18692 needed to be modified to access version 2.46. None of
Escort’s rationalizations address these points.
Moreover, Escort’s production of ESC 18692 was so much like its fraudulent
production of ESC 17363 – as discussed above – that Fleming was entitled to spend
long hours trying to unveil any fraud. Escort cannot assail Fleming for the time spent
on this production when it was Escort’s own acts that created a reasonable suspicion of
a second fraud.
Escort argues that Fleming eventually figured out how to modify ESC18692 to
obtain version 2.46. So what? After eight months – and with no help from Escort –
Fleming had a version of code that he had obtained himself by modifying discovery.
That is nearly worthless in litigation. Production in discovery is designed to be a
binding act. It binds the producing party to a representation that the item produced is
what it purports to be. Maljack Prods., Inc. v. GoodTimes Home Video Corp., 81 F.3d
881, 889 n. 12 (9th Cir.1996) (holding that documents produced by a party in

Memorandum Decision & Order – page 11

discovery were deemed authentic when offered by the party-opponent); 31 Federal
Practice & Procedure: Evidence § 7105, at 39 (stating that “[a]uthentication can also
be accomplished through judicial admissions such as . . . production of items in
response to . . . [a] discovery request”). Requiring your opponent to modify discovery
to obtain a key piece of evidence mocks the binding effect that production in discovery
is designed to create.
Stipulating to authenticity only addresses one of the harms – it does not address
verification. Even if Escort admits under Rule 901 that modifications are authentic,
Fleming has no way to verify that is true. Fleming can get the modifications admitted
under the Rules of Evidence but will never be sure if he has the real thing from Escort.
There is therefore an important difference between authentication and verification.
That is why Local Rule 3.4 requires the straight-up production of source code. As the
Court held in its original decision, “Escort had a duty to produce Version 2.46, not to
produce something else, leaving it up to Fleming to figure out how to transform it into
what Escort should have produced in the first place.” Memorandum Decision at p. 6.
Escort takes issue with the Court’s finding that Escort’s claim that source code
version 2.46 could not be produced in a stand-alone version was false. The Court
found that Escort’s own expert, Dr. Grindon, testified that Escort provided him with a
stand-alone Version 2.46 that was not embedded in Version 3.46. See Grindon
Declaration (Dkt. No. 192-4) at ¶¶ 11-13. Escort argues that the Court was mistaken:
Dr. Grindon was “not provided with a stand-alone source code version 2.46 but

Memorandum Decision & Order – page 12

instead was provided with a stand-alone hex code versions 2.46 so that he could
confirm the accuracy of the source code.” See Escort’s Brief (Dkt. No. 261) at p. 13
(emphasis in original). But Escort’s explanation gains it nothing. The reason Escort
has never been able to produce a stand-alone original version 2.46 is that Escort
spoliated that version of the source code.
In conclusion, the Court can find nothing in Escort’s arguments that would
persuade it to reconsider its earlier decision. The Court will therefore deny Escort’s
motion to reconsider.
Fleming’s Petition for Attorney Fees
In the Court’s original decision, it awarded fees and costs to Fleming, and he
has now filed his petition seeking $51,461 in fees and costs. See Memorandum
Decision (Dkt. No. 231). Escort argues again that the Court lacks authority to award
fees and costs in this case. But the Court’s earlier decision fully discussed the Court’s
authority to award fees and costs, and the findings above clearly give the Court that
authority for the reasons set forth in the Court’s original decision. There is no dispute
over counsel’s hourly rate and the Court finds it reasonable. Escort makes various
arguments that the fees are too high, but the Court rejects those arguments and finds
the sum of $51,461 adequately compensates Fleming for the wasted time and effort
caused by Escort in the way it produced ESC18692.
Conclusion

Memorandum Decision & Order – page 13

The Court will therefore grant Fleming’s motion for reconsideration in part
although it will deny the requested remedy that the Court enter a finding of
infringement with regard to certain Escort products. The Court will deny Escort’s
motion for reconsideration. Finally, the Court will grant Fleming’s motion for fees in
the sum of $51,461.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion for
reconsideration filed by Fleming (docket no. 265) is GRANTED IN PART AND
DENIED IN PART. It is granted to the extent that the Court modified its findings as
set forth above, but is denied in all other respects.
IT IS FURTHER ORDERED, that the motion for reconsideration filed by
Escort (docket no. 260) is DENIED.
IT IS FURTHER ORDERED, that Fleming’s fee petition (docket no. 238) is
GRANTED and that Escort pay to Fleming the sum of $51,461 representing fees and
costs.
DATED: September 4, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – page 14