LG Electronics, Inc. et al v. Motorola, Inc.

Filing 29

MEMORANDUM Opinion and Order. Signed by the Honorable Young B. Kim on 8/5/2010. (aac, )

LG Electronics, Inc. et al v. Motorola, Inc.

Doc. 29

UNITED STATES DISTRICT COURT N O R T H E R N DISTRICT OF ILLINOIS E A S T E R N DIVISION L G ELECTRONICS, INC. and L G ELECTRONICS USA, INC., P la in tif f s , v. M O T O R O L A , INC., D e f e n d a n t. ) ) ) ) ) ) ) ) )

C a s e No. 10 CV 3179 M a g is tr a te Judge Young B. Kim A u g u s t 5, 2010

M E M O R A N D U M OPINION and ORDER B e f o re the court is the motion of LG Electronics, Inc. and LG Electronics USA, Inc. (c o lle c tiv e ly "LG" or the "LG Defendants") to compel nonparty Motorola, Inc. ("Motorola") to produce documents and a witness for deposition. For the following reasons, LG's motion is granted in part and denied in part: Background and Procedural History T h e LG Defendants are parties in an underlying patent infringement case captioned V iz io , Inc. v. LG Electronics, Inc., Case No. 1:09-cv-1481, pending in the United States D is tric t Court for the District of Maryland. Motorola is a third-party to the dispute between V iz io , Inc. ("Vizio") and LG. In the underlying lawsuit, Vizio alleges that LG infringed s e v e n patents (the "Vizio patents" or the "patents") that Vizio purchased from Motorola in A p ril 2009. Motorola acquired the patents through the purchase of General Instrument C o rp o ra tio n ("GI") in January 2000.

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On January 12, 2010, LG served Motorola with a subpoena issued by the United S ta te s District Court for the Northern District of Illinois requesting the production of d o c u m e n ts for 47 categories pertaining to the patents at issue in the underlying case.1 (LG's E x . 1.) Fourteen days later, on January 28, 2010, Motorola served comprehensive objections to LG's subpoena. (LG's Ex. 7.) LG and Motorola then met and conferred by telephone and v ia written correspondence approximately 30 times to resolve their disputes related to the subpoena. Motorola contends that in its initial telephone conversation, LG narrowed the scope o f the subpoena and identified four categories of documents for which it sought production. (M o to ro la 's Resp. at 2.) These four categories of documents included: (1) the prosecution f ile s for the Vizio patents as well as any reduction to practice; (2) GI's communications and in v o lv e m e n t with two television standards setting organizations, including ANSI2 /S C T E 3 07 (form erly SCTE DVS031) titled "Digital Video Transmission Standard for Cable Television" (" S C T E 07") and the ITU-T 4 Recommendation J.83 Annex B, titled "Series J: Transmission o f Television Sound Programme and Other Multimedia Signals" ("ITU-T J.83"); (3)

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The subpoena also lists requests for 28 deposition topics; however, Motorola has agreed to produce a corporate witness to be deposed. (LG's Mem. at 2.) ANSI stands for American National Standards Institute. SCTE stands for Society of Cable Telecommunications Engineers.

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ITU-T stands for the International Telecommunications Union's Telecommunication S ta n d a rd iz a tio n Sector. 2

communications between Motorola and Vizio regarding the purchase of the Vizio patents and a n y due diligence; and (4) licenses referenced in the Motorola-Vizio Patent Purchase A g re e m e n t ("purchase agreement") pertaining to the Vizio patents. (Id.) Motorola claims that it provided LG with all non-privileged documents responsive to th e s e four categories, and a privilege log for those documents withheld. (Motorola's Resp. a t 2.) But despite Motorola's understanding that it had complied with the narrowed scope o f the subpoena, Motorola asserts that LG subsequently demanded additional categories of d o c u m e n ts . (Id. at 3.) As a result, Motorola engaged in extensive telephone, e-mail and w ritte n communications with LG, and ultimately produced an additional 500 or so pages of n o n -p riv ile g e d documents. (Id.) Motorola asserts that its ability to respond to the subpoena is limited by the fact that: (1) Motorola transferred its patent files to Vizio and did not retain a copy of those files; (2) the events at issue took place 15 years ago which was well before M o to ro la acquired GI; (3) the underlying lawsuit is centered around the development of two in d u s try standards which were drafted and promulgated in the mid-1990's; and (4) LG either a lre a d y has the documents in its possession or they are available directly from Vizio. (Id.) M o to ro la also objects to producing those documents that are available from Vizio, but that th e parties themselves had chosen not to pursue as part of the discovery plan in the u n d e rlyin g lawsuit, including e-mail communications. (Id. at 3-4.) L G , on the other hand, asserts that despite its willingness to narrow the scope of the s u b p o e n a to address Motorola's concerns, Motorola "barely produced any responsive

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documents." (LG's Mem. at 4.) Specifically, LG points out that Motorola only produced c e rta in documents which include several press releases, a one-page letter, and various lic e n s in g agreements between Motorola and other companies. (Id. at 4-5.) LG filed the in s ta n t motion on May 24, 2010, asking the court to compel Motorola to produce the re s p o n s iv e documents. This matter was referred to this court on June 8, 2010. Motorola f ile d its response on July 9, 2010, and LG filed its reply on July 21, 2010.5 A n a ly s is L G 's motion to compel is granted in part and denied in part. Federal Rule of Civil P ro c e d u re 26 governs the scope of discovery in civil cases. Pursuant to Rule 26, "[p]arties m a y obtain discovery regarding any nonprivileged matter that is relevant to any party's claim o r defense . . . . Relevant information need not be admissible at the trial if the discovery a p p e a rs to be reasonably calculated to lead to discovery of admissible evidence." F e d .R .C iv .P . 26(b)(1). With respect to motions to compel, the Seventh Circuit has instructed th a t a "district court may grant or deny the motion in whole or in part, and similar to a ruling o n a request for a protective order under Rule 26(c), the district court may fashion a ruling a p p ro p ria te for the circumstances of the case." Gile v. United Air Lines, Inc., 95 F.3d 492,

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The parties filed redacted briefs with the clerk's office, but provided the court with u n re d a c te d versions of the briefs. The court has made every effort to ensure that this opinion d o e s not contain any confidential information. The parties should contact the court im m e d ia te ly if the opinion contains any confidential information. 4

496 (7th Cir. 1996). District courts are afforded broad discretion in resolving discovery d is p u te s . See Peals v. Terre Haute Police Dep't, 535 F.3d 621, 629 (7th Cir. 2008). A. D o c u m e n ts Pertaining to Standards-Setting Organizations 6 L G first contends that Motorola should be compelled to produce documents related to GI and Motorola's activities with standards-setting organizations ("SSOs"). (LG's Mem. a t 6-10.) LG contends these documents are relevant to LG's standards estoppel affirmative d e f e n s e because, in the underlying lawsuit, Vizio alleges that LG's compliance with SCTE 0 7 and ITU-T J.83 amounts to infringement of the Vizio patents. (Id. at 7.) LG raises its a f f irm a tiv e defense on the basis of the Federal Circuit's ruling in Qualcomm, Inc. v. B ro a d c o m Corp., 548 F.3d 1004 (Fed. Cir. 2008), holding that the enforcement of a patent is precluded where an SSO member is subject to a disclosure duty and subsequently breaches th a t duty. Thus, LG contends that because GI and Motorola participated in the development o f the SCTE 07 and ITU-T J.83 industry standards, its understanding and treatment of these p a te n t policies are highly relevant to LG's defense. (Id.) LG points out that it first sought d is c o v e ry on this issue from Vizio, but Vizio claimed it did not know whether GI and M o to ro la had a duty to disclose or actually disclosed any of the patents at issue to the re le v a n t SSOs, including SCTE 07 or ITU-T J.83. (Id.)

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The documents requested by LG's subpoena include request numbers 16, 17, 18, 19, and 20. 5

Motorola, however, contends that contrary to LG's unsupported contention, it did not p a rtic ip a te in the development of the two industry standards that form the basis of Vizio's c la im s in the underlying lawsuit because these standards were promulgated before Motorola a c q u ire d GI. (Motorola's Resp. at 6-7.) Motorola represents that it provided LG with all of th e non-privileged documents pertaining to SCTE 07 and ITU-T J.83 that it has in its p o s s e s s io n , custody, and control after conducting a reasonable search of its records. (Id. at 7 .) Furthermore, Motorola informed LG that it did not make any intellectual property rights (" IP R " ) disclosures regarding the Vizio patents to ANSI, SCTE, or ITU, and produced a n u m b e r of documents including two press releases regarding GI's involvement with these s ta n d a rd s, one voting ballot regarding a 2006 revision to SCTE 07, and a privilege log of a s e rie s of e-mails.7 (Id. at 5.) The court agrees with Motorola and finds that LG's contention--that Motorola p a rtic ip a te d in the development of the SCTE 07 and ITU-T J.83 industry standards--is w ith o u t support. Motorola produced the Affidavit of Mark Schmidt ("Schmidt"), a Motorola te c h n ic a l staff employee8 , to support its position that "[t]here is no one at Motorola who p a rtic ip a te d in the drafting or promulgating of SCTE 07 or [ITU-T] J.83." (Schmidt Aff. ¶ 1 0 .) Schmidt further testified that Motorola provided LG "with the names of five individuals it believed may have been involved in the drafting or promulgating of SCTE 07 or [ITU-T]

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There is one e-mail from 1997, five e-mails from 2007, and 25 e-mails from 2008. Schmidt was previously employed at GI as a Senior Staff Engineer. (Schmidt Aff. ¶ 2.) 6

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J.83. These individuals are not employed by Motorola, nor subject to its control." (Id.) Moreover, Motorola has represented that it did not make any IPR disclosures relating to the V iz io patents for these two industry standards, (Motorola's Ex. F, April 28, 2010 Ltr. fr. M. O 'C a lla g h a n ), and has also represented that it produced all of the non-privileged documents p e rta in in g to SCTE 07 and ITU-T J.83 to LG that it has in its possession, custody and control a f te r conducting a reasonable search of its records. (Motorola's Resp. at 7.) While LG c la im s a Motorola employee, Andrea Harriman, participated in deliberations and voted in f a v o r of adopting the SCTE 07 standard at issue in this case, Motorola represents that H a rrim a n participated in a vote regarding a revision to the SCTE 07 standard approximately te n years after the SCTE 07 standard was drafted and promulgated. (Id. at 7 n. 8.) Motorola a ls o produced the only document it found related to her participation in this later revision. (Id.) F u rth e rm o re , to the extent that LG requests that Motorola produce documents from other SSOs, LG has failed to establish that these documents are necessary to defend the u n d e rlyin g case. So while LG may have obtained documents from third-parties showing that G I and Motorola have been involved in the activities of other SSOs, LG has not established h o w these standard-setting activities relate to their claims because there are no other s ta n d a rd s referenced in Vizio's complaint or LG's Answer. H o w e v e r, Motorola is not entitled to withhold the documents described in its privilege lo g under the attorney-client and work-product privilege. Pursuant to Federal Rule of Civil

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Procedure 26(b)(5), when a party withholds information otherwise discoverable by claiming p riv ile g e , the party must then make the privilege claim and then disclose a privilege log c o n ta in in g the following information for each document: (1) the date, the author and all re c ip ie n ts , along with their capacities; and (2) subject matter of the document, purpose for its production, and an explanation as to why the document is privileged or immune from d i s c o v e r y. The explanation must be sufficiently specific to allow the court to determine w h e th e r the claimed privilege or immunity is applicable. In this case, for all 13 categories of documents withheld from production, Motorola a s s e rte d the attorney-client and work-product privilege. The attorney-client privilege

p ro te c ts verbal and written communications exchanged in confidence between a client and a n attorney for the purpose of obtaining legal advice. See Upjohn Co. v. United States, 449 U .S . 383, 394-99 (1981). The court must determine whether legal advice of any kind was s o u g h t from an attorney in his or her capacity as an attorney, whether the material sought in d is c o v e ry contains communication related to the purpose of seeking such legal advice and w h e th e r such communication was made in confidence. See Sandra T.E. v. South Berwyn S c h . Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010). U n lik e the attorney-client privilege, work-product privilege protects documents p re p a re d by attorneys in anticipation of litigation for the purpose of analyzing, evaluating and p re p a rin g a client's case. See Fed. R. Civ. P. 26(b)(3); United States v. Smith, 502 F.3d 680, 6 8 9 (7th Cir.2007). The court must determine whether the documents sought in discovery

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contain an attorney's thought processes and mental impressions. See Sandra T.E., 600 F.3d a t 621-22. The courts in the Northern District of Illinois have construed Rule 26(b)(3) to lim it this protection to one who is a party (or a party's representative) to the litigation in w h ic h discovery is sought. See Cook v. City of Chicago, No. 06 CV 5930, 2010 WL 331737, * 1 (Jan. 26, 2010). M o to ro la cannot withhold the 13 categories of documents from production. First, the p riv ile g e log fails to comply with the requirements of Rule 26(b)(5). Most notably, Motorola f a i ls to explain why the withheld documents fall within the protection of the asserted p riv ile g e . Identifying the reason for withholding the documents as "Attorney Client/Work P ro d u c t" does not explain how these privileges attach to the documents. Second, contrary to Motorola's position, neither the attorney-client nor work-product privilege attaches to th e s e documents. The court examined all 13 categories of documents in camera but did not n o tic e any information from which to infer that these documents contain communications m a d e for the purpose of seeking or providing legal advice or the thought processes or mental im p re ss io n s of an attorney in anticipation of litigation. As to categories 1-5, 7 and 9, these e -m a ils do not show that they were exchanged for the purpose of seeking or rendering legal a d v ic e from an attorney. Instead, these e-mails were exchanged for the purpose of

in v e s tig a tin g the development of J.83 over the years when a new draft recommendation came o u t in December 2007. Document 6 is the December 2007 draft recommendation issued by a third-party organization, ITU, and appears to be identical to documents 8 and 11.

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Document 9 is the April 1997 version of the ITU-T J.83. Standards. As to categories 12 and 1 3 , the content of the forms shows that these were prepared to be disclosed to third parties. Even if these forms were not actually disclosed to others, they were not prepared to be kept c o n f id e n tia l. A ls o , because LG contends that GI participated in the development and im p le m e n ta tio n of SCTE 07 and ITU-T J.839 , and because Motorola did not address this c o n te n tio n , Motorola is directed to conduct a reasonable search of its records as it relates to G I's participation in the development and implementation of SCTE 07 and ITU-T J.83. If M o to ro la 's search does not turn up any responsive GI documents, Motorola is directed to s u b m it an affidavit to LG detailing its search activities of its records and attesting to the a b s e n c e of any responsive documents. B. D o c u m e n ts Pertaining To Vizio's Purchase Of The Patents 10 L G next argues that documents related to Vizio's purchase of the patents from M o to ro la are relevant to LG's defenses. (LG's Mem. at 10-12.) LG contends that Motorola is uniquely in possession of documents pertaining to Motorola's valuation of the patents, the validity and enforceability of the patents, and the circumstances surrounding the sale of the p a te n ts to Vizio, which are relevant to LG's defenses in the underlying lawsuit. (Id. at 10.)
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LG points out that Narisa Chu, a GI representative, was active in the adoption of the p re v io u s version of the SCTE standard before Motorola's acquisition of GI. (LG's Mem. at 8 .) The documents requested by LG's subpoena include request numbers 3,4, 22, 32, 44, and 47. 10

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LG is suspicious of the enforceability of the Vizio patents because Motorola sold these p a te n ts at a very low price and suspects that Motorola did so because it recognized certain d e f e c ts with the Vizio patents. LG points out that Motorola objects to producing this in f o rm a tio n because it consists primarily of e-mail communications, and Vizio and LG have a g re e d that they will not produce e-mail communications in the underlying lawsuit. (Id. at 1 1 .) LG, however, asserts that even though these e-mail communications cannot be obtained f ro m Vizio because of the agreement not to seek e-mail communications, LG argues that M o to ro la has an independent obligation pursuant to the subpoena and Federal Rule of Civil P r o c e d u re 45 to produce them. (Id.) Thus, LG avers that it is simply requesting that M o to ro la produce a narrowly defined set of communications "between Motorola and Vizio, lik e ly confined to a specific set of persons involved in the sale of the patents, that relate to th o s e patents and that occurred barely a year ago in 2009." (Id. at 12.) Motorola, on the other hand, contends that it should not be required to produce any document that is available from Vizio, including, but not limited to, any electronic c o m m u n ic a tio n s . (Motorola's Resp. at 10.) Thus, Motorola objects to the production of m a te ria ls that are equally available from Vizio absent some showing by LG that it attempted to obtain certain materials from Vizio, but was unable to do so through no fault of its own. (Id. at 12.) Next, Motorola asserts that it is LG's own fault that it does not have the e le c tro n ic communications it now seeks, because it chose to enter into an agreement with V iz io not to produce e-mail communications as part of the discovery plan in the underlying

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case.

(Id. at 12-13.)

In essence, Motorola asserts that LG's request for e-mail

c o m m u n ic a tio n s is a deliberate imposition of undue burden and expense on Motorola b e c a u s e it imposes on Motorola a task that the parties themselves have determined to be u n d u ly burdensome and onerous. (Id.) The court grants LG's motion to compel to the extent that Motorola is ordered to p ro d u c e those non-privileged documents, if any, reflecting Motorola's predecisional analysis o f the value of the Vizio patents and the validity and enforceability of these patents. If after a reasonable search of these documents, Motorola finds that responsive documents are s u b je c t to certain privileges, Motorola shall produce a detailed privilege log to LG. Next, to the extent LG requests production of e-mail communications as they relate to Vizio's purchase of the patents, the court denies this request. First, Motorola has re p re se n te d in its response that it provided LG with confirmation that it turned over all of its f ile s pertaining to the patents to Vizio as part of the sale of the patents. (Motorola's Resp. a t 5.) Motorola also created a chart detailing the documents it looked for but could not find a n d confirmed that LG had a copy of the purchase agreement in its possession. (Id.) As a rg u e d by Motorola, LG could have sought these e-mail communications from Vizio, but in s te a d it chose to enter into an agreement with Vizio not to produce e-mail communications a s part of the discovery process. This court will not require Motorola to produce e-mail c o m m u n ic a tio n s that Vizio and LG purposefully decided not to seek in the underlying la w s u it. Haworth, Inc. v. Herman Miller, Inc., 998 F.2d 975, 978 (Fed. Cir. 1993) (requiring

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the plaintiff to "seek discovery from its party opponent before burdening the nonparty" with d is c o v e ry requests). C. D o c u m e n ts Pertaining To Ownership And Rights In The Vizio Patents 1 1 L G asserts that the documents pertaining to the ownership and rights in the Vizio p a te n ts are relevant to its defenses. (LG's Mem. at 12-13.) LG points out, for example, that o n e of the patents was excluded from the purchase agreement even though Vizio's complaint a lle g e s that Vizio is the current assignee of that patent. (Id. at 12.) LG contends that if M o to ro la has retained rights in that patent or any other patents then Vizio cannot assert that p a te n t or others against LG. (Id.) LG further asserts that Vizio's interrogatory responses d is c lo s e a chain of assignments for each patent that does not involve Motorola. (Id. at 13.) Thus, LG avers that the titles to the patents remained with GI and not Motorola until they w e re allegedly transferred to Vizio. (Id.) On this basis, LG claims that these facts call into q u e s tio n Motorola's authority to dispose of patents owned by GI. (Id.) Because a defective tra n s f e r of title would strip Vizio of standing to assert the patents, LG asserts that Motorola s h o u ld produce documents related to its ownership and rights in the Vizio patents. (Id.) While Motorola does not specifically assert substantive objections to LG's request to p ro d u c e these documents, it does repeat that it provided LG with confirmation that it turned o v e r all of its files pertaining to the patents to Vizio, including all of the assignment

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The documents requested by LG's subpoena include request numbers 33, 34, 43, and 46.

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documents. (Motorola's Resp. at 5.) Motorola further reiterates that it produced a chart for th e documents that it looked for, but could not find, including the assignment documents. (Id.) As stated, Motorola also confirmed that LG has a copy of the purchase agreement, w h ic h shows the assignment of the patents from GI to Vizio.1 2 (Id.) Therefore, the court d e n ie s LG's motion to compel as it relates to Motorola's ownership and rights in the patents a s Motorola has represented that it turned over all of its files relevant to the patents, including th e assignment documents, to Vizio. Also, the court knows of no barrier preventing LG from s e e k in g ownership documents from Vizio that would verify Vizio's standing to sue in the u n d e rlyin g patent case. D. D o c u m e n ts Pertaining To Licenses and Products Related To The Patents 13 L G argues that licenses and products related to the Vizio patents affect LG's defenses a n d damages theory in the underlying case. (LG's Mem. at 13-14.) Specifically, LG c o n te n d s that, to date, Motorola has produced only two license agreements identified in the p u rc h a s e agreement even though there are many other license agreements identified in the p u rc h a s e agreement. (Id.) LG avers that Motorola's claim that these two licenses are the o n ly licenses that pertain to the patents-in-suit is not credible because GI's license agreement w ith a certain company expressly names four of the Vizio patents by number and also covers

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The ownership of the patents remained with GI until GI assigned the patents to Vizio. (S c h m id t Aff. ¶ 5.) The documents requested by LG's subpoena include request numbers 9, 30, 35, 36, 37, 3 8 , and 39. 14

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three others by implication. (Id. at 14.) Accordingly, LG asserts that Motorola should be re q u ire d to produce all of the license agreements contained in the purchase agreement so that L G can make an independent assessment as to whether any of the agreements pertain to the V iz io patents. (Id.) M o to ro la , on the other hand, avers that the licensing agreements demanded by LG are n o t relevant to the underlying lawsuit because they do not relate to the Vizio patents. (Motorola's Resp. at 14-15.) Motorola points out that it has produced to LG the two relevant lic e n s in g agreements. (Id.) B e c a u s e Motorola represents that it has produced the relevant licensing agreements, th e court denies LG's motion to compel as to this issue. However, Motorola is ordered to s u b m it an affidavit verifying that these two licensing agreements, of the licensing agreements id e n tif ie d in the purchase agreement, are the only agreements pertaining to the Vizio patents. Conclusion F o r the foregoing reasons, LG's motion to compel is granted in part and denied in p a rt. Motorola is ordered to comply with the following by August 19, 2010: (1) produce a c o p y of the 13 documents identified in its privilege log; (2) produce records pertaining to G I's participation in the development and implementation of SCTE 07 and ITU-T J.83; (3) p ro d u c e records reflecting its predecisional analysis of the value of the Vizio patents and the v a lid ity and enforceability of these patents; (4) submit an affidavit verifying that other than th e two licensing agreements it has already produced to LG, the other licensing agreements

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identified in the subject purchase agreement do not pertain to the Vizio patents; and (5) s u b m it to LG an affidavit detailing its search activities and attesting to the absence of any re s p o n s iv e documents if its search does not turn up any documents ordered herein. ENTER:

_________________________________ Y o u n g B. Kim U .S . Magistrate Judge

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