Philippi-Hagenbuch Inc et al v. Western Technology Services International Inc

Filing 60

OPINION by U.S. Magistrate Judge Byron Cudmore: Plaintiffs' Motion to Compel Discovery 32 ALLOWED IN PART. See written order. (LB, ilcd)

E-FILED

Monday, 03 June, 2013 11:18:26 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS, PEORIA DIVISION
PHILIPPI-HAGENBUCH, INC. and
LEROY G. HAGENBUCH,
Plaintiffs,
v.
WESTERN TECHNOLOGY
SERVICES INTERNATIONAL, INC.,
and WOTCO, INC.,
Defendants.

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No. 12-cv-1099

OPINION
BYRON G. CUDMORE, U.S. MAGISTRATE JUDGE:
This matter comes before the Court on Plaintiffs Philippi-Hagenbuch,
Inc.’s and LeRoy G. Hagenbuch’s (collectively Hagenbuch) Motion to
Compel Discovery (d/e 32) (Motion). For the reasons set forth below, the
Motion is ALLOWED in part.
BACKGROUND
Hagenbuch filed this action on March 30, 2012. Hagenbuch owns
two patents both entitled “Process for Three-Dimensional Modeling and
Design of Off-Highway Dump Bodies.” U.S. Patent No. 7,369,978, issued
May 6, 2008 (978 Patent); and U.S. Patent No. 7,412,357, issued August
12, 2008 (357 Patent) (collectively the Design Patents). Hagenbuch also
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owns two patents both entitled “Baffled Tank for a Vehicle.” U.S. Patent
No. 6,547,091, issued April 15, 2003 (091 Patent); and U.S. Patent No.
7,735,507, issued June 15, 2010 (507 Patent) (collectively the Tank
Patents). Amended Complaint (d/e 44) (Complaint), ¶¶ 17-18 and Exhibit
1-4 (All four patents collectively referred to as the Patents in Suit).
Hagenbuch alleges that Defendant Western Technology International, Inc.
(Westech) willfully infringed on the Patents in Suit. Complaint, ¶¶ 20-36.
On November 21, 2012, Hagenbuch served written discovery
requests on Westech. Hagenbuch sought technical, sales, and marketing
information regarding the accused tanks and the accused processes for
customized truck body designs. Hagenbuch did not include any time
limitations on the requests. See Plaintiff’s Memorandum in Support of
Their Motion to Compel Discovery (d/e 33) (Hagenbuch Memorandum),
Exhibit C, Request for Production of Documents (d/e 34), and Exhibit D
Interrogatories to Defendant (d/e 35). In response, Westech limited its
responses regarding the Design Patents to May 1, 2008, because the
earliest date of issue of those two patents was May 6, 2008. Westech
limited its responses regarding the Tank Patents to March 30, 2006,
because the six-year statute of limitations may limit Hagenbuch’s available
damages to that date. See Motion, Exhibit E, Westech Response to
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Document Requests, and Exhibit F, Westech Response to Interrogatories;
see also 35 U.S.C. § 286. Westech has now agreed to provide responses
regarding the Tank Patterns back to the first issuance date of the two
patents, April 15, 2003. Defendant Westech’s Opposition to Plaintiffs’
Motion to Compel (d/e 45) (Opposition), at 4. The Motion is, thus, moot
with respect to this information.
Hagenbuch moves to compel Westech to provide responses back to
the first application date of the Design Patents and Tank Patents
respectively. Hagenbuch filed the application for the first Design Patent,
the 357 Patent, on June 15, 1999, and the application for the first Tank
Patent, the 091 Patent, on June 1, 2001. Complaint, Exhibit 2, 357 Patent,
at 1, and Exhibit 3, 091 Patent, at 1. Westech provided information from
before the application dates. Hagenbuch does not seek to compel any
additional responses from before the application date. See Motion, at 3
n.3. Westech objects to providing responses from the issue dates back to
application dates on relevance grounds. Westech also objects to the
discovery requests as being overly broad and unduly burdensome.
PRINCIPLES OF DISCOVERY
Federal Rule of Civil Procedure 26(b)(1) allows parties to obtain
discovery regarding any matter, not privileged, which is relevant to the
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claim or defense of any party. Relevant information need not be admissible
at trial if the discovery appears to be reasonably calculated to lead to the
discovery of admissible evidence. The rule gives the district courts broad
discretion in matters relating to discovery. See Brown-Bey v. United
States, 720 F.2d 467, 470-471 (7th Cir.1983); Eggleston v. Chicago
Journeymen Plumbers' Local Union No. 130 U. A., 657 F.2d 890, 902
(7th Cir.1981); see also, Indianapolis Colts v. Mayor and City Council of
Baltimore, 775 F.2d 177, 183 (7th Cir.1985) (on review, courts of appeal
will only reverse a decision of a district court relating to discovery upon a
clear showing of an abuse of discretion).
The federal discovery rules are to be construed broadly and liberally.
Herbert v. Lando, 441 U.S. 153, 177 (1979); Jefferys v. LRP Publications,
Inc., 184 F.R.D. 262, 263 (E.D .Pa. 1999). Federal Rule of Civil Procedure
26(b)(1) provides that the “[p]arties may obtain discovery regarding any
matter, not privileged, that is relevant to the claim or defense of any
party . . .,” but “[f]or good cause, the court may order discovery of any
matter relevant to the subject matter involved in the action.” Id. The good
cause standard is intended to be flexible,
If there is an objection the discovery goes beyond material
relevant to the parties’ claims or defenses, the Court would
become involved to determine whether the discovery is relevant
to the claims or defenses and, if not, whether good cause exists
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for authorizing it so long as it is relevant to the subject matter of
the action. The good-cause standard warranting broader
discovery is meant to be flexible.
Federal Rule of Civil Procedure 26(b)(1) Advisory Committee Notes, 2000
Amendment.
The party opposing discovery has the burden of proving that the
requested discovery should be disallowed. Etienne v. Wolverine Tube, Inc.,
185 F.R.D. 653, 656 (D. Kan. 1999); Golden Valley Microwave Foods, Inc.
v. Weaver Popcorn Co., 132 F.R.D. 204, 207 (N.D. Ind. 1990); Flag Fables,
Inc. v. Jean Ann’s Country Flags and Crafts, Inc., 730 F. Supp. 1165, 1186
(D. Mass. 1989). Remember, we are talking discovery, not admissibility at
trial.
ANALYSIS
Hagenbuch argues that the information sought is relevant to prove
willful infringement, damages, and to oppose Westech’s invalidity defense.
Motion, at 5-9. Westech responds that information before the issuance
date is not relevant to any of these issues. Opposition, at 2-8. Westech
also argues that the requests are overly broad and unduly burdensome.
Opposition, at 9-10.
The Patent Act authorizes enhanced damages for willful infringement
of up to three times the compensatory damages. 35 U.S.C. § 284; In re
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Seagate Technology, LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007). To
secure enhanced damages, Hagenbuch must prove by clear and
convincing evidence that: (1) Westech “acted despite an objectively high
likelihood that its actions constituted infringement of a valid patent; and
(2) the objectively high likelihood of infringement was either known by
[Westech] or so obvious that it should have been known by [Westech].”
GSI Group, Inc. v. Sukup Mfg. Co., 591 F.Supp.2d 977, 981 (C.D. Ill. 2008)
(citing In re Seagate, 497 F.3d at 1371). Hagenbuch seeks technical,
sales, and marketing information to determine whether Westech copied
and used the inventions disclosed in the Patents in Suit while the
applications were pending, and then continued to copy and use the
inventions after the Patents in Suit were issued. The inventions consist of
the products disclosed in the Tank Patents and the design processes
disclosed in the Design Patents.
Hagenbuch argues that copying and using the inventions before the
Patents in Suit were issued would be relevant to show that Westech was
aware of Hagenbuch’s inventions, and so, knew that it was infringing once
the Patents in Suit were issued. Westech counters that the information
before issuance of the Patents-In-Suit is irrelevant because a patent is not
valid until it is issued. See GAF Building Materials Corp. v. Elk Corp. of
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Dallas, 90 F.3d 479, 483 (Fed. Cir. 1996). Thus, Westech argues that it
had no likelihood of infringement before the first issuance dates for the
Design Patents and the Tank Patents, respectively.
The Court agrees with Hagenbuch on this issue. Westech’s
knowledge of the existence of the applications for the Patents in Suit before
the issuance dates is relevant to Westech’s knowledge that its alleged
activities would constitute infringement after the issuance dates. Cf. e.g.,
GAF Building Materials Corp., 90 F.3d at 480-81 (defendant accused of
copying invention disclosed in patent application before issuance and then
infringing on the patent by continuing to use the invention after issuance of
the patent). Therefore, the sought after information is relevant to the issue
of willfulness.
The technical, sales, and marketing information from before the
issuance date is also relevant to the reasonable royalty method of
measuring damages. The reasonable royalty theory allows damages in the
amount of a reasonable royalty to which the infringer and the patent holder
hypothetically would have agreed at the time that the infringement began.
Wang Laboratories, Inc. v. Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir.
1993); see Power Integration, Inc., 711 F.3d at 1379. If Westech copied
and used the inventions disclosed in the applications for the Patents in Suit
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before the issuance dates, then its history and experience with those
inventions before the issuance dates would be relevant to measuring the
value of those inventions on the issuance dates, and so, relevant to
calculating a reasonable royalty on the issuance dates. Westech’s
arguments to the contrary are not persuasive. Westech’s relevance
objection, therefore, is overruled.
Hagenbuch also argues that technical, sales, and marketing
information before the first issuance dates of the Tank Patents and Design
Patents is relevant to the lost profits theory of damages. Under this theory,
Hagenbuch can recover lost profits resulting from the erosion in price
caused by the increased competition from Westech’s alleged infringement.
Power Integration, Inc., 711 F.3d at 1377-78. Hagenbuch argues that
Westech’s use of its inventions before the Patents in Suit issued is relevant
to determine the effects of their activities on the price of the products sold
through the use of the inventions. The Court disagrees with Hagenbuch.
Westech’s alleged use of Hagenbuch’s inventions before the Patents in
Suit issued would have been legal activity and not infringement.
GAF Building Materials Corp., 90 F.3d at 483. Thus, the impact of that
legal activity on market prices would not have injured Hagenbuch. The

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requested information, therefore, is not relevant to the lost profits theory of
damages.1
Hagenbuch also argues that marketing information before the first
issuance dates of the Tank Patents and Design Patents is relevant to
oppose Westech’s invalidity defense. Defendants’ Answer and
Counterclaims to Plaintiffs’ Amended Complaint (d/e 46), at 6, Second
Defense. Westech alleges that the Patents in Suit are invalid for several
reasons, including obviousness under § 103 of the Patent Act. 35 U.S.C.
§ 103. Section 103 of the Patent Act states, in part,
A patent for a claimed invention may not be obtained,
notwithstanding that the claimed invention is not identically
disclosed as set forth in section 102, if the differences between
the claimed invention and the prior art are such that the claimed
invention as a whole would have been obvious before the
effective filing date of the claimed invention to a person having
ordinary skill in the art to which the claimed invention pertains.
35 U.S.C. § 103. The determination of whether a claimed invention is
obvious turns on several factors:
Under § 103, the scope and content of the prior art are to be
determined; differences between the prior art and the claims at
issue are to be ascertained; and the level of ordinary skill in the
pertinent art resolved. Against this background, the
obviousness or nonobviousness of the subject matter is
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Evidence of infringement after the Patents in Suit issued, but during a period for which damages are not
recoverable (such as claims for infringement after the Patents in Suit issued but barred by the six-year
statute of limitations) may be relevant to the effect of infringement on the erosion of prices. Power
Integration, Inc., 711 F.3d at 1377-78. Thus, Westech should provide the requested information back to
the first date of issue, and has agreed to do so.

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determined. Such secondary considerations as commercial
success, long felt but unsolved needs, failure of others, etc.,
might be utilized to give light to the circumstances surrounding
the origin of the subject matter sought to be patented. As
indicia of obviousness or nonobviousness, these inquiries may
have relevancy.
Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17-18 (1966).
Evidence that Westech copied and used Hagenbuch’s claimed inventions
would be relevant to proving secondary considerations such as commercial
success and the existence of a long felt but unresolved need. Westech
argues that such evidence is irrelevant because the relevant point in time to
determining obviousness is the time of invention. The Court disagrees.
Secondary considerations, such as commercial success and the existence
of a long felt but unresolved need, may be proven by evidence of the
subsequent commercial success of the invention and the subsequent
copying of the invention by competitors. See Transocean Offshore
Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340, 134952 (7th Cir. 2012) (evidence of commercial success and copying of the
claimed invention supported nonobviousness). Thus, evidence that
Westech copied and used the claimed inventions disclosed in the
applications of the Patents in Suit in order to achieve commercial success
would be relevant to the issue of obviousness. Westech’s relevance
objection is overruled.
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Westech also objects on the grounds that providing responsive
technical, sales, and marketing information from the issuance date back to
the patent application date is unduly burdensome. Westech has agreed to
provide the responsive information with respect to the Tank Patents from
March 30, 2006, back to April 15, 2003. Westech does not claim that
providing the responsive information presents an undue burden.
Westech’s declarant Frederick J. Reynolds only discusses in detail the
difficulties that would be presented if the Court ordered production of
documents related to Westech’s body-design process. Westech
Response, Exhibit A, Declaration of Frederick J. Reynolds (Reynolds
Declaration), ¶¶ 5-7. Reynolds does not indicate that producing responsive
materials with respect to the accused tanks and the Tank Patents would
present such problems. Producing responsive information back to June 1,
2001, therefore, should not present a significant additional burden. The
objection that the requests are unduly burdensome with respect to
responsive technical, sales, and marketing information related to the
accused tanks and the Tank Patents is therefore overruled.
The burden of producing additional information with respect to the
accused design processes and the Design Patents would be more
significant. Westech would be required to provide responsive technical,
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sales, and marketing information for approximately nine years, from May 1,
2008, back to June 15, 1999. Reynolds states that producing responsive
documents related to body-design would be particularly burdensome for the
time period before 2004. Reynolds Declaration ¶ 5. Hagenbuch indicates
that it has reason to believe that Westech may have starting using the
claimed invention disclosed in the applications for the Design Patents in
2004. See Hagenbuch Memorandum , at 6 and Exhibits G and H. The
Court, therefore, will limit the required response to the discovery requests
with respect to the accused design processes and the Design Patents to
responsive information from May 1, 2008, back to January 1, 2004. This
limitation on the requested discovery should provide Hagenbuch with
sufficient information, but still minimize the burden on Westech.
Westech further complains that Hagenbuch fails to address
objections that it raised to the excessive breath of Hagenbuch’s discovery
requests. Westech is correct on this point. Westech made several
objections in its responses to Hagenbuch’s discovery requests on the
grounds that specific requests were vague or overly broad. Westech then
set forth in its responses the manner in which it would respond to each
such request. See, Hagenbuch Memorandum, Exhibits E and F,
Westech’s Response to Plaintiffs’ Requests for Production of Documents
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(d/e 35) and Westech’s Answer and Objections to Plaintiffs’ First Set of
Interrogatories (d/e 35) (Discovery Responses). The parties met and
conferred and Westech agreed to provide some additional information.
See Motion, Exhibits A and B, Letter dated March 11, 2013, and Letter
dated March 25, 2013 (d/e 34) (Conference Letters).
The Motion only challenges the temporal limitation that Westech
included in its responses and not Westech’s other specific objections. This
Opinion only addresses Westech’s temporal objection to providing
responses before the first issuance date of the Design Patents and the
Tank Patents respectively. Westech, therefore, may respond in its
supplemental responses in the same manner and to the same extent that it
responded in the Discovery Responses, as modified by the Conference
Letters, except that the responses must extend back to June 1, 2001, for
discovery requests related to accused tanks and the Tank Patents, and
January 1, 2004, for requests related to the accused design processes and
the Design Patents.
WHEREFORE Plaintiffs’ Motion to Compel Discovery (d/e 32) is
ALLOWED in part. Westech is directed to provide technical, sales, and
marketing information responsive to Plaintiffs’ discovery requests as
provided in this Opinion: (1) with respect to the accused tanks and the Tank
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Patents from April 15, 2003, back to June 1, 2001; and (2) with respect to
the accused design processes and the Design Patents from May 1, 2008,
back to January 1, 2004. Westech is directed to provide the additional
discovery responses by June 28, 2013. The Motion is denied as moot with
respect technical, sales, and marketing information responsive to Plaintiffs’
discovery requests with respect to the accused tanks and the Tank Patents
from March 30, 2006, back to April 15, 2003, because Westech has agreed
to provide such information voluntarily. Westech is directed to provide the
additional information that it has agreed to provide voluntarily by June 28,
2013, if it has not already done so. The Motion is otherwise denied.

ENTER: June 3, 2013

s/ Byron G. Cudmore
UNITED STATES MAGISTRATE JUDGE

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